ffirs.qxd 11/2/06 1:49 PM Page iii Five Key Principles of Corporate Performance Management Bob Paladino John Wiley & Sons, Inc. ffirs.qxd 11/2/06 1:49 PM Page ii ffirs.qxd 11/2/06 1:49 PM Page i Additional Praise For Five Key Principles of Corporate Perfromance Management “This book is emblematic of Bob’s considerable expertise in organizing a company around the Strategy Focused Organization approach using the Balanced Scorecard Method. As founder, chairman and CEO of Crown Castle International (CCI:NYSE) I hired Bob as a consultant to lead a pro- gram to initiate CCI on the SFO method. He later joined CCI and led a suc- cessful organizational transformation to a much more efficient global platform in the telecommunications industry. I am now chairman and majority shareholder of two international organi- zations; one in the multi-jurisdictional payroll arena and another in the aero- space industry and Bob is successfully transforming those companies into Strategy Focused Organizations. He is probably THE most knowledgeable and experienced individual in implementing the SFO approach to better organizational efficiency given his hands on experience and his considerable knowledge of accounting and finance as a CPA.” —Ted B. Miller, Jr., Chairman, M7 Aerospace and Chairman, Imperium International “This book brings strategy to life through real-life application and provides the road map needed to truly unite a company in its objectives. Bob Paladino’s method encourages team work, cross functional thinking and drives company success.” —Preston Atkinson, Chief Operating Officer, Whataburger, Inc. “Bob Paladino has taken a balanced approach of taking all attributes of high performing businesses and turning them from theory to practical application. His book also discusses a step by step approach by using case studies which, if followed, will help organizations get to the maturity level in a timely manner.” —Ashok G. Vadgama, President, Center for Advanced Management Institute (CAM-I)” “All companies today are looking for sustainable competitive advantages— which are more difficult to achieve. Consistent execution in performance and defining the right metrics are critical steps to achieving them. This book pro- vides excellent insights to get you started!” —Ralph Vasami, President Universal Weather & Aviation ffirs.qxd 11/2/06 1:49 PM Page ii ffirs.qxd 11/2/06 1:49 PM Page iii Five Key Principles of Corporate Performance Management Bob Paladino John Wiley & Sons, Inc. ffirs.qxd 11/2/06 1:49 PM Page iv This book is printed on acid-free paper. ࠗ∞ Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved. Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, 978-750-8400, fax 978-646-8600, or on the web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, 201-748-6011, fax 201-748-6008, or online at http://www.wiley.com/go/permissions. Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages. For general information on our other products and services, or technical support, please contact our Customer Care Department within the United States at 800-762-2974, outside the United States at 317-572-3993, or fax 317-572-4002. Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books. For more information about Wiley products, visit our Web site at http://www.wiley.com. Library of Congress Cataloging-in-Publication Data Paladino, Bob, 1959– Five key principles of corporate performance management / Bob Paladino. p. cm. Includes index. ISBN-13: 978-0-470-00991-8 (cloth) ISBN-10: 0-470-00991-8 (cloth) 1. Organizational effectiveness. 2. Management. 3. Performance—Case studies. 