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The KPI.org Blog

Tim Johnson Tim Johnson

Tim is a Balanced Scorecard Institute Senior Director of Consulting with over 32 years of experience in management and professional services management consulting. Areas of expertise include strategic planning, portfolio management, performance measurement/management, project management and business process improvement.

Strategic Planning in the Healthcare Industry

By: Tim Johnson

Dec 8, 2017 235 Views 0 Comments FacebookTwitterLinkedInGoogle Plus

Over the last 10 years we have seen a tremendous change in the healthcare industry.  Whether it is a shift in philosophy to focus on more value-based care or navigating the impact of implementing the Affordable Care Act here in the United States, significant shifts and changes have occurred and are occurring every day.  Given the relative unpredictability of how the healthcare market will change, is there really any use for those in the industry to go through a strategic planning initiative?  The answer is of course yes, but the real question is “how?”

To be successful in the future, no matter how turbulent the path forward may be, organizations need to create a vision based on the best future assumptions they can identify.  With any strategic planning effort is it really important to have at its foundation key assumptions about how the world will be different.  Organizations then can describe what they need to look like given those future assumptions, and then design a strategy to help them bridge the gap between where they are today and achieving that future success.  But if all our assumptions of the future are up in the air, then how can we really build a strategy effectively?

I would argue that in industries that are experiencing a lot of change it is even more important to be strategic!  Yes, there are many unknowns given the relative volatility of the US political landscape as it pertains to healthcare.  But there are some key assumptions that can be made that are relative certainties regardless of any potential future political or regulatory shifts?  If we can identify those “most probable” assumptions in the healthcare industry or in our particular marketplace, then it would be worth our time to identify them and begin building our response strategies accordingly.  I would like to present the follow set of ideas as examples of assumptions that most participants in the healthcare sector need to consider over the next five years and could be the basis for strategic discussion.  These are not meant to be all inclusive, but merely to demonstrate that there are fundamental assumptions that can be identified even in a marketplace where significant uncertainty exists.

  1. The need to provide ever increasing quality patient care will continue.  The focus over the next five years will continue to be on delivering highly impactful, cost-effective healthcare.  Whether it is driven by key stakeholder requirements or customer expectations, we know that successful players in the healthcare industry will be those that can generate healthy outcomes for their patients.  Fundamentality having strategies built around improved effectiveness and efficiency in delivering quality patient care will be a fundamental requirement in the future.  No real surprises but any strategic discussion in the healthcare sector must begin with patient care!  The point is that the ability to differentiate regarding healthcare outcomes will be the bases for any future success in the industry.

  2. Changing in customer volume and demographics will continue.  The fact is that the US population is going to continue to grow over the next five years.  In May of 2017, the US passed the 325 million mark and is expected to be over 332 million by 2020 (US Census data).  That means essentially there will be more people needing care in the future with some healthcare markets seeing fairly dramatic increases in patient populations.   We have seen a significant impact in demographic shifts in the US over the last five years and this trend will continue over the next five years as the increases in Hispanic and Asian demographic groups continues at a high rate.  How will these assumptions impact capacity requirements or service delivery requirements within the healthcare sector?

  3. Labor supply changes.  The US has seen labor supply grow by 2.6 percent per year over the last decade, but that trend will not continue.  Rand researchers (Karoly & Panis, 2004) have postulated that the growth of labor supply will only be around .04 percent over the next decade and will be even smaller the following decade.  Also, while the trend has been a more aging workforce over the last 20 years this will also change with the workforce being more evenly balanced across age groups in the future.  How will this impact the availability of skill workers and experience levels in the healthcare industry?  What does this mean for how we need to recruit and retain of workforce?

  4. Continued increase on wellness and prevention.  Significant increase in innovation with regard to nutrition for example will be driven by increase consumer demand for wellness. Patients are sharing that they want advice on weight management and diet therapies (PwC Health Research Institute, 2016) for example leading to increased focus on these services within the industry.  Smoking cessation and fitness programs are other programs that are already tied to health outcomes and will continue to be important in the future.  How will this trend impact the future services healthcare practitioners will provide?  Or the information they make available to their patients?

