Tesco: Evolving The Strategic Performance Framework

Tesco PLC British-based international grocery and general merchandising retail group.The company is the third largest retailer in the world measured by profits, has over 6,500 stores and employs more than 475,000 people.

In order to deliver its strategy and improve business performance Tesco developed a strategic performance management framework it called the Corporate Steering Wheel. Suchperformance frameworks are powerful tools to align everyone behind a single corporate vision and allow companies to ensure the delivery of the strategy is monitored and managed.

However, it is important to make these frameworks living documents that are regularly revised and up-dated to reflect the changing nature of the business. When strategic priorities shift and change the strategic performance framework need to be changed, too.

Tesco’s original Steering Wheel consisted of four perspectives – Finance, Customer, Operations and People (see figure below). Each of the four perspectives contains a number of strategic goals which highlight the priorities for the business at that point in time. The Operations perspective, for example, contains four goals: • Shopping is better for customers • Work is simpler for staff • The way we operate is cheaper for Tesco • The way we operate is responsible and safe

Evolving the Performance Framework

Tesco has been able to change its Steering Wheel in line with a shift in strategic objectives. One of the more major changes has been to add the community perspective to the Steering Wheel as a fifth perspective. Tesco realised that issues such as climate change and the impact its presence has on the local community are important challenges that required more strategic emphasis and focus. The figure below shows the later iteration of the Steering Wheel with the new Community perspective, which contains the following two goals: • Be responsible, fair and honest • Be a good neighbour

The new community perspective has led to initiatives such as reducing the use of carrier bags by 50 percent, more locally sourced products and a reduction in the carbon footprint.

You can also see from the new framework that many of the individual goals have been refined and changed. The revised Operations perspective now contains the following goals: • We try to get it right first time • We deliver consistently every day • We make our jobs easier to do • We know how vital our jobs are • We always save time and money

Ideas and insights you can steal

Tesco has been able to keep their performance framework fresh by regularly up-dating the not only the individual goals be even entire perspectives. Many organisations develop great performance frameworks but then let them get stale and fail to change them to reflect changes in their strategy – make sure you don’t fall into this trap and keep your strategic performance framework up-to-date at all times.

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