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Howard Rohm Howard Rohm

Howard Rohm is the Co-Founder and President of the Balanced Scorecard Institute. Howard is an author, performance management trainer and consultant, technologist, and keynote speaker with over 40 years' experience.

Obfuscating Objectives

By: Howard Rohm

Feb 15, 2018 742 Views 0 Comments FacebookTwitterLinkedInGoogle Plus

One of our clients decided to build their strategy map and balanced scorecard themselves after some training. They created a draft strategy map with 12 strategic objectives, linked together in a cause-effect chain--the strategy map--that showed how value was being created for their customers and the owners of the business. A few months after the training, the number went from 12 objectives to 32. Why? – a lack of discipline around the strategy development process and a feeling by a few folks who did not attend training that “more is better”.

How many strategic objectives should there be on a strategy map? Ten, fifteen, twenty? Are more objectives better? How many are too many?  How few are too few?

A strategy map is a visual representation of a strategy—it’s a hypothesis of what an organization has to do to create value for its customers and owners. For a private sector business, the owners are the shareholders; for a mission-driven organization -- nonprofit or government -- the “owners” at the end of the value chain are the benefiting stakeholders, e.g., members of an association, citizens of a government.

Strategic objectives, when connected in cause-effect links, represent a strategy hypothesis that can be tested and progress monitored using strategic measures of performance—KPIs—developed as part of the strategy development process. A good strategy map requires good objectives.

Objectives are used to identify measurable strategic intended results; develop KPIs that measure strategy progress; identify, prioritize and track actionable initiatives; build employee accountability; and communicate corporate vision and strategy internally and externally. We’ve identified a set of best practices for creating strategic objectives and strategy maps from our training and consulting engagements worldwide:

  • Objectives are not start/stop activities or projects (those are initiatives)…objectives are continuous improvement activities that work together to produce value
  • Twelve to 14 objectives are a good number for a corporate strategy map (organization size doesn’t matter here)
  • Objectives indicate action and the potential for continuous improvement (Remember: strategic objectives are the DNA of your strategy—they make strategy actionable and understandable throughout the organization.)
  • Objectives should be balanced among the four perspectives in a scorecard
  • Objectives are “altitude sensitive”—if the strategic altitude is too high, it’s hard to translate “lofty” language into employee action…if too low, objectives will be framed in operational, not strategic, language
  • Prioritized strategic initiatives, linked to each objective, should propel the organization forward toward its goals and vision
  • Objectives should be measurable based on the associated intended results, to monitor progress toward accomplishment

Arguably one of the most important contributions to the science of management in the past two decades, strategy maps communicate the organization’s value proposition with clarity, both internally to employees so they can see how they “fit” in the organization, and externally to boards and other stakeholders.

Get strategic objectives and your strategy map right and your balanced strategic plan and strategy story will come alive quickly and clearly. These tools can help take your organization to the next level of performance.

You can learn more about strategic objectives and strategy mapping by reading our book, The Institute Way: Simplify Strategic Planning and Management with the Balanced Scorecard, or by attending one of our worldwide training classes.

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 1786 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.  

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.

How to Keep Lettuce Crunchy and Other Strategy Execution Lessons

By: David Wilsey

Nov 22, 2016 5906 Views 0 Comments FacebookTwitterLinkedInGoogle Plus
I learned two lessons in college that I still think about – one in the kitchen and one as a strategy execution consultant. My professor claimed during a cell biology lesson that if you leave iceberg lettuce in water for about 20 minutes its cells expand as they soak up the water. He said that many chefs knew that soaking lettuce in cold water made it seem fresher and crunchier but few understood that it was because the cells were packed to the bursting point.

I went home for the holidays eager to share this new lesson with my mother. This is where I learned the consulting lesson. 

My mother had been taught that in order to keep salad crisp, you should throw a slice of bread into the salad as you are making it and then pull the bread out just before serving. The thinking was that the bread soaked up the excess moisture that would otherwise lead to wilting.

When I shared my professor’s theory with her, I assumed that we would immediately begin saving a nickel per month due to all that saved bread. Instead I was surprised to find that my mother was not about to change the way she made salad because of something her son’s biology professor said, not even after I showed her that the lettuce didn’t wilt.

Strategy execution is about transformation. It is about the systematic implementation of the changes needed to move an organization forward. Unfortunately, as you try to convince people to change the way they do things, many of them react exactly like my mother did.

The change management field is built around several general principles in how to manage people through change: thoroughly communicate how/why/what change is happening, look for the “what’s-in-it-for-me” for employees, communicate using two-way dialog, remove barriers to change, celebrate success, describe a “burning platform”, etc. Strategy execution specialists bring a few more key approaches to these basic doctrines. 

Engage Around the Big Picture. A simple business case (e.g. this initiative will help us improve process efficiency and lower operating costs) often isn’t enough. To embrace change it helps to understand how a particular initiative is aligned with the overall strategy of the organization (e.g. we want to bring low cost healthcare solutions to those suffering from an ailment. If we can improve this process, the solution could be better, more consistent, and cheaper than anyone else in the market). Employees will be far more motivated to change if they believe in the strategy. Strategy professionals typically have the skills needed to articulate and communicate that story.

Make Strategy Everyone’s Job. Strategy is a team sport. Too many strategy professionals think that because they are good at it they should do all of the work themselves. But good strategy execution relies on others to implement. I can tell my mother that this is a better way or (if she were an employee) order her to follow a new process, but as long as she can dismiss the idea as an outsider’s, change will be painful. Good strategy execution professionals understand that their job is to facilitate a consensus around a shared vision rather than simply dream up a vision in a vacuum.