  5. Emerging technologies in the healthcare marketplace.  PWC reports that “the US health industry lags behind other industries, such as retail and telecommunications, in deploying emerging technologies, including artificial intelligence, drones and virtual reality but that this trend is about to change.” (PwC Health Research Institute, 2016).  Accenture reports that “the global healthcare industry in the year 2020 will be a highly connected environment powered by large data networks, cloud computing, and mobile devices. There will be widespread increases in the number of connected healthcare networks providing seamless integration between care providers, patients, pharmaceutical companies, health insurers, and other invested parties anywhere in the world. Care within this model will become more patient-centric, less expensive to provide, and more innovative.” (Meissner, 2013).  These assumptions would call for a need to invest in breakthrough technologies that impact how patient care is provided and operational business processes are managed moving forward.  This will also impact the types of skills needed in the future within the industry.

  6. Rising operating costs driven by government regulations and expanded capacity requirements will impact the financial viability of healthcare systems (Jonash & Ronanki, 2015).  Healthcare CEO's and COO's must find innovative was to drive revenue and decrease costs.  How will rising costs impact the future viability of healthcare providers?  How must they change how they do business?  In what areas must they innovate to reduce costs? 

I share these discussion points as merely a sampling of assumptions that could be discussed by healthcare industry players in formulating their 3-5-year strategies.  With proper research conducted, there are dozens of additional assumptions that we could discuss to really understand the future of the healthcare industry.  I provide these few ideas as evidence that even in an industry that is experiencing rapid, constant change, there is a need to really understand how the world will be different in the future.  To do so, we must first understand what assumptions can be made and set out to use a strategic planning framework to understand how our healthcare organization must transform in the future in the face of those assumptions.  Once we are able to articulate that future successful state, we can then work to understand what must be accomplished to get from where we are today to achieving the needed transformation that must take place in the next few years – our strategy becomes the path and the plan to future success.  


Sources: 
Jonash, Ben & Rajeev Ronanki (2015). The convergence of health care trends: Innovation strategies for emerging opportunities. Retrieved from: https://www2.deloitte.com/us/en/pages/life-sciences-and-health-care/articles/convergence-health-care-trends.html?id=us::3bi:confidence:eng:cons::::qQmDoWY2::77378163007585:bb:::nb

Karoly, Lynn A. and Constantijn (Stan) Panis (2004). The Future at Work: Trends and Implications. Retrieved from: https://www.rand.org/pubs/research_briefs/RB5070.html

Meissner, Armin (2013). The Global Healthcare Industry in the Year 2020. Retrieved from: https://www.mddionline.com/global-healthcare-industry-year-2020

PwC Health Research Institute (2016). Top health industry issues of 2017: A year of uncertainty and opportunity. Retrieved from:  https://www.pwc.com/us/en/health-industries/pdf/pwc-hri-top-healthcare-issues-2017.pdf

U.S. Census Bureau (n.d.). Retrieved from: https://www.census.gov/2020census


David Wilsey David Wilsey

David Wilsey is the Chief Operating Officer with the Balanced Scorecard Institute and co-author of The Institute Way: Simplify Strategic Planning and Management with the Balanced Scorecard.

Identify Strategic Thinking with One Simple Question

By David Wilsey

Jul 29, 2014 18744 Views 0 Comments FacebookTwitterLinkedInGoogle Plus
I used to work on a research team for a company that produced an operational risk software product. I always found it interesting how different members of the same team answered an important question: what do you do?

Here is the way Person A and Person B responded:

Person A: We do research on the internet and enter data points into an operational risk database.

Person B: We help banks understand operational risk and how much related capital they were required to reserve by providing an analytical software solution that models operational risk in the global market.

Technically both answers were correct. For the data model to be statistically significant, the product needed a certain number of data points, and our research team’s job was to research and categorize examples of operational loss in order to populate the database and make the model work. And yet, somehow Person A’s answer was always unsatisfying for some people.

