A Balanced Scorecard Hall of Fame™ Profile

Crown Castle International

HARVARD BUSINESS
SCHOOL PUBLISHING
What is the Balanced Scorecard Hall of Fame?
The Balanced Scorecard Hall of Fame for Executing Strategy™, administered by Balanced
Scorecard Collaborative, recognizes organizations that have achieved breakthrough
performance largely as a result of applying one or more of the five principles of the
Strategy-Focused Organization. These principles, formulated by Balanced Scorecard
creators Robert S. Kaplan and David P. Norton, are described in detail in their book
The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the
New Business Environment (Harvard Business School Press, 2001). BSC Hall of Fame
members are personally selected by Drs. Kaplan and Norton.
To learn more about Hall of Fame selection criteria and Hall of Fame members,
visit bscol.com.

The Five Principles of the Strategy-Focused Organization

Each of the five principles of the Strategy-Focused Organization include specific
management best practices that contribute to the achievement of breakthrough
results. These best practices—validated through ongoing research with Hall of Fame
organizations and hundreds of other users of the Balanced Scorecard around the
world—must be embedded in any organization that wants to make strategy execution
a core competency.

Principle #1. Mobilize Change Through Executive Leadership

Executive leadership, driven by a need for change, supports the drive to
establish a new way of managing based on a performance-oriented culture.

Principle #2. Translate the Strategy into Operational Terms

The Balanced Scorecard is used to translate the strategy into a language
that everyone understands.

Principle #3. Align the Organization to the Strategy

The scorecard is used to cascade the strategy to all parts of the
organization and align resources needed to accomplish the strategy.

Principle #4. Motivate to Make Strategy Everyone’s Job

The reward and recognition system is used to align
individual behavior with performance objectives called for
by the strategy.

Principle #5. Govern to Make Strategy a Continual Process

Strategy execution is linked to the budget, and a reporting system
based on scorecard measures is used to provide feedback on
strategic performance.
Balanced Scorecard Hall of Fame Profile: Crown Castle International

Skillfully avoiding the body blow that struck

Table of Contents
Profile ..................................................................................1
Key Results, Takeaways ................................................9
SFO Spotlight (best practices) ................................10
Strategy Map..................................................................12
To Learn More ..................................inside back cover
the telecom industry, quiet giant Crown Castle
International—a leading global provider of leased
towers, antenna space, and broadcast transmission
services—recast its strategy in 2001 from acquisitions
to operational excellence. Supported by the company’s
adoption of the Balanced Scorecard, the new strategy
successfully carried Crown Castle through bumps
in the recent economic downturn.

ABOUT Crown Castle International

Industry: Telecommunications
The year is 2003. While its rivals struggle to recover
Crown Castle International is the world’s leading
from years of turmoil in the telecommunications
independent owner and operator of shared industry, Houston-based Crown Castle International
wireless communications and broadcast infrastructure. registers $900 million in revenues and reverses a
Crown Castle engineers, deploys, owns, and negative $500 million cash flow from the previous
operates technologically advanced shared wireless year to a positive $100 million. That same year, this
infrastructure, including extensive networks of leading global provider of shared wireless telecom
towers. With a network of nearly 12,000 broadcast and broadcast infrastructure hits an important market-
and wireless transmission sites, Crown Castle share milestone: serving more than two-thirds of
offers significant wireless communications U.S. markets and more than 90% of the U.K. and
coverage to 68 of the top 100 U.S. markets
Australia populations.
and effectively all of the Australian market.
Equally impressive, Crown Castle’s stock price
Crown Castle’s main businesses include: is beating leading market indices by more than
300%—not bad, considering that half of its original
• The design, deployment, ownership, operation, competitors have gone belly-up. And though Crown
and leasing of shared wireless communications Castle is hardly a household name, the company
sites, serving major wireless operators such
boasts a sterling customer roster that has included
as Verizon, Cingular, Vodafone, Orange,
T-Mobile (Deutsche Telekom), O2, and Optus
leading names in cellular phone service and broad-
casting worldwide: British Telecom, the BBC,
• The turn-key design, deployment, ownership, Vodafone, AT&T, Verizon, Nextel, Sprint PCS,
and operation of wireless communications and T-Mobile (Deutsche Telekom), and Cingular.
3G networks for customers such as T-Mobile
A Meltdown of “Biblical” Proportions
Headquarters: Houston Contrast 2003 with Crown Castle’s position in early
2001—when the telecom industry was suffering
Employees: 1,000 (Q4 2004) what some observers called a meltdown of “biblical”
proportions. That year, company leaders realized
Total revenues: More than $604 million (2004) that the acquisitions strategy Crown Castle had relied
on to fuel its explosive early growth had run its course.
Inducted into Balanced Scorecard
Hall of Fame: 2003 To be sure, Crown Castle’s growth-by-acquisitions
strategy had paid off in the past: When the company
went public in 1998, its plan was to acquire clusters
of towers in strategic locations and then promote
itself as an outsourcer to telecoms. Through what
CEO John Kelly candidly calls a “land grab,” Crown
Castle grew from just 127 communication towers
and a workforce of 700 in 1995 to more than 16,000
towers and 2,700 employees spanning three continents

