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 Balanced Scorecard Overview

 Balanced Scorecard” Means


 Different Things to Different People
• KPI (Key performance indicator) Scorecard – Light Duty
• Strategy Management Scorecard
• Integrated Strategic Planning & Management Scorecard
System – Industrial-strength, professional Grade
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Balanced Scorecard History
• 1990 Nolan Norton Institute Study on balanced measures of financial and non-
financial performance in several organizations
o David Norton, study leader. Robert Kaplan, academic consultant from
Harvard
• 1996 – The Balanced Scorecard” book published
– Introduced BSC concept and rationale for balanced measures
• 1997 – Balanced Scorecard Nine Steps to Success” framework developed
• 1998 – Balanced scorecard Institute Web site developed
• 2001 – “The strategy- focused Organization” book published
• 2002 – “A Balancing Act” article published in PEREFORM magazine
• 2003 – Balanced Scorecard Institute, , founded as a training and consulting
business
• 2004 – “Strategy Maps” book published
• 2006 – First Practitioner certification program offered by the Institute and George
Washington University

 The BSC is now used by over 65% of fortune 1000 companies, and
increasingly being adopted by Federal agencies, by state and local organizations,
and internationally.

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What is the balanced Scorecard (BSC)?
• An improved strategic planning process for focusing on the
most important things,
• A change initiative for visualizing and communicating an
organization’s long term strategic intent to all employees,
• A framework for breaking strategy into actionable strategic
objectives,
• An effective strategic management system for aligning day
to day work to an organization’s vision and strategy using
strategic performance measures and strategic initiatives,
• An integrated framework for informing strategic budgeting,
and allowing the organization to learn what works and to
become more strategy focused,
• In other words, BSC is an integrated strategic planning
and management system, not just a measurement
system!
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Summary of BSC Benefits, Costs and Risks


Benefits
• Brings employees together to talk about the organization’s
future, strategy, pains, and prospects
• Builds alignment among shared vision, strategy and
operations
• Improves interactive communications, internally and
externally
• Demonstrates a commitment to results and high-
performance
• Links employee day-to –day work with organization ”big
Picture” desired results
• Measures what matters
• Focuses on the most important things: customers,
employees, strategy, results
• Increases employee accountability and ownership
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Challenges
• It requires employee time commitment:-
• It Changes the way planning is done-
changes the way strategy is reported
and executed
• Expense of hiring expert training and
facilitation help
• Maintaining momentum and commitment
after the initial euphoria of a fresh new
approach
• Changing hearts and minds takes time

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BSC Best Practices
• Engage leadership at the highest possible level- a
commitment to a journey, not a project
• Use cross-functional teams to build the system, made up of
employees from all levels of the organization (you need
to incorporate different “voices”)
• Build the scorecard system right from the start; use a
disciplined framework to build and connect scorecard
components into a strategic planning and management
system
• Build in leadership development and two-way
communication at all levels
• Celebrate success frequently, and incentivize desired
behavior changes

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BSC Best Practices (Con’t.)
• Avoid the “rush to judgment” on:
o Performance measures (Ask “What should we
measure?”, not “Which of our current
measures should we use?”
o Focus just on current projects and activities
(Strategy is NOT the sum of all the stuff we are
currently doing!)
o Early software purchase (“just buy some
balanced scorecard software… that will give us
our scorecard”)
o “Let the planning shop build it-it’s their job”

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Balanced Scorecard Leadership

1. Establish a sense of urgency


2. Create a vision and align business strategy to vision
3. Create a guiding coalition toward a shared vision of the
future
4. Communicate the vision and strategy with clarity
5. Become strategy focused, and empower others to act
6. Organize and structure the change initiative, and provide a
forum for dealing with resistance
7. Build momentum
8. Consolidate gains and produce more change
9. Institutionalize the new system

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Building the Balanced Scorecard system

Learning Objectives:

• Understand what the balanced scorecard (BSC) is and is


not, and how it can be used to improve organization
performance,
• Learn how to contribute to and lead a balanced scorecard
development,
• Learn how each balanced scorecard system component is
integrated into a strategic planning and management
system,
• Learn advanced techniques for BSC program planning
change management, organization assessment,
developing objectives and strategy mapping,
performance measurement, and initiative prioritization.

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The balanced scorecard is (Is Not)

Is: Is Not:
A Strategic Planning & management system Just a performance measurement framework

A communication tool for the whole organization An executive Information Stem for a few managers
and executives
A journey- “change hearts and minds” A project- flavor of the month performance
measurement system
Strategic & Operational-requires critical thinking Operational- group current projects in to strategic
goals “buckets”
A transformation and change initiative Business as usual

A balance among financial, non-financial, efficiency, and Putting existing metrics into 4 perspectives
organization capacity views of performance
Increased accountability Tighter individual control
Aligning vision with strategy and operations A TQM, Six Sigma, ISO, Lean, Baldrige, or BPR
initiative

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Step One: Assessment
 Three Tasks In Step One
 Prepare for balanced Scorecard Program
Launch
• Team charter, roles & responsibilities
• Schedule and resourcing
• Team member time commitments
• Team initial training

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• Conduct Organization Assessment (“Environmental
Scan”)
• Existing plans, surveys, and data
• Mission
• Vision
• Core Values
• Customers and Stakeholders
• SWOT Analysis (Organization Internal & pains
and Enablers)
• Plan for change
• Readiness assessment
• Organization change management strategy and
plan
• Organization communications strategy and plan
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Teams
Roles And Responsibilities
Strategic Management Team

o Provide overall leadership, direction and ownership of the


Balanced scorecard program policy
o Dedicate resources necessary
o Champion the Balanced scorecard in the organization
o Set strategic Foundations
o Provide continuing leadership and Guidance
o Provide insight into organization and personnel issues
o Provide subject matter expertise as needed
o Develop corporate scorecard

Strategic Management /BSC Champion
• Provide Day-today Leadership and support
• Provide insight into organization and personnel issues
• Provide subject matter expertise as needed
• Arrange schedule and logistics support
• Serve as information conduit to all teams 20
Strategic Theme Teams
• Provide extensive subject matter expertise
• Build theme strategy maps
• Provide broad organizational representation
• Ownership and task-oriented contribution to
review and revision process
• Support implementation

Consulting Team
oWork closely with all teams
oFacilitate all aspects of the Balanced
Scorecard program
oProvide Balanced Scorecard expertise
oPerform performance measures gap analysis
oDesign BSC-based performance reporting
oIncorporate “ best Practices” insights 21

 Team Member Attributes:
• Desired attributes of team members:
o Analytical thinker, visionary, change agent,
business process expert, proactive(*outside
the box”) thinker, understand “ voice of the
customer”, quick mind, respected, “ can do”
attitude

• Essential team roles:


o functional specialists, planner, financial
expert, information technologist, and
administrative support experts

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Organization Assessment Sources
• One-on-one interviews with key
organization representatives (use survey
PLUS open-ended questions)
• Other “Voices” (Board, Commission,
regulators)
• Phone interviews
• Internet climate survey
• Previously completed SWOT/assessment
surveys
• Previously completed customer and
employee surveys
• Previously completed strategic plans
• Market/competitor studies and analyses 23

Organization Assessment Components
• Perform a SWOT analysis to recognize the
organization’s position, both internally and in
the external environment
• Identify organizational pains and enablers from
the SWOT analysis
• Develop clear mission (our purpose), vision
(our future), and core values (Our principles)
to provide direction for the organization’s
success
• Consider who the customers and stakeholders
are, and their ability to influence the outcome
of strategy 24
Conducting A SWOT Analysis

Strengths Weaknesses
Internal  What do you do well?  What could you improve?

What unique resources can you


 Where do you have fewer resources
draw on? than others?
What do others see as your
 What are others likely to see as

strengths? weaknesses?

Opportunities Threats
External What good opportunities are open What trends could harm you?
to you? What is your competition doing?

What trends could you take What is your competition doing/

advantage of? Looking at your weaknesses, what

Looking at your strengths, how can threats do these expose you to?
you turn these into opportunities?

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Turn Your SWOT Analysis into Pains & Enablers

Strengths Weaknesses
Internal What do you do well? What could you improve?
What unique resources Where do you have fewer

can you draw on/ resources than others?


What do others see as What are others likely to see

your strengths? as weaknesses?

Enablers Opportunities Threats Pains


What good opportunities What trends could harm you?
External are open to you? What is your competition
What trends could you doing?
take advantage of? Looking at your weaknesses.

Looking at your strengths. What threats do these expose


How can you turn these you to ?
into opportunities?

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Identifying Customers and Stakeholders

• Stakeholders
• A stakeholder is anyone who has an interest
in the outcome of the organization
• Customers
• A customer is a direct beneficiary of your
organization’s products or services
• Customers are stakeholders who benefit
directly
• Examples of stakeholders:
• Customers
• Clients
• Employees
• Management team
• Suppliers
• Regulators
• Policy Makers
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Defining Mission Statement
• A Mission Statement describes,
o Defines why our organization exists
o Reflects our purpose
o Who we are and what we are about- “Our Mission is
to provide (Serve)…….”
o A few sentences in length-no more than one
paragraph
– Incorporates features of our organization (e.g.
products or services, markets or community
served, functions performed, uniqueness)
– What functions) does the Organization perform?
– For whom does the Organization perform this
function
– Where does the Organization operate? (Geographic
domain)
– How does the Organization go about filling this
function? (Methods)
– Why does this Organization exist
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– What? (Service user's needs; services)
Defining Vision
• A Vision,
o Describes where we want our organization to be in the future,
typically 3-5-10 years from now – “Our Vision is to become
(achieve)….”
o Describes the organization’s future intent…. The “picture of the
future”
o Brief, easy to understand and communicate message, usually
one sentence: can include a high-level strategic result (goal)
or not
o Vision statement should be an emotionally inspiring picture of
future success
– Purpose of a vision
– Shared Vision is an initial force that brings people
together.
– Inspires stakeholders
– It is a life-blood of an organization
– Helps to see what you are working towards
– Clearly articulated vision can provide energy,
momentum and strengths to individuals
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– Provide bases for partnership
Overarching Strategic Result (Vision Result)
• “What will be the high-level result of being successful
with our Vision?
• The vision statement can be written as goal and target in
a single statement (e.g.. Starbucks 1998 vision: 2000
Stores in the year 2000”)
 In such a case, success can be easily measured and
progress tracked
• If the vision does not include a goal, Overarching
Strategic result can be developed for the vision
separately
 (eg. Sears Vision: “A Compelling Place to Shop, A
Compelling Place to Work,
 A Compelling Place to Invest” does not have a
goal included in the vision statement)
• The Overarching Strategic result should be achievable,
but with hard work (stretch target)

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Vision And Mission Statement Examples

 Do these visions need a high-level Strategic result, or is the desired result


Embedded in the vision?
 Volvo
Vision: To be the world’s most desired and successful premium car brand

Mission: we create the safest, most exciting car experience for modern families


Nature Conservancy
Vision: Saving the Last Great Places on Earth

Mission: Preserve the plants, animals and natural communities that represent the

diversity of life on Earth, by protecting the lands and waters they need to
survive,


Congressional Administrative office

Vision : 100% satisfaction, 100% of the time


Mission: Provide excellent and efficient administrative, technical, and support

services to our customers


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Core Values Guiding principles

• Describes what we stand for in the context


of the organization’s mission,
• Defines our code of conduct, our behavior,
• Based on the values our parents taught us,
• Human-centric
• Provides ethical guidelines for decision-
making and daily conduct (e.g.). Hiring,
promoting, relationship building)
• Aligned with organization vision, mission,
culture
• Generally, values are operational
philosophies
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Core Value Examples

• Do these Values meet the test for “Good?