It might be tempting to say that Person B was simply exaggerating the importance of their work by describing it in terms of the mission of the product line, but I think that misses an important point about the value of thinking strategically no matter what your position with the organization is. Person A was simply describing our job. Person B was describing how we created value. Different ways of describing our work was actually a window into the strategic thinking style of the team members.

From Daniel Pink to Simon Sinek and others, much has been said and written about how people are more motivated and productive when they understand the larger context for their work. Understanding why they are doing the work is profoundly important for creative professionals to feel a sense of engagement. Helping employees transition from narrowly thinking about what they do to more broadly thinking about what they are trying to accomplish can improve organizational performance in a number of ways.

The good news is that strategic thinking is a teachable skill. In our BSC Certification courses, we begin by teaching the basic semantics of strategy. At first, students mechanically append or replace the “task” language that most are comfortable with (we need to develop a new service by milestone x) with language that reflects a higher level objective (we want to improve the customer experience; the development of a new services is one option for accomplishing that). Over time, mechanical semantics evolve into an instinct for intuitively thinking about the strategic context. As students change the way they think about strategy and action, critical thinking skills improve as well (e.g. if we are trying to improve the customer experience, is a new service really the best way to do it?). The transition for many teams from always focusing on tactics and actions to always starting with the big picture and working down can be quite profound.

For more about how to improve strategic thinking in your organization, see our Balanced Scorecard Certification Program or The Institute Way: Simplify Strategic Planning and Management with the Balanced Scorecard.
David Wilsey David Wilsey

David Wilsey is the Chief Operating Officer with the Balanced Scorecard Institute and co-author of The Institute Way: Simplify Strategic Planning and Management with the Balanced Scorecard.

The “Words with Friends” Strategy Disruption

By: David Wilsey

Mar 4, 2014 10546 Views 0 Comments FacebookTwitterLinkedInGoogle Plus
Umiaq is defined as a large open Inuit or Eskimo boat made of skins stretched on a wooden frame, usually propelled by paddles. I looked it up only because my Words with Friends opponent just played that word. There are several possible explanations for this move. Maybe my friend of many years has recently become an expert in the Inuit culture. Maybe his linguistic genius is finally starting to gel, although that seems unlikely after years of unexceptional Scrabble play. Or more likely, he randomly guessed over and over until something was accepted.

Much has been made about “plugging”, the practice of guessing randomly until you stumble upon a word. To a Scrabble purist like me, this is cheating, pure and simple. To seemingly everyone else, this is just part of the game and I need to shut up and stop being a sore loser.

My point here is not to rant about the game. My point is that, for better or worse, sometimes your strategic competitive environment changes. Your favorite political party loses. Your competitors merge. Technology enables your customers to replace your cash cow service for free. A small new competitor comes up with a disruptive new technology that changes the rules in your industry.

This seems almost unfair in the strategic planning and management world because you spend so much time and energy designing and executing a comprehensive strategy around certain assumptions. Just when you think that the initiatives that you are implementing are closing the gaps on your targets, the rules change and you find yourself on the Blackberry end of the iPhone revolution.

There are a few guidelines you can follow to make sure that this doesn’t happen. First, don’t skimp on your external environmental scan during the Assessment step and be sure to go back and update that analysis periodically. Some of us work in industries that change abruptly from quarter to quarter, but in most industries, change happens gradually enough that an annual update will be adequate.

Second, use scenario planning to help identify strategy alternatives. Scenario planning helps recognize the many factors that combine in complex ways to affect future success, and tries to make sense of how these factors interact and how they drive change, leading to a deeper discussion on better business strategies.

Finally, sometimes planners get too attached to their product and have to be reminded that a dynamic strategy needs to be continuously evaluated to enable the organization to nimbly adapt and change. Evaluation helps organizations understand how well strategies accomplish desired results and how well the strategic management system improves communications, alignment and performance. A more formal evaluation process is usually conducted once a year, although if your organization is in a sector that changes more rapidly than that, more frequent evaluations are needed.