1 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Crown Castle International
in 2002. Its expansion paralleled the wireless digital
boom of the mid-1990s.
Besides improving the economics of networks,
the company intended to help customers realize
a better return on assets while relieving them
of zoning-restriction and “not-in-my-backyard”
concerns—thus facilitating their speed to market.
Once Crown Castle met its very high fixed costs
(such as land rent and utility fees), executives
Despite Crown Castle’s early success
and the continuing strong demand for
wireless services and capacity, the lead-
ership team realized it was time for a
whole new strategy. Yet what would it be?
theorized, revenues (EBITDA) from new tenants
would become pure cash flow—in an industry
where margins can grow to 75% or more. Sure
enough, revenues in 2001 hit $899 million
($317 million in EBITDA), up from $210 million
($85 million in EBITDA) just four years earlier.
But company executives knew that cellular and
wireless penetration rates would eventually plateau.
Moreover, an industry downturn had cast a chill on
capital markets financing; suddenly, those 75% margins
weren’t materializing. Other telecoms suffered as
well, as spending constricted in the wireless sector
in particular. All told, the entire telecom sector
reportedly lost $1 trillion to $2 trillion in value as
the 1990s drew to a close.
Despite Crown Castle’s early success and the continu-
ing strong demand for wireless services and capacity
(prompted by increases in the number of subscribers
as well as in minutes of use), the leadership team
realized it was time for a whole new strategy. Rising
debt levels and balance-sheet leverage complicated
the picture by triggering worries about cash flows.
At the same time, executives also wanted to sharpen
their focus on the company’s customers—through
efforts such as optimizing the 15,000 facilities that
Crown Castle had acquired over its four-year buying
spree. Continued acquisitions, they decided, risked
diluting these efforts.
Yet if a formerly successful strategy had to be
discarded, what would take its place? The Balanced
Scorecard methodology offered a starting point for
answering this question.
Shifting from Acquisitions to Operational Excellence
In February 2001, Crown Castle’s then-CEO, Ted
Miller, invited an outside Balanced Scorecard expert
(Robert Paladino, who would later join the company)
to facilitate a series of meetings designed to help
the company define a new strategy and develop a
plan for implementing it. The firm’s top 50 global
leaders attended the first of these gatherings. During
this session, participants explored the ramifications
of transitioning to a three-pronged strategy emphasizing
innovation, customer intimacy, and operational
excellence. Deeming this direction too broad, they
determined to narrow their strategic focus.
In the following months, internal workshops were
conducted for individual country teams, with an
eye toward sharpening Crown Castle’s strategic focus.
At a second meeting of top executives (this one
attended by 120 leaders), participants explored
potential corporate-level performance objectives as
well as lagging and leading measures.
During August of that year, John Kelly—president
and COO of Crown Castle’s U.S. operation—was
named CEO. Kelly embraced the BSC as a strategy-
execution methodology and supported continuation
of the strategy-refining process. By November 2001,
the leadership team had formulated a new strategy
centered on operational excellence. This new
direction was characterized by four themes:
1. Grow revenues organically. Growth strategies
included adding antennas, leasing additional space
on existing towers, leasing ground space to existing
wireless customers, and enhancing transmission
service contracts.
2. Expand recurring margins by driving efficien-
cies in existing business. With high fixed costs
but low variable costs, Crown Castle depends on
significant efficiencies for its financial success. Leaders
recognized that reducing cycle time, for instance,
could accelerate revenue.
3. Allocate capital to projects that achieve
higher returns with lower execution risks.
Buying back its company debt (at 50 cents on the
dollar and 20% yields) would restore cash flow health
to the company. Revived cash flow would, in turn,
open new opportunities to refinance debt at a
lower cost—ultimately allowing value-creating capital
investments that maximized shareholder value.
4. Expand revenue around existing assets at
high incremental returns on capital. Crown Castle
already had achieved economies of scale in leasing
2 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Crown Castle International
tower space; if it could realize similar economies in
its other services, such as equipment maintenance,
the company could enjoy growth from new offerings.
All this sounded promising on the surface. But how
would Crown Castle steer itself in this radically new
strategic direction—especially considering the degree
of decentralization that characterized this far-flung
international firm?
Introducing the BSC Process to the Executive Team
As Kelly explains, “Our whole culture—internal
systems, measures, rewards—was built around
an acquisition-oriented strategy. We needed to find
tools to implement and manage the new emphasis
on operational excellence.” A strategy map promised
to provide just such a tool.
But at first blush, the overall BSC process struck
Crown Castle’s executives and managers as compli-
cated. They couldn’t always make sense of strategy
maps and scorecards. Yet, according to Kelly, it was
crucial that they experience the process. Moreover,
they had to understand that “the BSC wasn’t just
a metrics exercise or a cost-cutting tool”; it would
serve as Crown Castle’s strategic management
system. “Fortunately,” he adds, “our business is
essentially the same throughout the continents in
which we operate. So we needed to create only
one corporate scorecard.”
Developing the high-level scorecard proved a
thought-provoking process of discovery and debate.
“You’re looking at things like ‘What do shareholders
expect from the company?’” Kelly explains. “These
are things that are critically important for an organiza-
tion to understand, especially one that’s modifying
its strategy. There was—and still is—a lot of discussion
about what role, if any, acquisitions should have
in our new strategy.”
Another point Kelly emphasized to executives and
managers was that the BSC is an “evergreen” process.
“As our environment changes and we become more
knowledgeable about our business,” he reminded
them, “we will need to adapt our strategy maps,
measures, and targets.”
Finally, Kelly stressed the importance of leading
indicators in the company’s scorecard. “Before we
changed our strategy,” he says, “we had no leading
indicators.” Such indicators promised to provide
early warning signals of needed change (such as a
decline in the number of customers at a particular
site). Leading indicators would also enable Crown
Castle to identify ways to achieve its desired financial
outcomes. For instance, to realize 75% margins, the
company had to maintain a level rate of general
and administrative expenses. And to ensure prompt
service to customers, it also needed to gather
accurate information about space availability and
the length of time required to get a customer
onto a site they had requested.
Overcoming Resistance
As with many management initiatives, Kelly expected
to encounter pockets of passive resistance to the
BSC effort. Some people, he anticipated, would view
the BSC as yet another “program du jour that they
hoped would just disappear.” To overcome such
resistance, he resolved to accelerate the scorecard
implementation—with an eye toward “sweeping
people up” in the change.
“Mapping strategy and developing measures takes
time,” Kelly acknowledges. “You don’t want to adopt
certain strategies that may not be well linked to the
“You’re looking at things like ‘What
do shareholders expect from the com-
pany?’ These are things that are critically
important for an organization to under-
stand, especially one that’s modifying
