Interview with Lawrence Ganti, Corporate Director, Office of Strategy Management, Serono.
Headquartered in Geneva, Switzerland, Serono reported 2005 revenues of more than $2.5 billion, making it the largest biotechnology company in Europe and among the leaders in the world. It has eight manufacturing plants and 4,900 employees spread across 45 countries. Serono’s groundbreaking work includes its treatments for infertility, growth hormone deficiency and multiple sclerosis.
Serono was inducted into the prestigious Balanced Scorecard Collaborative Hall of Fame in 2006.
How long have you been responsible for facilitating the Balanced Scorecard process?
I’ve been responsible for the Balanced Scorecard since the beginning of 2004. This evolved into my position as Corporate Director for the Office of Strategy Management in mid 2005.
What is included in your role as Director of the Office of Strategy Management (OSM)?
If you look at the OSM framework as described by Drs Kaplan and Norton, the OSM that we have established within Serono pretty much covers all of those components. So we take charge of coordinating strategic planning and execution, project and initiative management, the Balanced Scorecard design and measurement process, strategy review meetings, cross-functional alignment including HR and Finance, strategic awareness and strategic communication. Additionally we are responsible for enterprise risk management, special projects, and managing the agenda for the Executive Management Board meetings.
However, our OSM work didn’t come direct from the work of Drs Kaplan and Norton. Within Serono we established a ‘Make Things Happen’ office in 1995. Our then CEO, Fabio Bertarelli, who was the Father of our present CEO Ernesto Bertarelli, said that he wanted an office to ‘make things happen’, which would cover many areas such as creating alignment, performance management, business strategy and strategic planning. This has evolved into today’s OSM, which mirrors closely the office described by Kaplan and Norton.
Who do you report to?
I report to Roland Baumann, the Senior Executive Vice President responsible for corporate administration. He reports directly to the CEO.
How did you come to be involved in the Balanced Scorecard design and implementation program?
I was hired into the organization with scorecard management and facilitation identified as a core responsibility. Serono has been using the Balanced Scorecard since 1996, so it is well established within the organization. One of my early tasks was to make sure that the scorecard was meeting global best practices with regard to design and implementation. This led to external benchmarking activities and internal surveying to unearth how well we were managing with the scorecard and identify improvement opportunities.
I should state that the fact the Balanced Scorecard was well-established enormously eased my role. Ernesto Bertarelli introduced the scorecard after being exposed to it while completing his MBA at Harvard Business School. He was deputy CEO when it was first introduced as he continued to spearhead its implementation when he became CEO. The scorecard has the full support of the senior management team and indeed the board of directors.
Unlike HR or Finance, as examples, there are no clear job descriptions for a ‘Balanced Scorecard’ manager. What did your organization see as the key personal and professional qualities for your role in scorecard facilitation?
Project management is a key requirement, which is also important for other roles, such as within HR and finance as examples. To succeed in an OSM role you really need an entrepreneurial spirit and be able to make things happen behind the scene, and so be more than a planner.
It is also critical to be able to work with multiple people and across functions. I am a worldwide coordinator of this effort and most of the people I work with don’t report to me. Moreover, most of them are senior managers so I have to be able to build trust and cement good working partnerships. I work with them to facilitate the process and not as a monitor of their performance.
For instance consider making the budget work alongside the scorecard. This is crucial and requires a very strong working relationship with finance and the CFO. In a sense the budgeting process within Serono is so heavily linked into the Balanced Scorecard that you can’t do one without the other. This makes it doubly important that the relationship between the OSM and finance works extremely well.
However my boss, who is really OSM director, also has corporate internal audit reporting into him, and corporate quality assurance and compliance. Therefore he has responsibility for some controlling functions, which leads to some useful harmonization.
It’s also important to add that although the Balanced Scorecard is our key management tool and really acts as the glue that binds us together as a company, I don’t think it would work if we had somebody called a Balanced Scorecard Manager in charge of a specific scorecard program. The danger is the scorecard would be seen as a delineable program that is isolated from the rest of the work of the organization.