If I don’t like plugging in Words with Friends, I can simply stop playing out of principle. But if my livelihood depends on my ability to adapt to a changing world, I have to be able to quickly and systematically adapt my strategy.  If I am too stuck in my ways, my organization will have a serious problem.  Sort of like being in an umiaq without a paddle.

For more about how to adapt your strategy to a changing world, see The Institute Way: Simplify Strategic Planning and Management with the Balanced Scorecard.
Dan Montgomery Dan Montgomery

Dan is Senior Associate for the Balanced Scorecard Institute. An accomplished facilitator and trainer, Dan has a 30 year background as a manager, management consultant and executive coach. His previous professional consulting experience includes work with Accenture and Ernst & Young.

In Search of the Canadian Hippo

By Dan Montgomery

Feb 24, 2014 4513 Views 0 Comments FacebookTwitterLinkedInGoogle Plus
During the years we lived in Canada, my family became fond of Canadian Heritage Moments.  These were sixty-second vignettes that depicted formative moments in Canadian history.

One of my favorites has the intrepid French explorer Jacques Cartier arriving in the valley of the St. Lawrence River in the year 1534 and encountering a group of Iroquois. The leader of the tribe approaches the French party and invites them to visit his nearby village.  The viewer, having the benefit of English subtitles, learns that the word for village in Iroquois is “kanata.”

Cartier turns to the priest on his right and asks “What is he saying, father?” The priest hesitates a moment and then announces confidently: “He is saying that the name of this nation is Canada!”  A helpful and obviously intelligent young man steps up behind Cartier and says “Begging your pardon, sir, but he’s inviting you to visit him in his village. Canada is his word for village.” The priest asserts his authority, dismissing the young man, and off they go.  And the rest is history!

Enjoy the story at http://tinyurl.com/k84fsdk

When exploring new territory, it’s best to draw as much as possible on the collective intelligence of the group when assessing the situation. This is truer than ever in our organizations, and at least as true as it was in Cartier’s time.  Cartier, after all, thought he was in Asia.

One of the biggest mistakes we make in strategic planning is assuming that the future will be more or less like the past. It won’t. It’s critical to articulate – and question – our assumptions about the environment we operate in, in terms of what our customers value, what our competition is offering, and the impacts of big forces like technology and the economy.

Many of our organizational ways derive from a simpler time, when we could rely on the experience of people who’d been around longer for an accurate assessment of the situation. In one of my classes, a student raised his hand and said “That’s what we call the HiPPO principle.  It means that decisions are made based on the Highest Paid Person’s Opinion.”

In rapidly changing times, making strategic assessments and decisions based on what worked in the past may prove short sighted. A well-managed system for tracking and reporting strategic metrics is the compass that leaders and staff throughout the organization can use to learn from experience and align their actions in pursuit of better value for customers.

We recommend that you:
  • Schedule periodic reviews of your assumptions about your macro-environment and stay tuned for new information that may challenge these assumptions
  • Agree on the strategic performance metrics that matter to you as an integral part of your planning process – not after the fact
  • Maintain an especially acute focus on tracking customer experience and value
  • Incorporate those metrics into your scorecard and make scorecard review a regular item on your leadership meeting agenda
Gail Stout Perry Gail Stout Perry

Gail is co-author of The Institute Way with over 20 years of strategic planning and performance management consulting experience with corporate, nonprofit, and government organizations.

Wigs, Pigs, and Desserts

By Gail Stout Perry

Jan 31, 2014 18027 Views 0 Comments FacebookTwitterLinkedInGoogle Plus
Some of our clients use Franklin Covey’s methods to improve human and organizational performance, including the use of WIGs (Wildly Important Goals). I’ve wrestled with how to integrate Covey’s approach, which is sometimes loosely or creatively applied, into the balanced scorecard framework in a way that is disciplined, consistent, and simple to understand.
   
Recently, it dawned on me that WIGs are really based on the concept of contribution – a concept we use when measuring performance in the balanced scorecard framework. So first, I need to explain the concept of contribution.

