Performance Management & Strategy Execution Blog: The Glue

How to Organize Your Initiatives to Drive More Effective Improvement

When we started ActiveStrategy more than 11 years ago, we based our new solutions on the knowledge we'd acquired over many years deploying performance excellence and strategy execution frameworks in the real world. This practical experience taught us that the software we were developing (to help make these frameworks easier to deploy successfully) had to have rich support for monitoring and encouraging the actions people take to drive performance.

So, from version 1.0 of our software through today, we’ve led the industry in support for tracking tasks and projects to make sure that all of the actions needed to get results are front and center when our clients use ActiveStrategy Enterprise (ASE) to run a business review. (As an aside, it still amazes me that, even today, some so-called “performance management” software packages have little or no way to truly track and manage actions.)

Because of how critical initiatives and actions are to driving performance results, I want to share some insights into some of the ways our clients are having particular success using ASE to manage them.

One way is by using "phases" in ASE, which let users group and manage large numbers of initiatives (which some clients relabel as "projects") according to various factors or attributes, such as the responsible department, the quarter in which the initiative is occurring, or type of project. I'll explain more on phases in a bit, but I first want to explain some of the more fundamental ways we handle projects in ASE.

Initiatives in ASE can have their own lower-level tasks and milestones, allowing you to get quite granular with project management. And you can group multiple initiatives and tasks together into what we call "program groups."

Initiatives and program groups display (among other attributes) owners, current status (at several levels), and status reports. They can all also be linked to measures, objectives, and to each other (so you can create hierarchies of program groups with initiatives below them, and tasks below them).

By linking tasks to initiatives, and initiatives to program groups, and then creating additional higher-level "parent" program groups, clients are capturing the status of hundreds (and in some cases thousands) of important projects that are being worked on throughout the organization. 

But wait a moment. You might be thinking (if you're already familiar with ASE) that since ASE is a strategic management system, you should really just be using it to track the most important top-level strategic projects. To that I'd say yes...and no.  Yes, you need to track the highest-level strategic initiatives and have your top management team review their progress on an ongoing basis. But no, that isn’t enough. The real value of any Strategy or Performance Management system is to drive accountability, transparency, and (most importantly) regular business reviews down to the people who actually do the work, so cascading initiatives is a critical piece.

Let’s take an example. A large government agency client of ours has about a dozen main strategic initiatives (to get a sense of scale here, many of these initiatives approach a billion dollars in funding).  These are the 12 things that the leader of the agency reviews on a regular basis. But in preparing to report the status of each of those 12 top-level initiatives, the owner of each has to review the status of 20-40 sub-projects that drive each initiative. Each of the owners of those projects, similarly, needs to monitor the status of one project across many regions and several other contributing projects. And so on, and so on, and so on.

In a standard “Balanced Scorecard” model, these projects at the top level would (and should) be linked to the objectives (and, through association) to the measures they would drive. But once you get past the top few levels, it gets very difficult to meaningfully cascade objectives and measures down really deep into the organization. 

But cascading the initiatives and child initiatives down many levels is much more practical--and meaningful. This actually does make it straightforward to link the actions of tens of thousands of people with those 12 top-level initiatives.

And by using  ASE's “phases,” it’s easy to review progress during a business review, even though the projects may now involve thousands of people.

Here's how. In ASE, phases are more or less just "buckets" that you can use to group initiatives or program groups within a parent program group. You can have as many phases as you want, and you can call them whatever you want.

In the example above, each top-level program group might break all of the initiatives and program groups into the following phases: Cost Savings, Outreach, Effectiveness, and Efficiency. Thus, rather than working one-by-one through the status of 20-40 sub-projects during a business review, our client can examine and discuss how they are doing on projects within each specific area. In this case, phases allow for a logical grouping of actions that make the business review much easier.

