Post on 18-Mar-2018
Executing Strategy with the Balanced Scorecard
Paul Niven, President, Senalosa Group
National Council LIVE WebinarJanuary 22, 2009
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Agenda
• Introduction to Paul
• Factors Leading to the Prominence of the Balanced Scorecard
• Balanced Scorecard Fundamentals
• Adapting the Balanced Scorecard for the Nonprofit Sector
• Strategy Maps
• Case Study
• Questions and Answers
Presentation
Download this presentation at www.thenationalcouncil.org/cs/recordings/handouts
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Paul Niven and the Balanced Scorecard• BSC Practitioner first, then consultant, and writer
• Led a BSC implementation with large firm in mid-90s (an early inductee into the BSC Hall of Fame)
• Have consulted with Bearing Point (Chicago) and CSC (San Diego)
• Formed The Senalosa Group in 2001
• Have written 3 books and many articles on the subject of Balanced Scorecard
• Speak at conferences and seminars around the world
• Work with clients in many different sectors
Translated into 15 languages,
Second edition released April 2008
Released April, 2005
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Balanced Scorecard Overview
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The Changing Landscape of Performance Management
• 80% of respondents reported making changes in their PM system during the last 3 years. For 33% the change was described as a “major overhaul” More than 50% of respondents indicated their company is currently changing its PM system. (From Strategic Finance Magazine)
• More than 50% of the Fortune 1000 have turned to the Balanced Scorecard. (Bain & Company study)
• Hackett reported in their 2002 Benchmarking study that 96% of the 2000 global companies surveyed either were using a BSC or planned to implement it
• In the public sector, close to 60% of respondents agree or strongly agree that using performance measures has increased efficiency. (GASB study)
The question is why???
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Three Challenges
Prominence of the Balanced
Scorecard
Difficulty Executing Strategy
Rise of Intangible
Assets
Over-reliance on Financial Measures
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Only 10% of organizations execute their
strategy
Barriers to Strategy Execution
Only 5% of the workforce
understands the strategy
Vision Barrier
Only 25% of managers have
incentives linked to strategy
People Barrier85% of executive teams spend less than one hour per month discussing
strategy
Management Barrier
60% of organizations don’t
link budgets to strategy
Resource Barrier
Chart adapted from material developed by Robert S. Kaplan and David P. Norton
The Strategy Story
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A Fifth Barrier
• There is no universally accepted way to describe and communicate strategy
• For strategy to be executed, it must be clearly described
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Balanced Scorecard
What do our financial stakeholders expect or
demand?
How do we align our intangible assets to improve our ability to
support our strategy?
Vision & Strategy
Financial
Employee Learning & Growth
At what business processes must we excel to drive value for customers?
Internal Process
Who are our target customers, what are their expectations, and what is our value proposition in
serving them?
Customer
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Who do we define as our customer? How do we create
value for our customer?
How do we align our intangible assets - people, systems, and
culture to execute our strategy?
Vision and Strategy
Customer
Employee Learning & Growth
Mission
To satisfy customers while meeting budgetary constraints, at what
business processes must we excel?
Internal Process
How do we add value for customers while controlling
costs?
Financial
Public & Nonprofit Balanced Scorecard Model
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Customer Perspective
CustomerObjectives"To achieve our
vision, how should we appear to our customers?"
Measures Targets Initiatives
Internal Business ProcessObjectives"To satisfy our
shareholders and customers, what business processes must we excel at?"
Measures Targets Initiatives
FinancialObjectives"To succeed
financially, how should we appear to our shareholders?"
Measures Targets Initiatives
Learning and GrowthObjectives"To achieve our
vision, how will we sustain our ability to change and improve?"
Measures Targets Initiatives
Visionand
Strategy
• Should answer three questions:
• Who are our customers?
• What do customers demand?
• What is our value proposition in serving them?
• Operational Excellence
• Product Leadership
• Customer Intimacy
• System Lock In
Customer
Financial
Internal Process Perspective
CustomerObjectives"To achieve our
vision, how should we appear to our customers?"
Measures Targets Initiatives
Internal Business ProcessObjectives"To satisfy our
shareholders and customers, what business processes must we excel at?"
Measures Targets Initiatives
FinancialObjectives"To succeed
financially, how should we appear to our shareholders?"
Measures Targets Initiatives
Learning and GrowthObjectives"To achieve our
vision, how will we sustain our ability to change and improve?"
Measures Targets Initiatives
Visionand
Strategy
• Key processes we must excel at to drive value for customers
• Also focus on customer value proposition
• Normally contains the largest number of measures
Customer
Financial
Financial Perspective
CustomerObjectives"To achieve our
vision, how should we appear to our customers?"
Measures Targets Initiatives
Internal Business ProcessObjectives"To satisfy our
shareholders and customers, what business processes must we excel at?"
Measures Targets Initiatives
FinancialObjectives"To succeed
financially, how should we appear to our shareholders?"
Measures Targets Initiatives
Learning and GrowthObjectives"To achieve our
vision, how will we sustain our ability to change and improve?"
Measures Targets Initiatives
Visionand
Strategy
• No BSC is complete without financial measures
• Represent enablers or constraints
• Must balance effectiveness with efficiency
Customer
Financial
Employee Learning & Growth Perspective
CustomerObjectives"To achieve our
vision, how should we appear to our customers?"
Measures Targets Initiatives
Internal Business ProcessObjectives"To satisfy our
shareholders and customers, what business processes must we excel at?"
Measures Targets Initiatives
FinancialObjectives"To succeed
financially, how should we appear to our shareholders?"
Measures Targets Initiatives
Learning and GrowthObjectives"To achieve our
vision, how will we sustain our ability to change and improve?"
Measures Targets Initiatives
Visionand
Strategy
• Often overlooked
• Represent the “enablers” of the other three perspectives
• “Soft” measures can drive “hard” results
• Three areas of ‘capital’
Customer
Financial
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Strategy Maps
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Halifax
Truro
Sydney
Antigonish
Maps Get Us From “A” to “B”
Halifax
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Formation of a Strategy
Landmark 1
Successfully Executed Strategy
Landmark 2
Strategy is Also a New Destination
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Strategy Maps
A one-page, graphical representation of what you must do well to execute your strategy
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Food for the Hungry (U.S.)
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Strategy Maps
• Original Balanced Scorecard model didn’t include Strategy Maps
• Early adopters began prefacing measure discussions with objectives, and began linking them together
• A Strategy Map should “tell the story of your strategy”
• POWERFUL way to communicate what you need to do well to succeed
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To Learn More…• Please visit my website at www.senalosa.com
• Or, read more in any of my three books…
Case Study
Sharon Raggio, CEOColorado West Regional Mental Health Center
UM
Train staffDefine
recovery
Train clients and
community
Clientparticipation
Improved access Clinical
outcomes
Reduced unit cost
New markets/contracts
Customersatisfaction
Increaseproductivity
Monthly Run Charts (Corporate wide totals)
More Run Charts
Single Site Spreadsheet
Single Site Charts
Case Study
Jeff WalterCEO, Rushford Center
Rushford Balanced Scorecard Strategy Map
Build a Strong
Leadership Team
Build a strong
infrastructure for growth
Learning and GrowthDrive
continuous improvement
throughout our organization
Ensure effective, diverse
management
Push technology capabilities
Grow and diversify revenue
base
Ensure fiscal strength through sound financial management & control of cost
growth
Build our teams of high
caliber, committed clinicians
Provide clinicians with
evidence-based & best practice tools
Provide a seamless customer-
focused client experience
Build partnerships to promote integrated health & support
serviceswithin HHCC & outside
Rushford consumers prepared for healthy
living in recovery
Rushford &partners produce impact by
promoting awareness, prevention, treatment and
recovery
Rushford &partners produce impact by
promoting awareness, prevention, treatment
and recovery
Promote healthier communities
Financial Internal Operations Constituent Social Impact
Financial Perspective
Grow and diversify revenue base
Ensure fiscal strength through sound financial management
& control of cost growth
FY 09 Initiatives Measures Target Status Trend
Grow market share in profitable service lines
1. Expand commercial market penetration in addiction programs (AH)
Implement Referral Management Program 2/1/09
10 new referrals
Market Identity and PenetrationHow will we stay current in addressing community needs?
