Executing Strategy with the Balanced Scorecard by vow85608

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									  Executing Strategy with the
     Balanced Scorecard

Paul Niven, President, Senalosa Group

    National Council LIVE Webinar
           January 22, 2009
                           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
            Presentation

Download this presentation at
www.thenationalcouncil.org/cs/recordings/han
douts
              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              Second edition           Released April,
                   15 languages,                released April           2005
                                                2008




                                                                                     4
Balanced Scorecard Overview




                              5
      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
        Three Challenges

  Rise of                    Over-reliance
Intangible                   on Financial
  Assets                      Measures


             Prominence of
             the Balanced
               Scorecard




               Difficulty
               Executing
               Strategy


                                             7
                                               The Strategy Story

                                                                     Only 10% of
                                                                    organizations
                                                                    execute their
                                                                       strategy




                                                Barriers to Strategy Execution


                                                                                 Management
           Vision Barrier                          People Barrier                                   Resource Barrier
                                                                                   Barrier
           Only 5% of the                          Only 25% of                   85% of executive          60% of
                                                                                teams spend less
             workforce                            managers have                                     organizations don’t
                                                                                than one hour per
          understands the                       incentives linked to            month discussing
                                                                                                      link budgets to
              strategy                               strategy                        strategy             strategy



Chart adapted from material developed by Robert S. Kaplan and David P. Norton
                                                                                                                          8
                     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
                      Balanced Scorecard

                                      Financial
                                 What do our financial
                                stakeholders expect or
                                      demand?

       Customer                                                    Internal Process
   Who are our target
                                      Vision &
customers, what are their                                           At what business
expectations, and what is             Strategy                 processes must we excel to
 our value proposition in                                      drive value for customers?
      serving them?

                            How do we align our intangible
                            assets to improve our ability to
                                support our strategy?
                               Employee Learning &
                                     Growth



                                                                                        10
Public & Nonprofit Balanced Scorecard Model

                                      Mission


                                       Customer
                                Who do we define as our
                              customer? How do we create
                                value for our customer?

        Financial                                                  Internal Process
                                                               To satisfy customers while
 How do we add value for              Vision and
                                                                   meeting budgetary
customers while controlling            Strategy                   constraints, at what
         costs?
                                                               business processes must
                                                                        we excel?
                              How do we align our intangible
                              assets - people, systems, and
                                 culture to execute our
                                        strategy?
                                 Employee Learning &
                                         Growth
                                                                                            11
                                                                                     Customer Perspective
                                                                                                                                                • Should answer three questions:
                                                                                                                                                   • Who are our customers?
                                                                                                                                                   • What do customers
                                                             Customer


                                                 o uc e
                                              "T s c e d      bc e
                                                                       Financial
                                                             O je tiv s M a u s T rg ts In tiv s
                                                                         e s re a e       itia e
                                                                                                                                                     demand?
                                                 a c lly o
                                              fin n ia , h w
                                               h u e ppe r
                                              s o ldw a a
                                                  u
                                              too r
                                              s a h ld rs"
                                               h re o e ?

                                                                                                                                                   • What is our value
                Financial

                        Customer                                                                           Internal Bus sProces
                                                                                                                       ines    s
                                                                                                                                                     proposition in
"T a h v o r O je tiv s M a u s T rg ts In tiv s
  o c ie e u b c e       e s re a e       itia e              Vision                         "T s tis o r O je tiv s M a u s T rg ts In tiv s
                                                                                               o a fy u     bc e      e s re a e       itia e
 is n o h u
v io , h ws o ld
w a a too r
  e ppe r u
c s m rs"
 u to e ?                                                      and
                                                                                             s a h ld rsa d
                                                                                              h re o e n
                                                                                             c s m rs w a
                                                                                              u to e , h t
                                                                                              u in s
                                                                                             b s es
                                                                                             pro es sm s
                                                                                                c se u t
                                                                                              e xc l t?
                                                                                             w e ea "
                                                                                                                                                     serving them?
                                                             Strategy