Volvo

• Safety …….. Environment ……….Quality


Nature Conservancy

• Integrity Beyond reproach (blame)


• Respect for People, Communities, and
Cultures
• Commitment to Diversity
• Tangible, Lasting results
Congressional Administrative Office

• Commitment to Service
• Effective & Efficient resource Stewards
• Safe Working Environment

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What is Change Management?

 “Change management is the process, tools and


techniques to manage the people-side of business
change to achieve the required business outcome
effectively within the social infrastructure of the
workplace”
 Prosci Research

 More simply stated ….. It’s about changing hearts


and minds!

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Fundamentals of Change Management Planning

• Clear Vision/Business Case


• Engaged Leadership
• Clarity in communication
• Involvement of the whole organization
• Customized training
• Rewards & recognition (behaviors
&results)
• Possibly Organization restructuring

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Examples of Strategic Change Drivers (from Organization
Assessment)

Strengths and Enablers


 Challenges, Threats, and

• Customer focus Pains


• Dedicated employees • New leadership
• Skilled and talented staff • New markets
• High level of training • Increased competition
• Commitment to improving • New corporate strategies
the organization • Employee demographics
• Strong support for change • War outcomes, terrorism
from leadership • Economy
• Integrity of people and • New laws and regulations
process • Environment
• Support of stakeholders to • Technology innovation
continue improvements
• Enhanced work-life balance • Others?

• Others?

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ADKAR- A Change Management Model

• Awareness of the need to change


• Desire to participate and support the
change
• Knowledge about the change
• Ability to implement new skills and
behaviors
• Reinforcement to keep the change in
place
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ADKAR – Key Questions
• Awareness – Do you understand and
agree with the business reasons?
• Desire – Do you want it to happen or to
maintain the status quo? What would
cause you to want it to happen?
• Knowledge – do you know about the
change and the required skills to
support the change?
• Ability – are you capable of performing
these new skills?
• Reinforcement – Are you receiving the
necessary support to sustain this
change? 39
Organizational Change

• Preparation for Change (Unfreezing)– assess Scope,


Organizational readiness, Change Team, Change
Sponsors
• Managing Change (Changing)- Communications
Planning, Core Message development, coaching,
training, Resistance Management
• Reinforcing Change (Refreezing)- Celebrate successes,
provide incentives, conduct after action reviews to
assess effectiveness and develop corrective action
plans

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Change Management Actions

• Understand the key components of


change management
• Prepare for the Communications
Workshop
• Decide how to document workshop
findings and recommendations
• Decide how to report workshop
progress to others

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Communication Planning Actions

• Develop a plan and schedule for the communications


workshop
• Identify Communications team members
• Conduct the workshop, developing answers to the two
key questions: “Why the balanced scorecard?”, and
“Why now?”
• Develop a plan for “naming” the balanced scorecard
(e.g., “Strategic Pathway to Excellence”, “promise
Planning & Management system”, “A Plan for
Excellence”, “growing and reaching Excellence As a
Team”)
• Create the “Core Message”

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Develop the Core Messages

• What is our vision?


• What is the balanced scorecard?
• Why are we doing this?
• As a result, what will change?
• … which will help us to …?
• Over time, the impact on our company will be…?

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Communications Actions Workshop Steps

• Identify communication recipients and messengers


• Identify what needs to be communicated
• Identify how to communicate to the different “voices”
in the organization and externally to stakeholders
(Message, media, timing, messenger)
• Develop a schedule and the timing for implementing
the communications strategy

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Summary: Step 1 – Organization Assessment

Key Elements:

• Develop a plan for the BSC program, and organize the


effort
• Assess the organization internally and externally
• Define organization mission, vision, values, plans &
enablers
• Identify customers and stakeholders
• Create a change management plan
• Communicate the commitment to performance-based
management
• Stand-up the BSC teams
• Hold strategic planning workshop

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• Products developed in Step One:
o Management commitment to BSC Process secured
o BSC teams selected and empowered
o Resource commitments secured
o Key player roles and responsibilities understood and
accountability established
o BSC Plan and timetable developed and approved
o SWOT results summarized:
• Strengths + Opportunities = Enablers
• Threats + weaknesses = Pains
o Picture of the future" described
o Organization values identified
o Mission and vision elements identified: statement development
process initiate
o Customers and stakeholders identified
o Communication strategy developed

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Step Two: Strategy

Learning Objectives:

• Learn about the key elements of strategy and how


the elements fit together in the scorecard system
• Perspectives
• Customer value Proposition
• Strategic themes
• Strategic results

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Some “Strategic” Quotes

 “If you don’t know where you are going, you will wind up somewhere else”
Yogi Berra
 “HAVING Lost Sight of our objectives, we have redoubled our efforts”
Anonymous

“There is always a better strategy than the one you have … you just haven’t
thought of it yet” Lloyds CEO in HBR
“Strategy is Choice “ Herodotus 500 BC
“What’s the use of running if you are not on the right road?


Old German Proverb

“ We don’t have a (traditional) strategy process- it allows us to innovate”
 Eric Schmidt, Google

 (Military) “ Strategy is the art of winning (wars)” warfighting MCDP-1 1997


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What is Strategy ?

• Strategy is about broad business options and choices


the have organization-wide impact
• Strategy is a hypothesis of the best way for the
organization to achieve its vision and mission, and
satisfy its customers and stakeholders
• Strategies answer the broad question “What
approach/s should we pursue to get the results we
want?
• Strategy is different than tactics: tactics answer more
narrow questions, such as: “what specific actions
should we take at our level, that are consistent with
the organization’s overall strategy?

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Causes of Strategy Failure in Organizations
Root cause for Failure Description

Top- down style A top-down senior management approach does not


allow upward influence on the process and outcomes.
This weakens the entire process

Unclear strategy/ conflicting The strategy is not clear to staff, especially those at
priorities lower levels in the organization. Priorities often
conflict and are unclear to execute against

Ineffective senior team The strategy formulation team lacks the skills and
capacity to develop land follow through on a cohesive
strategy plan

Poor vertical communication The communication about the strategy is not very
effective down the line

Poor coordination across Bus Business units and functions are not aligned in their
or functions understanding or execution of the strategy
Inadequate down the line Level or resources involved in leading and deploying
leadership skills the strategy is inadequate 52
Traditional Strategic Planning

§ Every few years, executives go on a strategic


planning retreat
§ A few executives brainstorm about the organization
§ Strategic goals are chosen to include existing
projects and programs
§ The strategic plan is turned into an attractive color
document listing all the things planned for the year
§ The document sits on a shelf gathering dust

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Elements of “ New” strategic planning

§ Customer and stakeholder Needs


§ Customer Value proposition
§ Strategic Themes
§ Strategic Results
§ Strategic Perspectives
§ Strategic Objectives

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Identify Customer and Stakeholder Needs
§ Identifying customers and stakeholders
o A stakeholder is anyone who has an interest
in the outcome of the organization
o A customer is a direct beneficiary of your
organization’s products or services…
customers are stakeholders who benefit
directly
§ Identifying your primary customers
o By revenue impact or value to your
organization
o By influence
o By services offered
o Identifying needs
o Differentiate needs from wants
o Needs are based on what products or services
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the organization can or intends to deliver to
Identify and Understand Your Customers and Stakeholders
Customers and Stakeholders Planning Matrix

Customer/ Behaviors We Their Needs Resistance Their Influence


stakeholders Desire Issues
Group
Primary
customer

Other Customers

Stakeholders

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Customer Value Proposition

Customer Value Proposition


o Aligns an organization’s product or


service with the values and needs of
customers
o Identifies how the organization’s product
or service from the competition
o Includes three key components:
§ Attributes of your products,
programs, or services,
§ Relationship you want with you
customers, and
§ Image you want your customers to
have of your organization
o How the organization’s products or
services supply those needs
Ø
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§

§ Customer Focus
o By deliberately seeking to understand and
respond to customer’s needs, you build
brand loyalty and support from your
customer base
§ An organization’s goal should be to understand:
o The needs of customers (and how different
from ”wants”)
o
o

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e.g: Customer Value Proposition
A Business

• Attributes: Reliability, High Quality, Customized, High


Technology, Consistent on-time Delivery, Value,
Warranty, Long Product life
• Relationship: Quick turnaround Supplier, Customer-
centric, Consultative, High Technical support, Long-
term Relationship, Easy to get information
• Image: High Technology, High Quality, High
Reliability, Trust, Experience, Flexibility, Stability,
One stop shopping, Experts


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e.g.: Customer Value Proposition:
A Public Organization