its strategy. There was—and still is—
a lot of discussion about what role,
if any, acquisitions should have in our
new strategy.”
—John Kelly, CEO
overall strategy. As long as our people understood
that the BSC was a work in progress, it was OK. But
had we taken any longer to get the BSC launched, it
might have died on the vine.”
With a “fast-track” scorecard as the goal, Kelly and
his team developed the initial corporate (Level 1)
strategy map and scorecard in just five weeks. In
two months, they created Level 2 scorecards for
Crown Castle’s U.S. and U.K. operations (which
represented the bulk of the company’s free cash
flow). Then they completed Level 3 scorecards for
area operations. During the next five months, the
team linked the scorecard to business processes
3 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Crown Castle International
(such as devising plans for BSC communications and
executive meetings) and to performance management.
Crown Castle further cascaded the BSC through
its U.S. operations (the company’s largest revenue
group). Over the course of the next one to two
years, it created BSCs for district offices (Level 4)
and assigned measures to individuals for performance
review (Level 5). The sooner it could achieve
“We didn’t always get the measures right.
And we certainly didn’t always get the
targets right. If you look at a stoplight
report and see a lot of red, that's not
necessarily a good indicator that there’s
a problem. It might mean that you got
the target wrong.”
—John Kelly, CEO
organization-wide penetration, the strategy team
maintained, the faster it could link incentives and
compensation to manager and employee
performance.
Though a speedy implementation offered important
advantages, it also posed some problems. For
example, as Kelly notes, “We didn’t always get the
measures right. And we certainly didn’t always get
the targets right. If you look at a stoplight report and
see a lot of red, that’s not necessarily a good indicator
that there’s a problem. It might mean that you got
the target wrong. It takes one to two years to tweak
measures to get them right.”
Global Performance: A Strategy Management Office
In 2002, the second year of its scorecard imple-
mentation, Kelly established Global Performance—
a new function (and the company’s strategic
management office) led by Robert Paladino, newly
recruited from Balanced Scorecard Collaborative as
senior vice president for this role. The group set out
to integrate strategic direction (as expressed by the
corporate strategy map) with strategic measurement
and reporting (carried out through the Balanced
Scorecard), the capture and reuse of knowledge
(through communities of practice and CCI-Link,
Crown Castle’s knowledge management portal), and
process improvement (through programs such as
training and Six Sigma).
This organizing framework is represented by
a four-quadrant wheel, in which the four components
contribute equally to strategy execution. As Paladino
would later note in a January 2005 Strategic
Finance article:
What is the value of a BSC program without the
remedial improvement efforts of a Six Sigma or a
business improvement program to close performance
gaps? How can a company expect world-class
performance levels to be sustained and nurtured
throughout an enterprise without a best-practice or
knowledge-management process for replication? 1
The Global Performance model, and the group
formed to oversee and execute it, integrates these
time-tested methods, Paladino says, showing the
reinforcing links among them, just as the strategy
map itself depicts causal links between objectives
and across perspectives. When employees understand
these interconnections, he says—and how they
mesh with improvement actions—the possibilities
for performance improvements multiply.
Streamlining Initiatives
The cascaded scorecard soon generated valuable
insights. For example, it enabled people to streamline
the overabundance of strategic initiatives under way
at Crown Castle’s various operations. The company’s
U.S. operations, for instance, had more than 180
initiatives—a huge number for what was then a
1,000-person organization. As Kelly notes, “When
individuals aren’t certain about the specific objectives
and goals of the enterprise, they end up interpreting
their own set of initiatives based on what they’re
hearing or seeing on any given day or week. That’s
human nature. Typically, many things will occur in
a given week that may cause part of an operation to
believe that X is important. A while later, someone
comes to talk to them, and something else gets
added to the list of what’s important.”
Without an overall operating context, Kelly explains,
leaders of a company’s individual areas have difficulty
distinguishing the important from the unimportant.
Worried that they’ll miss something, they feel
compelled to keep adding to the “important” list.
Thanks to the BSC’s ability to clarify strategic priorities,
the leaders of Crown Castle’s U.S. operation were
able to pare down the list of 180 initiatives to the
12 efforts that they believed would exert the greatest
impact on strategy and cash flow. They “racked and
stacked” all the programs and decided which ones
were most important relative to the four elements of
the new strategy.
4 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Crown Castle International
The process wasn’t always easy. As Kelly explains, “It
took a little while to shift out of some of the strategic
initiatives that had legs. One was building additional
towers. You can’t just stop on a dime. You have
to finish projects you’re engaged in. But the BSC
has helped people to ask: How is this particular
effort helping us move forward in attaining our
strategic goals?”
Aligning a Far-Flung Workforce
Crown Castle has a vast workforce of independent-
minded managers who operate autonomously in
disparate markets. Moreover, people working in
these markets had grown accustomed to operating
in certain ways. “Good people,” Kelly says, “do
things they believe are adding value to the organiza-
tion. But consider the first element of our strategy:
growing revenues organically. If you’re used to
building towers, you might view that as the organic
growth opportunity. After all, it’s part of the business,
and, in your heart, you might feel convinced that by
continuing in that direction, you’ll also get a higher
return with lower execution risks (our third strategic
element).” The challenge, Kelly continues, is helping
people understand that if they keep going down
the old path, they won’t be optimizing current
strategic efforts.
Not surprisingly, aligning the organization behind
the new strategy proved one of the most daunting
challenges during the BSC implementation. To spread
strategic awareness among managers and employees
and clarify the need to realign operational tactics
behind new market dynamics, the company devel-
oped a multipronged communications program and
revised its incentive systems. “Simply articulating the
four elements of our strategy wouldn’t have worked,”
says Kelly. “It takes constant, consistent repetition
of the message and follow-through—aligning
compensation, communicating regularly—before
the concept finally sinks in.”
For communications, Crown Castle began covering
the BSC extensively in its internal newsletter,
Signal. These articles present the BSC as a new way
of working and thinking, not just another manage-
ment theory. Messages “from John” describing the
scorecard’s virtues complement articles explaining
“cascading” and other scorecard concepts.
Ongoing communication helps people understand
the importance of balancing long- and short-term
goals. For instance, like other publicly held compa-
nies, Crown Castle is measured daily by an “external
scorecard”—its share price. “If you’re implementing
a new strategy and your equity price declines,”
Kelly says, “that’s a real communications challenge.
Your external measure—equity value—might
be inconsistent with what you’re seeing internally.
The two measures aren’t always lined up, and you
just have to believe in the longer-term value of
the initiatives you’re following. We’re finding that
