Core practices in RBM

Benedict Wauters

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Organisations need to also take longer term perspectives for the organisation as a whole to capture emerging opportunies that could otherwise be missed and deal with threats that may otherwise catch them by surprise…

Preparing for the future triggers innovation and stakeholder management processes.

All of this impacts what future operations will be like.

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H. Mintzberg

= influenced by what we learn from acting incl. in daily

operations= why there needs to be room

for contingenciesin the budget (reserve

capacity)

STRATEGY IMPLEMENTATION

Boundary systems

Balancing learning and control

Strategy(plan)

Internal control

Core values,mission, vision

Criticalperformance

variables

Strategicuncertainties

Risks to be avoided

Interactive control systems Diagnostic control systems

Belief systems

Safeguarding critical assets by ensuring adherence to specific rules and regulations

(no arrow as does not rely on the content of the

strategy)

Bob Simons is the Charles M. Williams Professor of Business Administration at Harvard Business School. Over the last 30 years, Simons has taught accounting, management control, and strategy implementation courses in both the Harvard MBA and Executive Education Programs.

Results Based Management• an organization should be ready to respond to

changes in circumstances or performance and alter one’s approach if necessary, which requires… an analytical and performance-oriented approach to

understanding what to do; a view of performance that is centred on beneficiary level

outcomes; only thereafter moving toward identifying what resources,

actions and outputs are necessary to get there; a need for information about the subject and a capacity to

collect, process and analyse this information over time; a mechanism by which policy, planning and decision-making

can be influenced by performance information.

Source: REVIEW: RESULTS BASED MANAGEMENT IN DEVELOPMENT COOPERATION by the Riksbankens Jubileumsfond synthesised in the COP RBM Sourcebook ch. 3.3

Results Based Management

• an organization should be ready to respond to changes in circumstances or performance and alter one’s approach if necessary, which requires… an analytical and performance-oriented approach to

understanding what to do; a view of performance that is centred on beneficiary level

outcomes; only thereafter moving toward identifying what resources,

actions and outputs are necessary to get there; a need for information about the subject and a capacity to

collect, process and analyse this information over time; a mechanism by which policy, planning and decision-making

can be influenced by performance information.

Source: REVIEW: RESULTS BASED MANAGEMENT IN DEVELOPMENT COOPERATION by the Riksbankens Jubileumsfond synthesised in the COP RBM Sourcebook ch. 3.3

Demand orientation

Focus on the system

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Managing and Delivering Performance: How Government, Public Sector and Not-for-profit Organisations Can Measure and Manage What Really MattersBernard Marr is a global enterprise performance expert and a best-selling business author. He helps companies to better manage, measure, report and analyse performance. His leading-edge work with major companies, organisations and governments across the globe makes him an acclaimed and award-winning keynote speaker, researcher, consultant and teacher. Bernard is acknowledged by the CEO Journal as one of today’s leading business brains. He has written a number of seminal books and over 200 high profile reports and articles on enterprise performance. This includes the best-sellers 'Key Performance Indicators', ‘The Intelligent Company’, ‘More with Less’, ‘Managing and Delivering Performance’ and ‘Strategic Performance Management', a number of Gartner Reports and the world’s largest research studies on the topic. His expert comments regularly feature in high-profile publications including The Times, The Financial Times, Financial Management, the CFO Magazine and the Wall Street Journal.

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Six core RBM practices

• 1. Orientation of the PMO (programme management organisation) is clear

• 2. The PMO strategy is reflected in a strategic results framework

• 3. The strategy is translated into operations• 4. Performance information is collected and

supplied• 5. Performance information is used• 6. External stakeholders are involved in all

aspects

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1. Orientation of the PMO (programme management organisation) is clear

2. The PMO strategy is reflected in a strategic results framework

3. The strategy is translated into operations

4. Performance information is collected and supplied

5. Performance information is used

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Mission and values of the entity• E.g. “We support – with EU and national resources –

organisations to initiate actions that improve the functioning of the labour market. We acquire and share knowledge to contribute to solutions for today and tomorrow.”

• E.g. “customer focus: staff have an open and caring attitude, towards project promotors as well as other stakeholders. The promotor can easily get in touch and communicate smoothly with staff. The relation with stakeholders is based on mutual respect and appreciation. Agreements and promises are kept. All interests are taken into account. All of these aspects lead to a relationship of trust.”

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Example of expanded vision

Going beyond current capabilities is crucial!

Vision can have many different aspects• the ambition can be broad, generic

e.g. drive innovation in the labour market e.g. be champions of simplification e.g.

