1. Using a combination of the commonkads and system dynamics methodologies to make operational the transition between the definition of a joint innovation strategy and its implementation and management Sidnei Vieira Marinho Universidade do Vale do Itajaí (UNIVALI) Cristiano Cagnin DG Joint Research Centre Institute for Prospective and Technological Studies The 4th International Seville Conference on Future-Oriented Technology Analysis (FTA) 12 & 13 May 2011

2. Using a combination of the commonkads and system dynamics methodologies to make operational the transition between the definition of a joint innovation strategy and its implementation and management 1. Introduction Despite the growing number of publications on Performance Measurement Systems, it can be observed that consensus has not yet been on the stages of their implementation within an organization. The systematic proposal is composed by four different phases which to optimize the utilization of Balanced Scorecard by methods, tools and authors contributions of this paper.

3. Using a combination of the commonkads and system dynamics methodologies to make operational the transition between the definition of a joint innovation strategy and its implementation and management 1. Introduction (Why Balanced Scorecard?) Studies demonstrate that one of the performance management systems most widely used by organizations is the balanced scorecard. It is made up of four strategic perspectives and includes some of the subjects that are of greatest importance to implementation of strategy, these are: the transformation of strategy into operational actions; the creation of correlation hypotheses based on cause and effect relationships; the monitoring of both financial and non-financial measures; and alignment and management of the scope of objectives in such a way as to facilitate feedback and strategic learning with the aim of transforming strategy into a continuous process.

4. Using a combination of the commonkads and system dynamics methodologies to make operational the transition between the definition of a joint innovation strategy and its implementation and management 2. Balanced Scorecard

5. Using a combination of the commonkads and system dynamics methodologies to make operational the transition between the definition of a joint innovation strategy and its implementation and management 2. Balanced Scorecard LIMITATIONAUTORSSUGESTIONSAUTORS The cause and effect relationships between performance measures are linear and static Butler, Letza e Neale, 1997; Anthony e Govindarajan, 1998; Schneiderman, 1999; Norreklit, 2000; Richmond, 2001 System Dynamics Richmond, 2001; Todd, 2000; Akkerman e Oorshot, 2002; Linard, Fleming e Dvorsky 2002; Schoeneborn, 2003 There is a need for additional perspectives if all stakeholders are to be catered for Otley, 1999; Schneiderman, 1999; Norreklit, 2000; Neely, e Kennerley, 2002; Brignall, 2002; Atkinson, 2006 Performance PrismNeely, e Kennerley, 2002 The balanced scorecard fails because of difficulties that are encountered during the implementation phase Epstein e Manzoni, 1998; Atkinson, 2006 Hoshin KanriWitcher e Chau, 2007 Employees are not represented when strategic objectives and measures are defined Norreklit, 2000 Hoshin Kanri Witcher e Butterworth, 2000; Tennant e Roberts, 2001 Skandia Navigator Walker e MacDonald 2001; Olve, Roy e Wetter, 2001; Hagood e Friedman 2002; Andriessen 2004; Wu 2005 The balanced scorecard doesnt take into account the interaction between the processes of strategy development and implementation Epstein e Manzoni, 1998; Atkinson, 2006

6. Using a combination of the commonkads and system dynamics methodologies to make operational the transition between the definition of a joint innovation strategy and its implementation and management 3. Systematic Proposal Phase 4 Phase 3 Strategic Learning Phase 1 Mission Vision Values Organizational Strategy Strategic Diagnostic Phase 2 External Environment Internal Environment Cascading the Strategy into Operational Actions ObjectivesMeasuresTargetsInitiativesBudget

7. Using a combination of the commonkads and system dynamics methodologies to make operational the transition between the definition of a joint innovation strategy and its implementation and management 3. Systematic Proposal (Phase 2 – Strategic Diagnostic) Identification of strategic questions Analysis of internal environmentAnalysis of external environment SWOT matrix Selection of scenarios Description of scenarios Analysis of implications and options Selection of initial measures Stage 1 SWOT analysis Stage 2 Global Business Network Method