Now let's consider a large corporate client. They have more than a hundred Balanced Scorecards throughout the organization (some are more "balanced" than others, depending on where they are). There are about a thousand initiatives being tracked, each dutifully linked to the objective it drives. When they are doing a business review of a particular business unit, they can review each initiative in turn with related objectives on the scorecard. 

But what if I’m the CIO and I only want to review my IT projects ? What if I’m the head of marketing?  Or the person in charge of compliance? It would be pretty difficult to find all of the initiatives I’m responsible for across the entire organization (because they are all linked to the cross-functional objectives). How can I quickly get a feel for the status of the activities related specifically to my group?

No problem! We can quickly create program groups that link to those IT, or marketing, or compliance projects and group them into their own view. Now don’t forget that they are STILL linked to their respective objectives, but we can also view them separately as part of a phase. 

In IT, the groupings might be by development phase: ideation, requirements, development, QA, production.  In Compliance they might be by area: federal securities law, affiliate rules, antitrust, environmental, political, and facilities management.

By creating the right hierarchy of initiatives and program groups and using phases to further group them into categories that make sense to specific leaders, we can make it possible to quickly and easily monitor the status of hundreds (or more) initiatives in a business area that are important to driving results throughout other areas of the organization. 

The best part is that with ASE your business users can easily do all of this linking, grouping, initiative/program group creation...without needing any help from IT.

I welcome your comments on how you're handling initiatives today and thoughts on whether phases and program groups could help.

4 Keys to a Speedy and Sustainable Financial Turnaround

I see a lot of work being done within hospital departments aimed at improving bottom lines. I see teams working on IT projects and process improvement and lots and lots of measurement. The problem is, these efforts are creating a lot of busy work, but they are not translating into quick and sustainable financial results.

Here are four things I suggest you put in place to capture--and sustain--the ROI you're looking for:

1. Alignment
2. Stretch Targets
3. Prioritization
4. Reviews

I recently read Leigh Page’s article about three common hospital coding problems (read article here) and thought this would be a good example to highlight what I’m suggesting. In a nutshell, improving coding problems with short stays, infusion therapy, and discharge status may represent a substantial financial opportunity for your hospital. Here’s how to work through the opportunity using the four keys I suggest above.

(By the way, this approach applies to organizations outside of healthcare, too).

1. Alignment 

Too often, I see project work with no measurement of project success, nor timely completion. I'm talking about outcomes that are directly correlated to moving the needle on the top level measure "$ cost savings." Often this is the case because each team does not control the ultimate outcome; they merely influence it partially. To capture the ROI from coding changes, it will require a multi-department, cross-functional effort with changes from IT, finance, nursing, medical staff, and more. As individual departments, it’s hard to get motivated by implementing work and not seeing a result.  I suggest:

• A sponsor at the executive level who can foster dialogue between departments
• One cost savings measure that each department can align to (when work is done across all the departments, this one needle will move)

2. Stretch Targets

Your participants need a stretch, but realistic target at the top of the house ($ cost savings) which helps the team guage "how close we are.” For RAC denials, this will be a significant (potentially $ millions) opportunity.

Stretch, but realistic, targets must be set for each project outcome measure as well.

One way to challenge yourself is to ask this question before you get started on project work: “if I reach the target on every outcome measure I've identified for this effort (short stay, infusion therapy, discharge status project outcomes), will I achieve my cost savings goal?” If the answer is no, then either you have not set the right targets or you don’t have all the right improvements in place.
 
3. Prioritization

If your hospital is like most of those I work with, you’ll know how easy it is to add more work for your staff and how hard it is to take existing work off the table (I work with a client who uses the term “to don’ts” for the second group, which I really like).

This is where the cross-functional team, led by the executive sponsor plays a key role. In order to achieve financial results quickly, you need to re-sequence, reprioritize, delay, or simply take some other work off the table. 

For each “to do” you introduce to the medical, nursing, and IT staff, have you introduced a “to don’t?”

4. Reviews

Just measuring something won’t change an outcome. It might give you a temporary blip, but it certainly won’t lead to a sustained improvement.

