Leading Strategic Change with Strategy Maps and Scorecards

Transcription

1 Leading Strategic Change with Strategy Maps and Scorecards Driving Healthcare Delivery May 2014 Robert S. (Bob) Kaplan Marvin Bower Professor of Leadership Development, Emeritus

2 Leaders, even when sailing in smooth waters, must anticipate the dangers that lie ahead 2

3 Executing Strategy is Leading Change Change before you have to Jack Welch 3

4 Types of Organizational Change Proactive: Creating Opportunities TQM, Lean Continuous Improvement Strategic Change Reactive: Responding to a Performance Gap Fire-Fighting, Problem- Solving Re- Engineering Incremental Punctuated / Discontinuous Source: Professor Michael Tushman, Harvard Business School 4

5 Identifying and communicating the need to change: The Change Agenda for the U.S. FBI after 9/11 attacks Law Enforcement Roles National Security and Law Enforcement Case-Driven Focus Threat-Driven Quantitative Evaluation (Case-based) Measurement of Success Qualitative Evaluation (Threat-based) Restrict; and share what you must Information Sharing Share; and restrict what you must Contributor Intelligence Community Full Partner Domestic Scope Global Past Tactical Senior Management Strategic Future Ineffective communications Internal Communications Effective, relevant and timely communications Many Operational FBIs silos Organization One FBI Integrated integrated team approach team approach Inefficient and Ineffective HR processes Human Capital Highly efficient and effective HR processes Agents / Support Culture Team of Professionals Antiquated and disparate IT systems Information Technology Mission-enhancing integrated IT systems; productivity tools Applying developed S&T Science & Technology Developing and applying optimal S&T Budget drives Strategy Resource Management Strategy drives Budget FOUO/UNCLASSIFIED 5

6 A Change Agenda for health care executives towards Value-Based Health Care Delivery from Departments and specialty units offer fragmented, disconnected health care Metrics of inputs and processes (e.g., compliance, safety, quality); no valid cost measurements Fee for service, capitation, global reimbursement Each hospital or practice offers a full line of clinical services Local Point solutions; isolated IT systems for individual practices, departments, and facilities Structure of Healthcare Delivery Measurement Reimbursement Hospitals and physician organizations Geographical scope Information technology to Integrated Practice Units Patient outcomes and costs by medical condition Bundled payments for complete cycles of care, by medical condition Integrated health care delivery system, including primary care in community based facilities and complex care offered in centralized tertiary facilities Geographically integrated health care delivery systems Integrated patient centered IT platform capable of tracking patient outcomes and information across multiple providers 6

7 A Strategic Change Agenda for a healthcare provider Present Characteristics Future Characteristics Stewardship Customer Processes Learning & Growth From Inconsistent management of revenue and expenses Patient experience varies due to inconsistencies in customer service Fragmented outreach to other hospitals and providers in the region Some new and some outdated facilities Pockets of excellence in the organization Clinically-driven organization Clinical and departmental silos Fragmented culture with allegiances at department/unit level Internally focused, reactive organization To Effectively manages revenue and expense streams to ensure consistent reinvestment in the organization s mission Patient-centric, customer-service driven organization; patients move easily through the system from registration to care to billing Well-coordinated, integrated network of relationships with hospitals and referring providers across the region Modern facilities, including modern inpatient facilities that promote patient privacy, comfort and healing Quality and excellence at the core of everything we do Right balance of clinical, research and education missions Multi-disciplinary clinical centers of excellence and integrated non-clinical support functions One unified culture with strong employee pride and a commitment to our heritage and tradition Externally focused, proactive organization 7

8 John Kotter on What prevents CEOs from Leading Change? Complacency! Complacency exists when people think what they are doing is right and they don't need to change. The most common cause of complacency is past success. In a world that is changing faster and faster all the time, complacency is cancer. Not bad. Not a problem. Cancer. Well-known and often still highly respected companies have the disease, and their futures aren t pretty. Many people, including capable CEOs, don't recognize this in their organizations and even more don't see it in themselves. Success and scale usually result in an inward focus, where people don't see the threats or opportunities that lie just outside. 8

