Page 81 - Performance Leadership

70 • Part II Operational and Analytical Dimensions

typically in the form of a project, and it starts to run. In the first loop
of management, feedback is collected and the processes that are man-
aged are fine-tuned within the confines of the specifics of that partic-
ular strategy. An offline feedback loop may report the performance of
the overall process on a monthly basis or may be triggered when an
external discontinuity (such as changes in the market) occurs. Typi-
cally, there are multiple donuts, as organizations tend to optimize just
a certain domain, such as in supply chain management, customer rela-
tionship management, or back office management (enterprise resource
planning).
To achieve operational and analytical alignment, the two loops of
management should be shaped like a pretzel, a continuous cycle of not
only the first loop but also the second loop of management. Within the
pretzel model, the first loop and second loop of management invoke
each other. Early warning signals from first loop monitoring can imme-
diately trigger a strategic review. It is not necessary to wait for a trend
to appear. Previous experience or an early warning signal in related
connected cycles can be observed and acted on. For instance,
decreased performance in the supply chain may affect the performance
in customer-facing loops a little while later. Bottom-up input, collected
from a larger group of people, either triggers new strategic thinking or
contributes to an existing exercise. At the same time, improvements
and changes in the strategy are carefully implemented in an incre-
mental manner and tested; instead of necessitating heroic decisions,
dramatic strategy shifts, and radical process redesigns. There are mul-
tiple reasons why the pretzel model design is important for operational
and analytical alignment.

Escalation of Major Operational Problems
Organizations do not live in a closed system. Hiding information from
the outside world is a losing strategy, if it were even possible. But for
transparency to be successful, it is crucial to have the processes on
which you share information under control. This is important all the
time, but it is vital when there are operational issues so that problems
can be corrected quickly before the problem escalates. A well-known
example from the field of crisis management comes from the reaction
from a baby food company when glass fragments were found in baby