Rather than "what gets measured gets done," we like to say  “what gets reviewed gets done.” To drive something as big as a financial turnaround requires that the executive sponsor challenges their cross-functional team on many levels and frequently enough to convey the right sense of urgency. I'd expect to see these types of challenges occur during the project reviews:

• Is it OK for a project to be on hold for 3 months if it’s holding up your ROI?
• Is it OK for a project to be classified complete, but to see no change in the outcome measure?
• Is it OK for staff to go back to old habits if it threatens a sustainable ROI?

I've seen this basic structure work in many areas of financial turnaround. It takes discipline and dialogue, though, not just measurement.

"On the Road" with the Balanced Scorecard: Get Early Results

As a practitioner who has been helping organizations around the country implement the Balanced Scorecard performance management framework for years, I thought I'd share some of my insights from my time "on the road," where I've had the opportunity to see what works and what doesn't at so many organizations. I hope some of my insights help you as you implement the framework at your organization.

This time, I'll talk about about how to keep your scorecard from getting completely derailed by the implementation process that's required for the framework.

Paradoxically, one of the greatest strengths of the Balanced Scorecard is also its achilles heel. It has too many value propositions (communication, visibility, prioritization, accountability, etc.) and what often gets lost in all these promised benefits is the one thing that can protect a scorecard effort from failure: RESULTS. 

Think of this: to get a fully-functioning scorecard performance management framework up and running you'll need education, communication planning, meetings, strategic objectives, software, measures, targets, data, performance improvement...the list goes on. The risk is that if you fail to produce results important enough to the top executives, cultural resistance may sabotage your efforts before you get the framework up and running.

So what's the magic approach I use "on the road" to combat this potential issue?  Sequencing.

Picking the right sequence for what you need to do when is critical. You can't do it all at once. So you must focus first on the things that will drive results the executive team will care about.

• Start by asking what is the most important objective for the CEO/top executive.
  >>Don't wait to do this until after you've completed all of your education. Ask now...push the educational workshops later in the sequence when you can get on calendars.
• Hold a scorecard business review during which you discuss progress on the issue the CEO/top executive identified as most important (above) as soon as it's realistically possible to do so.
  >>Don't wait until all the supporting detail is built out. Start now and plan for more detailed discussions later in the sequence.
• Start holding cross-functional discussions now. In all likelihood, the top-level issue the CEO identified will require input from several areas of your organization to drive improvement. Bring them into the first business review.
  >>Don't wait until everyone involved has a scorecard. Get them contributing to the highest-priority issue now and sequence scorecard cascading when the time is right.
• If you see that actions aren't translating into results, make changes now that will impact that specific metric, rather than worrying too much about setting up a perfect and complete system of measures. 
  >>Don't wait to have all "perfect" measures built and deployed. Act now and get to the bigger data collection project after you've gotten some results under your belt.

Time is not on your side. But your CEO will be...once you get those results!

Measuring the Effectiveness of Knowledge Management

This post has been contributed by ActiveStrategy strategic consulting partner and guest author, Mark Graham Brown.

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Most organizations today would tell you that their primary value comes from their intellectual, rather than their physical, assets. Yet most struggle when it comes to documenting and passing on important knowledge, discoveries, and best practices so that others in the organization can benefit. The answer for most is some sort of Knowledge Management system.

Knowledge Management is a big term and open to much interpretation. It can include everything from Wikipedia to a fully customized portal. Regardless of the tools, documenting, managing, and sharing knowledge is a critical part of a successful, sustainable performance excellence approach, which is why the Baldrige Criteria includes Knowledge Management as part of Category 4 (quoting from the criteria: "Measurement, analysis, and knowledge management serve as a foundation for the performance management system").

But what does it mean in practice to have good Knowledge Management in place? How do you know if your approach is effective? Since I'm a performance measurement guy, of course my answer is you measure it.

