What is your business? It seems like a simple question, but think it through. It is not just the "industry you work in," but rather, the "beliefs, culture and unique differentiators" of your business. How your CEO answers this question can give powerful insights into how your company is managed.

While most companies have a mission statement, it is the executive leadership that communicates focus and passion. If not accurately cascaded throughout the organization, this focus and passion can have multiple interpretations. The various "versions" that guide operations can make it very difficult to deliver shareholder value efficiently or effectively.

Depending upon the business, the definition of value could include metrics that measure revenue, profits, risk ratios, liquidity or human capital. If the majority of this measurable value is driven by intangible assets (people and information technology), managing performance becomes increasingly more challenging.

From a management perspective, shareholder value is achieved through maximizing revenue and minimizing cost. Taken one step further, maximizing revenue is about focus, while minimizing cost is about alignment. Not all revenue is profitable, and cutting costs can have adverse effects. So how do forward-thinking organizations mitigate those risks when formulating and executing strategies? By consistently managing the processes, people, systems and external factors around them-and recognizing that the closer you get to managing performance, the greater the impact on profitability.

That process includes an assessment of risks and trade-offs between strategies. For every action, there is a reaction. If your strategy for revenue growth is to introduce new products and services, you run the risk that your staff may not have the skills and competencies to do them justice. If your strategy for cost reduction is to reduce head count, you run the risk of losing valuable knowledge while putting remaining employees under greater pressure. Both scenarios could compromise results. In turn, rework costs could escalate beyond savings, increasing the risk of losing customers because of decreased satisfaction. Before executing strategy, therefore, analyze the potential down sides and consider how you will mitigate the risks.

Managing and understanding actions across your enterprise, with analytic depth, not only helps you define, monitor and predict outcomes, but also helps you accurately plan, budget and report on progress. Theoretically, the rules are simple for organizations striving to ensure shareholder satisfaction more quickly and consistently.

Misalignment is expensive. Significant factors that contribute to misalignment include the risk of duplication within the organization, conflicts of interest, inability to get everything done that should be done, and spending too much time reacting. Each issue represents wasted money. With a better understanding of who has an interest in what you do, and what conflicts exist, you can improve your alignment- and efficiency.

Lack of focus translates to lost opportunity. Businesses always run the risk of concentrating on low-value drivers, not understanding priorities clearly, failing to exploit competencies and capabilities, and missing deadlines. Each factor represents lost potential. By identifying the top 20 percent of activities that contribute 80 percent of your value, you can better manage your time and potential.

Silos drive behavior and behavior drives performance. Integrated information is a powerful asset. Successful companies strive to eliminate phrases like: "I didn't realize Dept. X was doing that," "No one needs to know about this," and "If the boss doesn't, why should I?" No three-legged race is ever won if your partner is pulling in a different direction.

Maps get you from A to B - efficiently and effectively. To use a jogging analogy, businesses need to choose the right path, look for milestones, assess the terrain and use the right gear. It is critical to be able to rely on accurate data and start out with the end goal in mind. If an obstacle presents itself, the right performance management solution will allow you to seek alternatives, focus and then adjust your pace.

Enterprise intelligence gives you competitive advantage. Less than 10 percent of effective strategies are effectively executed. Delivering information to everyone's desktop initiates a consistent, insightful feedback process that allows businesses to stay aligned and map out their strategies while understanding whom they affect - and by how much. Staying focused, prioritizing, setting clear goals, understanding your business drivers and becoming passionate about costs puts each and every value investment to good use. Some companies call this enterprise intelligence approach "performance management." Some call it a balanced scorecard. I call it common sense.

Clearly, business processes of the 21st century must be more efficient and dynamic to build and sustain value across the organization. It is no easy task to redefine the fundamental paradigm of strategic performance management, but it can be done successfully. An organization must focus all operations on one strategic vision, becoming proactive rather than reactive, abandoning the silo mindset, understanding and leveraging relationships, automating best practices, communicating tailored information and capturing knowledge, not just data. In the end, the ability to execute strategy is more important than the quality of the strategy itself.