Primary Customers: Citizens


Key stakeholders: Regulators, Government Political
Appointees, other government Agencies, Foreign
Governments
1. Attributes: Reliability, High Quality, Appropriate
Technology Efficient on-time Delivery, value for Tax
Dollars
2. Relationship: Quick Turnaround, Customer-centric,
impartial, your Government partner
3. Image: Efficient, Accurate, Trustworthy, Fair, Rule of
Law, No special interests, No Political Agenda, Wise
Use of Taxpayer Dollars

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e.g. Customer Value Proposition
A Nonprofit foundation
• Primary Customers: Members, Grantees, Affiliates,
Donors, Sponsors
• Secondary Customers: Information seekers, shoppers,
volunteers
• Key stakeholders: patients/survivors, Local Grantees,
policy makers/ Regulators, media, vendors, medical
community
• Attributes: responsive, Accurate information, good return on
investment, Brand value, Use Resources Wisely
• Relationship: collaborative, Mutual interest, servant
leadership, Long-term Engaged, Professional, Honest,
Mutually Responsive and Beneficial, Team
• Image: Inclusive, passionate, Advocate, Global Leader,
Credible, the “Go To” Team, catalyst, Forward Thinking,
Good Stewards.
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Strategic Themes Help Create Alignment

Strategic themes represent the major focus areas of the


organization.. The “ Pillars of Excellence”
Strategic themes broadly define the business and allow

the organization’s vision to be decomposed into


operational effort
 Strategic themes help create organizational
alignment by cutting through:
o All four BSC perspectives, harnessing the
energy of activities in each of them
toward a common result.
o The organizational boundaries, harnessing
many capacities and processes toward
desired results
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Characteristics of Good strategic Themes

• They answer the question: in what key areas must we


excel in delivering high value to our customers?
• Represent the few main strategic focus areas of the
organization (typically three or four)
• Represent the organization’s “ Pillars of Excellence”
• Allow mission and vision to be translated into more
operational terms (“How will we achieve our vision
and mission?”)

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The” Altitude” of strategic Themes

• Need to find the correct ”altitude” of strategic Themes;


at the start, the altitude of candidate themes may not
be the same, with some themes having an altitude
that is too low (i.e., too specific/not general enough)
• To raise the strategic altitude, ask the question “why do
we want to do this?”
• If there are too many themes identified initially, try to
combine them and raise their strategic altitude to a
more general theme
• Try thinking bottom-up: what will be the results if we
are successful in achieving our strategy?
• Apply “ filters” to candidate themes

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Apply Filters To Candidate Strategic Themes

 Filters to reject candidate themes include these


questions:
o Is this just a functional description of what we
do?
o Is this just a description of what one
department does?
o Is this something that we must do really well,
or is it merely something that must be done
in the course of business?
o Is most of the activity in only one perspective?

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Strategic Themes Example:
An Administrative support organization

§ Customer-Focused operational
Excellence
§ Compelling place to work
§ Support Anywhere, Anytime

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Some other Strategic Theme Examples

 Diversified services Company


§ Grow high contribution Business
§ Operate with Excellence
§ Innovate to Grow
 Retail sales Company
§ A Compelling place to shop
§ A Compelling Place to work
§ A Compelling place to invest
 Telecommunications company
§ Market-leading Technology product
offerings
§ Customer- intimacy toward A Total
Solution
§ Sustained Profitable Business Growth
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§
Affinity Grouping As a Tool For Creating Strategy

The Affinity Process (or Affinity Diagram) is an Excellent


tool for developing strategy in a team setting
The Affinity Process:

o Groups similar things together- in this case


strategic ideas and possible business
strategies into strategic themes
o Helps to “level the playing field” among
participants
o Encourages “divergent” thinking - brainstorming-
first
o Provides a safe and effective process for
“convergent” thinking - reaching consensus
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The Affinity Process

To apply the Affinity Process:


o Identify a “ lead question” which all participants


will consider
o Allow time for people to write answers to the
question on “ post-its”
o Assemble the “post-its” on a white board,
randomly
o Allow the participants to move ideas - post-its-
into groupings with like ideas- the facilitator
may help, but should not lead, the process
o Review and refine the final groupings

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Defining Strategic Results

• Strategic Results describe what will occur if the


organization successfully executes its strategic
themes
• Strategic Results answer the “ How will we know we
are successful” questions for strategic themes

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Strategic Themes And Results Example:
An Administrative Support Organization

Customer- Focused Operational Excellence


o Provide what the customers need when they need
it
Compelling place to work

o Highly qualified and motivated people come to


work in our organization, and choose to stay
Support Anywhere, Anytime

o Our customers can function from regular


workplaces or remote locations, and can
operate outside of usual business hours

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Characteristics of Good Strategic Results

• Describes the outcome that the strategies and


objectives within a strategic theme are intended to
produce- these may be outcomes that we can
influence, but not control
• Keeps the focus of strategic thinking on “end states”
rather than specific activities or tasks
• Taken together, the set of strategic Results should
translate into success in achieving the mission and
vision
• The set of strategic results should aggregate upward to
the next strategic level- the vision, and possibly an
overarching strategic result developed for the vision
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Some Common Strategic Themes And Results

Theme: Build the Business


o Result: New and existing customers are highly


satisfied, resulting in increased customers and
average sales per customer
§ Theme: Operational Excellence
o Result: customer-facing services are delivered
efficiently to satisfied customers
§ Theme: strategic Partnering
o Result: partnership quality is increasing, and both
partners strive for win-win relationships
§ Theme: Customer Delight
o Result: Customer satisfaction and retention are
increasing 78
§ Theme: Life cycle management
o Result: The cost of ownership is improving along
with reliability
§ Theme: Support Anytime, Anywhere
o Result:24/7 support worldwide
§ Theme: Effective and Efficient Government
o Result: Increased tax base, and efficient and
effective services
§ Theme: Good governance
o Result: Audits are “ clean’ and accountability is
increasing
§ Theme: Community involvement
o Result: Increased community involvement and
satisfaction
Ø 79
Worksheet: Document Strategic Themes and Results
Strategic Theme: Strategic Result:
(Example: Operate the (Example: Meet and exceed
business with excellence.) our customers’ expectations
in the services and products
we deliver to them)

what it includes (key concepts):

What it does not include;

How will we measure our success?

How it moves us to a higher level of performance:

80
Choose Balanced Scorecard Perspectives

• Balanced scorecard Perspectives represent different


views of the organization; they help assure
balance to our strategies and measures
• Perspectives are different lenses, or performance
dimensions

81
Some “Perspective” on perspectives

Balanced scorecard perspectives are not


 the
functional departments of the organization:
However, most departments will have a role in each
perspective
§ Strategies for success
 Strategies are a vertical slice that cut
across all perspectives

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83
Balanced Scorecard Perspective Examples

Private Sector Public & Non profit


 Financial Customer
 Customer  Customer/Stakeholder
 Stakeholder  Students/ parents
Financial Stewardship
 Shareholder
 Business Processes  Budget
 Internal Processes
 Resources
 Learning & Growth
 Cost Control
Business Processes
 Tools & Technology

 Internal Processes
Organizational Capacity

 People & Tools


 Learning & Growth
 Organization Readiness

84
Summary of Step 2- Strategy

Key Elements:

§ Develop an overarching strategic Result, tied to


vision
§ Choose perspectives
§ Develop customer/ stakeholder needs
§ Develop the customer value proposition
§ Develop strategic Themes and Strategic Results
§ Document the strategic thinking process results

85
Products Developed in step Two:

 Overarching strategic result prepared

 Perspectives selected

 Customer needs and value proposition


described
 Strategic Themes and strategic Result for
each Theme developed
 Commentary prepared to document the
process

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87
88
89
Aligned Government Agency strategic Themes

• Mission:To contribute to domestic and international


security and travel by issuing secure travel documents
through authentication of identity and entitlement
• Vision: Global security, global service, global standards
in state-of-the art identity authentication and travel
documents for the benefit of the nation

90
Module 3
Step Three: Strategic Objectives

Learning Objectives:

o Learn how to organize the development of


strategic objectives
o Learn how do identify strategic objectives
o Learn how to document the discussions around
strategic objectives
o Understand the elements of change
management, communications, and facilitation
that are important for the step
o Practice what you learned

91
What Are Strategic Objectives?

• Strategic objectives are the building blocks of


strategy…. A strategy’s “ DNAS”
• Strategic Objectives make up the detailed game
plansthat describe what is to be done to
accomplish strategic Results.
• Strategic objectives are used to break strategic
Themes into the more actionable activities that
lead to the strategic Result .

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93
Three Tasks in step Three

Team Preparation:

o Team charter, roles & responsibilities


o Schedule and resourcing
o Team member time commitments
o Team initial training
§ Develop Strategic Objectives
o Strategy “ DNA”
§ Document Objective commentary
o Capture, for use later on, what is
included in each objective and what
is not included .
94
95
•Develop Strategic Objectives
D E V E L O PM E N T
O B J E C T IV E
Strategic Objectives Describe our intended Results

What is the Result ( Outcome or output) that we intend to


accomplish?
Should be “ verb-object” form

o Improve health
o Increase work efficiency
o Lower cycle time
o Increase employee satisfaction
Should indicate what a “ good” result is:

o Improve
o Increase
o Decrease
o Enhance
o Optimize

96


Sample Strategic Objectives

o Improve product innovation


o Reduce cycle time
o Strengthen partnerships
o Increase process efficiency
o Improve network reliability
o Improve coordination among departments and
agencies
o Increase skill level of new staff hired
o Improve alignment of individual and
organization goals
o Optimize use of resources
o Improve member loyalty
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Characteristics of Good Strategic Objectives

Good Objectives,

o Action oriented activities ( What must be


done to be successful)
o Continuous improvement potential
o Easy to understand; simple statement of
intent
o Not projects or activates; no “ on-off”
switches

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How to Develop Strategic Objectives

• Start from one of the Strategic Results identified


during the strategy step: place this at the top of a
blank sheet
• Work downward from the top asking “what
objectives need to be accomplished in order to
achieve the strategic Result?”