• …or it can relate to specific thematic policy challenges high on the political agenda at a give time e.g. improve the life of Roma… e.g. tackle poverty…

• if ambition is too low or perceived to be irrelevant as it does not connect with the policy context, those who decide on its mandate may attack it

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Vision and current operations

• When current operations are a mess…• … then vision becomes a vision of survival: how

to keep the boat from sinking!• This reaffirms the importance of systems

thinking for your current operations: If daily work life is a struggle for survival…

…then senior managers coming along with wonderful statements about vision, mission and values are bound to be seen as coming from another planet

Warning!• Mission, values and vision can be actively used to drive

out critical voices, thus eradicating diversity in the organisation which is problematic for accountability as “robust, resilient and adaptive”

• The idea is to foster “a community of inquirers”: practitioners start from their own day-to-day experience of trying

to do the work, within the framework of a mission and a vision, but where the aim is to make subjective experience more objective through reflection and discussion with the manager and others

in doing so the practitioner and manager could open themselves up to different ways of working and perhaps move themselves on from stuck and less productive ways of working with peers

• This entails that what the mission and the vision “mean” at a practical level is constantly being (re)invented

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Example output of a SWOT exercise What are key strategic priorities? Eg what S can we use to capture O?What W must we amend? Etc.

Once, again, if current operations are mess, this

will crowd out any thinking about longer

term opportunities and threats

• A key question here is to define how you want to add value as a PMO?

• We will cover this when we discuss delivery mechanisms!

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PMO strategy = strategy concerning added value

PMO

stra

tegy

=

tech

nica

l ass

istan

ce

prio

rityOP

Priority1

OPPriority

2

OPPriority

3 PMO strategy = technical assistance priority

OPPriority

1

OPPriority

2

OPPriority

3

Added value by leveraging the technical assistance!

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Strategic results frameworkThe COP RBM system focuses on SF PMO and what these organisations should be aiming for and doing toincrease their added value to a country or region.

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The top level reflects policy challenges. But the PMO strategy will not typically emphasise all thematic context objectives from an OP and

may add other types of expectationsto/ from these stakeholders.

Expectations in different perspectives are bi-directional (toward and from)

These are the outcome objectives(beyond control hence only influencable). SHOULD BE: what our partners/constituents REALLY care about and WE are willing to fullfill given our interpretation of our vision

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These are the input/process/output objectives(deemed under control)

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The three components of the value adding core process are reflected.

• only outputs and outcomes deemed critical to achieve a vision

• this means that the map is not intended to reflect all possible internal processes and associated outputs nor all possible external process, constituent and legitimizing authority outcomes

• this would overload such a map and render it useless as an instrument for strategic action.

Cascading• From the business unit strategy is cascaded to operational teams within

the business unit• They should conduct a mission, vision and values exercise at their own

level, within the framework of the higher level ones, and then to look at the higher level strategy map from that perspective this may lead to requesting adjustments to the higher level map or to adjusting

mission, vision and values most frequently unit level mission, vision and values will just be helpful in

translating a higher level map into a suitable lower level one.

• The strategic outputs and outcomes on the map are arrived at in consultation with staff in the cascading process The business unit strategy may therefore be adjusted in the cascading process

• The idea is that there is a discussion where a lower level can argue for its interpretation of a higher level map and can even argue for modification of the higher level

• Contestation is very much at the core of this process and it is crucial that higher level management incites this and creates openness for it

Within operational business units, individual staff member objectives are then similarly aligned to unit objectives

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Regulatory/Support unit alignment

• Regulatory/Support unit strategy map should have:a top level with a focus on both effectiveness (this

contains the objectives from the corporate, business and operational unit maps that the support unit can impact on) and efficiency (in terms of use of resources)

a client level that identifies who the units serve and what these clients (or client groups, e.g. staff, managers, ...) expect

an internal process levelan internal capacity level

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Skip for now

Strategic initiatives

• The vision relates to the next 3-10 years. Hence so does the strategy. This entails the strategy map is future oriented.

• If the vision was challenging enough (as it should be) then it would be hard to imagine that this can be realized by doing more of whatever the entity is already doing or by doing it better with whatever means it is already using.

• Rather, the entity will have to do things it does not do yet at all or acquire new capacities, competences and/or relationships it does not have yet.

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Strategic initiatives

• Strategic initiatives do not represent: business as usual or … ongoing improvement/maintenance of existing processes and outputs

• They proactively prepare the organisation for the future e.g. by addressing NEW products/services via new (types of) calls for

proposals …and/ or NEW relations, competences, expanded capacities hence there is considerable uncertainty about how to run them and what

they can achieve• E.g. a full Vanguard method based redesign

• Require coordination from many parts of the organization• As some strategic initiatives may be related (complementing each other

or feeding each other), they should be grouped under overarching themes that can be visualized in the strategy map.

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1.Select a processobjective

Quality of care: solve my health issues in a sustainable way as quickly as possible

*illustrative real example not be taken as an ideal example

*

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2. Break up the process objective into its key components

THREE MAJOR TRANSACTION POINTS OF CONTACT THAT FEED INTO EACH OTHER

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3. Break down the components into driversTo understand better what the situation is, you can engage in measurement

*illustrative real example not be taken as an ideal example

*

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4. Reflect on what the measurement tells you from a systemic point of view

Ask: “How are things currently organised / done –as a system- that needs to be

different?”