9 But leadership alone is not sufficient. Businesses need management tools to implement the leader s change agenda. High LEADERSHIP Low Innovative and energetic but on the edge of chaos An enterprise that will soon go out of business unless it is a protected monopoly Satisfies todays customers and shareholders superbly well while also adapting to change to make the enterprise stronger in the future A solid money maker, if it has high market share, but also bureaucratic and controlling; unable to adapt well to a changing environment Low MANAGEMENT Source: Professor Michael Tushman, Harvard Business School High 9

10 Inspirational Leadership and Effective Management Must Work in Harmony, Together. Leadership creates the vision and sense of urgency. Leaders communicate, inspire and motivate. Leadership Management Management provides the rigor, alignment, and discipline required to implement the strategy and achieve the vision. 10

11 The Balanced Scorecard: The Central Component in a Strategy Execution Management System Private Sector Organizations Financial Perspective "If we succeed, how will we look to our shareholders? Customer Perspective "To achieve our vision, how must we look to our customers? Process Perspective "To satisfy our customers and shareholders, at which processes must we excel? Learning & Growth How do we align our intangible assets to improve critical processes? Non Profit and Public Sector Organizations Mission (Customer) Perspective How do we have a social impact with our citizens/constituents? Support Perspective How do we attract resources and authorization for our mission? Process To have a social impact and to attract resources and support, at which processes must we excel? Learning & Growth How do we align our intangible assets to improve critical processes? Financial How should we manage and allocate our resources for maximum social impact? 11

12 Jeollabuk-do Province, South Korea Population had decreased from 2.5 mm (1966) to 1.87 mm (2006) Last place in every index among the nation s 16 provincial governments Gross regional domestic product Income per capita Financial self sufficiency # of businesses and employed workers Reliance on raw materials extraction and agriculture DMTHOTH via Wikimedia Commons 12

13 New Governor, Wanjoo Kim, Takes Office in July 2006, Re-Elected in 2010 Adopts Balanced Scorecard as the Province s performance management system Strong opposition from labor union and some employees Challenges to develop quantifiable performance goals 13

14 Goals Achieved: 2007 to 2011 Population has begun to increase, reversing 45 years of decline 8.6% CAGR in GRDP; national average is 3.7% 1 st among 16 provinces in growth rate of exports Exports in 2011 = $12.8 bn Exports in 2006 = $ 5.4 bn Increase in percentage of GRDP from secondary (value added) industries from 23% to 29% 350% increase in number of businesses attracted (five year average) Number of paying tourists increases 70% Fiscal self reliance percentage increases from 15% to 21% 14

15 Leaders Create a Sense of Urgency by Setting a Stretch Target and a Date by Which it Must Be Achieved Stretch Target WOW! BHAG Value Gap Business as Usual (Continuous Improvement)

16 Formulate the strategy: How we will achieve our vision while delivering on the mission and living our values. SWOT Analysis Strengths Opportunities Weaknesses Threats External (PESTEL) Analysis Political Economic Social Technological Environment Legal Strategy Formulation Vision Advantage Scope Industry Analysis Buyer Power Supplier Power Barriers to Entry Threat of Substitutes Industry Rivalry and Intensity of Competition 16