103
• List (brainstorm) ways in which the Strategic Result
could be accomplished on a continuous
improvement basis
• Capture commentary for all objectives that are
selected e.g.
o What is included/
o What is not included,

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105


O D
B O
J C
E M
C E Prepare Objective Commentary
T N
I T
V A
E T
 I
 O
 N

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Documenting Strategic Objectives:
Objective Commentary

• Strategic Objectives need explanation and


documentation- we call this the “objective
Commentary”
o Later reminder to team members
o Explanation for those who were not involved
• Objective Commentary Should
o Clarify the scope of the objective- what's included
and what's not
o Describe the intended out comes of the objective
o Identify key components of the objective
o Be captured as objectives are being discussed in
workshops

107
Sample Strategic Objective Commentary
Description
 Improve recruiting strategies to ensure we recruit people that are highly
motivated and share our core values. We will attract and Retain skilled
experienced leaders, technical and Construction professionals reduce
 Improve the recruiting cycle and increase our ability to meet the rising Needs of our
Hiring organization as we grow. Improve candidate Assessment, screening and
and selection process
Out come:
Retention Lean, Versatile, committed and loyal workforce
Low short term turnover rate
Labor pools that fluctuate with workload
Right size recruitment time and cost
A diverse work force, representatives of community
demographics

Description
Improve client Alignment from opportunity identification
Through close out, ensuring we exceed the client’s written
And unwritten expectation. It includes proper planning for
Improve Communication process necessary to foster collaboration
And ensure common goals with stakeholders are identified
Client Early, tracked and reported.
Alignment Out come:-
This alignment will create a common bond between all internal and
external
Client participants, a pro-active model that results in no surprises to any
Stakeholder on the team and ensure that we have correct answers and 108
Solutions every time
Summary Step 3- Strategic Objectives

Key Elements:-
•Facilitate workshops to develop strategic objectives for each
Theme
•Capture objective commentary (short paragraph on what is
included
and not included in objectives)
Products Developed in Step Three:
•Strategic objectives defined
•Objective commentary documented
•Objectives categorized by strategic Theme

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112
Group Exercise

1. Identify strategic foundations of your organization:


• Vision, Mission, Core Values, SWOT
2. Formulate Strategic theme, Strategic result and
strategic objectives for your respective
organizations

113
Module 4
Step Four: Strategy Mapping

Learning Objectives:

• The trainees will be able to,


o Understand the basic concepts of Strategic
Mapping
o Link Strategic Themes with Strategic
Objectives
o Build the corporate (i.e., organization-wide)
strategy map

114
What Is A Strategy Map
 A Strategic Map is an important business tool for
communicating value internally and externally:
o Defines the causal relationships among
Strategic Objectives leading to results
o Helps create a balance among Objectives,
Performance Measures, and Initiatives across
the Perspectives
o Helps to visualize the logical consistency of the
scorecard
o Helps align an organization around strategy

115
Why Strategy Maps Are Important

• A strategy map shows how organizational value is


created, by mapping the cause-effect relationships
among the building blocks of strategy ( strategic
objectives)
• Objectives, linked together in cause-effect
relationships, tell the story of an organization's
strategy
• A strategy map encourages balancing leading and
laggingperformance measures, tangible &
intangible asset, financial and non-financial
objectives

116
117
118
Characteristics of Good Strategy Maps

• Tell a story of how value is created for the business


• Show the logical connection(cause-effect links)
among the objectives where success is needed to
get the results we want
• Contain a balanced set of objectives, representing
each of the perspectives
• Contain objectives that are at the same level of detail
• Show an upward flow of value creation from
performance driving objectives to results objectives

119
How To Construct A Strategic Link

Reduce
Cycle Time
Of Billing
Improve
Computer
Skills

A Strategic Link

• Is a cause- effect relationship between strategic objectives


• Is constructed by if –then logic
 “if we improve computer skills, then we can reduce cycle time”
• Represents the most important drives toward the strategic Result
• Is developed by a cross-functional team
• Is a hypotheses- an educated guess of the team
 A strategic Map is a collection of strategic links that show how the
organization creates values for its customers and effective financial
performance for its shareholders, stakeholders, or members
 120
Developing Causal Relationships

1. Start with an objective that is the effect to be


understood
2. Identify the causes of the effect (another objective)
3. The identified causes drive performance (i.e,
performance drivers) and form the basis for
measuring performance
Note:- Measures will be developed later to track

performance and to predict future performance

121
Strategy Mapping Procedure

• Select highest-level “customer” objectives if for a public


or nonprofit organization) or “financial” objectives ( if
for a privates sector business); identify those that lead
directly to the desired” Strategic Result”
• Select one “customer” or “financial” objective and, as a
group, identify cause-effect linkages of that objective
to others
• Continue to identify cause-effect linkages among other
objectives
• Rearrange create objectives as needed
• Place objectives on a blank strategy map in appropriate
Balanced Scorecard Perspectives
• Review logic by leading the map “from the “bottom up”

122
123
124
Develop A Corporate Strategy Map

• The corporate-wide (or enterprise-wide, agency-wide,


organization-wide) strategy maps are constructed
from the bottom up, that is, by merging strategic
Theme strategy maps into a single corporate-wide
map
• Theme objectives are merged, grouped, re-worded,
and combined into other objectives to develop
corporate-wide objectives

125
Constructing Organization-Wide Strategy Maps From
Strategic Theme Objectives

 The overall (corporate; enterprise; agency-wide)


strategy map is constructed from objectives
developed by strategic Theme teams. These
Theme objectives must be “integrated” into a
single overall map. To do this:
1. Prepare" post-its” with all objectives from all
Themes (you may wish to “color code” the
objectives by Theme
2. Identify all the objectives that seem to belong in the
top (e.g. customer) perspectives of the overall
map
3.

126
3. Eliminate duplicate objectives, and combine closely
related objectives into a single “ overall”
objective
4. Proceed as with previous instructions, identifying
objectives that “cause” others continuing to
eliminate duplications and combine closely
related objectives as you go
5. Some Theme Objectives may not be included on the
overall map, but should be set aside for future
reference; they may appear as Objectives in the
“cascading” process

127
128
129
130
Summary Step4- Strategy Maps

Key Elements:
•Link Strategic Objectives in cause-effect relationships, to show the value
chain to customers and the logic of our strategy
•Create an enterprise-wide strategy Map from Theme Team maps

Products Developed in Step Four


Overarching Strategy Result tied to Vision, and Vision linked to Steps:
Strategic Theme 1,2 &3
Strategic Results for each strategic objectives in

cross-functional team workshops


Cause-effect relationships among objectives developed

Enterprise-wide strategy Map created from Theme team maps

Enterprise-wide Strategy Map approved by leadership

Steps:
4

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134
Module 5
Step Five: Performance Measure

Learning Objectives:

o Understand how to develop balanced scorecard


performance Measures
o Learn how to develop specifications and
reporting requirements for performance
measures
o Learn how to transform data into performance
information

135
Why Do We Need Performance Measures?

 “Measurement is the description, (often


quantification), of a property of an object, activity,
process, or result that enables comparisons across
items being compared, or across time”
o To monitor the implementation and effectiveness
of an organization’s strategies
o To determine the gap between actual and targeted
performance
o To determine organization effectiveness and
operational efficiency
 Performance measure development work will typically
be done by a small “measure development team”,
usually composed of the objective owner and a few
other employees

136
Develop Meaningful Performance Measures

• Meaningful means strategic


o Focused on the strategic results we want
o Derived from the objectives on the strategy
Map
• Meaningful means relevant to the user
o It tells the user what he or she needs to
know
o It provides information that will help make
better decisions
• Meaningful means “SMART”
 Note: “SMART” can also be used to describe

the
 attributes of strategic objectives and
personal goals

137
Decision Model For Determining What To Measure

• Use performance information to Better inform


Decision-making
 Decisions to make

 Information needed to make decisions


 (what and how it should be presented)

 Data needed to produce information

138
Performance Measurement Definitions

•Outcome Measure: A Results Measure that defines


what is accomplished (End Outcome=final
accomplishment,
Intermediate Outcome=Intermediate Accomplishment)
•Out put Measure: A Result Measure that defines
what is produced. Outputs used efficiently and effectively
Lead to out comes
•Process Measure: A Performance Drive that measures
what
Is happening in the system or process that produces a
Specific out put

139
• Input Measure: A Performance Driver that measure
attributes (amount, type, quality) of resources
consumed in processes that produce out puts
• Project Measure: A measure of schedule, budget,
scope, or risk associated with a project or initiative
• Lagging Measure: An indicator of past performance that
shows how successful we were in achieving results
• Leading Measure: An indicator of performance that is a
precursor of future success

140
• Target: Desired level of performance
• Threshold: Upper and lower ranges of performance
around a target value (e.g. Green threshold range
indicates Good performance, Yellow threshold
range indicates Satisfactory performance, Red
threshold range indicates poor performance)
• Benchmark: Comparison of one organization's
performance to an industry standard or “best in
class” performance

141
Performance Measures have Several Dimensions

Measure
What? Quality, Timeliness, Economics, Competence,
Effectiveness, completeness, Efficiency, Satisfaction,
Governance, Compliance

Measure
How? Directly, Indirectly

Measure
Type End Outcome, Intermediate Out come,
Output, Process, Project, Input

Measure
Timing Leading, Lagging

142
Performance Measures Should Answer Key
Strategic Questions


This
may be based on a

Objective
Strategic objective at the
 “enterprise”
level, or on a
Strategic objective at a low

Cascaded level

1)How much work did we do?- Out put measure


2) How efficiently did we do the work?-Process efficiency measure
(output/input)
3) How much benefit did our customers and stakeholders get from our work?
Outcome measure
4) How satisfied were our customers with our products and services?-
Outcome measure
5) How well are we managing our project and programs?- project measure

143
Measuring Strategic Objectives
Strategic Out comes and Outputs are derived directly
from the strategy map!

 Strategic
 outcome Measures

$&%change in ?Tax
Strategic Tax Revenue Revenues from
Objective Growth Previous Year


$&% change in
Increase Taxable Base

Tax Bases from
Economic Growth
 Previous Year
 Growth Strategic
 Out puts

 As strategic objectives lead to top-level strategic results,


 strategic measures leading indicators for that strategic result.
144
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146

P
E

R M F
F E R
O A A
R S M
M

U E •Understand the framework for assessing
A R W performance
N E O
C S R
E K

147
Framework for Assessing Performance
When developing performance measures, it is helpful to think
Of the development process as having four components:

• Describe the Intended Result:


• What out come or output do we intended
 to achieve?
• Select the Measure or Indicator:
• How will we determine how well we are doing?
 What measure or indicator best tells us what we
 need to know about performance?
• Establish Targets and Thresholds
• What is the value of the measure that we are
 striving to achieve in the next reporting period?
• What performance levels that are at, above,
 or below the Target will trigger action on our part?