Like other publicly held companies,
Crown Castle is measured daily by
an “external scorecard”—its share price.
“Your external measure—equity value—
might be inconsistent with what you’re
seeing internally,” notes CEO Kelly.
“The two measures aren’t always lined
up, and you just have to believe in the
longer-term value of the initiatives
you're following.”
balance, but it takes a while to get the message
across to the organization.”
In 2002, Crown Castle augmented its communication
program with new compensation and recognition
systems to improve alignment. Managers’ compensation
is now tied to performance on their unit’s scorecard.
As Kelly explains, “Managers see they are better able
to influence their compensation when it is tied to
a unit scorecard rather than to the larger corporate
scorecard, which relies on things outside their control.”
As managers worked through the process of building
their own units’ scorecards, they began seeing the
connection between their performance and the
overall strategy. “Many of them,” Kelly points out,
“have adopted more aggressive goals than I might
have imposed.”
BSC measures are also tied to compensation for
the majority of employees. Additional recognition
programs include Olympics-inspired monthly “Gold,”
“Silver,” and “Bronze” awards. High performers
also earn dinners, evenings out at the theater, and
other rewards based on the achievement of individual
objectives related to their team or unit scorecard.
The potent blend of strategy map, scorecards,
communication, and aligned incentives has generated
impressive results. “Before,” says Kelly, “many
5 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Crown Castle International
employees had lost their way. [But now, people]
can see how they link back to corporate strategy.
People are excited. I hear employees using the same
terminology we in management use—people at
the lowest levels of the company.” Kelly cites an
example of how the BSC has enabled people to
make their own connections between elements of
the new strategy and their day-to-day work: “In our
corporate strategy map, the linkage between updating
the asset database and the sales process wasn’t
clearly defined. Recently, the folks in one of our U.S.
regions clarified it. In developing their own strategy
The company has used CCI-Link to codify
its management practices, providing
standardized approaches to about 40
core and support processes that create
value from the customer’s perspective.
map, they linked engineering data with asset infor-
mation to help customers solve their problems faster.”
Managing Knowledge Through
Scorecard Automation
In 2003, Crown Castle’s Global Performance group
created CCI-Link, a knowledge management portal,
to help the company further capitalize on the BSC
and enhance alignment. CCI-Link houses the firm’s
automated BSC. (The company’s BSC has always
been automated, first with Workbooks, then, in
2003, with a BSC software application.) Through
the portal, all measure reporters and owners can access
the BSC software and briefing books (performance
reports). District-level BSCs contain actual, forecasted,
and target results by month and quarter—thus
providing variance analysis.
In addition, CCI-Link provides benchmark information
for all 35 U.S. district offices and drill-downs of
measures and supplementary documentation, such
as source documents, Management Discussion and
Analysis (MD&A) reports, and corrective action plans.
CCI-Link also serves as a repository for best practices,
process documentation, Sarbanes-Oxley control
points, and customer information (such as financial,
legal, and sales data).
The company has used CCI-Link to codify its
management practices, providing standardized
approaches to about 40 core and support processes
that create value from the customer’s perspective. For
instance, it documented how someone successfully
obtained a zoning approval in a particular locale.
CCI-Link’s core architecture is becoming standard
across Crown Castle’s geographies, while content is
largely local. Thus the system fosters performance
alignment and a shared language while respecting local
market differences.
Refreshing the Strategy Map, Refining Measures
In the same year that CCI-Link was born, Crown
Castle revised its corporate-level strategy map with
district-level employees’ participation—affirming
the view that the BSC process is “evergreen.” The
goal of the revision? To better reflect the company’s
focus on operational excellence and decentralized
management.
The revised map eliminated vague language and
“corporate-speak,” contained redefined objectives in
the operations (internal) perspective, and depicted
reconfigured cause-and-effect relationships. The
result? A more accessible strategy map that guides
employees in executing strategy.
For example, consider the new objective “Increase
understanding of assets” in the operations perspective.
With more and improved data about its towers—such
as available space and engineering specs—Crown
Castle can now maximize tower performance and
better serve customers. And since customers highly
value minimized downtime, the older operations
objective “Establish/improve core capabilities and
support processes to maximize efficiencies”
became the clearer, more actionable “Resolve
NOTAMS [trouble tickets] in a timely way.”
This clarifying and sharpening process was applied
throughout the high-level strategy map. For instance,
in the financial perspective, executives replaced
a previously vague objective about asset utilization
with the highly specific “Reduce past due accounts
receivable (A/R), unbilled revenue, and work-in-
progress (WIP).” And in the customer perspective,
the unclear “Good to do business with” became the
more meaningful “Improve speed to market.”
Over time, Crown Castle has also refined its score-
card measures to better reflect its business needs.
One such change, instigated by Crown Castle USA’s
Great Lakes Area region, demonstrates the power of
carefully chosen measures in stimulating rapid results.
The measure supporting the operational perspective
objective “Accelerate application-to-rent commence
cycle time” only tracked the last five of 10 steps in
6 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Crown Castle International
the entire process involved in installing an antenna
on a Crown tower to get signal transmission for
a customer. But the company’s customer survey
showed that the information on customers’ applica-
tion requests addresses the first five steps. To address
this gap, Matt Sturgill, the vice president of asset
management for the Great Lakes Area region, created
a new measure, “percent of applications completed
in less than 21 days,” to cover those first five steps.
Aligning measures with customer expectations yielded
quick improvements within the region. More applica-
tions were processed at those earlier steps. That,
in turn, boosted performance in the financial per-
spective objective “Increase pipeline,” which, in
turn, produced higher forecasted financial results.
Making All-Around Gains
Crown Castle’s four strategic themes and skillful
BSC implementation have generated mutually
reinforcing benefits. By making it easy to target areas
for improvement, the BSC has helped the company
realize significant efficiencies in such back-office
areas as properties management, lease maintenance,
and property taxes. The “allocate (optimize) capital”
strategy reversed a negative $551 million cash flow
in 2001 to a positive $141 million by 2003. This
reversal also validated the company’s business model
and improved Crown Castle’s equity value.
The company’s recent U.K. venture perhaps best
exemplifies its strategy of generating additional
revenue with existing assets. When ITV Digital declared
bankruptcy, its transmission carrier license became
available. Meanwhile, as Crown Castle lost revenue
from this customer’s demise, other content providers
approached the company about transmitting their
programming through the set-top box ITV Digital
had sold them. In partnership with BSkyB (British
Sky Broadcasting Group, producers of Sky News