17 Active Health used the SWOT and Balanced Scorecard frameworks to summarize its strategic analysis Stewardship Strengths Weaknesses Opportunities Threats Financial Strength Slowdown in managed care rate increases External fundinng of biomedical research Support from the Trust Declining state revenues Charitable giving to Active Health Debt Capacity Triple A credit rating & low cost of capital Prevention & Advocacy Programs unique among providers Declining revenue sources from community organizations and partners Decline in inpatient admissions Approach 2008 elections to be able to educate candidate Advocate changes in policies, programs & practices to support overall health and well being Cost pressures Bad debt particularly related to growing uninsured & underinsured population Medicaid reimbursement Significant capital needs Change in Govenor in 2008 Unreimbursed preventative services Customer Respected as an expert in childrens' health & health matters Focus on childrens' health Patient and family dissatisfaction as relates to access (i.e. phone, scheduling, website navigation) Increase marketshare within the Midwest Branding Active Health and other social marketing Increased competition in the Midwest market Flat demographic Process Learning & Growth Integrated childrens' health system Distinguishing ourselves in clinical quality, patient safety, health Consumer driven health plans promotion Robust electronic environment, committed to using IS in clinical care Improve service excellence Pay for performance Priority on patient safety & quality Infrastructure needs Address access issues Price transparency Special programs: Kidshealth & Inflation on capital projects Brightstart Integration of clinical treatment and Community & government community based prevention partnerships to advance policy & Technology obsolescence practice change in prevention Quality healthcare professionals & delivery competitive pay & benefits package, especially for physicians Pediatric specialist & nursing shortages Low vacancy rates Organizational culture Culture change initiatives Aging workforce Below industry turnover rate Performance management Erosion of trust 2012 Palladium Group, Inc. 17

18 But a still gap exists between a leader s vision and strategy and employees understanding and every day actions MISSION Why we exist VALUES What we believe in and how we behave VISION What we want to be STRATEGY What our competitive game plan will be WIIFM? Less than 10% of strategies effectively formulated are effectively executed. Fortune In the majority of cases we estimate 70 percent the real problem isn t bad strategy... It s bad execution. Fortune OPERATIONS How we create and deliver value 18

19 A Strategy Map and Balanced Scorecard bridge link leadership objectives to management of initiatives, processes and employees everyday actions. MISSION Why we exist VALUES What s important to us VISION What we want to be STRATEGY Our game plan STRATEGY MAP Define & communicate priorities and focus BALANCED SCORECARD Measure performance against priorities INITIATIVE and PLANNING PROCESS Manage actions and resources to drive change EMPOWERMENT / PERSONAL OBJECTIVES Motivate employees STRATEGIC OUTCOMES Satisfied SHAREHOLDERS Delighted CUSTOMERS Efficient and Effective PROCESSES Motivated & Prepared WORKFORCE 19

20 A Strategy Map and Balanced Scorecard provides the foundation for a new strategy execution system. Productivity Financial Perspective Sustained Shareholder Value Revenue Growth #1. Financial performance, a lag indicator, measures the tangible outcomes from the strategy. Customer Perspective Product/Service Attributes Relationship Image Price Quality Time Function Relation Brand #2. The customer value proposition defines the source of value. Operations Management Processes Process Perspective Customer Management Processes Innovation Processes Regulatory and Social Processes #3. Strategic processes create value for customers and shareholders. Learning & Growth Perspective Human Capital Information Capital Organization Capital #4. Aligned intangible assets drive improvement in the strategic processes 20

21 Funding/Revenue F2 Generate revenue from the extended reach of an integrated delivery system and reimbursement optimization Active Health Care Strategy Map Our mission is to improve the health of the people in the communities we serve by integrating patient care, education and research in a caring environment. Ensuring financial stability to achieve our mission and vision F1 Finance our mission by investing in our people, programs and services F3 Expand funding from grants, investments and philanthropy Productivity/ Expense Control F4 Lower costs through clinical and non clinical process improvements That provide a uniquely satisfying customer experience Patients & Families C1 Give me confidence that I am receiving the highest quality of care in a safe and respectful environment Care Partners C2 "Provide me with a sustainable partnership for our patients and the health system Community C3 "Understand our community health care needs help us address them" Students and Researchers C4 Provide me with an academic environment that helps me advance medical knowledge and improve health To deliver the strategic processes Growth, Achieve Scale P03 Achieve growth through business development, partnerships with payers and payment advocacy P02 Support the XX enterprise and continue to strengthen the brand Patient Focused Clinical & Operational Excellence P06 Optimize the patient care experience across the continuum through coordination, patient engagement, and personalized attention P05 Achieve outstanding patient safety and quality of care relative to nationally recognized best practice P04 Optimize core processes and service lines through process design and standardization, utilization, cost management, and evidence based practices Innovation & Education P08 Define expectations and engage the entire organization and system in innovation and education P07 Strenghen the academic medical center partnership P01 Build an Integrated Delivery System to provide coordinated services and be clinically and fiscally accountable for the outcomes We will enable our people L1 Give me the training and skills I need to succeed Skills L2 Help me work better in teams and across functions Culture L3 Instill pride in our heritage and our future Information/ Tools L4 Provide me with the information and tools for today s changing environment Core Values: Respect, Stewardship, Responsible Choices, Excellence, Community, Caring, Communications, Integrity, Scholarship 21