To figure out what we should measure, we should look at what it is that organizations hope to get out of their Knowledge Management efforts. Comprehensive (and often expensive) Knowledge Management systems cite benefits like:

• Documentation of valuable knowledge that currently only resides in senior employees' heads
• Increased speed of access to information
• Shared lessons learned across various parts of the organization
• Minimizing the impact of valuable employees retiring or quitting by first documenting what they know and have learned over the years
• Increased sharing and cooperation across units, locations and levels in the organization
• Improved processes resulting in cost savings and productivity improvements

But what really happens?

Thousands of hours and possibly hundreds of thousands of dollars are spent gathering and documenting  intellectual property, but when senior management wants to know how this new Knowledge Management Program is going, they typically hear anecdotes, opinions, or counts of meaningless activities such as number of meetings held, databases created, or number of hits on the Knowledge Management web site.

Fast forward another year or two and the picture could be even bleaker. I've heard plenty of stories from companies that have created these systems and say things like:

• Use of the Knowledge Management system steadily declined after its initial implementation 
• Most employees still use sites like Google or Wikipedia to find what they need
• When someone really wants to know something, they ask someone else
• The most valuable information in an organization still walks out the door when senior employees retire
• Processes have not really improved because everyone thinks their situation is unique and that they can’t really benefit by implementing best practices discovered by others
• Training budgets continue to escalate even though decreased training costs was one of the supposed benefits of Knowledge Management

So how can effective performance measurement help capitalize on the promise of Knowledge Management?

A study by APQC gives you a good idea of what NOT to measure. The study found that many companies simply look at things like overall company growth, profit, and new product sales to evaluate whether or not Knowledge Management has made an impact. While these are certainly important, they are highly unlikely to be influenced solely by Knowledge Management activities, and therefore make poor metrics. A further problem is that these outcome measures are all lagging indicators and it might take several years for sharing of knowledge to impact them. 

Organizations that have made a major investment in Knowledge Management need a separate metric or gauge on their corporate dashboards to tell them how the program is working. 

An aerospace client of mine searched for best practices when it came to Knowledge Management metrics, and found that the metric they were most impressed with was an approach used by Ford Motor Company that focuses on outputs and outcomes. Ford measures how many ideas or approaches are developed in one part of the company that are then adopted and implemented in other parts of the company. Ford also measures how implementation of the ideas and approaches has paid off on bottom-line outcome measures. 

While my aerospace client loved the Ford approach, they were concerned with a metric that was strictly a rear-view mirror (or lagging) measure. They wanted a way to include roughly 60% lagging indicators and 40% leading indicators. For the lagging portion, they chose to follow Ford's example. 

For the leading portion, we came up with measures of awareness and engagement (demonstrated behaviors such as high-level participation in key meetings). We created a 10-point scale and the client rates it quarterly because the level of participation in these activities tends to change over time.

I think this is a good approach. To create your own measure of Knowledge Management success, I suggest creating an index comprised of the following four contributing types of measures:

1. Awareness – knowledge of what to document, how to document it, how to access the databases, etc.
2. Behavior – participation in Knowledge Management activities such as committees/teams, making presentations, etc.
3. Outputs – creation of databases, white papers, lessons learned reports, best practice documentation, etc.
4. Outcomes – impact of new knowledge on key measures of organizational performance such as new product sales, productivity, cost reduction, or quality improvement

Knowldge Management is important and--if it's actually used the way it's intended--it can help you improve performance across your entire organization. So don’t fall into the trap of measuring Knowledge Management by counting teams, meetings, databases, web site hits, or similar meaningless things that are easy to quantify and report on. Focus most of your metric on real results that can actually be attributed to Knowledge Management.   

An Approach to Managing Cross-Functional Breakthrough Improvement - Part 2

In part one of this article, I talked about the approach that's required to successfully manage cross-functional breakthrough improvement in an organization that is set up functionally or vertically. In this follow-up, I'll get a little deeper into the mechanics involved in making the cross-functional committees that I suggested last time work.