148
Describe The Intended Result

• What is the Out come or Output that we Intended to


accomplish?
• Should be ”verbal- object: form
• Improve health
• Increase work efficiency
 Use the objective commentary of the strategic
objective to fully understand the intended result. The
next task is to decide how to measure progress
toward that result

149
Measuring Performance Directly

 The best measures are those that allow us to measure


the result Directly. For example
• Services are delivered in a timely manner:
• We know when the service is due; we know when it is
delivered; thus, we can directly measure whether it
was delivered on time.
• Profitability is improved:
• We know how to determine “profit” for a specific time
period; we know whether profit for the current period is
better than the previous time period; thus, we can
directly measure whether profitability is improved
 Our ability to measure results directly depends on
our ability to define our terms precisely and
consistently!
150
Measuring Performance With “Indirect” Indicators
In many situations, we can’t measure the result Directly:
 Unfortunately, this is often the case with “high level”
objectives in enterprise-level strategy maps, e.g.:
• Improved health
• Increase security
 The concepts of “health” and “security” don’t have
single obvious, unique, direct measure
In these cases, it is useful to look for indirect measures

For example, measures that:

• Correlate with a desired result- if the indirect measure


improves, the desired result improves also, because of
the correlation of the measures.
• Contribute to desired result- If A & B occur, the result will
be C


151
Measuring Performance With “Indirect Indicators”

• Correlation with desired result- if the indirect measure


improves, the result improves as well, e.g.
o Desired result- improved health
o Indirect measure- fewer cases of specific disease
o Logical correlation- if specific disease
decreases, health improves
 The “validity” of indicators based on correlation
depends on the “strength” of the relationship between
the indicators and the desired result. With adequate
data, we can test this relationship quantitatively

152
Measuring Performance with Indirect Indicators

• Contribution to desired result- If A & B occur, the result will be


C. e.g.
o Desired Result- Improved Health
o Indirect Measure: Increased vaccinations against
common diseases, and lower blood pressure and
cholesterol levels
o Contribution- More extensive vaccinations, and lower
blood pressure and cholesterol lead to fewer
incidents of disease, and thus improved health
 The validity of indicators based on contribution depends
on how confident we are that we understand the
“cause/effect” relationship. With adequate data, we can test
this relationship quantitatively.

153
Select the Measure or Indicator

• Identify all the variables necessary to get a complete


picture performance
• Identify the objective accomplishment
• Measure what you need to know (start with the end
out come first, then go to intermediate out come,
out put, process, and input)

154
• Use measures with strongest contribution to
(correlation with) results
• Use those over which you have influence or control
• Use those that capture desired behavior changes
• All other things being equal, consider accessibility
of data, ease of collection and use

155
Business Intelligence Value of Different Types of
Performance Measure

Increase in
Business 1. Outcome (e.g. customer retention, profitability,
Intelligence organization Value, impact)
Value
2. Intermediate Outcome (e.g. customer/stakeholder
satisfaction, Sales employee development/

knowledge gain)
 3. Out put (e.g. number of customers booked, items
 sold, parking tickets issued)
When Results
4. Process (e.g. efficiency-output/input cycle time
cost per unit)
Are clearly
5. Project (e.g. accomplishment of schedule tasks,
Linked resources used Scope)
To Drivers 6. Input (e.g.; FTE, budget amount number of
computer)

156
Establish Target

• Targets are the desired values of performance for the


reporting period in question
• Should not be arbitrary!
• Should be based on some knowledge pf process/program
capability-baseline
• Should reflect" best practices”- benchmark
• Should reflect needs of those who benefit-customer
requirement
• May include stretch targets that test the organization

157
Target Based On Customer Requirements
 Targets based on customers requirements can be of
two types:
o Those intended to meet self imposed, or agreed
service levels or performance standards
§ Internal performance standards”
§ Service level Agreements (SLA’S)
o Those that reflect a minimal essential level of
performance
§ Failure to meet these causes
customer to fail
§ Failure may involve high human or
financial costs
• The latter type of requirement takes precedence over
both baseline and benchmark considerations!! 158
Develop Baseline Data

 Use a baseline as the reference for measuring


current and future performance
• Baseline data answer the question
• How well do we perform now?
• What is our current capability?
• Historic organizational data can be used as a baseline
• If baseline data doesn’t currently exist, a first order of
business is to develop it.
 To exceed our baseline level of performance, we
will have to change the way we do business!!

159
160
Determine Thresholds

• Thresholds are performance ranges


• Normal convention is to indicate “Good” (green),
“satisfactory” (yellow), and “poor” (Red) range of
performance for each performance measure (and
Gray for Data not Available”)
• First consider the Target (desired level of
performance)
• Determine whether good performance is anything
equal to or greater than the target value, or some
other range determined by the team
• Determine what range of measure value should be
considered satisfactory, and what range should be
considered poor

161
162
Performance Measures Example
Strategic Result: Improve Our IT Security

•Out come- Improve IT security


•Measure -Number of IT security incidents that occur this year
•Target- 10% fewer IT security incidents than previous year (baseline)
or
•Target - no more incidents per employee (location, region, etc)
then the best in my industry or
•Target - zero incidents

•Intermediate Outcome – Improved knowledge of IT security requirements


•Measure – change in security test scores after training
•Target – 15% improvement in security test scores over some baseline
(last period, other similar organization)

163
Performance Measure Example (Con’td)
Strategic Result: Improve our IT security

Output – Provides IT security awareness training to employees this year


Measure – percentage of all employees for whom security awareness training
Is provided by December 31, 2009
Target – All employees trained in computer security by December 31, 2009

Process – Train all employees cost-efficiently


Measure – Cost per employee trained
Target - &1000 per employee trained

Input – Budget dollars spent on security awareness training


Measure - percentage of training dollars spent versus authorized
Target – 100% of authorized amount spent (e.g. $125,000 for calendar year
2009
164

P
E

R M D
F E E
O A F
R S I
M U N •Compete Data Definition Tables for each
A R I measure
N E T
C S I
E O
 N

165
Performance Measurement “Data Definition Table”

• Need a systematic, thorough and consistent approach


to determining the data to be used to measure
performance,
• Defining data thoroughly demonstrates that we really
understand what we intend to measure, and how,
• The “Data Definition Table” provides a useful tool to
accomplish this

166
Performance Measures Template:
Data Definitions Table
• A strategic objective Development Team completes
this table for each measure for which it is
responsible
• Strategic objective (number and name)
• Objective owner

measure Data Units of formula Collection baseline Target Measure Validated byVerified
source measure frequency Thresholds location's & by
owner

167
Performance Measure: Data Definition

• Data source
o How will the data be collected
• If automated, where does the data currently reside?
• If manual, who will collect the data? How and where
will they record it ?
• Collection frequently
• How often will the data be collected?
§ Annually, monthly, weekly, daily, continuously?
• How often with data be reported
• Units of measure
• What will you be counting or recording?
§ Dollars; days; proportions; events

168
Performance Measures: Data Definition (Con’td)

• Formula
§ How will performance measures be calculated
• Baseline
o How well are we performing now in this performance
area?
§ Historical data; comparable Organization
benchmark data
• Target
o What is our expected/desired level of performance?
§ Targets based on: expectations (e.g. stretch
goal) analytically derived, baselines,
benchmarks
• Thresholds
o What are the performance ranges above and below the
target that indicate Good, Satisfactory, and Poor
performance?
169
Performance Measures: Data Definition (Con’td)

• Measure location and owner


o Where does the data reside?
§ On someone’s desk; in a hard copy report; in a
spreadsheet, information database, or other electronic
format?
o Who is responsible for seeing that the data is
collected, verified, maintained and reported to
others who need it?
• Validation
o How do we know the measures accurately measure
what is intended?
• Verification
o How do we know that the data are correct?
§ Edit checks; sampling inspection; automated checks for
“error flags”
§ Who performs the data verification? How often? 170
171
Objective Owner Responsibilities
Strategic Performance Measures & Strategic Initiatives
Element Strategic Objectives Targets

Responsibility

Understand Objective Complete data definition table, Define scope, schedule,


Oversight/ Accountability Commentary (a clear and concise develop targets and thresholds quality, budget, and project
description of (red, yellow, green levels); deliverables Turn initiative
what is included in each ensure that performance into risk managed project
objective) information is getting to those
who need it

Understand relationships among Verify and validate data Report progress against
Reporting all objectives accuracy; ensure timeliness; assist project milestones, resource
Report summary results with visualization reporting performance risk, cost and
scope

Recommend revisions in Identify data interdependences, Track schedule and cost


Strategic Thinking & Analysis Objectives, linkages anomalies, and variances; variances, and project impact on
recommend changes in measures, objective outcomes Monitor and
among Objectives and strategy control changes to schedule,
(strategic Themes and Results) and collection and reporting for
resource requirements, costs,
Recommend changes in clarity of meaning and display; communications Recommend
goal; informed decision making prioritization schemes
measurement and initiatives tied
to Objectives

172
Performance Measure Technical Requirements

• Appropriate measurement frequency


• Timeliness
• Accountability
• Sufficient accuracy
• Long-term consistency
• Ease of use and useful

173
174
Timeliness

• Relate performance to events


• Take corrective action before crises
develop
• Current information versus ancient
history

175
176
177
Long-term Consistency

• Want to track performance and make


valid comparisons over the long term
• For measures use ratios or percentages
that will not change as the base of
customers or products changes

178
Ease Of Use and Useful

• Information relevant to the user


• Easy to use- put data in and get
information out
• Easy to understand
• Measures and relationships understood
• Measure validity (“it measures what it is
intended to measure”) accepted by
users

179
I
R N
E F
P O
O R
 Turn data into management information
R M  Visualize performance information
T A
I T
N I
G O
N

180
Wrap-Up: How To Develop Meaningful
Balanced Scorecard Performance measures

o Review strategic objective and objective


commentary
o Identify desired objective results and consider
possible outcome measures first; then consider
Output measures
o If direct measurement is not possible, consider
indirect measurement techniques for each
possible measure, consider the criteria for
selecting measures
o Choose one to three measures for each objective
o Identify possible targets, and develop targets and
thresholds for the next reporting period
 Performance measure development work will
typically be done by a small “measure development
team” usually composed of the objective Owner and a
few other employees
181
Objective Owner Responsibilities For
Performance Measures

o Clarity of objective commentary


o Developing and “defining” the measures
o Managing and maintaining the measures
o Accountability to the organization to report
performance trends, analyze and report
results against targets, recommend corrective
actions for performance improvement, and
recommend new/revised measures and targets
 Assigning the right people, and equipping them to
do the job effectively, are key to having meaningful
and useful performance measures!