I recently wrote a blog (Skinny Jeans and the New Math) in which I was trying to watch my weight but could not directly measure my weight via a scale, so I used a correlate measure based on a pair of skinny jeans in my suitcase.  A different technique to measure something indirectly is to use a contributing measure.  A contributing measure is something you can measure directly and which you believe will influence the results on the thing that you cannot measure directly (in this example, my weight). I actually have two contributing measures that I use while traveling, but until now I haven’t told anyone my secret.  

Science has shown that several things contribute to weight gain or loss. I have chosen two that are within my control and are easily measurable: (1) How often I eat sweets while on a trip, and (2) How often my gym shoes actually get removed from my suitcase for a brisk walk around the hotel. By setting goals of one or fewer desserts per week (chocolate is my weakness) and using the gym shoes at least once a week, I can keep track of these two contributing measures, both of which will influence what the scale will say when I finally get home.
   
And that’s exactly what Franklin Covey’s WIG approach is.  It’s a series of contributing goals/measures in which one action influences resultant performance on another.
 
So, how can the Covey methodology effectively integrate with the balanced scorecard framework?  Here’s how:  An executive’s WIG must be based on either a strategic performance measure / target or on a strategic initiative.  These are two scorecard elements that are most likely to have actionable contributing factors that an individual can relate to.   The contributing WIGs (which individuals are tasked to create to support the executive’s WIG) are the individual activities or measurable milestones or measurable contributing indicators that ensure individual performance contributes to the overall executive WIG, thereby contributing to the execution of organizational strategy. To further align the Covey execution methods to the organization’s strategy, a disciplined process should be deployed at Tier 3 (individual and team performance objectives for the scorecard system) to ensure that the individual understands the strategic context of their personal and team WIGs.
 
To learn more about how different frameworks integrate into a logical, holistic system to improve organizational performance, we invite you to explore The Institute Way: Simplify Strategic Planning & Management with the Balanced Scorecard.  
Dan Montgomery Dan Montgomery

Dan is Senior Associate for the Balanced Scorecard Institute. An accomplished facilitator and trainer, Dan has a 30 year background as a manager, management consultant and executive coach. His previous professional consulting experience includes work with Accenture and Ernst & Young.

What’s the Value in Having Values?

By: Dan Montgomery

Dec 13, 2013 9628 Views 0 Comments FacebookTwitterLinkedInGoogle Plus

“It’s not hard to make decisions when you know what your values are.” – Roy E. Disney

Values can sometimes seem like the stepchild of strategic planning.  The guts of a strategic plan can include a results-oriented vision translated into specific objectives, measures and initiatives that will support it.

Values, on the other hand, can feel a bit fuzzy. Often, people think of values as a “do-gooder” thing. The exercise of defining values may feel like an exercise in identifying lofty sentiments rather than guiding day-to-day behavior.

Edgar Schein, who has made a career of studying organizational culture and values, makes a distinction between “espoused values” – the things we say we believe in - and “shared tacit assumptions” – the often unspoken assumptions about “the way things are” that actually shape our behavior. All organizations have values, whether these are explicit or not.

This last point is important. For example, Enron had a list of four values that sounded very convincing: respect, integrity, communication and excellence. There also were a number of other values, such as “consistent profits quarter over quarter no matter what,” that weren’t stated, yet were the primary drivers of management behaviors – hidden from public view until it was too late.

These kinds of values – stating things that sound nice but don’t really guide our behavior – are what we call “lobbyware.” They look good on a plaque but don’t really say anything about how we make decisions.

There’s nothing wrong with having a value based on profit—this is how businesses grow and sustain over time. I was working with the executive team of a privately-held company, defining values as part of Step 1 of the Institute’s Nine Step process, and the CEO proposed a value of “profit.” Some of his executives were mildly horrified, to say the least.  They were coming from the paradigm that all values have to be “nice,” and felt that somehow focusing on profit just wouldn’t be very motivating to most employees.  The CEO’s response was telling – “If we don’t make a profit, we’re out of business. And we’re all out of a job.”  Similarly, in the non-profit world, we hear the slogan “No margin, no mission.”

