The Glue

How Hospital Scorecards Change Before, During, and After Improvement

2008-08-19T12:53:18-04:00

During each stage of an organization's improvement journey, the discussion changes and therefore their Balanced Scorecard content/structure changes.

Before improvement you look for root cause.
During improvement you verify that suggested remedies fix the problem.
After improvement you sustain the gains you've achieved.

Take for example a hospital with poor performance in the medication reconciliation component of their patient safety composite. That would appear on your top level scorecard as the lagging measure "Accurately and Completely Reconcile Medications Across Continuum of Care" which is the Joint Commission's National Patient Safety Goal 8A.

Scorecard Structure Prior to Improvement: the first action will be to charter a project team to look into root causes and suggested remedies. The scorecard should show three things at this point:

The Lagging Measure: "Percent of Medications Accurately and Completely Reconciled Across Continuum of Care."
The Dimensional Drill Down Measures: Break down the lagging measure by the same unit of measure across your departments to see if the problem is systemic or exists in just a few areas.
The New Initiative: You want to get a status on the timing, budget, and resources right away and make sure your team gets to root causes as quickly as possible. They might follow the PDCA, Test of Change, CAP, RPI, or even Lean Six Sigma project methodology to do so.

Scorecard Structure During Improvement: at this point the project team has some ideas about root causes, but you need to verify that their suggested remedies both improve performance on the root causes and ultimately improve performance on the lagging measure. The scorecard will therefore show:

The Lagging Measure: you want to see if improvement in the root cause measure has a positive influence on performance in the lagging measure.
The Dimensional Drill Down Measures: you may choose to make improvements in selected departments first, so improvement may appear here first.
Root Cause Measure(s): You need to set a performance target on the root cause measure to see if the remedies put in place make an impact. An example might be the "Number of Medication Transcription Errors."
The New Initiative: You still want to keep track on the timing, budget, and resources of this project now that they are working on training and process changes.

Scorecard Structure After Improvement: at this point the project team is focusing on rolling out the new tools and processes via training and observation. You should expect to see:

The Lagging Measure: you want to see if improvement is sustained in the measure you care most about.
The Dimensional Drill Down Measures: you want to see that all departments are sustaining improvement.
New Root Cause Measure(s): At this point, training and adoption of new procedures and tools is so vital that you need to place measures on your scorecard that monitor this. Examples might be: % of physicians trained on new procedures, % of new tools used properly.

Achieving Sarbox Compliance with Dashboard Software

2008-08-14T09:39:00-04:00

Many public corporations have spent millions of dollars over the past few years building processes and automated software tools to track key measures needed to prove compliance with the Sarbanes-Oxley Act (“Sarbox”). But what if this critical information could instead be managed using the same strategic dashboard tool that you use to execute your overarching business strategies?

This is, in fact, what some clients have done, using dashboards designed and managed by their Finance departments. Rather than representing a truly “balanced” scorecard (as is more typical for our clients), these dashboard focus on areas of strategic importance to this one functional area in the company. And one area of intense focus for publicly held companies is clearly Sarbox compliance.

In some ways, these KPI (key performance indicator) dashboards can represent a cascade of the corporation’s top-level scorecards –- and they provide tremendous additional value in supporting this key financial reporting responsibility. They are used to track areas of Sarbox compliance such as “Percentage of Balance Sheet Accounts Reconciled by Deadline,” “Dollar Value of Balance Sheet Non-Current Reconciling Items,” and “Number of High-Risk Internal Audit Comments.”

Since ActiveStrategy Enterprise software allows drill-down to as many layers of detail as desired, when a “red stoplight” appears next to a top-level indicator, such as “Percentage of Compliance Measures Meeting Goal,” the Finance Director can click to drill down into the underlying detailed measures and look for root causes of the problem (i.e., the detailed issues that are really driving the measure to miss goal). Then, resources can be assigned to improve performance in that area and correct the problem. The improvement initiatives themselves can also be tracked and reviewed using the software's Initiative Management functions.