and Sky Sports) and the BBC, Crown Castle bought
the broadcasting license and launched Freeview,
and offered content from leading providers.
The BSC has also fostered a robustness within Crown
Castle that has enabled it to prevail during persistent
turmoil in the industry as well as throughout its
own business changes. In 2003, a contraction in
customers’ capital spending, along with its own
outsourcing, compelled the company to reduce its
workforce by 40% to 1,500 employees. Then, in
August 2004, the company’s lucrative divestiture of
all its U.K. operations (which included extensive
services to the BBC) triggered a further workforce
reduction to roughly 1,000 employees. But the fact
that Crown Castle has steadily advanced its new
strategy despite such major changes is a testament
to the power of the BSC.
Driving Exciting Innovations
Crown Castle’s use of the BSC has led to four
exciting innovations:
1. Process improvement documentation.
As Global Performance SVP Paladino (who left the
company in early 2005) explains, the company has
developed a matrix of processes and subprocesses
and defined them in a taxonomy within CCI-Link.
Any employee can access the documents. For
instance, if a person clicks on “receivables,” the
database will walk them through a flow chart of the
process, as well as help them drill down to retrieve
supporting forms, templates, training materials,
policies, measures, and so forth.
CCI-Link is also used to notify process owners of
proposed and actual changes. According to Paladino,
“If we update process number 15, step seven, the
database can spit out all information about how that
change affects other processes. This ‘change log’
then goes to process owners.” This innovation saves
people from “poring over documents day and night
trying to figure out what they have to do in response
to a process change.”
2. Six Sigma. Crown Castle has integrated the
BSC with Motorola University’s five-day Six Sigma
course, held at Motorola’s headquarters in Shaumburg,
Illinois. The company has sent 15 people who
collectively represent various functions (finance,
assets, geographic regions, and so forth) to take the
course. Day 1 of the course features an introduction
to the BSC and Six Sigma, prepared by Paladino
and the vice president of Motorola University. The
manual for the training also contains a case study
of Crown Castle’s use of the BSC.
According to Paladino, “What’s important about
this is that a lot of Six Sigma programs in companies
run into problems; they often focus on the wrong
projects. Having the BSC in place has helped us
to focus on our strategy and know where to apply
Six Sigma. Several banks and railroad companies
that participated in the course while we were there
picked all kinds of projects—often not strategic ones.
They were at a disadvantage. We were ahead of the
game. We had a strategy map to refer to, which helped
us readily identify and evaluate our problem areas.”
Paladino notes that Crown Castle is only in its
second or third quarter of practicing Six Sigma (as
7 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Crown Castle International
of November 2004). But, he adds, “now we have
a virtual Six Sigma team and an internal community
of practice around Six Sigma. We have monthly
calls, discuss common issues and projects, and
cross-review projects.”
3. Service partners’ support of field operations.
Crown Castle refers to its support organizations
(such as the Global Performance, HR, finance, and
other groups) as service partners. Instead of having
each service partner create its own strategy map,
Paladino’s group decided to “cut to the chase. We
interviewed every area president in the field and
asked, ‘What do you need and want from corporate
service partners to achieve your goals?’ We got field-
defined requirements; each one gave us a measure.
Then we had a roundtable with the corporate service
partner folks to share this.”
A major theme in the Global Performance group’s
findings involved cycle time. Overall, Paladino says,
the company needed to get information in a more
timely way. “Eighty percent of our measures are
cycle-time driven; our theme is speed.” Paladino’s
team showed their findings to the various service
partners and encouraged them to create scorecard
measures for improving cycle time.
Result? Thirty measures across eight service partners,
approximately 24 of which are focused on cycle time
to meet internal, thus customer, requirements. “There
are actually only a few critical things that each part-
ner had to do,” says Paladino. “Finance, for example,
had to accelerate its cycle time for closing financial
statements. Engineering had to turn around structural
design reviews more quickly.” The effort paid off.
“Finance statement flows have gone from twenty
days to six days,” Paladino notes, “and the engineer-
ing team speeded up the structural design review
process from three weeks to a twenty-four-hour
turnaround.”
4. Tailoring services to customers. The BSC has
helped Crown Castle to improve its customer-surveying
ability. According to Paladino, an electronic customer
survey now goes out every quarter, and the response
rate has gone from 15% to 40%. This feedback
enables the company to get more “granular” information
from customers—which it can then use to kick off
customer-focused initiatives.
5. Scorecard-based, or measures, “budgeting.”
Once a year, Crown Castle sets targets for all 25
measures across the four perspectives for its 40-plus
scorecards. These targets are cascaded down through
the units. Using a hypothetical example, assume a
$100 cash flow target is set at the corporate level,
which translates to a $90 target for the U.S. operation.
With six geographic areas, this target would break
down to a $15 target for each area, which (assuming
three district offices) would, in turn, break down to
a $5 target per district office. Such cascaded targeting
enables company executives and managers to calibrate
performance for each area.
Yet this “budgeting” approach is static, based on
the one-year target setting; it doesn’t accommodate
changing conditions, which happen in every industry,
and frequently in the telecom industry. To accommo-
date these fluctuations and provide greater managerial
flexibility, some Crown Castle regions introduced a
two-quarter rolling “scorecard forecast” for the current
and next quarters. To the static (original) budget
and the actuals, the company added a “reforecast”
category to its measures budget. So, if a client were
to suddenly notify the company that it couldn’t do
business until the third quarter, the measures forecast
would be adjusted to reflect zero for the first two
quarters. Q3 would then reflect a “backloading”
toward the cash flow target.
The benefits of this approach? For one, the company
has the ability to adjust activities to refocus on
problem areas, and even modify the timing of certain
initiatives. Rolling forecasts enable the company to
reallocate resources to areas that show below-target
performance. It can even help senior managers
optimize when they schedule training or planning
meetings or even employee vacations.
Moreover, rolling measures forecasting doesn’t really
require extra work. It involves a monthly review of
the updated BSC (the Great Lakes Area does weekly
reviews). In one meeting, the business head gets a
holistic view of performance across functions, instead
of holding separate meetings with engineering,
sales, and so forth. Leaders can laser in on emerging
trends, reforecast results, and plan remedial actions.
A View to the Future
When asked how Crown Castle’s BSC implementation
might evolve in the future, CEO Kelly maintains that
alignment will likely remain Crown Castle’s greatest
challenge as the company continues to navigate a
volatile environment. But the BSC, he believes, will
continue to serve as a crucial tool. “People respond
to it because they want to know how they can be
successful. And the best way is to know what’s
expected of you.”
1
Robert E. Paladino, CPA, “Balanced Forecasts Drive Value,”
Strategic Finance (January 2005).
8 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Crown Castle International