22 Health Reform Strategy Map Purpose Vision Values To help people remain healthy and to provide effective, safe, high quality health care and personal social services to the people of Ireland. Our Vision for a reformed Health and Social Care Service for the people of Ireland is one that is trusted to: - Involve and support families and communities to achieve their full health potential - Provide timely access to affordable quality care in the appropriate setting - Deliver effective services through an integrated approach to achieve excellent health outcomes - Use resources wisely and effectively to ensure maximum benefits to the public - Foster a culture that values the people who work in the health service and that is open, transparent and accountable - Openly share and continuously improve health outcomes by learning from the experience of patients and staff Real change experienced on the ground by everyone Organisational Perspectives Strategic Objectives. Trust Kindness Learning Service 1. Positive experience for patients and public 2. Service, system & organisational changes e.g. MFTP e.g. Integrated Models of Care e.g. Hospital trusts and community organisations e.g. Shared services 3. Enabling capacity & capabilities e.g. Strategic HR e.g. Individual health identifier e.g. National Leadership Programme e.g. Open Disclosure V 1.5 SW 22

23 A good strategy map tells the story of your strategy through cause-and-effect linkages. Mission: To provide top notch healthcare to our community. What will drive margins? Grow services for which we can deliver excellent outcomes Financial Perspective F2 Grow targeted patient base F1 Grow financial base & margins F3 Increase productivity How? By providing personal care to our targeted population By providing easy access to our services Customer Perspective C1 Provide personalized care C2 Provide easy access What should our process focus be? Keep patients informed throughout the process Deliver a personal experience that focuses on the individual and his/her needs Streamlines inefficient clinical and administrative processes Process Perspective P1 Deliver a personal experience P2 Keep patients informed P3 Streamline processes Will our people be prepared to do that? Yes, if we hire and develop people that focus on customer service Yes, if we reward the team for focusing on customer service and the strategy Yes, if we provide the team the tools they need to do their job well Talent and Technology Perspective L1 Hire & develop the best L4 Understand & deliver on the strategy L2 Reward our team L3 Provide technology & resources 23

24 A good Balanced Scorecard tells the story of your strategy through a set of cause and effect measures. Financial Strategic Objectives F1 Grow financial base & margins F2 Grow targeted patient base F3 Increase productivity Strategic Measures Total revenue Margin (%) % revenue from targeted patient population % cost per FTE Customer C1 Provide personalized care Customer satisfaction survey rating C2 Provide easy access # of complaints re: access Process Talent & Technology P1- Deliver a personal experience P2 -Keep patients informed P3 -Streamline processes L1 Hire & develop the best L2 Reward our team L3 Provide technology & resources Service level spot check rating % repeat patients for separate incidents # key processes improved vs. plan Average # wait days to see doctor Employee Satisfaction Survey # employees recognized for outstanding service % new technology used by staff 24

25 The Balanced Scorecard connects the strategy map to objectives, measures, targets, and initiatives Strategy Map: Diagram of the cause and effect relationships between strategic objectives Financial F2 Grow targeted patient base Customer Strategic Theme: Revenue Growth F1 Grow financial base & margins Statement of what strategy must achieve and what s critical to its success How success in achieving the strategy will be measured and tracked The level of performance or rate of improvement needed Key action programs required to achieve objectives C1 Provide personalized care Objectives Measurement Target Initiative Internal P1 Deliver a personal experience P2 Keep patients informed Keep patients informed Service level spot check rating Customer service training Learning L4 Understand & deliver on strategy 25