Since these types of dashboards and measures are being used for federal compliance, and there is a legal responsibility involved, one question that might arise is whether one can control the definitions of the compliance measures to prevent employees from changing the calculations or otherwise tampering with the measure results.

In the software, this can be accomplished using something called an “Owner-No Edit“ setting. The owner of a measure can enter data and run reports, but the owner has no access to the underlying definition of the measure. In this way, central control over the measure definitions can be demonstrated irrefutably, should the need occur in an audit.

So a strategic dashboard can indeed be used to monitor and report on Sarbox compliance measures. The advantage is that the same dashboard, and its cascaded measures, can be used to drive strategic improvements, correcting any issues in these same Sarbox areas. In addition, these dashboards can be used to track and improve performance in other areas –- which will be the subject of a follow-up article on this blog.

How do you currently track Sarbox compliance? Have you ever thought about merging these efforts with a strategic management dashboard? Would this work in your organization? Tell us about it.

Strategy Execution vs. Performance Management Software: What You Should Know (Part 1: Intro)

2008-08-11T08:31:00-04:00

When I first got into the game of Strategy Execution, I had many years of building data warehouses and business analysis systems under my belt. But when I had the chance to actually participate in implementing a real closed-loop management system from within, I had a true moment of clarity:

Although business intelligence systems are great for showing people where problems are located, they don’t do anything to drive better business results.

Achieving better business results requires that an organization has a performance-driven culture. So if you plan to use software in your performance management and improvement journeys, you had better make sure it drives the key culture changes needed to get breakthrough results.

Broadly, business intelligence (BI) systems have focused on data, analysis, and reporting. Back when my colleagues and I founded ActiveStrategy, we coined the term Enterprise Strategy Execution to differentiate it from BI as a holistic approach to driving business results. Strategy Execution management systems focus on accountability, action, performance improvement, and communication. While BI systems have been built to support a data infrastructure, Strategy Execution provides a management methodology and helps build a performance-driven culture.

Most, if not all, businesses need BI and analytics tools to assist with thorough financial analysis, organizational troubleshooting and optimization, and planning support functions. Through the years, there has been some confusion as BI suite vendors have added features, such as dashboards and scorecards, and have begun using Balanced Scorecard terminology in relation to their reporting.

Terms like “performance management,” “scorecarding,” “corporate performance management,” “operations management,” and others are thrown into the pot and seasoned with a healthy dose of marketing hyperbole. The result is a big mess of confusion.

Hopefully this series of posts will help clear up some of that confusion. It will highlight the ways that Strategy Execution software can help an organization shift toward this kind of focus on performance (which is often a significant change). I'll share which aspects of a technology solution do (or do not drive) performance improvement and long-term results and why I believe these things are critical.

Throughout, I’ll be using the term Strategy Execution to mean a holistic, closed-loop combination of software and methodology, versus the more open-to-interpretation term “performance management.”

Watch for much more to come and please share your thoughts on this topic.

Performance Management Forum for State/Local Governments

2008-08-05T11:52:38-04:00

For anyone in State/Local Government interested in Performance Management, there is a free breakfast forum taking place this Friday, August 8th in Philadelphia. This is also open to any non-profit organization wishing to learn about these topics.

The focus of the forum is "Sustaining Performance During the Good Times and the Bad" and will include an impressive line-up of panelists whom you'll be able to query about best practices and ideas for overcoming challenges, even as budgets are getting squeezed.

The panelists are:

Jeff Friedman, Deputy Director of Performance Management, City of Philadelphia, PA
Steve Marchand, Mayor, Portsmouth, NH
Mark Freeman, Performance Management Coordinator, City of Columbus, OH
Chris Heflin, formerly with the City of Coral Springs (2007 Baldrige Winner) and now heading up ActiveStrategy's Public Sector Consulting Practice

The event is taking place at the Sofitel Hotel in downtown Philly. It's just a few blocks from the 30th Street Train station. Breakfast is at 8:00 am and the forum will wrap up by 11:30.