The cross-functional committees should be tasked with ensuring that all of the following questions are addressed:

Planning Related Issues to Address:

1. Are the objectives on the top scorecard within your committee’s assigned area worded correctly?
2. Are we tracking the right measures on the top scorecard within your committee’s assigned area?
3. Do those objectives and measures have clear and concise definitions?
4. Are the measure targets set correctly?
5. Do we have meaningful charters developed and approved for all initiatives that were prioritized by the executive board or senior team?
   
   Note: the cross-functional committee should report back any suggested changes related to the above 5 questions to the executive board or senior team for approval.
   
   Planning-related questions related specifically to breakthrough improvement:
   
   
6. If we are trying to dramatically improve a key outcome measure, are the key under-performing measures (and their "drivers") identified in all of the contributing functional areas? (See an illustration showing cascading drivers below)
   
7. Do we have meaningful initiative charters developed for each of those contributing improvement teams?

 
 
Deployment-Related Issues to Address:

1. Have the initiative teams been properly "kicked-off" in person using the charters?
2. Have the initiative teams refined their charters as needed?
3. Have they been provided time to work on the initiatives?
4. Do they have the proper coaching and facilitation?
   
   Deployment-related questions related specifically to breakthrough improvement:
   
5.  Are the teams using the correct improvement methodology?
6.  Have they been thoroughly trained?
7. Are all of the functional areas working on the right initiatives to improve the “drivers” that will in the aggregate result in dramatic improvement?

Reviewing Cross-Functional Performance:

1. Are the initiative teams being reviewed by your committee at regular, predetermined check points? And are these reviews occurring at least monthly or quarterly?
2. Is the executive board or senior team reviewing the initiative progress (with the coordinating executive of the committee acting as the point person)? Are the committees, functional managers, and initiative teams supporting him or her, as needed?
3. As the various contributing improvement efforts are completed, has the performance of the outcome measure improved accordingly? If not, why not?

This is a systematic way to drive coordinated and dramatic improvements across organizations that are set up in silos or functional cylinders (i.e. almost all of them). Without a systematic approach like this in place, the planning, deployment, and reviews are ad hoc and, fundamentally, left to chance. In my experience, relying on chance is not a suitable and sustainable solution.

An Approach to Managing Cross-Functional Breakthrough Improvement

Almost all organizations, whether they are profit-focused, governmental, military, or not-for-profit, are set up to be managed vertically (i.e., in silos, like business units, departments, divisions, etc.). From a viewpoint of managing the day-to-day business and aligning to and pursuing overall organizational goals, a vertical approach works just fine.

However, to achieve dramatic breakthrough improvement, cross-functional (horizontal) efforts must be coordinated. Unfortunately, the only person who actually has a cross-functional job in the entire organization is typically a CEO, COO, or General Officer in charge and s/he doesn’t have the time to ensure the success of each of those cross-functional improvement efforts.

So, a different “systems approach” has been used to great effect to break down the functional barriers and achieve the desired dramatic results from cross-functional improvements.

How does it work? The organization remains organized vertically for the day-to-day management. But the executives learn a new systematic approach that entails wearing a second “cross-functional” hat. This can be an unfamiliar and uncomfortable, but necessary change.

The mechanics are as follows:

The senior team or executive board that normally convenes annually to develop the strategic plan will create the 3- to 5-year “focus” of the organization, which is usually manifested by a strategy map and a Balanced Scorecard.

In addition, they will identify a few (and only a few) prioritized high-level initiatives that call for a new approach or a new system (for example, the implementation of a Knowledge Management System or an Electronic Medical Records System in a hospital).

Finally, they should identify a few very important and under-performing outcome measures (like profit, mission readiness, infection rates, etc.) that will become the “focus within the focus” for cross-functional breakthrough improvement.