26 Strategic Initiatives Help to Close the Performance Gap OBJECTIVE Improve Order Fulfillment Objectives articulate the components of our strategy Measure Target Time from order to shipment 12 hours MEASURE / TARGET Time (hours) gap INITIATIVE Implement automated order management system Actual Target Measures and targets track our progress toward achieving and communicating the intent of the objective. Initiatives help close the gap between our current and desired performance Palladium Group, Inc

27 Select Strategic Initiatives that align with Strategic Objectives Key Steps 1. Collect all initiatives 2. Map initiatives to strategic objectives Marketing Projects, Activities Quality Projects, Activities Development Projects, Activities Corporate Projects, Activities 3. Establish rationalization criteria 4. Rationalize initiatives to meet $$$ and calendar/staff time available (based on forced ranking) Output: Short List of Strategically Aligned Initiatives 27

28 Strategy map and BSC links long term strategy and measures to operational planning & budgeting. Strategy Leadership Longer Term (3 5 year) View Shorter Term (Annual and Monthly) View Tactics Management Mission Vision Strategy Map Objectives Measures Targets Initiatives Milestones Accountable Resource Alloc. To provide top-notch healthcare to our community Be the community hospital of choice F2 C1 P1 L4 F1 P2 Financial Learning Process Customer Grow highmargin service Provide personalized care Keep patients informed Provide technology & resources % revenue from highmargin services Customer satisfaction survey rating Service level spot check rating % new technology used by staff 14 xx% 15 xx% 16 xx% 14 xx% 15 xx% 16 xx% 14 xx% 15 xx% 16 xx% 14 xx% 15 xx% 16 xx% Develop organizationwide survey Electronic notes project Learning assessment project Survey drafted by 6/14 Complete by 2014 All patients logged in Deadline met Marketing Team Dept. Chairs HR Committee $ xxxx $ xxxx $ xxxx All columns to the right support columns on the left 28

29 Stage 3 of the Management System: Alignment 2 TRANSLATE THE STRATEGY Strategy Map / Themes Measures / Targets Initiatives Funding / Stratex 1 DEVELOP THE STRATEGY Mission, Values, Vision Stretch Targets Strategic Analysis Strategy Formulation 3 ALIGN THE ORGANIZATION Business Units Support Units Employees Board of Directors TEST & ADAPT Profitability Analysis Strategy Correlations Emerging Strategies 6 4 PLAN OPERATIONS Key process improvement Sales planning Resource capacity plan Budgeting MONITOR & LEARN Strategy Reviews Operating Reviews 5 EXECUTION Process Initiative 29

30 Active Health s Cascading Plan Enterprise Illustrative Example Stewardship Stewardship Customers Processes People & Learning Foundation Stewardship Customers Processes Customers Processes People & Learning Stewardship Customers Processes People & Learning Lab (Ancillary Unit) Stewardship Customers Processes People & Learning East Region Practice Sites Stewardship Customers Processes Stewardship Customers Stewardship Customers Processes People & Learning West Region Practice Sites 2012 Palladium Group, Inc. - Confidential People & Learning IS Processes People & Learning Cardio (Clinical Unit) People & Learning HR 30

31 Align employees to the strategy: Four HR processes 1. Create Strategic Awareness Communicate Communicate Communicate 2. Align Personal Goals Personal Scorecard Make Strategy Everyone s Job 3. Provide Necessary Skills Strategic Job Families Strategic Readiness 4. Align Personal Incentives Variable pay Team based Strategy should be linked to existing HR programs for performance management. 31

32 Leaders must communicate the vision and strategy using multiple media Align employees to strategy Communicate seven times seven different ways Well-performing organizations Employees have a good understanding of the overall organizational goals Poorly-performing organizations 67% 38% Intranet Newsletters Posters Town Hall Meetings s Screensavers Large Group Meetings Reports Board game Videos Formal Speeches Hallway/Coffeepot Conversations Advanced Copies of Agendas 32

33 A good communication plan aligns the right message, the right audiences, with the right media Audience Media Message Corporate Board Telephone Audio BSC Framework Stakeholders Business Unit Management Sites And Functions Teams And Individuals Video Print Electronic/ Face to To face Face Our Strategy Progress to Strategy Individual Contribution to Strategy 33