And, all values aren’t necessarily “humanistic” attributes like teamwork, respect, or public service. Values create both an ethical and a practical compass that influences actions and decision in every-day situations. In a “lean” company like Toyota, for example, values include “Go to where the work is done and find the facts,” “Encourage Consistency,” and “Reduce Waste” – all part of a rigorous emphasis on continuous, measureable process improvement.

Ultimately, values reflect the personality of the organization, and are an important component of the organization’s culture – part of the foundational perspective we refer to as “Organizational Capacity.” As part of this, well-articulated values can be a powerful way to attract and screen new employees who are compatible with the culture of your organization.

Finally, the assessment of an organization’s strengths and weaknesses may show that the current values of the leadership or workforce are incompatible with what is needed to move forward, seize opportunities, or adapt to change.  In that case, a strategic theme addressing cultural transformation may be called for.  This cultural transformation may be essential to achieve other goals of the organization.

Read more about Values in The Institute Way: Simplify Strategic Planning and Management with the Balanced Scorecard.

David Wilsey David Wilsey

David Wilsey is the Chief Operating Officer with the Balanced Scorecard Institute and co-author of The Institute Way: Simplify Strategic Planning and Management with the Balanced Scorecard.

Hungry for Some Perspectives?

By David Wilsey

Dec 6, 2013 5287 Views 0 Comments FacebookTwitterLinkedInGoogle Plus

RestaurantOne of the participants in a recent Balanced Scorecard Professional Certification workshop was struggling with the difference between Strategic Themes and Balanced Scorecard Perspectives. In fact, he fundamentally questioned the need for both.  His argument was that Themes and Perspectives are essentially both focus areas of some sort.  Finally, he asked that I show him how different restaurants would use the terms if they were to create a balanced scorecard.

His request actually proved to be a great teaching example. Different restaurants, because they are in roughly the same business, will use roughly the same four Perspective names. All restaurants have to hire and train cooks and other personnel, build or rent physical facilities and use technology of some sort (Organizational Capacity Perspective). All restaurants have to order, prepare, and serve food or otherwise provide a particular atmosphere / experience of some sort that depends heavily on efficient internal processes (Internal Process Perspective). All restaurants want to please customers of one segment or another (Customer Perspective) and they want to control costs and make money (Financial Perspective). Restaurants might tweak the names of these perspectives to match their specific culture, but the concepts will be the same.

It is in the Strategic Themes and the accompanying Strategic Results that the restaurants will likely be different.  Strategic Themes are derived from each restaurant’s unique mission, vision, values and customer value proposition.  One restaurant might specialize in Mexican cuisine and another Italian. One might deliver a low cost family experience while another might be focused on luxurious atmosphere and world class service.  Maybe one is trying to grow into a worldwide franchise with thousands of stores that all look alike and another is trying to be the finest unique restaurant in New York City.

These differences in competitive positions will result in different strategies as represented by the Strategic Themes.  For each Theme, there is a specific Strategic Result that the organization is trying to accomplish.  Strategic Results define the desired outcome or goal of the Theme and indicate how we will know success within the Theme.  Strategic Results are written in “end state” declarative language, like “we are number one or two in 20 geographic markets,” rather than describing future actions, e.g. “we will increase our marketing efforts”.

The point is that the organization’s business model determines what Perspective names you select and their sequencing for the strategy map.  But the specific strategy that you want to implement to compete in your chosen marketplace determines which Themes you select.  Together, Perspectives and Themes form the foundational framework for the resultant balanced scorecard.

For more on how to develop and manage strategy using Themes, Results, and Perspectives, please see The Institute Way – Simplify Strategic Planning and Management with the Balanced Scorecard.



Gail Stout Perry Gail Stout Perry

Gail is co-author of The Institute Way with over 20 years of strategic planning and performance management consulting experience with corporate, nonprofit, and government organizations.

Are Strategic “Leaps of Logic” Leaving You Dazed and Confused?