See more about the event and the topics on the agenda at the Performance Institute website.

If you're within a short drive (or train ride) from Philadelphia and would like to attend, email ward@performanceweb.org to rsvp. Though the event is no charge for Government employees, you do need to rsvp.

The Overthinking Paradox

2008-08-05T08:12:00-04:00

I was sitting with a senior executive the other day who has been quite opposed to the implementation of a strategy execution system, when I suddenly realized why she has been so reluctant.

First, let me explain that she's incredibly brilliant, very experienced, and tempered by the realities of her industry. So, when we sat down to start brainstorming potential measures for their top-level scorecard, she became very twisted in mental conundrums and frustrated when asked to identify possible customer-focused measurements.

Here are the issues she was struggling with:

We should be defining the actual outcomes to which their organization contributes. But they only play a contributing role to the outcomes -- so why measure them? Most will remain unachieved, making them meaningless.
We should be defining key outputs. But, again, many needed outputs were not capable of being measured due to external forces resisting such measurement (think of this organization as an internal support/staff division with a line division that won't cooperate).
The top-level strategic goals are illogical and thus impossible to align to. They produce products and services that individually impact all of the strategic goals, so artificially categorizing them is only for external political/public consumption and not helpful to her.
Management 'knows' how things are going, so why waste time counting things when that time could be spent on producing products.

It's almost a defeatist argument, but I'll call it the 'overthinking paradox.' If you think too much about why you can't, then you'll fulfill your own prophecy.

So, my message is this: should you encounter an executive in your own organization like this, here are the counterpoints:

Select your outcomes based on what you believe you can control. That may make those outcomes very short term or almost 'output-like.' But you've got to start somewhere.
Management generally only perceives that it knows what is going on. (I know, you can't actually say this out loud.) Data and trends reveal the real truth. Research in the quality realm indicates that gut-feel is right only about 20% of the time.
Don't waste time measuring things that don't matter. Find out what does matter and go with that.

Sometimes these counterpoints still won't influence an "overthinker," so you may need to move on without him/her. This is why having a 'guiding coalition' is so important for strategy execution implementations. Proof found in someone else's pudding often breaks through these kinds of stonewalls.

Top 10 Reasons Strategies Fail To Be Executed

2008-08-04T09:10:00-04:00

Why do our best laid plans so often go awry?

Turning strategy into reality is never easy -- which is compounded when that strategy is up against an existing, strong culture or status quo. While there is no perfect, fool-proof model for implementing strategy effectively, there are some common pitfalls that can be avoided to get yourself on the right path.

Here are the top reasons why strategic implementations fail:

1. The goal is not clear
High-level, "pie in the sky" goals won't resonate with staff. Goals need to connect staff and leaders to their “purpose.” To do so, look at the F.O.R. -- what is the “frame of reference” for your team, department, and overall organization? For the teams, remember that one person’s ceiling is another person’s floor, so goals must always be communicated in a way that accommodates each individual's F.O.R. Can the staff understand the “why” behind its pursuit?

2. The goal doesn’t create a “call to action”
Does the stated goal create yawns? Or is it something that staff and leaders can rally behind? Top-level goals need be aligned with the mission, vision, and values of the organization and should provoke passion, as well as a common belief that reaching the goal will create tremendous value for the organization, the community, and/or the staff.

3. The so-called "strategic" goals turn into a long grocery list
Years ago, I was the director of business development for a rehab hospital. The CEO had me assemble a “book” of all of our goals and initiatives. Unfortunately, we had way too many goals, no true focus, and we stumbled trying to do it all. Prioritizing is the key -- focus on a select few and tackle them really well. Then, and only then, move the next most important goals onto your list.

4. The plan does not "tune into" WIIFM
I once worked with a physician executive consultant who told me that physicians’ favorite radio station is WIIFM -- “what’s in it for me?” If a strategic plan does not connect to personal/professional goals and have meaning to the work-lives of the staff, they won’t commit. Be sure to "tune in to the station" and be able to tell everyone what is in it for them.