34 SMDC Hospital System Web-based Strategy Map The Strategy Home Page displays the strategy map and metrics and is the starting point for the driver drill down 2009 Palladium Group, Inc. 34

35 Communication Examples Newsletters: Strategy Map Brochures: 35

36 Communication Examples Strategic Plans Managers Tool Kit Intranet Website Screen Savers Letters from Executives 36

37 Royal Canadian Mounted Police V Division Iqaluit (Baffin Island) 37

38 Stage 4 Link Strategy to Local Operations 2 TRANSLATE THE STRATEGY Strategy Map/Themes Measures / Targets Initiative Portfolios Funding / Stratex DEVELOP THE STRATEGY Mission, Values, Vision Strategy Formulation 1 3 ALIGN THE ORGANIZATION Business Units Support Units Employees TEST & ADAPT Profitability Analysis Strategy Correlations Emerging Strategies 6 4 PLAN OPERATIONS Establish priorities for process improvement initiatives Risk Management MONITOR & LEARN Strategy Reviews Operating Reviews 5 EXECUTION Process Initiative 38

39 Dashboards articulate the critical link between strategy management and operations management Strategy Map Cause-and-Effect Model of Each Key Process Web-based Dashboard of metrics used to manage a Key Process PROCESS linked to METRICS METRICS improve PROCESS Identify operational processes key to executing strategy and manage those processes using dashboards and KPIs rather than instincts 2012 Palladium Group, Inc. 39

40 The patient access process can be decomposed into success factors, operational drivers, and associated KPIs Process Component Process Sub-Component Operational Driver KPI P01 - Assure service excellence & optimize the customer experience by continuously improving process flow and interaction Patient access # of patients admitted to the hospital Patient scheduling Patient registration Knowledge of available system capacity Scheduling speed Available appointments Speed and ease of registration Integrity of information captured during registration Correct identification of patient needs (DRG) Unit Meeting Notices Daily Census Time to make appointments (from request) Time to 3 rd available appointment # of scheduling attempts unable to make an appointment Unit at capacity Time to register patient (ED and DA) Patient satisfaction rating with registration Customer service training # of registration errors # of denials from incorrect patient information Nurse and physician scheduling % of time that patients wait for to be seen more than X minutes ED capacity and flow management Bed availability Coordination between admission points and bed management Wait time from the decision to admit a patient from the ED to placement of the patient in an inpatient bed # of bed availability updates 2012 Palladium Group, Inc 40

41 Dashboards for critical processes support local improvement activities by front line employees P01 - Assure service excellence & optimize the customer experience by continuously improving process flow and interaction

42 Stage 5 of the Management System: Monitor and Learn 2 TRANSLATE THE STRATEGY Strategy Map / Themes Measures / Targets Initiative Portfolios Funding / Stratex DEVELOP THE STRATEGY Mission, Values, Vision Strategic Analysis Strategy Formulation 1 3 ALIGN THE ORGANIZATION Business Units Support Units Employees TEST & ADAPT Profitability Analysis Strategy Correlations Emerging Strategies 6 4 PLAN OPERATIONS Key process improvement Sales planning Resource capacity plan Budgeting MONITOR & LEARN Strategy Reviews Operating Reviews 5 EXECUTION Process Initiative 42

43 The Leadership Team Conducts a Monthly Strategy Review Meeting Strategy Review Meetings corrections result Why did we miss the target? What correcting actions should we consider? Strategy Review Loop Are initiatives on schedule? Do you need more resources? input Performance Initiatives & Programs output Would an multi-functional task force help? 43

44 A color coded strategy map sets the agenda for the leadership team s strategy review meeting Vision: Freedom from disabling conditions Strategy Map That supports Our Mission Mission: To provide leadership, institutions and services to restore and improve the health of children through care and programs not readily available, with one high standards of quality and distinction regardless of the recipient s financial status Palladium Group, Inc 44

