Executing Strategy with the Balanced Scorecard

Transcription

1 Executing Strategy with the Balanced Scorecard Paul Niven, President, Senalosa Group National Council LIVE Webinar January 22, 2009

2 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 2

3 Presentation Download this presentation at douts

4 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,

5 Balanced Scorecard Overview 5

6 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??? 6

7 Three Challenges Rise of Intangible Assets Over-reliance on Financial Measures Prominence of the Balanced Scorecard Difficulty Executing Strategy 7

8 The Strategy Story Only 10% of organizations execute their strategy Barriers to Strategy Execution Vision Barrier Only 5% of the workforce understands the strategy People Barrier Only 25% of managers have incentives linked to strategy Management Barrier 85% of executive teams spend less than one hour per month discussing strategy Resource Barrier 60% of organizations don t link budgets to strategy Chart adapted from material developed by Robert S. Kaplan and David P. Norton 8

9 A Fifth Barrier There is no universally accepted way to describe and communicate strategy For strategy to be executed, it must be clearly described 9

10 Balanced Scorecard Financial What do our financial stakeholders expect or demand? Customer Who are our target customers, what are their expectations, and what is our value proposition in serving them? Vision & Strategy Internal Process At what business processes must we excel to drive value for customers? How do we align our intangible assets to improve our ability to support our strategy? Employee Learning & Growth 10

11 Public & Nonprofit Balanced Scorecard Model Mission Customer Who do we define as our customer? How do we create value for our customer? Financial How do we add value for customers while controlling costs? Vision and Strategy Internal Process To satisfy customers while meeting budgetary constraints, at what business processes must we excel? How do we align our intangible assets - people, systems, and culture to execute our strategy? Employee Learning & Growth 11

12 "To achieve our vision, how should we appear to our customers?" Financial Customer Objectives Measures Targets Initiatives "To succeed financially, how should we appear to our shareholders?" "To achieve our vision, howwill we sustain our ability to change and improve?" Customer Financial Objectives Measures Targets Initiatives Vision and Strategy Learning and Growth Objectives Measures Targets Initiatives Customer Perspective "To satisfy our shareholders and customers, what business processes must we excel at?" Internal Business Process Objectives Measures Targets Initiatives 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 12

13 Internal Process Perspective "To achieve our vision, how should we appear to our customers?" Financial Customer Objectives Measures Targets Initiatives "To succeed financially, how should we appear to our shareholders?" "To achieve our vision, howwill we sustain our ability to change and improve?" Customer Financial Objectives Measures Targets Initiatives Vision and Strategy Learning and Growth Objectives Measures Targets Initiatives "To satisfy our shareholders and customers, what business processes must we excel at?" Internal Business Process Objectives Measures Targets Initiatives Key processes we must excel at to drive value for customers Also focus on customer value proposition Normally contains the largest number of measures

14 Financial Perspective "To achieve our vision, how should we appear to our customers?" Financial Customer Objectives Measures Targets Initiatives "To succeed financially, how should we appear to our shareholders?" "To achieve our vision, howwill we sustain our ability to change and improve?" Customer Financial Objectives Measures Targets Initiatives Vision and Strategy Learning and Growth Objectives Measures Targets Initiatives "To satisfy our shareholders and customers, what business processes must we excel at?" Internal Business Process Objectives Measures Targets Initiatives No BSC is complete without financial measures Represent enablers or constraints Must balance effectiveness with efficiency

15 Employee Learning & Growth Perspective Often overlooked "To achieve our vision, how should we appear to our customers?" Financial Customer Objectives Measures Targets Initiatives "To succeed financially, how should we appear to our shareholders?" "To achieve our vision, howwill we sustain our ability to change and improve?" Customer Financial Objectives Measures Targets Initiatives Vision and Strategy Learning and Growth Objectives Measures Targets Initiatives "To satisfy our shareholders and customers, what business processes must we excel at?" Internal Business Process Objectives Measures Targets Initiatives Represent the enablers of the other three perspectives Soft measures can drive hard results Three areas of capital