5. The plan is developed without the right people involved (or with them involved too late)
Did you or your team go through a solid stakeholder analysis during the planning phase? Many times, the engagement piece is overlooked, or at least short-changed. Failing to ask for input of key stakeholders is sure to bring out resistance when it's time to put the plan in motion. Engage all stakeholders early and often. One tool I have used to do this is called a “pulse survey.” It’s a quick questionnaire that can help uncover issues around communication, awareness, and early signs of engagement (or dissatisfaction) with the effort at hand.

6. Cultural risks are overlooked
Ever hear the phrase, “culture eats strategy for lunch, every day”? The hammer approach to strategic implementation can get quick results (like resignations!), but a better way to have long-lasting positive impact is to understand and set appropriate risk mitigation plans based on the coming changes. Cultural resistance is inevitable; not addressing it or thinking it won’t impact the plan is foolish thinking.

7. Business reviews are not conducted (or not done well)
Paying attention to the progress and measured results of the plan are key. “Spraying and praying” (i.e., blindly sending out vast amounts of data to everyone, hoping the right people will take action) won’t cut it. If the plan isn’t measured, tied to goals and time lines, and reviewed regularly, it won’t come together. Effective reviews with consistent agendas (and holding folks accountable for their portions of the plans) makes a world of difference. Requiring variance reports for under-performing areas is also of great value in helping to measure performance and progress.

8. The plan lacks ownership or an executive sponsor
Do each of the plan items have an owner? If so, does that individual have too many plates spinning? I have seen some clients list 4-5 “owners” or responsible individuals for action items or initiatives. This lets the plan drift. Leadership and key stakeholders don’t know who to go to if things are off course. Teamwork is always key -- but it often works best to put one person as the primary owner and driver (and be sure that owner has a sponsor or executive support).

9. Strategy and its execution is seen as “that department’s job”
So who owns strategy within your organization? It truly needs to be seen as everyone’s job, not just that of the strategic planning group, finance, or quality. Not everyone has the same role or responsibility within strategy execution, but stakeholders need to understand their role in achieving the goals. A Chief Strategy Officer and their team may facilitate and define the model, approach and goals -- but it is up to top leadership to drive and hold people accountable, many team members to implement the action plans, and the organization as a whole to achieve its goals.

10. Results, good or bad, are not communication and shared
Sometimes plans or initiatives don’t meet the goal. Either way, results and progress need to be communicated to the right stakeholders. If you start a strategic initiative, rally the troops, hold a kickoff event, but then never connect the dots later, you will lose interest and support. Did you develop a communication plan for the projects? Do staff have access to the results? Keep people informed -- share the good and the not-so-good when appropriate.

History is a great teacher. I wish I had known then what I know now…

Relating the "Medical Home" to Balanced Scorecards

2008-07-30T16:31:00-04:00

According to a July 21st New York Times article called “Trying to Save by Increasing Doctors’ Fees”, the latest "new, new thing" is the Medical Home, being piloted by payers across the nation. As stated in the article:

"The idea is that by paying family physicians, internists and pediatricians to devote more time and attention to their patients, insurers and patients can save thousands of dollars downstream on unnecessary tests, visits to expensive specialists and avoidable trips to the hospital."

Here in Pennsylvania, where I live, IBC, Aetna, and Cigna are spending upwards of $13M on these programs over the next 3 years.

The way I see it, there are striking parallels between these ideas and some of the fundamentals of well-deployed Balanced Scorecards. To explain, let me translate the Medical Home concepts into Balanced Scorecard speak. The goal of the Medical Home is to save money on “downstream” costly conditions (i.e. lagging measures) by spending money on less costly “upstream” activities (i.e. leading measures). This is exactly the type of thing you would want to see on a Balanced Scorecard for a Primary Care area of a health system.