Be careful with measures: should be “systemic”.

*illustrative real example not be taken as an ideal example

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Strategic versus operational plans

Demand plan: planned (increase of) outputs by type (ranging from simple outputs to complex calls for

proposals)

Capacity requirements + free capacity maintained (in % used of available people and facilities)

Factoring in expected process improvements

Direct operational, maintenance AND improvement costs

= OPEXCapital expenditure

(replacement/expansion of existing facilities for current business)

=CAPEXIndirect operational cost=OPEX

Strategic initiatives

STRATEX(can be

bothexpenses

orcapitalisa

tion)

PLANS

BUDGET

Operational plans (with a one year time horizon) specify which outputs will bedelivered by which parts of the entity.

Remember!

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This concerns planning and score keeping, NOT operational management (developing, improving)!

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/ quarterly

Does not question strategy as such

= strategy reviews are mainly interactive control systems! They

focus on learning!-what comes up from strategic

initiatives?-what comes up from operations

that they cannot handle?

Cascading to be performed again

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/ quarterly

Does not question strategy as such

(could also be prompted by new threat or opportunity emerging from regular environmental scanning)

= strategy testing and adaptation meetings are also interactive control

systems, now questioningthe strategy as such

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/ quarterly

Does not question strategy as such

(could also be prompted by new threat or opportunity emerging from regular environmental scanning)

Operational reviews are mainly a diagnostic control system –focusing on

“control”- but, as it concerns continuous improvement, is also used interactively

Strategic measurement-1

• This measurement should reflect key performance questions (KPQs) that require data for informed discussion regarding possible answers: open questions (what, why, how) rather than closed questions (yes, no,

how much): e.g. Not: “was the budget spent? Rather, “what has happened with the budget?”, “why?”, “how will we act?”

relate to the strategy map formal “measurement” does not necessarily equate to an indicator but may

require qualitative/quantitative research

• Strategy testing questions relate to the map in its entirety and to the underlying strengths, weaknesses, opportunities and threats e.g. does it really matter to invest in networks to get our delivery partner to

be more innovative… We were not sure about this. How will we find something out?

e.g. we thought our programme would have 30% less financial resources? What happened? What will we do?

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Interactivequestions

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Strategic measurement-2• Strategy review questions related to objectives on the strategy map

and associated initiatives e.g. (among others) How are strategic initiatives developing (what has changed, why)? How

are they contributing to realising strategic objectives as hoped (what has changed / why)? What will we do?

• …e.g. we wanted to make sure staff were able to deal with requests one stop so we trained them for predictable demand. What have we learned?

How is the programme deployed by the PMO having an impact on Roma? To what extent are innovative actions of DPs for Roma developing properly? Why? What will we do?

• Frequency of strategic measurement depends on the nature of the KPQs: minimum quarterly for questions looking at progress of strategic

initiatives and possibly their impact on the strategic objectives minimum yearly basis for questions relating to the overall logic of

the strategy as visualised by the strategy map

Strategic measurement-3

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E.g. Action research (probe, sense, act / plan, do , check ,act) responding to KPQs such as “What is getting developed, what is not getting developed, why and what are the implications?”

Traditional arsenal of social research (incl. theory based and counterfactual impact evaluation)

Interactivequestions

Programmme evaluation is one specific kind of measurement activity!

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Tools like Sensemaker are also of use

What is it that makes this cluster of stories different from that one?

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Tools like Sensemaker are of use…especially when using them over time

Why this “deviance”?

All stories from various sources were related to only 1 staff member!

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Strategic measurement and cascading• If relevant, questions and associated measurement ideas are

cascaded at the same time as the objectives they measure This means that cascaded objectives also have cascaded measurement

at unit level: staff think about KPQs at their level, just as they thought about objectives and engage in discussion with higher level

• A baseline is established when measurement is conducted for the first time discuss with relevant staff whether and how improvement can be

achieved and how the PMO will know if things are moving into the right direction

when using quantitative research, it entails ensuring that the direction of the desired trend is discussed

when using more qualitative research, the key characteristics of the desired situation should be discussed

in both cases we will want to answer “why” change has occured which is not something we can derive from descriptive info

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Operational measurement

• Operational reviews are:Diagnostic:

• By now it should be clear that we want to use systemic measures and statistical process charts

Interactive • Look for “signals” in diagnostic system and then look into

reasons behind these (interactive) To what extent are we achieving what we expect (what has

changed)? Why not? What to do?

• Inline experimentation initiatives to improve service How are process initiatives (not) improving KPIs? Why?

Tools in the hands of staff that do the work to self-regulate (decide what to do about it), NOT for managers to control them

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time

UCL, LCL and center are NOT YES/NO targets but bounds of natural variation.

Process is under control

Exception reports. Can trigger interactive control if cause outside control of operational teams.