At Serono when people talk of budgets they don’t say ‘what is your budget’, they say ‘what is your Balanced Scorecard?’ Similarly when people talk of plans they don’t say ‘what is your plan, they ask ‘what is your Balanced Scorecard? The Balanced Scorecard has really been fully embedded into the company culture.
How were you trained in facilitating a Balanced Scorecard program?
I have an undergraduate degree in entrepreneurship from Babson College and an MBA from IMD (International Institute for Management Development). This gave a good grounding for the role. But I also learn from observing other companies, attending Kaplan and Norton conferences and working internally with people who had a number of years experience of using the scorecard within Serono.
A Balanced Scorecard has to become ‘the way we manage around here’. From where do you get the authority (for example from the CEO) to go into a team and say ‘we’re going to build a Balanced Scorecard’?
It is so well ingrained in the company that it is already the way we manage around here.
All employees in Serono have some part of their incentive compensation linked to the Balanced Scorecard, although the variable bonus percentage varies according to level. Consequently, everybody knows what the scorecard is and how their performance is linked to it.
The incentive compensation link has been in place since 2001 and we are looking at it again to see how we can improve the link. What people often don’t realize is that once you link compensation to the Balanced Scorecard, then whatever’s on the scorecard gets done. That’s good and bad. It’s great because it gives people their marching orders, and gets people focused on the objectives that are most important. It becomes problematic, however, in that people can do the calculation in their heads and realize that this activity is worth 2% of my compensation plan so that’s all the attention I will give to it. This sometimes means that not enough attention is given to activities when circumstance requires it, and even less attention gets paid to important activities that do not appear on their scorecard. We have worked closely with HR to develop the incentive compensation plan and will do so as we make improvements.
What are the major challenges you face when facilitating the process of building and implementing Balanced Scorecards and how are these overcome?
A critical challenge is being able to respond to the unanticipated problems that the scorecard brings, such as the cited challenges with compensation. Sometimes it can take three or four years after the scorecard is set up before problems show themselves.
In saying that, there are many unanticipated benefits. For example, people think about the scorecard all the time and so following the quarterly publication of results on the scorecards we have throughout the worldwide, there is an exchange of information on what’s been missed and where practices can be shared, which is certainly positive but was equally unanticipated.
And such sharing is great as we have 37 scorecards in Serono. At the highest level we have the Corporate Scorecard, which is essentially the CEO’s Objectives. Then each of his nine direct reports has their own scorecard, such as for the Head of Research. Continuing the cascade, the research scorecard is supported by three research site scorecards. And lab workers have their performance linked to the scorecard through individual objectives, with their compensation linked to the site scorecard and their own objectives.
As another devolved example, we have an IT scorecard and they have a flat screen monitor on the wall showing the Balanced Scorecard, with performance updates on a regular, sometimes real-time, basis.
Are there people dedicated full-time or part-time to the scorecard within your organization? If so, what are their roles?
With OSM, there are two of us who facilitate the worldwide scorecard development program. A third person in the group has been focused on rolling out the Enterprise Risk Management program. Also, within Serono we have a group that is not in OSM, but reports performance against scorecard metrics, so we have a split between those who develop the metrics and those who report on them. This group is essentially responsible for all non-financial strategic reporting.
How do you see your role developing over the next 2-3 years?
Within OSM it’s hard to say how the work will develop as we evolve our responsibilities according to market and organizational needs. For instance, last year we took responsibility for developing a risk management competency and linking that to the scorecard. When that is well established we will put it into the business, perhaps through a dedicated risk management function. So in OSM we play an important role as an incubator for new roles and ideas.
From your own career perspective, how do you think this role will benefit you personally in the longer-term?
I have been able to explore all aspects of the business which is not normally afforded within a strategic planning role for instance. It’s been great to get out in the business and really understand the business and understand which metrics are important to them. Such insight can only benefit anybody’s career.
From your experience what are the critical success factors in succeeding as a Balanced Scorecard manager?
Flexibility. That is an absolute must. The reason why the OSM has worked well in Serono is because it has evolved. If people want stability and routine then working with an OSM would not be for them. In this job routine does not exist.