For the value-growth strategy, we would expect to see an increase in shareholder
value. If not, it could be due to one of two causes: (1) implementation problems or
(2) an invalid strategy. First, it is possible that key performance indicators such as training
and process design did not achieve their targeted levels. (That is, fewer hours of
training were given than planned, and the process was not redesigned.) In this case, the
failure to produce the expected outcomes for other objectives (e.g., customer retention
and shareholder value) could be merely an implementation problem. On the other hand,
if the targeted levels of performance drivers were achieved and the expected outcomes
did not materialize, then the problem could very well lie with the strategy itself. This
is an example of double-loop feedback. Double-loop feedback occurs whenever managers
receive information about both the effectiveness of strategy implementation as well
as the validity of the assumptions underlying the strategy. In a traditional performance
management system, typically, only single-loop feedback is provided. Single-loop feedback
emphasizes only effectiveness of implementation. In single-loop feedback, actual
results deviating from planned results are a signal to take corrective action so that the
plan (strategy) can be executed as intended. The validity of the assumptions underlying
the plan is usually not questioned.