182
Creating Accountability For
Maintaining And Reporting Measures

Performance Measure Accountability


• The performance Measurement Development Team is accountable


for the detail on how to actually measure and gather data
• The Measure Owner is:
q Responsible for leading the completion of the “Data Definition
Table” for this measure
q Accountable for providing data are accurate, and represent
what they are intended to – and for seeing that it is
reported on a timely basis.
q Responsible to the primary users of the measure, especially
for the measure's validity and usefulness
• A system ownershould be identified who will be accountable for the
effective operation of the automated data collection and reporting
system

183
Summary Step 5- Performance Measures
Key Elements:
Develop one or more performance Measures for each objective Set

Set expected targets and thresholds for each measure

Develop baseline data for each Performance Measure


Complete the Data Definition Table TM
Plan for how performance Measures will be used

Consider “Performance Measures Technical Requirements”

Products Developed in Step Five:


Performance Measures and targets for each objective

A balanced set of key performance Measures

Baseline data for each performance Measure

Benchmarking plans

Upper and lower thresholds for each measure

Performance data visualization

184
185
Module 6
Step Six: Strategic Initiatives

 Learning Objectives, The trainees will be able to,


o Understand the basic concepts of strategic
initiatives
o Identify candidate strategic initiatives
o Develop a selection filter to rank initiatives
o Rank candidate strategic initiatives using the
selection criteria
o Turn strategic initiatives into risk-managed
projects

186
What Are Strategic Initiatives?

• Projects that help ensure strategy


success by improving the performance
of strategic objectives

• Actionable short-term or long-term


projects that are linked to strategic
objectives

• Projects that have wide-reaching


potential for significant organization
impact and benefit

187
Four Tasks in Step Six

• Identify candidate Strategic Initiatives


q Start with brainstorming results from Theme Team workshops (from
the “Parking Lot”)
q Refined initiatives come from creation of the corporate Strategy Map
• Develop a selection filter (secretion criteria)
q Review candidate selection criteria
q Choose final criteria (usually 3-5)
q Weight each criterion
• Rank strategic initiatives using selection criteria and
ranking framework
q Choose a ranking framework (Weighted Scoring, 2x2 Matirx, Paried
comparison, other)
q Complete selection template to rank Strategic Initiatives
• Resource and mange the selected final Strategic
initiatives

188
Strategic Initiatives Make Strategy Actionable

Objective

Project Project Scope, Resources, Schedule,


Management Deliverables, Risk, Progress (e.g., Earned
Attributes Value), Ownership

189
Prioritized Strategic Initiatives, tied to strategic
objectives, drive performance improvement

Potential Initiatives

Objectiv Prioritization
e Selection
Criteria

1 2 3 4 5 6 7
Prioritized, Actionable
Projects
190
Initiatives are Means, Not Ends

Strategic Measure
Do initiative
Objective Initiative

“Organizations often get this wrong. Their strategy consists


Primarily of a list of initiatives that will be undertaken, and
their
Initial business measures are milestones-time and cost
Metrics- about those initiatives.

Such a planning process is backwards! Strategy is not about


Managing initiatives.”

191
The Right Sequence

Strategic
Measures &
Targets

Strategic
Objective Project
Strategic Measures &
Initiatives Targets

“The Strategic Planning Process should use initiatives to help the


organization achieves its strategic objectives, not as ends in
themselves.
“Public sector and nonprofit organizations are especially guilty of
Often confusing initiative completion as the target rather than
improvements in mission objectives and agency effectiveness.”

192
Identifying Strategic Initiatives
•Definition of Strategic Initiatives
qEach initiative must be clearly defined before it can be assessed
qEveryone in the organization should have an understanding of
what
the initiative will create, why you are creating it, and what will be
required of the organization to create it
•Four components of describing an initiative
qScope
§What is included in each initiative?
qOpportunity Description
§How will the initiative benefit the organization?
§What is the opportunity that the initiative capitalizes on?
§what strategic objectives on the strategy Map are
supported?
qDeliverables
§What will the initiative produce?
§What is the output of the initiative?
qRequirements
§What resources are necessary for the initiative to succeed?
§What does the organization need to do to “Make it
happen”? 193
Initiatives Need To “Fit” The Strategy

•Chosen initiatives should be in line with the strategic vision


and mission of the organization
•When considering each initiative, ask:
§Is the proposed idea consistent with the mission of the
organization?
§Does the fulfillment of this initiative fit with the vision
of the organization? Does this initiative lead to improved
results?
§Will the initiative help achieve a Strategic Result or
§Results
§What corporate strategic objectives does the initiative
support?
§Does the projected financial impact of the initiative
satisfy the goals and measurement that are part of
Strategy of other financial thresholds that have been
defined?

194
§
Characteristics of Good Strategic Initiatives

•Strategic Initiatives are new or existing, short-term or long-term strategic


projects and activities identified during the scorecard development
process that will improve performance in strategic objectives

•Strategic Initiatives are linked to Objectives and perspectives (e.g.,


Rapid Rewards Program (Initiative) linked to improve Customer Retention
(Objective) in Customer performance dimension (Perspective)

•Strategic Initiatives can be prioritized and ranked by selection criteria

•Example selection criteria include: potential alleviation of organization


pain, risk, cost, time to implement, benefits, improvement potential in
strategic objective performance

• Schedule, deliverables, resource commitments, and ownership need to


be defined

195
Example: Strategic Initiatives

Perspective Improvement Initiatives

Financial Cost reduction/control projects, Planning/ Budgeting


system, Waster/Fraud/Abuse Management System
Costumer Market research, Customer survey, Reward programs,
Customer Relationship management system
Business Six sigma, ISO 9000 Certification, Activity Based Costing
Processes System, Business Process Re-Engineering projects,
paper-to- electronics, Enterprise Resource Planning
system, bench marking study
Organization Skills assessment, Customized Training, Re- designed
Capacity Hiring process, Capital Improvements, Information
Technology upgrades, Incentive program,

196
Candidate Selection Criteria

Potential secretion criteria:


Pain alleviated or benefit captured - Risk
Regulation/requirement - Early win
Feasibility - Timeline
Alignment with organizational strategy - Probability of success
“Low hanging fruit” - Number of objectives addressed
Cost - Number of perspectives
Effort required addressed

What other prioritization criteria do you need to consider


in your organization?

197
Choosing Final Selection Criteria

Ask these questions:


•What are the most important selection criteria for the
organization?
•when do we need to show results?
•what is the budget formulation process, and how will
initiatives
impact the process?
•How much discretionary money is available for intuitive?
•How many initiatives can we “take on” at this time?

Most organizations will want to choose less than 12 strategic initiatives


after the filtering/selection process is completed (the “A List” projects)

198
Applying Selection Filter To Candidate Initiatives

Candidate Initiatives
•Marketing campaigns
•Pre-promotion studies
•BPR
•Process improvement Selection Criteria To Ranking
•TQM proposals •Effort required Framework
•Training courses •Budget 1
•Urgency
•Policy analysis •Results 2
•R & D efforts anticipated
•Branding studies •Multiple
3
•Workflow improvements objectives
supported
•Time needed 4
•Risk

199
I
N •
I qsimple weighted Scoring
T qWeighted Criteria Scoring
R I q2x2 Matrix
A A qPaired Comparison
N T qOther (?)
K I •Analyze candidate initiatives against selection criteria
V •Rank initiatives
E
S

200
Choose Ranking Framework

o Decide on a voting strategy for members of the selection


team,
such as 5 votes for each member, or 1o votes for each member
o
o List the potential initiatives on flip chart paper on a wall
o
o Invite each team member to vote for the selection (s) of his
or
her choice, using anywhere from zero to the total number of
votes available
o
o Add up the number of votes for each initiative and rank
order
the results
201
202
203
204
2x2 Matrix Framework

2x2 Matrix Steps:


o Select two important selection criteria


o Draw a 2x2 matrix
o Place each criteria along either the X or Y axis
of the matrix
o For each included strategic initiative, place a
market in the quadrant that best describes
satisfied the two selection criteria
o Review the results

205
Example: 2x2 Matrix Framework


Maintain Maintain or improve

P Low impact High impact
 E
C R High performance High performance
U F
R O
R R
E M
N A Monitor Highest Priority
T N Low impact High impact
 C
Low Performance Low performance
 E

IMPACT

206
Paired Comparison Framework

Paired Comparison Framework Steps:


•List the options you will compare and assign a letter
to each option
•Mark the option as row and column headings on a
worksheet
•Block out the cells on the worksheet where you will
be comparing an option with itself (e.g., A and A), and
cells where duplicate comparisons exist (e.g., A and C
and A)
•For each of the non- blocked cells, compare the
option in the row with the option in the column, and
decide which of the two options is more important

207
• Write down the letter of the more important option in
the cell, and score the difference in importance
from 0 (no difference) to 3 (major difference
• Consolidate the results by adding up the total of all
the values for each of the options (e.g., A-6, B-11,
C-8, etc.)
• The option with the highest score is the

