The Glue

Clockwork Strategy Execution

This past summer, I started working with a client where the project sponsorship for Balanced Scorecards/Strategy Execution resides within the strategic planning function. In this instance, we started our initial discussions around how to provide a better strategic planning automation system.

I’ve been down this path before, and I’ve built and seen just how work-flow intensive and complicated the automation of the planning process can be. Furthermore, I’m convinced that the automation of the planning cycle is somewhat of a low value-add. Planning is about communication, discussion, analysis, disagreement, and hard choices. Applying a coat of technological asphalt over the process isn’t necessarily a good thing.

So, the conversation morphed into one that crossed their functional boundary into that of strategy execution –- which meant we were really talking about the emerging idea of an Office of Strategy Execution. This label hasn’t been openly applied at this client as of yet, but the planning folks are already way down the path of thinking about how to ensure execution occurs (which is clearly beyond their existing functional definition, but the realization of the gap makes it now impossible to ignore). The key is that planners want to see and ensure the results of their plans.

The realization and point I want to make in this posting is that organizations work in clockwork cycles. Appreciating the nuances of these cycles and their inter-related timing is crucial to better strategy execution, wherever it gets its start.

Strategy Execution Grows Up

This week I attended the Ventana Research Connections Conference, where the 2007 Performance Management Leadership Awards were presented.  I'm glad I went, not only because our clients won two of the top three awards, but also because I saw even more evidence that companies are accelerating their understanding of "performance management" -- in fact, I think this maturing trend is becoming a flood.

At our client conferences over the past several years, the discussions and questions have evolved from "how do you do this?" into lively exchanges around much more mature topics, like how to encourage culture change and how to drive/sustain long-term improvement. We now have large organizations sharing best practices from multi-year implementations.  The Ventana folks confirmed during their wrap-up that they are seeing the same things.

Part #2: Tackling the Organizational Barriers that Hinder Hospital Outcomes

In my previous article on this subject, I discussed the first 2 organizational hindrances to sustained hospital improvement:

1. Leadership turnover
2. Fear of upsetting physicians
   
   Now, on to items 3-5:
3. One-way communication from executives – Improvement happens on the front line, so if that part of a Balanced Scorecard (BSC) framework withers, improvement does too.  I see this often.  The BSC project starts off with a bang.  Slowly, but surely, nurses and lab workers stop inputting data and stop holding reviews.  Why?  They realize the executive team isn't looking at the information they work hard to put into the BSC system.  I’ll go a step further.  When you roll out your BSC, everybody on the front line expects this to happen.  They figure executives will lose interest soon enough and move on to something else.
   
   How to keep healthy communication going? The executive team must meet regularly to evaluate and challenge the progress they see in the BSC, including drilling down into leading measures and the improvement projects that drive them.  They must clearly let the front line know they are not just reviewing performance, but also listening.  Communication around improvement must flow in all directions.  Otherwise, it’s only a matter of time until the front line gives up.
4. Improvement delegated (not owned by the C-level) – Who OWNS your BSC framework?  Is it the Chief Medical Information Officer, the COO, the CNO, glory be…a Chief Strategy Officer?  Or does the executive team think that the DSS team owns it, or the VP of Clinical Quality, or that Chief of Staff who's relied upon to get everything done?
   
   Outcome measures on the top-level scorecard need to be owned by C-Level executives.  End of story. If that doesn’t happen, the BSC is in big trouble.  By owning, I mean they are accountable to the rest of the executive team for reporting, on a routine basis, on whether all the moving parts are on track to add up to the goal they’ve set.  Only someone with the authority and title at the C-Level can truly keep all the cross-functional entities on the hook that are required to make sustainable change.

Getting Results Fast – An Action-Oriented Balanced Scorecard

Building a Balanced Scorecard framework is tough work. Identifying and gaining agreement on key strategic objectives, measures, and initiatives, and then linking them all together in a meaningful way across an enterprise requires a major effort.

Despite all this expended energy, we sometimes come to the end of a scorecard-building project with a client and feel like the effort has been mostly academic. Yes, it might have provided some new strategic clarity and generated some enthusiasm. But every so often, these efforts stop short of addressing the key things that we know are broken in an organization.  We haven’t managed to address the “elephant in the room,” i.e., the one big, high-priority issue in the organization that everyone knows needs to be fixed, but can't figure how to tackle.

So we ask "why not?"  Why not create a set of initiatives that address that big, overwhelming problem?  Why not link these initiatives to the top-level scorecard?  Why not tackle the root of the most important issue troubling the organization?

Most often, it seems that the "elephant" doesn't get addressed because client teams see the scorecard as a tool for long-term strategic alignment and synchronization (which it is, of course), but do not see how to use it to fix more immediate pressing issues (the elephant).

How do you use the scorecard to both ensure strategic alignment and long-term results and also to attack the primary problem(s) confronting the organization right now?

Tackling the Organizational Barriers that Hinder Hospital Outcomes

Across the U.S., study after study shows that our hospitals have not yet achieved and sustained improvements in clinical quality and safety outcomes.  This is in spite of the fact that most hospitals have an abundance of data, multiple dashboards upon which to view data and reports, and many even have Balanced Scorecards (BSCs) in place. 

So, beyond the common issues that all large organizations face regarding change and improvement, what are specific organizational barriers that get in the way of hospitals achieving  strategic outcomes and what are some ideas for overcoming them?