16 Strategy Maps 16

17 Maps Get Us From A to B Sydney Truro Antigonish Halifax 17

18 Strategy is Also a New Destination Landmark 1 Landmark 2 Successfully Executed Strategy Formation of a Strategy 18

19 Strategy Maps A one-page, graphical representation of what you must do well to execute your strategy 19

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21 Food for the Hungry (U.S.) 21

22 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 22

23 To Learn More Please visit my website at Or, read more in any of my three books 23

24 Case Study Sharon Raggio, CEO Colorado West Regional Mental Health Center

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26 New markets/ contracts Reduced unit cost Customer satisfaction Improved access Clinical outcomes UM Increase productivity Client participation Define recovery Train staff Train clients and community

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28 Monthly Run Charts (Corporate wide totals)

29 More Run Charts

30 Single Site Spreadsheet

31 Single Site Charts

32 Case Study Jeff Walter CEO, Rushford Center

33 Rushford Balanced Scorecard Strategy Map Learning and Growth Push technology capabilities Ensure effective, diverse management Build a Strong Leadership Team Drive continuous improvement throughout our organization Build a strong infrastructur e for growth Financial Internal Operations Constituent Social Impact Grow and diversify revenue base Build our teams of high caliber, committed clinicians Provide a seamless customerfocused client experience Rushford consumers prepared for healthy living in recovery Rushford &partners produce impact by promoting awareness, prevention, treatment and recovery Ensure fiscal strength through sound financial management & control of cost growth Provide clinicians with evidencebased & best practice tools Build partnerships to promote integrated health & support services within HHCC & outside Rushford &partners produce impact by promoting awareness, prevention, treatment and recovery Promote healthier communities

34 Market Identity and Penetration How will we stay current in addressing community needs? 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

35 Service Delivery How will we ensure we provide the right service in the right setting to meet consumer 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

36 Quality and Service Excellence How will we ensure an effective infrastructure is in place to drive clinical and service excellence? FY 09 Initiatives Measures Target Status Trend Internal Operations Provide a seamless customer-focused client experience Deliver excellent customer service 6. Customer Service Training program at Silver St. (AH/OD) External and Internal customer surveys 4.0 ratings Q4 Internal Operations Build our teams of high caliber, committed clinicians Provide clinicians with evidence-based & best practice tools 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 Drive continuous improvement throughout our organization Provide a seamless customer-focused client experience 9. Six Sigma Coord. Of Care Project (LD) Service mapping 4/1/09

37 People How will we ensure that we have the right people with the right knowledge and skills to drive our continuous quality improvement? FY 09 Initiatives Measures Target Status Trend Internal Operations Build our teams of high caliber, committed clinicians Be recognized as a great place to work 10. Improved hiring/on-boarding process (WH) New hire survey 4.0 rating Q4 11. Licensed nurse/clinician recruitment/retention strategy (WH/KU) 12. Comprehensive communication/ recognition program Learning & Growth Reduced agency staff usage Employee focus survey Build a strong infrastructure for growth <15% Q4 4.0 rating Q4 13. Establish & assess clinical caseload standards (KU) Assessment and action plan 6/30/09 Learning & Growth Build a strong leadership team Ensure effective, diverse management 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

38 Financial Strength What are the financial objectives that will drive all other aspects of our strategy? Financial Perspective Grow and diversify revenue base Ensure fiscal strength through sound financial management & control of cost growth Improving Operating Margin FY 09 Initiatives Measures Target Status Trend 15.Improved revenue cycle and efficiency (AC) -Reduced bad debt expense -Reduced A/R days 6/30/09: 6.0% 75 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, Reduce cost through e-automation (AC) Scanning project & Time/Attendance program 6/30/09

39 Thank You Thank You for attending Executing Strategy with the Balanced Scorecard Download the presentation at douts A recording of today s webinar will be available at the same url in 48 hours.

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