By: Gail Stout Perry

Nov 22, 2013 13865 Views 0 Comments FacebookTwitterLinkedInGoogle Plus

Have you ever known someone whose brain works faster than they can talk or write?  They often appear to be making leaps of logic when actually, their brain is working through logical steps but they are only communicating their first and last thought in the flow...not the thoughts in the middle.  I have found that many CEO’s suffer from a similar “problem.”  Often, they have a strategy in their heads yet it appears to others that they have made a giant leap from vision to KPIs or initiatives.   So while the CEO usually understands how the pieces fit together, most employees are not mind-readers and cannot follow the “leaps of logic”.

This point was vividly illustrated to me in a phone call I had last week.  A CEO called to say he wanted to use a balanced scorecard – he had seen a competitor company achieve outstanding performance which they attributed to their use of balanced scorecard.   Furthermore, he had already figured out the five most important KPIs for his own company...and he asked if we could help him get the managers and employees in his 36 locations to understand and get motivated to take action in alignment with these 5 KPIs. SIGH....I knew it would be a long conversation but he was so sincere and motivated that I dove in and began to try and pull the “middle part” out of his head by asking him questions.

He had a very clear picture of the future state of his company and his descriptions were compelling and detailed.  As we talked, I began to loosely translate his word images to strategic objectives...I could almost create a strategy map from his stories.  And that’s ONE point:  A strategy map tells a story, it paints the picture of the organization’s future state and how it plans to get there.  He seemingly skipped this and other important steps when he leaped from vision to KPI’s and, therefore, he was missing the logical linkages.

Furthermore as I helped him cross-walk his 5 KPIs to the potential objectives,  I was able to show him that his KPIs were all in the results perspective(financial and customer)...he hadn’t fully considered the  driver KPIs that would be needed until I asked enough questions to start teasing the driver strategic objectives out of his head.  In other words, he was asking his employees to focus on end results without articulating a strategy to achieve those results.

After about an hour he said, “I get it.  I skipped the middle part and that’s the MOST important part. I was told that there is a LOT of work to get to meaningful and strategic KPIs but I didn’t understand the middle part.  It is truly important.”   Eureka!

And one final point that I made ....and which he definitely understood:  no matter how smart and fast-thinking he is, if he doesn’t involve his team in the creation of strategy and the strategic balanced scorecard, they will be unlikely to buy-into or actively engage in improving the company’s performance.  He knows that he must SLOW DOWN and let other not only catch up, but have a SAY in strategy and KPIs. 

Are you a fast-thinking CEO who “skips the middle” or do you work for someone who does?  You may enjoy other real stories and examples in the The Institute Way:  Simplify Strategic Planning & Management with the Balanced Scorecard.

David Wilsey David Wilsey

David Wilsey is the Chief Operating Officer with the Balanced Scorecard Institute and co-author of The Institute Way: Simplify Strategic Planning and Management with the Balanced Scorecard.

The Strategic Planning Wheel of Doom

By David Wilsey

Oct 25, 2013 8524 Views 0 Comments FacebookTwitterLinkedInGoogle Plus

Hamster wheelI talked to a student from one of our classes over a year after the class to see how things were going, and she told me a long story about how they were still debating the exact wording of objective number 9.  I asked her if they had reached their targets on any key measures and she said that they were still tweaking the measurement data definition.  So a year after the class, they were still just thinking about how to get started!

In our recent webinar, we named this as one of our Top Eight Strategic Management Horrors, dubbing it the Wheel of Doom.  This horror is where the strategic management team begins the strategy formulation and planning process and is never heard from again.  They wordsmith the mission and vision statements for weeks.  They argue for months about the SWOT analysis.  They change strategic themes four times.  They refine the strategy map for months and months, and so on, without ever moving on.

So what is the solution?  How do you get the hamster off that wheel?

My first recommendation is to set a deadline.  In other words, if you start your strategic planning effort on September 1, set a deadline of, say, October 31.  On that date, everyone should agree that we will no longer wordsmith strategy but will instead discuss our performance results.  We won’t have to have the entire system done, but we will have at least a couple of important measures in place so that we can discuss how we are performing versus our strategic objectives.