In a deployed Balanced Scorecard framework, there should be alignment between the lagging indicators of performance (e.g., the number of patients with expensive conditions) and the leading indicators that impact that measure (e.g., t he number of preventative efforts that have been shown to improve or prevent those conditions).

Here’s an example used in the Times article that illustrates the kind of linkage we create through cascaded Balanced Scorecards. Activities such as adding patient educators or hiring additional staff to help monitor patients’ treatment and follow-up can be translated into Balanced Scorecard initiatives or improvement projects. Measures that track the percentage of a doctor’s roster having timely mammography and colorectal screenings are the leading indicators that those activities are intended to improve. Outcome measures, such as breast cancer and colon cancer rates, are the lagging indicators to which these leading indicators align.

The goal of the Balanced Scorecard is to have your leadership monitoring progress on initiatives, such as the Medical Home, that will move leading indicators in the right direction. These leading indicators are predictive in nature, they are measured more frequently than high-level lagging measures, and they make it possible to make mid-course corrections, all of which drive toward better strategic outcomes in the long run (improved patient care, better financial health, better utilized employees, and a healthier community).

Strategy Execution is a Change Process - Part II

2008-07-28T10:49:00-04:00

In this series of posts, I am viewing a Strategy Execution implementation through a Change Management lens.

For those needing a review, I'm comparing the ESE concepts against Kotter's latest installment, where he outlined the eight "Stages of Change." They include:

- Sense of Urgency
- Guiding Coalition
- Developing a Vision
- Communicating the Vision
- Empowering Employees
- Short Term Wins
- Consolidating Wins
- Anchoring in the Culture

In my last post (part 1) I wrote about Sense of Urgency. So now let's discuss the Guiding Coalition. It represents the vertically integrated people who will ensure that the project succeeds, even in the tougher times. First let's talk about 'who.'

At the top, the Coalition needs a top-echelon senior executive who thoroughly understands the journey, possesses the credibility to lead the team, and has budgetary control. This is frequently labeled the Sponsor. Often, senior executives without the requisite power base lead coalitions to an unsuccessful ending, as their perceived power and influence prove limited and insufficient to overcome the obstacles. The Sponsor doesn't need to be that involved, but they do need to be the lead 'general' constantly clearing battlefield for the team.

Next in line comes the Senior Champion. One step down the totem-pole, they are still quite senior in rank, but very active in the weekly activities of the team. They truly understand the internal workings, politics, and nuances to ensure project success.

Then you need your project team who will get the work done.

All very logical and reasonable.

But, the interesting thing that I've learned is that you need to work with a guiding coalition EVERY TIME. Even in the implementations where the executive team appears unified and the top executive appears 100% behind the project, don't be fooled.

You still need the core coalition who will go first, be successful, and represent the model for the rest of the organization. The reason is that in any organization, there are always doubters and resistors to change. Many may have gotten good at smiling and nodding their heads, but their actions (or lack of them) show their true feelings. If you're in an organization where buy-in is marginal, then using a guiding coalition should be a no-brainer.

In my next installment, I'll talk about steps 3 & 4, which address the Vision and how to communicate it.

Hospital Scorecards: Where Should Strategy Live? How About Balance?

2008-07-25T11:11:00-04:00

At all levels of a hospital or health system, from the board of directors to the nursing units and support departments, good scorecards should be "balanced," meaning that they should include objectives that represent all of the hospital's key stakeholders (e.g., patients, physicians, employees, community, financial stewardship, etc., depending on the particular hospital's situation).

But there are different reasons for that balance.

First, let me say that there will be meetings where parts and pieces of Balanced Scorecards will be reviewed, such as budget reviews, event reviews, and quality governance meetings, but these meetings are not intended to be conversations about the holistic strategy, so these won't necessarily cover the full scope of a truly "balanced" scorecard framework, which is just fine.

Now let me examine the different reasons for balance in scorecards at all levels of the hospital.