Pick Your Battles. Strategy is about focus and strategic thinkers should be good at prioritizing. The worst thing you can do is overwhelm employees with dozens of major changes at the same time and then when things go badly decide that it’s not worth the trouble. Better is to pick the most important changes and implement them at a pace that the organization can handle. Then think through and communicate the timeline, action steps, and resource changes that will happen as the change is rolled out.

Facilitate a Sense of Inevitability. The weakest client outcomes in my career happened when there was uncertainty about whether or not the senior-most executives were on board. A well-meaning strategic planning director that isn’t visibly supported by the executive team will struggle to move an organization forward even if they do everything else right. On the other hand, if the executive team has thoroughly and repeatedly communicated that this change is going to happen with or without you, the inertia of inevitability will convince people to jump on the bandwagon even if other change management mistakes are made.

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 19446 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.
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.

Don’t Be THAT Guy!

By Gail Stout Perry

May 15, 2014 11950 Views 0 Comments FacebookTwitterLinkedInGoogle Plus
A very distraught woman (we’ll refer to her as Vera) recently called the Balanced Scorecard Institute office in panic.

Vera:  “Hello?  I need those flags.  Can you please overnight the flags to me?  It’s urgent!”  

Us:  “Excuse me?  I think you may have the wrong number?”

Vera:  “Isn’t this the Balanced Scorecard Institute?”

Us:  “Yes, ma’am.  But we don’t sell flags.”

Vera:  “Yes, you do.  My boss said so.”

Us: “Ummmmm….could you elaborate?”

Vera (in an exasperated tone):  “Listen!  My boss just announced that we are going to improve performance using a Balanced Scorecard.  He sent us a memo that said each store is responsible for showing performance by using red, yellow and green flags.  I’m a store manager and I am being held RESPONSIBLE!  I called the other store managers and nobody has the flags.  We all need to order those flags NOW!  You ARE the Balanced Scorecard Institute, are you not?!?”

I really am not sure we ever adequately explained to her that the “flags” are a term meaning a visual representation of the level of performance around a target value for a strategic objective or measure, with green generally indicating good performance, yellow generally indicating satisfactory performance, or red indicating poor performance.  And I’m pretty sure she thinks we are idiots for giving a complex response to a simple request to order some flags that she can wave.

For the record, I am not making fun of the caller herself.  She was an intelligent woman and obviously a dedicated worker.  But she was dreadfully misinformed and the source of the misinformation is the point of this blog.

My point is that her boss created angst and confusion in his organization by making an announcement with no explanation and no context.  HE knows his strategy, HE knows how he wants to measure performance on it, HE created a balanced scorecard to do so (without teaching anyone what that means), and HE announced it to the world and then said “YOU are responsible!”  

Don’t be that guy.  

Many bosses / executives / leaders are really smart.  They have a well-thought out strategy in their heads and they can make the leap from planning to execution…in their head.  But they are better at internal conversation (in their own head) than they are at communicating with others.   If this sounds familiar, let us help you bridge the gap between what you say and what your employees hear.  
I’ve written another blog about this topic (
Are Strategic Leaps of Logic Leaving You Dazed and Confused?), because this problem comes up over and over again.  

Please contact us and let us help. 

Or to learn more about how to translate your strategy into something that is clear to communicate in a way that employees can understand and effectively contribute to, we invite you to explor
e 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 “Words with Friends” Strategy Disruption

By: David Wilsey

Mar 4, 2014 11832 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 co-author of The Institute Way. 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 4992 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
Howard Rohm Howard Rohm

Howard Rohm is the Co-Founder and President of the Balanced Scorecard Institute. Howard is an author, performance management trainer and consultant, technologist, and keynote speaker with over 40 years' experience.

How Can They All Be Our Customers?

By Howard Rohm

Oct 4, 2013 5600 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.

Dan Montgomery Dan Montgomery

Dan is co-author of The Institute Way. 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.

Bringing Innovation Down to Earth

By Dan Montgomery

Sep 27, 2013 10183 Views 0 Comments FacebookTwitterLinkedInGoogle Plus

Years ago, I worked for a Big 5 consulting firm and did a lot of strategic planning projects. In one case I remember we facilitated four three-day workshops with the top 25 executives in a government-owned power generation company in Canada. We went through a pretty typical strategy formulation process, talking about strengths and weakness, opportunities and threats, mission, vision, values, on down the line until we developed key performance indicators and an action plan.

A big theme in both the vision and the values was Innovation.  We wordsmithed those statements, and moved on.  Everything was going along like clockwork until 3 pm on the very last day of the very last workshop, when one manager raised his hand and said, “You know, after all this talk about vision and values and innovation, I don’t see that we’ve ever really defined what we mean by innovation or talked about how to put it into practice.”

And he was right. The way we did strategic planning back then, there was no connecting the dots. Which indicators would tell us if they had become more innovative?  What projects would foster innovation? That was never discussed. The indicators were all operational measures, and the projects were all concerned with improving power generation processes – nothing about innovation.

I went back to the office feeling like something was wrong with this picture.  Imagine my delight a few weeks later when I shared this dilemma – with another client – and he told me about balanced scorecard.  I’ve been working with it ever since. With the balanced scorecard, Innovation can be treated as a theme and integrated – top to bottom  - in a way that is measureable and actionable.  To read more about how the balanced scorecard can foster Innovation, see How to Build Innovation Into Your Strategy.