208
e.g.: New Initiatives (the “A List”) Allow Us to Test
Strategy Hypothesis
Implement a project management model
Identify key management systems; (prioritize) Complete business needs assessment and
determine business rules and protocol (example: CRM; fin; HR) Determine financial
resources needs and acquisition strategy.
Identify internal collaborative opportunities for Center Boards
Create ”cradle to give” training system that supports cross-functional departments
Establish stronger advocacy in Washington, to improve coordination among agencies and
departments
Institutionalize the new strategic planning/management system, including the development
of standardized organizational strategic planning procedures, and the assignment of
system oversight and management responsibilities to a program manager/management
team
Establish priority process for allocation of Brach assistance, Association Partners, United
Way and other funds
Develop information products that support the core message and better inform internal and
external stakeholders about our programs and services
Develop an organizational orientation program using a cross- functional team

209
210

 M
 A
 N
 A
 G
 E
 m
 E
N
•Project Definitions Table

 T
 •Project Management Process
 P •Project Reporting
 R
 O
 J
 E
 C
 T
 S

211
Choose and Prioritize Strategic Initiatives:
Project Definitions Table
• Complete this worksheet to document the tracking of strategic projects
that will help us achieve our strategies and objective. Sort initiatives
into “A” list, and Other

Sponsor Manager stakeholde Objectives Deliverables Completion Cost Key Risks


rs covered ROl Date Assumptions
constraints

“A” list project

Other
projects

212
Management is Needed to Ensure Project Success


• Project Management is about ensuring the successful
management of resources to deliver your product or
service on time, to specification and within budget
• Project Management is about managing risk
• An Initiative Manager should be assigned early
• Project management involves five overlapping
phases: planning, initiating, executing, controlling,
and closing

213
Initiative Manager Responsibilities

The initiative Manager is responsible for:


• Schedule
• Resorting
• Anticipated deliverables
• Risk management
• Communications management
The Initiative Manager Should also:

• Monitor initiative progress to ensure focus


• Celebrate success
• Look for early wins

214
215
216
Summary Step 6 -Strategic Initiatives

Key Elements:
•Identify potential new strategic initiatives
•Develop selection criteria for strategic initiatives
•Choose ranking framework
•Prioritize and identify the “A List”
•Turn initiatives into risk-managed projects by completing the strategic initiative
•Definition Table

Products Developed In Step Six


•List of possible initiatives
•Selection criteria
•Ranking criteria
•Prioritized list of strategic initiatives
•A List of highest priority strategic initiatives
•Project management instituted on highest priority strategic initiatives:
•Ownership, scope, schedule, and deliverables expected
217

 P
 E
 R B
 F U
 O D
 R G
 M E Align performance expectations to budgets
 A T
 N I
 C N
 E G

218
Align the Scorecard to Budget:
Building A Performance-Based Budget

Objective class budgeting Performance-based budgeting

All budgeting starts with object classes Establish accountability between points
Object classes start at the smallest unit “A” and “B”
level Connect resource with goals

Object classes reflect distinctive Allow cost-effectiveness calculations

terminology Allows comparisons among optional

Objective classes fall into general approaches to similar goals


typologies

219
220
Module7
Step Seven Automation

• Learning Objectives:- At the end of this training the


trainees will be able to,
o Analyze software options
o Identify enterprise IT requirements
o Choose software
o Develop data visualization criteria for users
o Begin collecting and reporting Performance
information
o
o
o 221
Why Is Automation Important?

• Performance needs to be made visual to be useful


• Automation adds discipline to the process of strategic
planning and management
• Software automates the collection, reporting, and
visualization of performance data
• Performance measurement data must be transformed
into useful information and business intelligence
• Allows us to present performance information to the
people who need it in a visually appealing format
• Helps people use performance information to better
inform decision making

222
223
224
Three Tasks In Step Seven

• Understand the organization's enterprise architecture and data


requirements (No surprises!)
• Information technology “backbite” and future
directions
• Operating systems and software requirements
• Understand software options, including features and limitations
(know your system options!)
• Capabilities
• Cost of purchase and ownership
• Understand user needs for information (know your users!)
• Charts, briefing books, reports, other
• Analysis
• Visualization

225
Software Requirements

• Use tested technology; elegant in features and ease


of use, but not extravagant
• Links to existing legacy and desktop databases, and
other software
• Highly flexible to accommodate changes in
measurement environment (measures will continue
to evolve)
• Accommodates changing information technology
systems environment
• Easy integration into work environment

226
• Displays not just numbers but stories (description;
interpretation; actions planned, etc..) about
measures, the business, and performance
• Provides analysis and “what if” capabilities, to allow
analysis of trends forecasts multiple level drill-
downs into underlying data
• Supports exception reporting

227
Analyze Organization Automation Requirements

• Automating data collection and reporting for the


scorecard requires an assessment of the data that
needs to be collected, the performance
information that needs to be communicated, and
the information technology options that will be
used to process the data and transform it into
information. Use the checklist below to organize
the information you need for the computerization
step.

228
Data Considerations
•Data currently collected,
•Number of data elements location,
•Owners Data quality (validity verification)
•Current software being used
(e.g. spreadsheet, database, word processing,
data Warehouse)
•Update frequency storage

229
Information Considerations

o Identify who needs what


o Performance information
o Reporting frequency
o Types and numbers of reports
o Charts, briefing books
o Presentations needed, by user
o Information delivery requirements
o Analysis capability needed
o Number & location of users
o Formatting
o Composite indexing and
o Performance measure weighting
o Analysis of soft ware options

230
Technology considerations

o Enterprise architecture-now and


o Future training maintenance
o Programming support
o Needed impact of balanced
o Scorecard initiative on
o Other enterprise systems (project
o Management, ISO, lean six sigma,
o HR performance, budget system

231
Performance Information software Options
Software Solution
Enterprise Space
Requirements •Enterprise-wide data
•Composite measures
Business •Many data/reporting
Performance Information Intelligence locations
Collection & Reporting System •Advanced executive
reporting
•Web publishing
•Numerous measures •Ad-hoc queries •Advanced analysis
•Advanced charting (OLAP) •Dynamic links to legacy
Nine •Advanced
•Multiple locations systems
Steps TM analysis
•Web publishing
Databas •Predictive Data Warehouse
•Analysis &
e analytics
commentary
Toolkit •Advanced
graphics
•Supports scorecard
development
•Information portal for Toolkit
business
•Few•Tied to existing software
measures COTS
•Simple Database
reports
•Small office
• 232
Time and Cost to Implement
Software Solution Comparisons

Software Pros Cons

Scorecard Development & Access database documents Documentation tool only Limited
Documentation (BSCI workshop deliverables performance information reporting
Database Toolkit) functionality

Commercial-Off-The-Shelf Inexpensive first-cost software Customization greatly increases cost


Desktop Applications No support, or users group

Performance information Professional, robust data Primarily designed for performance


collection & Reporting collection, analysis, reporting, information processing, not
and visualization budgeting, forecasting, or project
management

Business intelligence Robust management, More expensive, some customization


measurement, forecasting, to get meaningful output reporting
budgeting tools

Toolkits Link other software (e.g., Software links developed Limits


Microsoft) together in an imposed by underlying software
information system

Data Warehouse Strongest data engine “Slice Most expensive option Requires
and dice” Data marts dedicated IT staff Limited “Out of the
box” reporting capability, requiring
custom development 233
Major BSC Software Suppliers

•Balanced Scorecard Institute Performance Toolkit TM


•Balanced Scorecard Institute Quick Score TM (Spider Strategies
CMS)
•Performance Soft views (Actuate)
•Cognos (IBM)
•CorVu (Rocket software)
•SAS
•Hyperion (Oracle)
•Microsoft
•Oracle
•Pilot software
•Business objects (SAP)
•QPR
•SAP
•Comparator

234
Summary Step-7 Automation

Key Elements:
•Define enterprise data collection and reporting requirements
•Evaluate information Software system options and choose one
•Automate the collection and reporting of quantitative data
•Transform data into relevant information
•Communicate performance information to decision makers visually
• Use information to build knowledge and better inform decision
making

Products Developed In Step Seven:


•Data characteristics and collection issues resolved
•Data transformation into useful information
•Software systems evaluated and one system selected
•Decision makers’ information needs defined
•Reporting requirements defined
•Performance information delivered to users in a timely manner
•Knowledge management plan developed

235
Module 8
Step Eight: Cascading

Learning Objectives:
•Align the organization
•Develop scorecards for business and support
units,
and for teams and individuals
•Develop performance measures and
initiatives
for cascaded scorecards
•Recognize and incentivize desired behavior
changes

236
237
What is Cascading?

•Translate high- level strategy into aligned lower-level


Objectives and Measures,
•Create alignment around the organization’s shared vision,
to make Strategy actionable to departments, and down to
individuals,
•Develop department scorecards, aligned to corporate
vision
and strategy
•Develop individual scorecards, aligned to departments
and support units Objectives to tie rewards, recognition, and
incentives to results

238
Organization Alignment Comes From Scorecard
Cascading


Tier 2: Strategic Unit Scorecards

•Purpose Statement
 Tier 1: Organization-wide scorecard
•Department Strategic Objectives
•Strategy Maps (Optional)
•Mission •Unit Performance Measures &
•Vision Target
•Core Values Initiatives
•Customer Focus
•Strategic Theme (Focus Areas)
•Strategic Objectives
•Performance Measures &Targets
•Initiatives Tier 3: Individual Scorecards

•Personal Goals (SMART Goals)


•Accomplishments
•Performance Measures

239
Three Tasks In Step Eight

• Develop Cascading Options


o Function
o Department
o Location
• Organize Cascading Teams
o Business units
o Support units
o Training
o Facilitated workshops
• Build cascaded scorecards
o Tier 2
o Tier 3
240
241
242
C
A
S O
C P
A T
D I
I O • Decide which cascading option to use
N N
G S

243
Cascading Options:
Cascade By Function, Organizations Structure, Or
Location


Vision: Become A Customer- Focused Organization

 Function Department Location


 Tier one

 Tier Two

 Tier Three

244
245
Cascading Best Practices

•Involve cross-functional teams, to build their own objectives and


build employee buy-in

•first align objective, then develop performance measures

•Stay strategic as long as possible (cascade off corporate objectives)

•Build in rewards and recognition as you go along

•Showcase the use and usefulness of performance information


Celebrate Success: Use the opportunity to “Change hearts and


minds”

246
C
A
S
C
T A
I D
E I
R N
G • Organizing teams
•Develop objectives, measures, and initiatives
2 S
T
E
P
S

247
Cascading Team Responsibilities

•Facilitate workshops are used to develop objectives



§Each Business Unit selects a team to help identify Tier 2
Objectives, Performance Measures, and initiatives

§Each team should have a Team Leader, and Recorder. The


Recorder captures the key results of the Team’s effort
at the end of the session.