KEY RESULTS

• Top-line growth, cost efficiencies, and capital management have improved asset yield
significantly. Free cash flow hit $141 million in 2003, a huge reversal from its
negative $551 million level in 2001.
• Throughout 2003, Crown Castle’s stock beat leading stock market indices by 300%.
• Electronic customer surveys have enabled the company to create more focused customer
satisfaction programs.
• Cycle times for customer-related processes have been reduced, and customer satisfaction
has risen accordingly.
• Efficiency gains have helped subsidize the launch of new products, including
innovative high-technology antennas.
• CCI-Link, the company’s knowledge management system, provides a repository of
best practices and performance standards for key processes, thus advancing alignment.
• Rolling scorecard “forecasts” have helped Crown Castle adjust its activities on an ongoing
basis to address problem areas, reallocate resources, and modify the timing of initiatives for
greatest impact as conditions evolve

TAKEAWAYS

• A speedy implementation can help overcome employees’ passive resistance to

the BSC program and sweep people up in the change.
• But remember, accelerating the launch may mean you’ll need to revisit measures and targets
early on. Expect to need one to two years to “tweak” measures to get them right.
• Populate your BSC with leading indicators; they are essential early warning signals
of needed change.
• Use plain language in your communications. Be as precise as possible in your strategy-map
language. It will make the map more accessible, thus more useful, to employees.
• A knowledge management system is a great way to achieve alignment. It facilitates the
sharing of BSC results, and provides a repository for customer information, benchmarking
data, and process documentation.
• Automating the BSC early on accelerates its integration as an ingrained process and tool.
An automated BSC not only expands reporting and performance measurement capabilities
(including analysis), it facilitates knowledge sharing.
• Six Sigma and other process improvement methodologies are more effective when
used in tandem with the BSC framework.
• View the BSC process as “evergreen,” evolving as you gain a greater understanding
of your business.

