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A defense agency strengthens its governance and performance management

To ensure successful execution of its five-year strategy, a US defense agency designed and developed a new governance structure and performance-management system.

Challenge

After a decade of expansion driven mainly by conflicts in Afghanistan and Iraq, a US defense agency began transitioning to a more austere budgetary environment. To ensure the agency remained relevant during this time, its senior leadership developed a new 5-year strategy. Agency leaders then sought McKinsey’s support to develop a system to measure performance, prioritize initiatives, and establish a new governance approach to ensure the strategy’s successful implementation.

Discovery

Working closely with the client, the McKinsey team began by analyzing the agency’s current strategy, its past experience with performance management, and its management culture. This diagnostic involved interviewing leaders throughout the agency and benchmarking the results against relevant private- and public-sector examples. We then helped the client map the strategic initiatives currently under way and compare them with the new 5-year strategic goals and objectives.

Following the diagnostic, we supported agency leaders in identifying the priority initiatives it should execute in phase one of the 5-year strategy. For each priority initiative, the client defined the desired end state and detailed the necessary steps to get there.

We then helped create a governance board to drive implementation of the initiatives. We also helped put in place a performance-management system and processes, including a regular cadence of senior-leadership meetings in which leaders share and discuss detailed, fact-based progress reports.

Throughout the project, we focused heavily on training agency leaders and building their capabilities to enable them to execute the initiatives independently. We worked closely with the agency to develop a customized capability-building curriculum both for agency leadership and for the staff supporting the new performance-management system.

Impact

The agency implemented the new performance-management system ahead of schedule, and its staff is fully trained to sustain its success. The new approach to governance has increased transparency across all strategic initiatives, allowing senior leadership to identify and address potential barriers to implementation as quickly as possible.

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