The second thing that is critical to always remember the old saying that perfect is the enemy of good. None of this is written in stone.  Strategic planning is an iterative process and so implementing an 80% solution quickly is better than drawing out the process trying to create the perfect system.  It’s easier to maintain momentum if you can maintain high energy and move on quickly.

The third recommendation is to keep it simple.  Remember you can’t do everything for everyone.  Be a brutal minimalist at each step of the way to keep the number of objectives and measures down.  Then when you start executing strategy, focus on just a few key focus areas to start. Focus on improving 1-3 key processes that will drive the highest priority gaps in performance.

Finally, it seems like common sense for people that are good with action items, but some folks are intimidated by long term projects and so they never get going.  They literally don’t know where to start. For those of you that struggle with that, the first step is to take those long-term, complex initiatives and break them down into shorter-term tasks.  Then get started on the first task.

For more on how to improve strategic planning and move on to strategy execution, see The Institute Way: Simplify Strategic Planning and Management with the Balanced Scorecard.

Howard Rohm Howard Rohm

Howard Rohm is President and CEO of the Balanced Scorecard Institute and Founder of the Strategy Management Group, Inc., the Institute's parent company. He is a performance management trainer, consultant, and technologist with over 40 years' experience.

How Can They All Be Our Customers?

By Howard Rohm

Oct 4, 2013 5142 Views 0 Comments FacebookTwitterLinkedInGoogle Plus

Twenty-three people were waiting for the workshop to begin. The job at hand was to facilitate key managers, analysts, and program advisors through a strategic thinking process and formulate a new strategy. The organization was a four-hundred employee health care non-profit. It was 20 years old and was created around a single purpose: saving lives by processing tissue and organs for transplantation.

Strengths, Weaknesses, Opportunities and Threats were summarized into two major categories--Enablers and Challenges. I told the group that the enablers and challenges are important inputs to the strategy formulation process and critical to the next step--deciding who the organization’s customers were.

I took a quick survey. “I’m going to name different individuals and groups, and I want you to raise your hand when I mention a customer. First, I named organ donors--almost every hand went up. Transplant recipients--same thing, almost every hand. Doctors, about three quarters of the hands went up. Hospitals, same thing. Family members of a donor, same. Family of a recipient, the same.

I then asked a question: “If everyone is your customer, how can you create a business strategy that is actionable and focused?--How can you provide world-class services to so many different customers?”

The answer is--you can’t. You need to figure out who the primary customer is and how your organization can serve customer needs efficiently and effectively. Here’s how to do it.

Define customers as the direct beneficiaries of your products and services. Define others as stakeholders--those individuals or groups with an interest in your organization’s success (or failure if they are a business competitor!). And yes, customers are a subset of the larger group called stakeholders.

Separating customers from stakeholders allows you to focus on doing a few things well and not trying to do everything for almost everybody--a common failing that I have observed over the years in many organizations.

So who are the customers and who are the stakeholders in the example above? There are only three customers who are direct beneficiaries of the organizations products and services: a doctor who receives a live tissue or organ product for transplantation, a hospital who receives a product from the organization for delivery to a doctor who performs the surgery, or a dentist who performs an implant. That’s it, just three--value given and value received (in the form of a payment for a product). Are others in the example important? Of course they are, but they are very invested stakeholders, not primary customers.

How did this workshop help the organization? By identifying the three primary customers, new strategies were developed that aligned directly to the mission and vision. These strategies provided strategic direction that could be made actionable with a budget and an operating plan. Then several strategic initiatives were identified that would directly improve customer-facing processes and services affecting the three primary customers. And strategic performance measures were identified, to ensure that progress was being made on the organization’s goals.

Building a strategy focused organization is about defining and connecting organization strategic elements. Identifying customers and their needs is a critical step. You can learn more about how to identify your customers and improve customer value in our new book, The Institute Way: Simplify Strategic Planning and Management. You can order it here or on Amazon.

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