9 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Crown Castle International

SFO SPOTLIGHT

All Balanced Scorecard Hall of Fame organizations exemplify the five principles of the Strategy-
Focused Organization. Crown Castle is especially noteworthy as an exemplar of the following
SFO best practices:

• Top leadership sponsorship: Crown Castle chose the BSC to help translate and implement
its new strategy. In the critical rollout phase, newly appointed CEO John Kelly was a visible
and active champion of the BSC. He regularly communicated his support for the program in
the company newsletter and sponsored an educational forum. In year two of the implementation,
he established the Global Performance group (the strategic management office) and made
the BSC the centerpiece of management decision making. [Principle #1: Mobilize Change Through
Executive Leadership]

• Case for change clearly articulated: The telecom sector was in a downward spiral, and
executives saw that cellular and wireless penetration would soon level off. Beyond these
market realities and fiscal concerns, executives recognized the need to focus on customers
and the company’s new acquisitions. [Mobilize principle]

• Leadership team engaged: All top executives participated in developing the corporate
strategy map and cascaded the BSC throughout the organization. [Mobilize principle]

• Vision and strategy clarified: Crown Castle’s initial “land grab” strategy gave way to a
focus on operational excellence. Executives forged a four-pronged strategy that became the
foundation of the strategy map. [Mobilize principle]

• Strategy map developed: A corporate strategy map was created and has periodically
been revised to: better reflect the strategic focus on operational excellence and the newly
decentralized governance structure; sharpen objectives in the internal perspective; eliminate
vague language; and more clearly delineate cause-and-effect relationships. [Principle #2:
Translate the Strategy into Operational Terms]

• Corporate role defined: Executives and senior managers have codified best practices and
ensured their adaptation across the enterprise. Processes are categorized as customer facing
or internal/support; customer-facing processes receive higher priority in best-practice sharing.
[Principle #3: Align the Organization to the Strategy]

• SBU–External partners aligned: A procurement BSC was developed for use with
individual vendors, who are monitored through the use of margin measures in country,
area, and district BSCs. [Align principle]

continued on next page

10 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Crown Castle International

SFO Spotlight continued from previous page

• Strategic awareness created. Understanding the importance of repetition in getting the

message across, Kelly and his team embarked on a multipronged communications program,
which has included extensive coverage of the BSC in the company newsletter. Articles discuss
the strategy, the BSC, and initiatives, and profile successful measure owners. CCI-Link, the
knowledge management portal, also provides information on the strategy, performance results,
process documentation, best-practices information, and other vital information. [Principle #4:
Motivate to Make Strategy Everyone’s Job]

• Personal goals aligned: The corporate intranet contains a link—Success Profiles—

that shows measures clarifying how employees influence strategic direction. Even at the
lowest levels, job descriptions include a subset of BSC measures. [Motivate principle]

• Personal incentives aligned: Most employees’ compensation is tied to the strategy map
and BSC measures in the form of base salary, bonuses, and, where applicable, stock options
and grants of restricted stock. Crown Castle also recognizes employees in a number of ways.
When targets are achieved, measure owners are profiled in the company newsletter; receive
“gold, silver, or bronze” awards; and win dinners, travel benefits, and other rewards.
[Motivate principle]

• Strategic review meetings conducted: Strategy is reviewed during weekly and

monthly meetings, with an eye toward “adaptive strategy”—the understanding that strategy
management is a dynamic process. New strategy management ideas include online meeting
management, shared services scorecards, CRM, and best practices benchmarking.
[Principle #5: Govern to Make Strategy a Continual Process]

• Process management linked to strategy: The company implemented Motorola’s Six Sigma
methodology to address more systemic and significant process improvement issues identified
through the use of the BSC. It has integrated Six Sigma in its broader portfolio of Global
Performance tools. [Govern principle]

• Knowledge sharing linked to strategy: CCI-Link, launched in 2003, is a database of best

practices for business processes measured through the BSC. The portal supports organizational
learning and enables Crown Castle to benchmark each of its 40 district offices to identify best
practices, which are categorized by strategic objective. [Govern principle]

• Strategic Management Office established: In year two of implementation, the Global

Performance team, a strategy management office, was created. The group is charged
with managing strategy output, BSC implementation, process improvement, best practices
documentation transfer, and business process training. It integrates multiple management
systems and approaches, with the BSC as the guiding framework. [Govern principle]

11 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Crown Castle International

THE CROWN CASTLE STRATEGY MAP

Maximize shareholder value Expand revenue (adjacencies)

Financial
Grow organic revenue
Perspective Optimize capital Expand
revenue
Expand recurring revenue margins around
Reduce assets
Increase Increase
past due A/R,
BBEs pipeline
unbilled revenue,
Increase Reduce Increase and work-in-
recurring operating installation progress
revenue costs margin

Customer Cultivate Improve Provide Ensure Improve

customer speed to competitive accurate value for
Perspective relationships market pricing data service