Here's my "Top 5" list of issues that get in the way for hospitals:

1) Leadership turnover
2) Fear of upsetting physicians
3) One-way communication from executives
4) Improvement delegated (not owned by the C-level)
5) Lack of mechanism to identify and share best practices

Of course there is a rich body of knowledge and training on improvement techniques.  (In fact, I’m writing this as I'm attending a two-day IHI workshop called the “Science of Improvement.”)  Despite all this information, however, these organizational barriers continue to impede hospitals. Today, I'll focus on the first 2. Part II of this article will cover 3-5.

The Relative State of Management Maturity in Local Governments

This past week, I co-delivered a presentation to a packed auditorium of mostly city and county managers at the annual ICMA Conference.  The topic was a real-life look at how Miami-Dade County has implemented and is using their Balanced Scorecard management system.

Although the audience was incredibly intrigued (no doubt by the exemplary presenters!), I was struck by the gap that I find between leading local governments and other industries in the area of management practices. 

As many reading this know, there is a massive movement in government to adopt a ‘results-oriented' model.  In a nutshell this is a methodology based on the ‘logic model.’  It enables organizations to identify their customer-desired outcomes and then work backwards to understand which of their service outputs align to these outcomes.  If there are misalignments or under-performance issues, this model spurs the creation of initiatives (often mislabeled as strategies).  Also, it should be said that it’s relatively easy for people to understand, hence the high rate of adoption.

The problem is that the ‘results oriented' model does not do a great job of helping an organization deploy strategy down into the organization where it can be executed.  The model, as commonly implemented, leaves 'strategy' at the top of the organization and only deploys actions down to the departments. 

Measures in the Non-Profit World

For professionals in the non-profit world, it sometimes seems that life is much easier in the commercial world.  In the commercial world, it’s so much more straightforward to measure strategic outcomes (revenue, profit, number of new product introductions, customer satisfaction rating).  However, with a little thought, it is definitely possible to measure meaningful outcomes in the non-profit world to ensure that you are meeting your organization’s goals and satisfying your constituencies.

A key concept in deriving meaningful measures in a non-profit environment is the idea of “outputs” versus “outcomes.”  Outputs are measures of activities or processes completed, such as “# of applications processed,” “# of articles published,” and membership statistics. Outputs can be easily measured, and for that reason they often are tracked on the top-level scorecards of non-profit organizations.  These outputs don’t always have a clear relationship with the organization’s desired outcomes, however.

Outcomes are the organization’s intended impacts on society or on their membership group.  They are often very “squishy,” qualitative, and lofty, such as “improve women’s health” or “reduce obesity.” Non-profits attempt to reach these strategic goals using various means, such as conducting research, publishing studies, lobbying congress, sponsoring promotional events, organizing educational campaigns and events, and so on.

Dashboards and Supply Chain Metrics – Scorecards & SCOR

Supply-chain and manufacturing professionals have always used a large number of metrics to measure the health of their functional areas, because these areas tend to create most of the value for their companies, while also generating most of the company’s total expenses. 

These metrics were standardized and codified by the SCOR (The Supply-Chain Operations Reference-model) effort in the 1990s and early 2000s.  So, the idea of measurement is not new to these professions. But how do traditional supply chain and manufacturing metrics fit into today’s emerging strategic dashboards?  That is, how does SCOR fit with scorecards? First, a quick look back at the history of SCOR.

Metrics such as manufacturing through-put, error rate, on-time delivery, back-order percentage, days of supply, number of invoice errors, rework percentage, and dozens more have long driven the operations of supply chain management and manufacturing.  In fact, SCOR was organized precisely because there were so many metrics and so many different ways to calculate them that a need was revealed to standardize them and promote the standardized definitions.

Technology Clarifies Strategy Execution

Last week, ActiveStrategy's seminar series on Enterprise Strategy Execution had a stop in San Francisco. While delivering my 6th of 9 presentations at this 2-day event, something hit me.  Let’s call it a small epiphany (though really it’s something I’ve known all along, but am just now fully embracing).

My focus within ActiveStrategy is on providing consulting support to organizations wishing to pursue better Strategy Execution.  So, my perspective can be rather myopically focused on how to teach and educate executives on the methodologies of strategy execution.  As we all know, just gaining this understanding is a major hurdle and the first part of the change process in the strategy execution evolution or journey.

Though ActiveStrategy is also a software company, I often find myself avoiding references to the software and explaining strategy execution as divorced from software or automation. This has been partly to ensure I'm operating with complete integrity for my clients and partly because I've feared that bringing in a  software discussion might cause confusion, diverting attention away from learning the core, underlying methodology elements, which are the prerequisites to using the software.

Do You Have an Innovation Scorecard?

Last week, I had the opportunity to attend the International Society for Performance Improvement conference in Phoenix, Arizona and met one of the distinguished luminaries of the society, Donald Totsi of Vanguard Consulting.  Given the recent article in BusinessWeek (June 11, 2007) entitled, 3M’s Innovation Crisis: How Six Sigma Almost Smothered Its Idea Culture, I was captured by his findings about the core indicators of what it takes to implement innovative product and services.

Based on Don’s performance analysis of 10 companies that successfully launched RADICALLY new products and services to meet the demands of their marketplace, here are the top ten cultural practices, in order of their perceived importance of executing innovation: