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PowerPoint PresentationHow to Drive Organizational Alignment to
Strategy Using Balanced Scorecards
p. 2
Presentation Overview
• Aligning & Prioritizing Improvement Initiatives
• Best Practices
p. 3 p. 3 © 2009 ActiveStrategy, Inc.
Strategic vs. Operational Goals
strategic efforts (typical)*
improved plus key strategic improvement initiatives
Increased time spent on
• Perspectives –high-level focus areas
• Objectives – verb-noun statements that reflect the strategic plan (e.g., “Improve Customer Satisfaction”)
• Measures/Metrics - #, $, or % that indicates performance against an objective
• Targets – what the measure should attain
• Initiatives – improvement projects (e.g., “Improve Cycle Time”)
p. 6 p. 6 © 2009 ActiveStrategy, Inc.
Making Strategic Goals Actionable
execute plan
Key Strengths, Weaknesses,
• Helps ensure you’re not missing any key drivers
p. 8
Steps to Creating a Strategy Map 1. Prioritize SWOT outputs & convert to
“verb noun” strategic objectives
3. Identify cause-and-effect relationships with arrows
p. 9 p. 9 © 2009 ActiveStrategy, Inc.
The Anatomy of a Strategy Map
High-level “objectives” (verb/noun)
Links showing relationships
P e rs
“ P
Example Strategy Map for Public Sector
Note: Perspective names and their cause & effect order change
p. 11
p. 12
Creating a Balanced Scorecard Step 1: Transfer from Strategy Map
• Transfer Perspectives and add Index numbers (1.0, 2.0)
• Retain cause & effect hierarchy
• Transfer Objectives into proper Perspective and add Index numbers (1.1, 2.1)
p. 13
Keep in Mind
• Can use more or different perspectives (if appropriate), BUT BALANCE IS CRITICAL
• Objectives must contain a verb (grow sales, reduce complaints, etc.)
• Keep objectives focused (7-12 max per scorecard)
p. 14 p. 14 © 2009 ActiveStrategy, Inc.
Perspectives & Objectives on BSC
Creating the Top-Level BSC Step 2: Determine Measures
• Should represent the best indication that an objective is being met
• Ask what outcomes your stakeholders desire from the objective:
• Quality or defects
• Keep to 1-3 measures per objective
• One objective may be measured with two or three dissimilar
units of measures, e.g. Customer Satisfaction may be measured
by:
• Turnaround time (2 days)
p. 17
Lagging Measures
• Lagging measures are reported infrequently, too late to prevent a problem
• Examples are a company’s critical high-level outcome measures:
• Sales
Breaking Down a Lagging Measure • First Step – Dimensional Measures
• These break down a measure by its component parts using the same units (e.g. Sales by Division or Geography)
• Note: dimensional measures alone do not get at the root causes of a problem
p. 19
Leading Measures
• Leading Measures
• break down an important measure into what drives it (e.g. # of quotes or size of pipeline)
• Also called Cause & Effect or Process Measures
p. 20
• % Service Rep Availability leads Service Response Time
• Leading/Lagging are relative terms
• A leading measure in one area is likely a lagging measure to another area
© 2008 ActiveStrategy, Inc.
• Initiatives are time-bound projects
• They have defined resources
• Some are derived from the SWOT Analysis
• They should be prioritized based upon: • alignment to an identified performance gap in a
strategic area
• resources required to improve
• Align current initiatives (time-bound improvement projects) to measures
• Cease initiatives that do not align and any that align to measures that are meeting goals
• Consider new initiatives to address underperforming measures
• Aligned initiatives drive results by addressing root causes
p. 24 p. 24 © 2009 ActiveStrategy, Inc.
A Prioritization Matrix
Column 4 Column 5 Column 1 Column 2 Column 3 Prioritization Factors
(Enter 1, 3, or 5 in each – see instructions below ) Priority
Score/Departments
Also list key dept. needed to achieve it
1.
2.
3.
4.
An Example Completed Matrix
Column 4 Column 5 Column 1 Column 2 Column 3 Prioritization Factors
(Enter 1, 3, or 5 in each – see instructions below ) Priority
Score/Departments
Also list key dept. needed to achieve it
1. Improve
margins Improved
2. Improve
productivity in
3. Implement new
4. Open new
Customer Education & Facilities
• Well…actually, this is just the beginning
• The next step is to create a “cascaded” framework of scorecards
• Create linked scorecards down & across the organization
• This is where you really start to deploy your strategy and make it actionable
p. 27 p. 27 © 2009 ActiveStrategy, Inc.
What It Looks Like (Long-Term) Top-Level Scorecard
Divisional or Business Unit
• It results in a proactive performance system
• it communicates and translates the strategy to all levels
• when a critical top-level lagging measure is underperforming, lower level causes can be easily identified
• allows you to fix important problems before they become high-level issues
p. 29
• Create linked, related (but not identical) scorecards for next organizational level
• As you go, translate objectives to make them meaningful to that area
• e.g., “Improve Customer Satisfaction” might become “Reduce Wait Times for Customers”
• Align measures to the translated objectives
• e.g., % of Customers waiting more than 5 minutes
p. 30
p. 31
• Used to align business processes to strategic objectives
• Helps to identify their translated objectives & leading measures
• Works best for functional and support areas
• Process owners must be involved
© 2008 ActiveStrategy, Inc.
Corporate Objectives
O u tc
Corporate Objectives
’s B
ro c e s s e s O u tc
o m
e s
D a ta
e d
Corporate Objectives
O u tc
D a ta
e d
Align measures identified in the processes to the cascaded Objectives
Corporate Objectives
p. 35
p. 36
Place On Appropriate Scorecard • Place objectives & related measures on the appropriate
scorecard
• Finally, establish goals for each measure to track progress
• Cascaded objectives & measures create alignment to top-level strategy
p. 37
GOING FROM STRATEGY TO ACTION PLAN
An Example “Drill Down” from the City of Coral Springs Scorecards
p. 38 p. 38 © 2009 ActiveStrategy, Inc.
Police Scorecard
Drill down reveals
Additional Measure
Chart Detail –
Initiative Detail
• Keep objectives to the critical few
• Pick measures you can actually measure – and those that drive the right behaviors
• Cascade & deploy (scorecards are NEVER perfect, so don’t wait)
• Review performance of scorecards regularly
p. 2
Presentation Overview
• Aligning & Prioritizing Improvement Initiatives
• Best Practices
p. 3 p. 3 © 2009 ActiveStrategy, Inc.
Strategic vs. Operational Goals
strategic efforts (typical)*
improved plus key strategic improvement initiatives
Increased time spent on
• Perspectives –high-level focus areas
• Objectives – verb-noun statements that reflect the strategic plan (e.g., “Improve Customer Satisfaction”)
• Measures/Metrics - #, $, or % that indicates performance against an objective
• Targets – what the measure should attain
• Initiatives – improvement projects (e.g., “Improve Cycle Time”)
p. 6 p. 6 © 2009 ActiveStrategy, Inc.
Making Strategic Goals Actionable
execute plan
Key Strengths, Weaknesses,
• Helps ensure you’re not missing any key drivers
p. 8
Steps to Creating a Strategy Map 1. Prioritize SWOT outputs & convert to
“verb noun” strategic objectives
3. Identify cause-and-effect relationships with arrows
p. 9 p. 9 © 2009 ActiveStrategy, Inc.
The Anatomy of a Strategy Map
High-level “objectives” (verb/noun)
Links showing relationships
P e rs
“ P
Example Strategy Map for Public Sector
Note: Perspective names and their cause & effect order change
p. 11
p. 12
Creating a Balanced Scorecard Step 1: Transfer from Strategy Map
• Transfer Perspectives and add Index numbers (1.0, 2.0)
• Retain cause & effect hierarchy
• Transfer Objectives into proper Perspective and add Index numbers (1.1, 2.1)
p. 13
Keep in Mind
• Can use more or different perspectives (if appropriate), BUT BALANCE IS CRITICAL
• Objectives must contain a verb (grow sales, reduce complaints, etc.)
• Keep objectives focused (7-12 max per scorecard)
p. 14 p. 14 © 2009 ActiveStrategy, Inc.
Perspectives & Objectives on BSC
Creating the Top-Level BSC Step 2: Determine Measures
• Should represent the best indication that an objective is being met
• Ask what outcomes your stakeholders desire from the objective:
• Quality or defects
• Keep to 1-3 measures per objective
• One objective may be measured with two or three dissimilar
units of measures, e.g. Customer Satisfaction may be measured
by:
• Turnaround time (2 days)
p. 17
Lagging Measures
• Lagging measures are reported infrequently, too late to prevent a problem
• Examples are a company’s critical high-level outcome measures:
• Sales
Breaking Down a Lagging Measure • First Step – Dimensional Measures
• These break down a measure by its component parts using the same units (e.g. Sales by Division or Geography)
• Note: dimensional measures alone do not get at the root causes of a problem
p. 19
Leading Measures
• Leading Measures
• break down an important measure into what drives it (e.g. # of quotes or size of pipeline)
• Also called Cause & Effect or Process Measures
p. 20
• % Service Rep Availability leads Service Response Time
• Leading/Lagging are relative terms
• A leading measure in one area is likely a lagging measure to another area
© 2008 ActiveStrategy, Inc.
• Initiatives are time-bound projects
• They have defined resources
• Some are derived from the SWOT Analysis
• They should be prioritized based upon: • alignment to an identified performance gap in a
strategic area
• resources required to improve
• Align current initiatives (time-bound improvement projects) to measures
• Cease initiatives that do not align and any that align to measures that are meeting goals
• Consider new initiatives to address underperforming measures
• Aligned initiatives drive results by addressing root causes
p. 24 p. 24 © 2009 ActiveStrategy, Inc.
A Prioritization Matrix
Column 4 Column 5 Column 1 Column 2 Column 3 Prioritization Factors
(Enter 1, 3, or 5 in each – see instructions below ) Priority
Score/Departments
Also list key dept. needed to achieve it
1.
2.
3.
4.
An Example Completed Matrix
Column 4 Column 5 Column 1 Column 2 Column 3 Prioritization Factors
(Enter 1, 3, or 5 in each – see instructions below ) Priority
Score/Departments
Also list key dept. needed to achieve it
1. Improve
margins Improved
2. Improve
productivity in
3. Implement new
4. Open new
Customer Education & Facilities
• Well…actually, this is just the beginning
• The next step is to create a “cascaded” framework of scorecards
• Create linked scorecards down & across the organization
• This is where you really start to deploy your strategy and make it actionable
p. 27 p. 27 © 2009 ActiveStrategy, Inc.
What It Looks Like (Long-Term) Top-Level Scorecard
Divisional or Business Unit
• It results in a proactive performance system
• it communicates and translates the strategy to all levels
• when a critical top-level lagging measure is underperforming, lower level causes can be easily identified
• allows you to fix important problems before they become high-level issues
p. 29
• Create linked, related (but not identical) scorecards for next organizational level
• As you go, translate objectives to make them meaningful to that area
• e.g., “Improve Customer Satisfaction” might become “Reduce Wait Times for Customers”
• Align measures to the translated objectives
• e.g., % of Customers waiting more than 5 minutes
p. 30
p. 31
• Used to align business processes to strategic objectives
• Helps to identify their translated objectives & leading measures
• Works best for functional and support areas
• Process owners must be involved
© 2008 ActiveStrategy, Inc.
Corporate Objectives
O u tc
Corporate Objectives
’s B
ro c e s s e s O u tc
o m
e s
D a ta
e d
Corporate Objectives
O u tc
D a ta
e d
Align measures identified in the processes to the cascaded Objectives
Corporate Objectives
p. 35
p. 36
Place On Appropriate Scorecard • Place objectives & related measures on the appropriate
scorecard
• Finally, establish goals for each measure to track progress
• Cascaded objectives & measures create alignment to top-level strategy
p. 37
GOING FROM STRATEGY TO ACTION PLAN
An Example “Drill Down” from the City of Coral Springs Scorecards
p. 38 p. 38 © 2009 ActiveStrategy, Inc.
Police Scorecard
Drill down reveals
Additional Measure
Chart Detail –
Initiative Detail
• Keep objectives to the critical few
• Pick measures you can actually measure – and those that drive the right behaviors
• Cascade & deploy (scorecards are NEVER perfect, so don’t wait)
• Review performance of scorecards regularly