•The Business Units and Support Units will meet to identify


objectives that support corporate-wide strategy map objectives

•Unit teams meet for an additional day or two to identify


Performance
Measures and initiatives for their unique objectives

248
Cascading Action Steps- Tier 2

•Choose a cascading scheme (e.g., by department, by region, by


business function, by product/service line)
•Choose up to seven business/support units to cascade
•Write a purpose Statement for each strategic business/support
unit
•Using the purpose statement and the Tier 1 corporate strategy
map,
review strategic objective commentary
•For each strategic objective on the corporate map, ask “Does my
unit support this objective significantly and strongly?
•Then write a unit objective for how the unit supports the chosen
corporate objective (S) Note: Corporate objectives can have zero,
one, or more supporting unit objectives.

249
Example: Cascading Strategic Intent
To A Tire 2 Business Unit

Aligned Balanced
Scorecard objectives:
Tier 1
Increase PM1: Corporate
Sales Sales

Tier 2
Increase PM1: Divisional
Sales Sales

Tier 1= Enterprise –wide PMx = Performance Measure No. x


Tier 2= Business and Support Units
250
Example: Cascading Strategic Intent
To A Tire 2 Support Unit
Aligned Balanced
Scorecard objectives:

Improve Tier 1
Ease of
PM1:% of processes
Customer
Access Automated

Improve Improve My Tier 2


Information Department’s
On Available Ability To
Services Assist PM1: % of on-
Customers time
Reports to
PM1:% of information internal
Available electronically Customers

Tier 1= Enterprise –wide PMx = Performance Measure No. x


Tier 2= Business and Support Units
251
252
253
Cascading Action Steps – Tier 3

•Start with the strategic objectives developed at Tier 2


•Tier Three: After the Tier 2 unit objectives have been developed, ask
How do I support my unit’s (e.g., department, division) objectives?”
•If employees have personal development plans in place, look for
one
or more critical success factors (e.g., strategic personal goals) that
align with the unit’s strategic objective (s)
•If no personal development plan is in place, write a strategic
personal
goal for how each person supports the unit’s strategic objectives (s)
Note: Each employee should have at least one personal goal that
supports one or more unit objective,. At the individual level, these
personal goals may be called “personal objectives”, critical success
factor”, “personal objectives”, “MBO’s”, or something similar
•Develop a performance measure and initiative for each personal
goal
254
Change Management and Cascading

Cascading includes all the elements of change


management:
•Clear, shared Vision
•Communicate the business case
•Leadership
•Involvement of all employees
•Interactive communication
•Training
•organization restructuring
•Rewards and recognition (Behaviors &
Results)

255
Leading Sustainable Change- Key Lessons

Change is enabled when employees are involved and equipped,


and they see visible commitment to the change!

•Consistency in leadership commitment is A CRITICAL FACTOR


•Employees must understand the WHY and the HOW (the business case)
•Infrastructure is not simply an expense- it’s a critical investment in
project credibility
•Some rewards and recognition tied to change-related performance puts
“skin in the game”, but too much creates job fear and the likelihood of
passive sabotage.
•Involve people! Two-way communications is the fastest way to kick off a
change- it builds trust, leverages relationships, and helps identify potential
problems. Don’t substitute Mass Exposure for this!
•Ensure that employees have the training they need to implement the change
•The combinations of these areas of change management matter. Use
them together to help people see the value and to provide support.

256
Recognition and Rewards

•Recognition and rewards should fit the person and what’s important
to him/her …i.e. “they should fit like a glove.. and not like a mitten”
oA first step- determine “what is of value to whom?”
oRecognition is first- as it should be more frequent, is “no-cost”,
o and generally means more (when done sincerely by a
respected
person)
•Most people simply want to know that their ideas are valued, their
work is valued, and they are valued
•Money is appreciated as a reward, but usually has a very short-term
(reinforcement) impact
•Informally interview people to find out what recognition and reward
approaches really matter; make sure you probe beyond the obvious
•Whatever methods you use, make sure that recognition and rewards
are rewards are timely, sincere, meaningful, and tied to the
behaviors/results you want

257
The Internal Change Journey

Change Management deals with the INTERNAL side of change


“ Changing Hearts and Minds”

•Commitment: Stakeholder embraces new corporate


Culture, values and process… It’s the way we do business
around here!
•Acceptance: Stakeholder demonstrates visible actions
toward implementing the change, and begins to consistently
use the new systems and processes
•Understanding: Stakeholder more fully comprehends the
nature, Scope, and intent of change
•Awareness: Stakeholder has basic knowledge but is unclear
Of scope, impact, and rationale for change

258
Summary Step 8 – Cascading

Kay Elements:
•Communicate scorecard plans throughout the organization
•Align organizational components
•Build aligned scorecards for strategic business and support units
(Tier 2)
•Build aligned scorecards for teams and/or individuals (Tier 3)
•Develop performance incentives, rewards, and recognition plans

Products Developed In Step Eight:


•Buy-in and commitment expanded
•Organizational alignment continued
•Scorecards for business and support
units, and teams and individuals developed
•Incentives/rewards program implemented
•necessary organization structural issues discussed

259
Module 9
Step Nine: Evaluation

Learning objectives:
•Assess why the organization achieved the results it did
•Make needed corrections to strategy, objectives,
measures
and initiatives
•Understand supporting communications, change
management, and leadership actions

260
261
What is Evaluation?

• Review of organization progress toward planned


 strategic results
• Review of the balanced scorecard strategic planning
and management system to determine where the
system can be improved

 Evaluation results lead to modifications in


organization planning assumptions, strategy,
objectives, performance measures and targets,
strategic initiatives, and budget

262
Three Tasks in Step Nine
• Develop an evaluation Plan
• What is to be evaluated?
• By whom?
• Evaluation results reported to who?
• Determine schedule and scope
• Analyze strategic results against planned results
• Review background assumptions
• Evaluate performance results against targets
• Evaluate initiative results against expectations
• Make any necessary changes to strategic elements and
rebalance the scorecard system
• Revise vision, mission, values, customer value proposition
• Revise strategic themes
• Revise strategic objectives and the strategy map
• Revise performance measures and targets
• Identify new strategic initiatives
• 263

Evaluation Planning
• Identify the purpose of the evaluation effort
• Review program, service, product, and project results
• Refine strategies based on review of strategic
assumptions
• Rebalance scorecard system
• Identify who the evaluation results are designed to serve
• Leaders and managers, who need to re-evaluate
strategic direction and focus
• Key stakeholders who need to be informed on the
organization’s progress
• Identify the key questions
• Why did we get the results we did?
• How do people in the organization feel about the
relevance and timeliness of performance information?
• How do people in the organization feel about the
relevance and timeliness of performance information?
• Where can the use and usefulness of information be
improved?
• What objectives, strategy map linkages, performance
measures and targets, and strategic initiatives be
modified, added, or deleted?
• Lay out the schedule and evaluation team assignments 264
What should Be Evaluated?

• Program, product, service, and project results-did we


get the results we expected?
• Leadership-are leaders (at all levels) engaged?
• Strategic Environment- has the “strategic
environment” (technology, economic situation,
political) changed? Has stakeholder influence
changed?
• Organization capacity- do we have an learning
organization?
• Alignment- is our organization aligned around out
comes and accomplishments?

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• Performance measures and Targets- are the
measures effective: are they being used to deliver
actionable business intelligence, and are targets
realistic?
• Strategic initiatives- did we get the results we wanted
from our initiatives?
• Workflow and processes-did we get the results we
wanted from our initiatives?
• Workflow and Processes- are they efficient, and are
customer-facing processes working as planned?
Are communications interactive (Two-way)/
• Employee Engagement-are we getting the behavior
changes needed?
• Budget influencing-are strategies “budget
influencing”?

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Evaluation Starts With Desired Results

• Business Results-Typical
• Improve shareholder value
• Improve profitability
• Improve earnings
• Improve governance
• Improve community responsibility
• Federal government Reform Goals-Office of
Management and Budget
• Improve effectiveness and public
accountability
• Improve oversight decision making and
visioning
• Improve internal management
• Hold agencies accountable for achieving
goals
• Initiate agency-specific reforms to make a267
dramatic and material difference in program
Example: Government Program Assessment Rating
Tool (PART)

• An evidence-based assessment to determine how successful agency


programs are
• Identifies strengths and weakness of programs, and links program
actions to intended outcomes
• 25 questions in four areas:
o Program Purpose and legislative design (20%)
o Strategic Planning (10%0
o Program results and Accountability (50%)
q Yes/No answers with rigorous evidence
q Based on information in strategic plans, performance and
accountability reports, and other budget and performance
documents
q Informs actions to improve performance and budget
recommendations
q Agencies are held accountable for making progress on
recommendations
q Published for public review as part of the president’s budget
submission to Congress

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Evaluate performance Management progress (Effectiveness)

Effectiveness
(1=Low.5=High)

• Evaluation components
• Communications effectiveness
• Critical performance issues identified and being worked
• Performance measure and target setting effectiveness
• Strategy is actionable and effective
• Leadership and other employee engagement and buy-in
• Objectives understood and working
• Progress on Strategic initiatives
• Budget influencing is evident
• Proactive performance management corporate culture working
• Identifying and solving “red” problems
• Performance information linked to organization capacity
learning
• Useful business intelligence going to the right people on time
• Process improvements realized
• Incentive/rewards program effectiveness
• Customer satisfaction scores high/improving

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Summary Step 9- Evaluation

 Key elements:
• Evaluate strategic results achieved
• Analyze why organization results were what they were
• Review organization strategic elements
• Update any strategic elements to reflect learning
• Modify strategy, strategic Objectives, Strategy Map. Performance Measures,
and Strategic initiatives as necessary
• Make other organization changes (restructuring) as needed

 Products Developed in step Nine;


• Feedback on what is working and what needs to be changed
• Formal plans for changes
• New strategic initiatives identified and assigned project status
• Continued buy-in developed
• Continued success celebration

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