Strategy Surrogation?

Organisations need success measures in order to track progress of their strategy. The tricky bit is choosing the right metrics to achieve this. A recent research spotlight article in the online UNSW BusinessThink (READ IT HERE) reviews a just published article by UNSW academics Professor Mandy Cheng and Dr Linda Chang and Dr Kelly Wang from UTS that addresses the phenomenon know as “surrogation propensity” (find the article here), which can adversely affect effective strategy achievement.

Surrogation propensity occurs when achieving a strategic measure substitutes for achieving the strategy itself. The example in the article notes the situation when attempting to improve health, focussing solely on the number of steps each day neglects “other crucial factors like nutrition, posture, and mental health.” This “managing by numbers” emphasis can lead to strategy surrogation and distract from “a more balanced approach to measuring success.”

The review quotes from the paper in explaining this further: “Strategy surrogation happens when managers make suboptimal decisions because they focus only on their performance measures and forget that these performance measures are only an imperfect representation of their strategy. In other words, managers sometimes mistakenly think that performance measures and strategy are the same thing when performance measures only capture some aspects of the strategy.”

The authors recommend a potential option to reduce the impact of strategy surrogation by “implementing a flexible performance measure system (PMS) [that] can reduce strategy surrogation and improve managers innovation investment decisions.” When managers have the ability to modify and “customise the PMS in response to emerging needs when implanting their strategy’” they have flexibility and buy-in, effectively utilizing a bottom-up approach.

Rather than being stuck trying to constantly meet performance measures that may or may not actually impact strategy, flexibility encourages innovative thinking that can achieve much greater results. The article goes into much better nuanced explanation of the process, and is well worth the time reading it. It may even revolutionize the way you achieve your strategy.