8. Using a combination of the commonkads and system dynamics methodologies to make operational the transition between the definition of a joint innovation strategy and its implementation and management 3. Systematic Proposal (Phase 3 – Cascading the Strategy) Stage 3: Definition of the Strategic Objectives Stage 4: Construction of the Strategy Maps Stage 5: Selection of the Measures Stage 6: Targets Supervision Stage 7: Strategic Management of Initiatives Stage 8: Strategic Budget CASCADING THE STRATEGY INTO OPERATIONAL ACTIONS STRATEGIC OBJECTIVESMEASURESTARGETSINITIATIVESBUDGET

9. Using a combination of the commonkads and system dynamics methodologies to make operational the transition between the definition of a joint innovation strategy and its implementation and management 3. Systematic Proposal (Phase 4 – Strategic Learning) MONITORING CYCLE MONITORING MEETING (SINGLE LOOP) EXIT RESULTS ENTER RESOURCES FINANCE LEARNING MEETING (DOUBLE LOOP) STRATEGIC LEARNING CYCLE INITIATIVES AND PROJECTS BALANCED SCORECARD STRATEGY BUDGET TRANSLATION OF THE STRATEGY

10. Using a combination of the commonkads and system dynamics methodologies to make operational the transition between the definition of a joint innovation strategy and its implementation and management 4. Validation (Delphi Method and Case Studies) Once this system had been defined, its phases and stages were validated using the Delphi method, in order to obtain the opinion of the specialists This implementation of the Delphi method involved specialists from Brazil, Germany, Spain, Canada and Japan. The systematic proposal has been tested within three case studies.The first case aimed to assess the efficiency of the Brazilian State of Parana in sharing juridical knowledge with citizens to implementation of sustainable policies. The second case aimed at verifying if the social responsibility measures used by a higher education institution were sufficiently linked to its strategic objectives The third case took a place in a no-profit organisation and aimed at checking how far its annual budget was directed towards the strategic objectives of the caring population.

11. Using a combination of the commonkads and system dynamics methodologies to make operational the transition between the definition of a joint innovation strategy and its implementation and management 5. Quantitative and qualitative aspects of the proposal and roles of FTA The System Dynamics tries to investigate and provide solutions to problems via simulations and modelling embedded in a learning environment. By performing changes in variables, which are controlled to ensure it leads to robust and viable outcomes, one can easily understand how policy or strategy options will resonate in the overall system. In the same line, the integration and adaption the CommonKADs into the proposal provides an enhanced governance of the system as it enables strategic knowledge in terms of processes and production to be transferred, thus offering robust information and value measures across the system or value chain. The combination of CommonKADs with System Dynamics provide effectiveness in fostering learning and transferring knowledge since such combination integrates all important elements of an organisation's strategy and operations.

12. Using a combination of the commonkads and system dynamics methodologies to make operational the transition between the definition of a joint innovation strategy and its implementation and management 5. Quantitative and qualitative aspects of the proposal and roles of FTA Systematic Proposal Phases Contributions of FTA Organizational strategyFTA supports the development of a shared vision in the value chain. It does so by providing spaces in which actors can come together to shape likely pathways into the future, which would be the basis for actors to jointly develop creative solutions to challenges. This supports the definition of a common as well as an individual strategy. Strategic diagnosticFTA provides a shared understanding of stakeholders' views as well as of risks, opportunities, system capabilities and dynamic changes, all of which are critical to better understand ways in which the system might evolve. This is critical for the definition of a vision to be pursued. Cascading the strategy into operational actions FTA involves the collective articulation of visions and expectations, which is paramount in the definition of a common strategy and related action plans to be pursued as well as of monitoring systems to put in place and resources which need to be coordinated and mobilised. This increases legitimacy, ownership and transparency of decisions. Strategic learningFTA processes lead to mutual experimentation and learning. This increases communication across the value chain and the development of partnerships based on trust, which in turn allows the system to become adaptive in time and to build new configurations through a multi-level governance approach.

13. Using a combination of the commonkads and system dynamics methodologies to make operational the transition between the definition of a joint innovation strategy and its implementation and management 6. Conclusions The systematic proposal was developed based on perceived gaps in the process of implementing the balanced scorecard; The combination of Delphi and case studies demonstrated both the importance and originality of systematic proposed; The application of systematic proposal in practice shows that the notion of stakeholder involvement, mutual experimentation and learning, and of a common vision to be pursued across the system is however still neglected; Embedding FTA enables firms to steer solutions to possible challenges in decision making and implementation processes which include the coordination and mobilization of resources across the value chain.