Next, the senior team or executive board should set up cross-functional committees headed by coordinating executives. These are merely functional executives who will also serve in a cross-functional role for a given scorecard perspective, theme, or objective on the top-level scorecard.

In my next post, I'll list specific questions/issues that the cross-functional committees need to address in the areas of planning, deployment, and business performance reviews.

Prioritizing and Managing Improvement Initiatives: 4 Steps That Drive Results

Even if you have the best strategic planning process in the world, plus well-defined, cascaded, aligned scorecards, and are  holding regular performance reviews of those scorecards, the fact is you won't see the improvements you want unless you also have the right improvement initiatives being executed in a timely fashion.

I probably can't find a single person who disagrees with this statement, so why is it so hard to find organizations that handle initiatives effectively?

Maybe it's because no organizations are perfect and therefore, they always have more areas to improve than they have resources to do it. Or maybe it's because employees really care and want to improve their organizations, but just truly don't have enough time to do so. Or, maybe management is just overambitious.

Whatever the cause, it seems almost universally true that organizations attempt  more initiatives than they have resources to work on and the results are nearly always underwhelming.

What's different within the few companies that are exceptions to this rule -- those that successfully manage their improvement initiatives and turn in results year after year? Here's a four-step approach that works wonders:

1. Prioritize by sequencing
2. Ensure the right scope, schedule, expectations, and restrictions by using a charter
3. Manage the initiatives carefully across a number of factors
4. Ensure accountability with ongoing reviews

The Differences Between Functional or Departmental Scorecard Reviews and Breakthrough Scorecard Reviews

Recently I posted an article about the use of cross-functional breakthrough improvement scorecards to drive dramatic results in an organization. Breakthrough improvement scorecards exist in parallel with functional or departmental scorecards, but have slightly different purposes, which affects the skill levels required of the reviewers and reviewees, as well as the content of the monthly performance reviews of these scorecards.

Each breakthrough improvement scorecard is focused on dramatically improving one high level outcome measure, whereas functional scorecards exist to track a functional or departmental list of objectives, measures, targets, and initiatives that should be aligned to the strategic plan and that could be either breakthrough improvement focused, incremental improvement focused, or even daily control in nature. Also, no matter what is shown on the breakthrough scorecards, it must also exist on various functional scorecards because that is where it actually gets functionally reviewed, owned, and executed.

Because of these differences, the monthly reviews are slightly different for each type of scorecard and some of the required skills are different.

First, with functional scorecards one must ensure that the scorecard actually aligns upward to the scorecard at the next higher level. The real question here is “for all of the objectives, measures, targets, and initiatives on the boss’s scorecard, is the lower scorecard contributing to the ones that the boss thinks it should be contributing to?” Once that is agreed upon, then the monthly questions are:

• Is the data up to date?
• Are the targets stretch enough?
• Has the owner explained for any measures that are red; why they are red, what will be done about them, who owns those actions and when they will be completed?
• For any improvement initiatives, are they on schedule, on budget and really getting to the root cause?

For the breakthrough improvement scorecard, the questions are similar, but are more advanced and will require more data stratification and root cause analysis skills either known by both the reviewers and reviewees or, at least, available to them through process analysis experts. The questions now become:

• Has the senior team defined only 3 – 5 breakthrough improvement scorecards? (Any more at one time will dilute the focus and minimize the results)
• For each breakthrough improvement scorecard, has the data been properly stratified into the vital few drivers, thus identifying the most important underperforming leading measures that will be addressed with multiple improvement initiative teams?
• Is the data up to date?
• Are the targets stretch enough?
• Are there enough initiatives targeting this outcome measure to drive significant improvement in the aggregate?
•  For those improvement initiatives, are they on schedule and on budget
•  Which proven improvement initiative methodology will be used to identify, verify and eliminate the root causes?
•  During each monthly review, a review in detail of two or more of the process improvement initiatives should occur.