Operational excellence
Reduce
negative tower
margin

Operational
(Internal)
Preserve Accelerate
Perspective land leases Reconcile
Resolve
application-to-rent NOTAMS
on strategic commence rent rolls with
in a timely
towers cycle time customers
way

Manage,
Update Increase projects timely,
drive test understanding accurately, and
data of assets profitably

Emulate Fortune’s 100 best companies

Learning & Improve Align Improve Implement Promote

Growth employee organization with global knowledge world-class career
satisfaction strategy management PM* system development
Perspective

Systems availability

Provide high systems availability

Improve alignment of applications to processes

* performance management

12 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Crown Castle International
TO LEARN MORE
To learn more about Crown Castle and its Balanced
Scorecard program, see:
• Balanced Scorecard Report articles:
“The Challenges of Strategic Alignment:
Crown Castle’s CEO Shares His Perspectives,”
An interview with John Kelly, CEO, Crown
Castle International; by Janice Koch, Editor,
BSR July–August 2004 (Reprint #B0407B).
“Global Alignment: A Telecom’s Tale,” by
Janice Koch, Editor, BSR May–June 2004
(Reprint #B0405B).
“One CEO’s Journey: Reflections on a Scorecard-
Driven Transformation,” BSR July–August 2002
(Reprint# B0207C).
• Balanced Scorecard Hall of Fame Report 2004
features a brief profile on Crown Castle and the
12 other Hall of Fame inductees from 2003
(Product #5828).
• Strategy Maps: Converting Intangible Assets into
Tangible Outcomes, by Robert S. Kaplan and
David P. Norton, Harvard Business School Press,
2004 (see case study, pp. 219–223) (Product #1342).
• The BSC library: BSC portal members with access
to the library can search the keyword “Royal
Canadian Mounted Police” for a complete list
of resources, including conference presentations
and executive video interviews. (For information
on becoming a BSC Portal member, go to
www.bscol.com.)
• www.crowncastle.com
ADDITIONAL RESOURCES
• For more information on the Strategy-
Focused Organization (SFO) principles,
visit BSC Online. Membership is free.
Go to www.bscol.com/bsc_online.
• For additional guidance on the SFO principles,
and to learn about best practices in use at other
organizations that have successfully executed
strategy, go to www.bscol.com/toolkits. Here,
you’ll find many resources available for purchase,
including Strategy Execution Toolkits.
• For access to the largest compilation of
published materials on the Balanced Scorecard
and the Strategy-Focused Organization, visit
www.sfo.harvardbusinessonline.org.
Editorial Advisers
Robert S. Kaplan
Professor, Harvard Business School
David P. Norton
President, Balanced Scorecard Collaborative
Edward D. Crowley
Executive Director–HBR Specialty Publications
Publisher
Robert L. Howie Jr.
SVP, Balanced Scorecard Collaborative
Director of Research
Randall H. Russell
Balanced Scorecard Collaborative
Editor
Janice Koch
Balanced Scorecard Collaborative
Writer
Lauren Keller Johnson
Design
Robert B. Levers
About Balanced Scorecard Collaborative
Balanced Scorecard Collaborative (BSCol), a Palladium
company, is a global family of professional service firms
that helps clients use the Balanced Scorecard to successfully
execute strategy. BSCol offers a wide range of services,
including education (conferences, publications, research),
training (public seminars, in-house, online), consulting
(strategy, performance, change), and technology (“BSC
Portal™,” “BSC First Report™,” toolkits). To learn more,
visit www.bscol.com, or call 781.259.3737.
About Harvard Business School Publishing
Harvard Business School Publishing is a not-for-profit, wholly
owned subsidiary of Harvard University. The mission of
Harvard Business School Publishing is to improve the
practice of management and its impact on a changing
world. We collaborate to create products and services in
the media that best serve our customers—individuals and
organizations that believe in the power of ideas.
Ordering Information
To order additional copies of this profile (in print or by
download), call HBSP at 1-800-668-6705 (617-783-7474
outside the U.S.) and request product #1231 or visit
www.sfo.harvardbusinessonline.org and insert the product
number into the search field, or type in “Hall of Fame.”
Here you’ll find a list of all available Hall of Fame profiles
and other products for the Strategy-Focused Organization.
© 2005 by Harvard Business School Publishing and Balanced Scorecard
Collaborative, a Palladium company. Quotation is not permitted. Material
may not be reproduced in whole or in part in any form whatsoever
without permission from the publisher. Balanced Scorecard Hall of Fame
for Executing Strategy™ and Balanced Scorecard Hall of Fame Profiles™
are trademarks of Balanced Scorecard Collaborative. The trademarks
referenced in this publication are the property of their respective owners.
The Balanced Scorecard Hall of Fame™ Profile Series
Learn how each of these Balanced Scorecard Hall of Fame organizations
became strategy-focused. Each individual profile provides a source of
information on how to “do it right”, including a profile narrative, Strategy-
Focused Organization spotlight best practices, key results and takeaways.

Chrysler Group

City of Charlotte

Economic Development Administration

(U.S. Department of Commerce)

E-Land

Hilton Hotels

Media General

Mellon Europe

Mobistar

Motorola’s Government and Enterprise Mobility Solutions

Royal Canadian Mounted Police

Tennessee Valley Authority

Unibanco

U.S. Army

To learn more visit: www.sfo.harvardbusinessonline.org

or call 1-800-668-6705 (617-783-7474 outside U.S.)

Product Number 1231