4. Executives. I. Title. HD58.9.P35 2006 658.4'06—dc22 2006025192 Printed in the United States of America 10987654321 ffirs.qxd 11/2/06 1:49 PM Page v My Family I offer praise to my grandfather, Alberto “Poppy” Paladino, for his courage as a teenager to migrate from Tuscany just after the turn of the twentieth century and for imparting his values of integrity, hard work, and education to his sprawling family tree. Thank you to my parents, Albert and Dorothy, for their enduring support and for being excellent role models. Special admiration to my wife, Ellen, for her positive attitude and to my children for keeping me inspired. Our Freedom I express gratefulness for my freedom of speech and have enormous respect for those who have preserved it. I will share book royalties to aid injured soldiers returning home and with the United Flight 93 Tower of Voices Memorial. It contains 40 wind chimes; sounds in the wind are a living memory of the 40 persons honored, many of whose last contact was through their voices. To express your appreciation, please go to www.honorflight93.org and www.saluteheroes.org, both IRS Section 501(c)(3) nonprofit organizations. ffirs.qxd 11/2/06 1:49 PM Page vi ffirs.qxd 11/2/06 1:49 PM Page vii Pathway to Success Waste no more time talking about great souls and how they should be. Become one yourself! —MARCUS AURELIUS ANTONINUS ffirs.qxd 11/2/06 1:49 PM Page viii ftoc.qxd 11/2/06 1:48 PM Page ix Contents Acknowledgments xiii chapter 1 Introduction: Five Key Principles of Corporate Performance Management 1 Best Practice Award-Winning Enterprise Cases 1 Why Read This Book? 2 Principle 1: Establish and Deploy a CPM Office and Officer 4 Integrating Principles 2 through 5 CPM Processes and Methods 6 Summary 7 My Promise 9 chapter 2 Why Do Most Companies Fail to Implement Their Strategies? 10 Four Barriers to Strategy Implementation 10 Industry Clock Speed: A New Consideration to Implementing Strategy 16 Top Five Blockers to CPM Project and Process Success 19 Summary 23 chapter 3 Research and the Five Key CPM Principles: A Best Practice Model 25 Principle 1: Establish and Deploy a CPM Office and Officer 26 Crown CPM Office and Officer Is Born 29 CPM Research 29 High-Performing Organizations 32 Principle 1: Establish and Deploy a CPM Office and Officer 33 Principle 2: Refresh and Communicate Strategy 33 ix ftoc.qxd 11/2/06 1:48 PM Page x x contents Principle 3: Cascade and Manage Strategy 33 Principle 4: Improve Performance 35 Principle 5: Manage and Leverage Knowledge 35 Summary 36 chapter 4 Principle 1: Establish and Deploy a CPM Office and Officer 39 Crown Castle International: Best Practice Case 41 City of Coral Springs: Best Practice Case 47 Tennessee Valley Authority: Best Practice Case 49 Medrad: Best Practice Case 53 Serono: Best Practice Case 55 LB Foster Company: Best Practice Case 58 Florida Department of Health: Best Practice Case 62 American Red Cross: Best Practice Case 64 Bronson Methodist Hospital: Best Practice Case 68 Ricoh Best Practice: Best Practice Case 72 KeyCorp: Best Practice Case 77 Sprint Nextel: Best Practice Case 80 chapter 5 Principle 2: Refresh and Communicate Strategy 85 Pareto Inc.: Foundational Strategy Map Case 87 Crown Castle International: Best Practice Case 93 City of Coral Springs: Best Practice Case 97 Tennessee Valley Authority: Best Practice Case 103 Medrad: Best Practice Case 107 Serono: Best Practice Case 115 LB Foster Company: Best Practice Case 118 Florida Department of Health: Best Practice Case 128 American Red Cross: Best Practice Case 131 Bronson Methodist Hospital: Best Practice Case 133 Ricoh: Best Practice Case 140 KeyCorp: Best Practice Case 144 Sprint Nextel: Best Practice Case 151 chapter 6 Principle 3: Cascade and Manage Strategy 161 Pareto Inc.: Balanced Scorecard Introduction 163 Crown Castle International: Best Practice Case 166 City of Coral Springs: Best Practice Case 170 Tennessee Valley Authority: Best Practice Case Study 175 Medrad: Best Practice Case 183 Serono: Best Practice Case 192 LB Foster: Best Practice Case 199 Florida Department of Health: Best Practice Case 203 ftoc.qxd 11/2/06 1:48 PM Page xi contents xi American Red Cross: Best Practice Case 213 Bronson Methodist Hospital: Best Practice Case 221 Ricoh: Best Practice Case 233 KeyCorp: Best Practice Case 238 Sprint Nextel: Best Practice Case 246 chapter 7 Principle 4: Improve Performance 252 Introduction to Six Sigma 254 Crown Castle: Best Practice Case 257 City of Coral Springs: Best Practice Case 265