                                                               Learningand Growth
                                                                                                                                                      • Operational Excellence
                                               o c ie e u
                                             "T a h v o r O je tiv s M a u s T rg ts In tiv s
                                                            bc e      e s re a e       itia e
                                              is n o ill
                                             v io , h ww
                                               e u ta u
                                             w s s ino r
                                             a ilitytoc a g
                                              b
                                             a dim v ?
                                              n pro e"
                                                       hne

                                                                                                                                                      • Product Leadership
                                                                                                                                                      • Customer Intimacy
                                                                                                                                                      • System Lock In
                                                                                                                                                                             12
                                                                     Internal Process Perspective


                                                                                                                                                • Key processes we must
                                                                    Financial
                                                                   Customer
                                                                                                                                                  excel at to
                                                 o uc e
                                              "T s c e d      bc e       e s re a e       itia e
                                                             O je tiv s M a u s T rg ts In tiv s
                                              fin n ia , h w
                                                 a c lly o
                                              s o ldw a a
                                               h u e ppe r
                                              too r
                                                  u
                                               h re o e ?
                                              s a h ld rs"
                                                                                                                                                  drive value for customers

                     Financial
                      Customer                                                                             Internal Bus sProces
                                                                                                                       ines    s
                                                                                                                                                • Also focus on customer
                                                              Vision
                                                                                                                                                  value proposition
  o c ie e u b c e
"T a h v o r O je tiv s M a u s T rg ts In tiv s
                         e s re a e       itia e                                             "T s tis o r O je tiv s M a u s T rg ts In tiv s
                                                                                               o a fy u     bc e      e s re a e       itia e
v io , h ws o ld
 is n o h u                                                                                   h re o e n
                                                                                             s a h ld rsa d
w a a too r
  e ppe r u                                                                                   u to e , h t
                                                                                             c s m rs w a
 u to e ?
c s m rs"                                                      and                            u in s
                                                                                             b s es
                                                                                                c se u t
                                                                                             pro es sm s
                                                                                              e xc l t?
                                                                                             w e ea "
                                                             Strategy

                                                               Learningand Growth
                                                                                                                                                • Normally contains the
                                             "T a h v o r O je tiv s M a u s T rg ts In tiv s
                                               o c ie e u
                                              is n o ill
                                             v io , h ww
                                             w s s ino r
                                               e u ta u
                                              b
                                             a ilitytoc a g
                                                       hne
                                                            bc e      e s re a e       itia e
                                                                                                                                                  largest number
                                              n pro e"
                                             a dim v ?


                                                                                                                                                  of measures
                                                                                              Financial Perspective



                                                                                                                                                • No BSC is complete without
                                                                    Financial
                                                                   Customer
                                              "T s c e d
                                                 o uc e
                                                 a c lly o
                                              fin n ia , h w
                                              s o ldw a a
                                               h u e ppe r
                                              too r
                                                  u
                                                              bc e
                                                             O je tiv s M a u s T rg ts In tiv s
                                                                         e s re a e       itia e
                                                                                                                                                  financial measures
                                               h re o e ?
                                              s a h ld rs"




                                                                                                                                                • Represent enablers or
                     Financial
                      Customer                                                                                         ines
                                                                                                           Internal Bus sProcess
"T a h v o r O je tiv s M a u s T rg ts In tiv s
  o c ie e u b c e
v io , h ws o ld
 is n o h u
  e ppe r u
w a a too r
                         e s re a e       itia e              Vision                         "T s tis o r O je tiv s M a u s T rg ts In tiv s
                                                                                               o a fy u
                                                                                              h re o e n
                                                                                             s a h ld rsa d
                                                                                              u to e , h t
                                                                                             c s m rs w a
                                                                                                            bc e      e s re a e       itia e
                                                                                                                                                  constraints
 u to e ?
c s m rs"                                                      and                            u in s
                                                                                             b s es
                                                                                                c se u t
                                                                                             pro es sm s
                                                                                              e xc l t?
                                                                                             w e ea "
                                                             Strategy
                                                                                                                                                • Must balance effectiveness
                                             "T a h v o r O je tiv s M a u s T rg ts In tiv s
                                               o c ie e u
                                             v io , h ww
                                              is n o ill
                                               e u ta u
                                             w s s ino r
                                                               Learningand Growth
                                                            bc e      e s re a e       itia e                                                     with efficiency
                                              b        hne
                                             a ilitytoc a g
                                              n pro e"
                                             a dim v ?
                         Employee Learning & Growth Perspective