Finally, the breakthrough improvement scorecards are usually reviewed by the senior management team at their monthly meetings, while the functional reviews occur throughout the organization on a monthly basis prior to the breakthrough improvement scorecard reviews. This sequence ensures timely execution of the initiatives on the functional scorecards, which roll up to the breakthrough improvement scorecard.

Are you using any Breakthrough Improvement scorecards now? Tell me about how they're working (or let me know if you'd like some help getting one started).

           

Driving Dramatic Results: Breakthrough Improvement Scorecards

Especially in an economy like the one we are currently experiencing, organizations must come up with a way to create laser-like focus on the critical areas that are under-performing and dramatically improve them fast...or the consequences can be dire. Incremental improvement is not good enough.

In situations like this, identifying the few areas that must be improved and monitoring their improvement on what I call a "Breakthrough Improvement Scorecard" is a proven way to drive the focus, cross-functional accountability, and dramatic improvement that is absolutely necessary.

A Breakthrough Improvement Scorecard is similar to a Balanced Scorecard in that it contains objectives, measures, targets, improvement initiatives, and owners for each, but it is different in that it usually focuses on only one perspective (like financial) and one high-level outcome measure within that perspective that is under-performing and is cross-functional by design.

Some examples might be operating margin, customer satisfaction, or quality outcomes (like risk-adjusted mortality rates in a hospital). Each Breakthrough Improvement Scorecard focuses on only one outcome measure and an organization should have no more that five or six breakthrough improvement scorecards at one time, due to the number of resources required for each one. The scorecard is designed using some of the correlation tools that you might find in statistical problem solving processes like Six Sigma.

The design begins, of course, with the identification of the biggest organizational challenges or “burning platforms” that require special attention and dramatic improvement. For example, if the burning platform is that operating margin is in the red, first a target for improvement must be set, which would probably be to get it at least into the black.

Then, the operating margin must be segmented into its key drivers or components. Those drivers can be defined by formula (e.g., revenues and expenses), then by location (e.g., revenues by department or business unit; expenses by location or by category such as labor or supplies) and finally by correlation. Correlation is defined using tools like pareto charts or structure trees and would define leading measures like “productivity” as a driver of expenses or “volume” as a potential driver of “revenues.”

The next step is to align all of these measures in a correlation or cause-and-effect sequence and review the data for each driver. In other words, productivity drives expenses, which when combined with revenues, drives operating margin. Then, based on the measures that are under-performing most significantly, improvement initiatives would be developed and owners and contributors would be assigned.

The final step to dramatic improvement is for all of these initiative teams to find and eliminate the various root causes of the red measures. As that is completed, the individual gap reductions aggregate into not just incremental improvement, but breakthrough or quantum improvement.

I've been involved in deploying this approach at numerous organizations. One grew revenues from $2 Billion to $7 Billion (a financial organization and Baldrige recipient). Another reduced defects by 60% (a petrochemical company). Yet another reduced customer complaints by 78% (electric utility and Deming Award Winner).

If you're struggling with a way to drive similar types of changes at your organization, consider applying the Breakthrough Improvement Scorecard approach. If you need additional guidance on how to get it moving, please let me know. And if you try it, let me know how it works for you!

Don't Get Killed by an Anecdote

I was working with a client today whose Strategy Execution framework I'm helping to build and automate. When we were talking about setting good targets for some key performance measures, I was reminded of an important lesson I had learned years ago about effectively measuring service levels: hitting average service level targets is not enough.

Several years ago, I worked for a CRM company that managed the laptops of very large companies' sales forces. If a sales rep had a problem, he or she simply overnighted the laptop to our company, we fixed it, and overnighted it back. We targeted a 4-day turnaround. In reality, we almost always turned around repairs and shipped the unit back in one -- or at most two -- days. Great, right?

Well, sometimes there were problems. Sometimes an incoming unit was put in the wrong pile. Or the rep didn't put the right RMA number on it. Or it was shipped out without a label. Not to worry, though. These kinds of thing were REALLY rare and we were always within our targeted 4-day average.