The Board Level and CEO Scorecard – All perspectives (i.e. strategic groupings) will be present and the holistic strategy will be represented. This audience views the strategy as it cuts across all the silos of the organization. This scorecard shows how success in objectives for the workforce, internal processes, and external partnerships will translate into better patient experiences and improved quality of care, as well as improved financial performance.

Specialized Businesses – These entities inherit selected objectives from the board-level scorecard, but they are also stand-alone business units and therefore probably have their own holistic strategies. Examples are cardiovascular care centers or cancer care centers. The strategic components cascaded from above might be objectives around strategic growth or patient satisfaction. In addition, they will have a more holistic, balanced strategy represented to accomplish their specific goals.

Core Department Scorecards - They will have objectives in all perspectives, but not for the sake of their own department’s holistic strategy; they exist to support the organization (and its strategy) as a whole. An example might be the Emergency Department or MedSurg. They inherit objectives from the scorecards above them to which they align, and they also inherit objectives from two other sources. One source will be other departments requesting that an objective be placed on the scorecard because it has a cause-and-effect relationship with their ability to perform. Another source will be objectives from within the department that are truly owned, functionally, by them. Put altogether, all the balanced perspectives on the department scorecard are populated with content, but for an entirely different reason than the board-level scorecard (not to review strategy, but to execute it).

Support Department Scorecards – Again, these represent silos within the organization. Examples are Transport, Lab, Finance, and IT. These scorecards will have objectives in all perspectives, but for the same reasons as the core department scorecards, they will not be balanced for the sake of their own holistic strategy, but rather to support the complete corporate or organizational strategy.

As an organization is developing scorecards, getting this sort of broad balance won't happen right away. It will happen through the course of ongoing scorecard business reviews, increased maturity of the framework and the organization's understanding of it, and an ever-widening scorecard deployment.

A Leader's Role in Driving Performance Excellence

2008-07-22T08:45:00-04:00

When I was a General Manager in a company that decided to embark on a Performance Excellence program, I remember asking myself “what will I have to change in my own approach to leadership as my company negotiates this journey toward improved performance?”

Borrowing from Joseph M. Juran, the esteemed Quality Planning, Improvement, and Control guru and a contemporary of Dr. W. Edwards Deming, there are eight roles of leaders that simply cannot be delegated.

Leaders must:

Serve on the governance vehicle that is established to guide the performance excellence (PE) journey. These vehicles used to be called the Quality Council, but now have names like the PE Governance Committee or the PE Implementation Team or the Strategy Execution Committee. Whatever it is called, it’s a great way to ensure active participation by the leadership in the direction, status, and decisions surrounding the PE culture change.
Establish the high level organizational strategic goals. Many times this is done by driving and participating in a strategic planning process and then communicating, deploying, and translating the results of that process to the entire organization.
Provide the necessary training to expedite the changed behaviors. The training and coaching needed for the new performance excellence approaches may include strategic planning methodologies, goal deployment, root cause methodologies, project management, structured performance reviews,and the like.

Stimulate focused performance improvement. Obviously, if the under-performing measures in an organization are not specifically targeted and the root causes eliminated, then the only changes seen will be temporary common cause variation.
Regularly review progress. This role is key to the culture change as employees must be held accountable for improving their portion of the organization. Moreover, this role also applies to holistically reviewing the growth and maturity of the organization using such tools as organizational assessments.
Give recognition. Reinforcement of improved behaviors, processes, and results is a proven methodology to ensure that you continue to see more of the new outputs and outcomes.
Revise the reward system. Ensuring that the reward system is changed to sync up with the new behavioral expectations is both logical and critical.
Provide the needed resources. Finally, all of the previous seven roles imply that resources must be allocated differently than in the past. Employees will be asked to perform additional and different tasks and training and coaching must occur that require leadership support.

Many organizations seem to believe that the above tasks can be owned and executed totally by a quality manager, a strategic planning director, a training manager, or some combination of those and other positions. The truth is that the leaders must own these eight tasks, though of course they can -- and should -- work hand in hand with others to achieve them.