                                                                                                                                                • Often overlooked
                                                 o uc e
                                              "T s c e d
                                              fin n ia , h w
                                                 a c lly o
                                                              bc e
                                                                    Financial
                                                                   Customer
                                                             O je tiv s M a u s T rg ts In tiv s
                                                                         e s re a e       itia e
                                                                                                                                                • Represent the “enablers” of
                                               h u e ppe r
                                              s o ldw a a
                                              too r
                                                  u
                                              s a h ld rs"
                                               h re o e ?
                                                                                                                                                  the other three perspectives

  o c ie e u b c e
"T a h v o r O je tiv s M a u s T rg ts In tiv s
v io , h ws o ld
 is n o h u
                     Financial
                      Customer
                         e s re a e       itia e              Vision                           o a fy u
                                                                                             s a h ld rsa d
                                                                                              h re o e n
                                                                                                                       ines
                                                                                                           Internal Bus sProcess
                                                                                             "T s tis o r O je tiv s M a u s T rg ts In tiv s
                                                                                                            bc e      e s re a e       itia e
                                                                                                                                                • “Soft” measures can drive
                                                                                                                                                   “hard” results
w a a too r
  e ppe r u                                                                                   u to e , h t
                                                                                             c s m rs w a
 u to e ?
c s m rs"                                                      and                            u in s
                                                                                             b s es
                                                                                                c se u t
                                                                                             pro es sm s
                                                                                              e xc l t?
                                                                                             w e ea "
                                                             Strategy


                                               o c ie e u
                                                               Learningand Growth
                                             "T a h v o r O je tiv s M a u s T rg ts In tiv s
                                                            bc e      e s re a e       itia e
                                                                                                                                                • Three areas of ‘capital’
                                              is n o ill
                                             v io , h ww
                                               e u ta u
                                             w s s ino r
                                              b        hne
                                             a ilitytoc a g
                                              n pro e"
                                             a dim v ?
Strategy Maps




                16
Maps Get Us From “A” to “B”



                                   Sydney


                      Antigonish
              Truro




         Halifax
         Halifax




                                            17
Strategy is Also a New Destination



                                        Successfully
                                         Executed
                                         Strategy
                           Landmark 2
            Landmark 1




          Formation of a
             Strategy



                                                       18
         Strategy Maps


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




                                   19
20
Food for the Hungry (U.S.)




                             21
                         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
                      To Learn More…
• Please visit my website at www.senalosa.com
• Or, read more in any of my three books…




                                                23
       Case Study
          Sharon Raggio, CEO
Colorado West Regional Mental Health Center
          New markets/                  Reduced unit
                                           cost
          contracts



                           Improved
Customer                      access                   Clinical
satisfaction                                               outcomes



                                                  Client
UM                       Increase
                                                  participation
                         productivity




                                                  Train clients
                         Train staff                  and
Define
    recovery                                      community
Monthly Run Charts
   (Corporate wide totals)
More Run Charts
Single Site Spreadsheet
Single Site Charts
Case Study
     Jeff Walter
 CEO, Rushford Center
     Rushford Balanced Scorecard Strategy Map
Learning and Growth
                              Push                                                             Drive
                           technology                                                        continuous
                           capabilities                                                    improvement
                                                                                          throughout our
                                                         Build a                            organization
                                                          Strong
                                                        Leadership
                                                          Team
                             Ensure                                                           Build a
                            effective,                                                        strong
                             diverse                                                       infrastructur
                           management
                                                                                           e for growth




      Financial                Internal Operations                     Constituent                         Social Impact

           Grow and              Build our            Provide a
       diversify revenue                              seamless                                                Rushford &partners
                              teams of high                              Rushford consumers
              base                                   customer-                                                produce impact by
                                  caliber,                               prepared for healthy
                                                   focused client                                            promoting awareness,
                                committed                                 living in recovery
                                                     experience                                              prevention, treatment
                                clinicians
                                                                                                                 and recovery




          Ensure fiscal                        Build partnerships to
        strength through         Provide        promote integrated        Rushford &partners                 Promote healthier
         sound financial     clinicians with     health & support         produce impact by                    communities
         management &           evidence-            services            promoting awareness,
         control of cost      based & best     within HHCC & outside   prevention, treatment and
             growth           practice tools                                   recovery
                                      Market Identity and Penetration
                          How will we stay current in addressing community needs?
Financial
Perspective                                                                 Ensure fiscal strength through
                                   Grow and diversify revenue               sound financial management
                                             base                             & control of cost growth




               FY 09 Initiatives                                 Measures                              Target        Status   Trend


Grow market share in profitable service lines


                                                        Implement Referral Management
1. Expand commercial market penetration in                                                            2/1/09
                                                                  Program
addiction programs (AH)                                                                           10 new referrals
                                        Service Delivery
   How will we ensure we provide the right service in the right setting to meet consumer needs?


   Constituent                              Rushford Consumers                             Rushford partners produce
                                         prepared for healthy living in                       impact by promoting
                                                  recovery                                  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
                                                                          Plan completed                 4/1/09
(MB)

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)
                                                                   Successful RFP Bids                 6/30/09
5. MH Voc RFP w/Kuhn (LD)
                                          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.         External and Internal customer                4.0 ratings
(AH/OD)                                                               surveys                                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
                                                         Silver St. DMHAS designation                     2/1/09
designation (BS)

                                                         Assessment and Training
8. Trauma-informed services (BS)                                                                         6/30/09
                                                                Completed


Learning & Growth                          Drive continuous improvement throughout our organization


Internal Operations                          Provide a seamless customer-focused client experience



9. Six Sigma Coord. Of Care Project (LD)                            Service mapping                      4/1/09
                                                                          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
                                                                                                                   4.0 rating
10. Improved hiring/on-boarding process (WH)                           New hire survey
                                                                                                                      Q4

11. Licensed nurse/clinician recruitment/retention                                                                   <15%
                                                                Reduced agency staff usage
strategy (WH/KU)                                                                                                      Q4

12. Comprehensive communication/ recognition                                                                       4.0 rating
                                                                   Employee focus survey
program                                                                                                               Q4

Learning & Growth
                                                                  Build a strong infrastructure for growth



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
                                                                          Phase 1 plan                              10/1/08
14. Leadership Development Program – Phase 1                   Individual personal dev. plans                      11/30/08
        (WH)
                                                                   Individual assessment                            6/30/09
                                           Financial Strength
            What are the financial objectives that will drive all other aspects of our strategy?

  Financial
                                                                                   Ensure fiscal strength through
  Perspective                         Grow and diversify revenue                   sound financial management
                                                base                                 & control of cost growth




                FY 09 Initiatives                                   Measures                            Target      Status   Trend
Improving Operating Margin
                                                         -Reduced bad debt expense
                                                                                                       6/30/09:
                                                                                                         6.0%
15.Improved revenue cycle and efficiency (AC)
                                                              -Reduced A/R days
                                                                                                        75 days


Ensure Long Term Financial Viability
                                                            Days of Cash on Hand
16.Increase Cash on Hand (AC)                                                                           20 days



17.Improve commercial reimbursement (AC/)                          Higher rates;                      +$175,000


                                                            Scanning project &
18.Reduce cost through e-automation (AC)                 Time/Attendance program                       6/30/09
                 Thank You
Thank You for attending “Executing Strategy with the
Balanced Scorecard”

Download the presentation at
www.thenationalcouncil.org/cs/recordings/han
douts

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