45 Scorecard Performance Summary (with selected Objectives and Measures) = On Target = Approaching Target = Off Target = Data Not Available OBJECTIVE MEASURE INITIATIVE P01 Assure service excellence & optimize the customer experience by continuously improving process flow and interaction P1A P1B P1C # of patients admitted to hospital Average length of stay (days) Average time of discharge (HH:MM) New patient scheduling & planning, budgeting & forecasting system roll-out P02 Build a meaningful partnership with physicians to enhance the continuum of care P2A % of physicians participating in task forces, leadership committees, etc. Physician project management training initiative P03 Communicate our brand & capabilities as an academic health center to meet the community s healthcare needs P3A % of facilities/departments that meet brand standards Brand development initiative Welcome Center build-out P04 Achieve exceptional outcomes through coordinated, evidencebased care, health promotion, & improved clinical processes P4A P4B P4C % infection rate Clinical outcomes index rating % of providers trained in evidence-based medicine EMR implementation project Provider evidence-based medicine training program P05 Achieve outstanding patient safety and quality of care P5A P5B # of falls Hand washing rate Hand washing training program P06 Optimize utilization of our capital & human assets to operate efficiently P6A Budgeted strategic initiatives that follow the planning criteria Initiative management process redesign P07 Improve efficiency and reduce cost of non-clinical processes P7A P7B P7C # of targeted business processes improved vs. plan # of billing lines collected in 120 days Billing software implementation 2012 Palladium Group, Inc 45

46 The leadership team reviews performance, examines strategic initiatives, makea informed decisions, and assigns accountability. 1 Use of a BSC Report in Strategy Review Meetings 2 I03 Identify Adverse Trends 3 5 Identify Performance Issues: Focus on the performance of objectives NOT measures. Analyze Objective Performance: What are the measures telling us? Are the measures driving change and adding focus? 4 Objective: Discussion/Update: What are the root causes of what s occurring? What are the expectations for the future? And, are current initiatives sufficient to close the performance gap? Are initiative on track to deliver expected value? If not, why and what can be done to remedy issues? What action steps including additional or different initiatives are required to improve performance going forward? 6 7 Recommendations/Required Actions: Person(s) Responsible: Due Date: Priority (A, B, C): Action Item Detail: Take Action: Discuss and agree on how to remedy issues. Assign accountability to ensure decisions are implemented. 46

47 Stage 6 of The Management System: Test and Adapt 3 ALIGN THE ORGANIZATION Business Units Support Units Employees 2 TRANSLATE THE STRATEGY Strategy Map / Themes Measures / Targets Initiative Portfolios Funding / Stratex DEVELOP THE STRATEGY Mission, Values, Vision Strategic Analysis Strategy Formulation 1 TEST & ADAPT Profitability Analysis Strategy Correlations Emerging Strategies 6 4 PLAN OPERATIONS Key process improvement Sales planning Resource capacity plan Budgeting MONITOR & LEARN Strategy Reviews Operating Reviews 5 EXECUTION Process Initiative 47

48 Executives Adapt the Strategy at an Annual Strategy Review Meetings Test and Adapt the Strategy update the strategy Strategy Learning Loop incorporate learning Are the data consistent with our strategic hypotheses? Has the environment changed in a fundamental way? Have new strategic options emerged? Strategy Review Questions corrections result Why did we miss the target? What correcting actions should we consider? Strategy Review Loop Are initiatives on schedule? Do you need more resources? input Performance Initiatives & Programs output Would an multi functional task force help? 48

49 The Kaplan-Norton six-stage closed loop management system for Strategy Execution 2 TRANSLATE THE STRATEGY Strategy Map/Themes Measures / Targets Initiative Portfolios Funding / Stratex DEVELOP THE STRATEGY Mission, Values, Vision Strategy Formulation 1 3 ALIGN THE ORGANIZATION Business Units Support Units Employees TEST & ADAPT Profitability Analysis Strategy Correlations Emerging Strategies 6 4 PLAN OPERATIONS Key process improvement Sales planning Resource capacity plan Budgeting MONITOR & LEARN Strategy Reviews Operating Reviews 5 EXECUTION Process Initiative 49