Constituent Rushford Consumers prepared for healthy living in
recovery
Rushford partners produce impact by promoting
awareness, prevention, treatment and recovery
FY 09 Initiatives Measures Target Status Trend
Provide family-focused recovery services
2. Assessment of and plan for C & A service line (MB) Plan completed 4/1/09
Improve health status of clients with SPMI
3. On-site pharmacy at Paddock (CA/KU) Pharmacy opened 4/1/09
Compete successfully in State procurement of existing services
4. Redesign Adult Crisis Services (LD)5. MH Voc RFP w/Kuhn (LD) Successful RFP Bids 6/30/09
Service DeliveryHow will we ensure we provide the right service in the right setting to meet consumer needs?
FY 09 Initiatives Measures Target Status Trend
Internal Operations
Deliver excellent customer service
6. Customer Service Training program at Silver St. (AH/OD)
External and Internal customer surveys
4.0 ratingsQ4
Internal Operations
Ensure excellent clinical quality
7. DMHAS co-occurring enhanced services designation (BS) Silver St. DMHAS designation 2/1/09
8. Trauma-informed services (BS) Assessment and Training Completed 6/30/09
Learning & Growth
Internal Operations
9. Six Sigma Coord. Of Care Project (LD) Service mapping 4/1/09
Quality and Service ExcellenceHow will we ensure an effective infrastructure is in place to drive clinical and service excellence?
Provide a seamless customer-focused client experience
Build our teams of high caliber, committed clinicians Provide clinicians with evidence-based & best practice tools
Drive continuous improvement throughout our organization
Provide a seamless customer-focused client experience
Internal Operations
Be recognized as a great place to work
10. Improved hiring/on-boarding process (WH) New hire survey 4.0 ratingQ4
11. Licensed nurse/clinician recruitment/retention strategy (WH/KU) Reduced agency staff usage <15%
Q4
12. Comprehensive communication/ recognition program Employee focus survey 4.0 rating
Q4
Learning & Growth
13. Establish & assess clinical caseload standards (KU) Assessment and action plan 6/30/09
Learning & Growth
Drive high performance/high quality culture
14. Leadership Development Program – Phase 1 (WH)
Phase 1 plan 10/1/08
Individual personal dev. plans 11/30/08
Individual assessment 6/30/09
FY 09 Initiatives Measures Target Status Trend
PeopleHow will we ensure that we have the right people with the right knowledge and skills to drive
our continuous quality improvement?
Build our teams of high caliber, committed clinicians
Build a strong infrastructure for growth
Build a strong leadership team Ensure effective, diverse management
Financial Perspective Grow and diversify revenue
base
Ensure fiscal strength through sound financial management
& control of cost growth
FY 09 Initiatives Measures Target Status Trend
Improving Operating Margin
15.Improved revenue cycle and efficiency (AC)
-Reduced bad debt expense6/30/09:
6.0%
-Reduced A/R days75 days
Ensure Long Term Financial Viability
16.Increase Cash on Hand (AC)Days of Cash on Hand
20 days
17.Improve commercial reimbursement (AC/) Higher rates; +$175,000
18.Reduce cost through e-automation (AC)Scanning project &
Time/Attendance program 6/30/09
Financial StrengthWhat are the financial objectives that will drive all other aspects of our strategy?
Thank You
Thank You for attending “Executing Strategy with the Balanced Scorecard”
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