organizational strategy and the balanced scorecard

Strategic Managementand

The Balanced Scorecard

Susan T. Blake

Organizational Strategy

RavenswoodFamily Health Center

CENTERFOR THE HEALTH PROFESSIONS

1 Susan T. Blake Consulting

Overview

• Welcome and Introductions• Strategy Planning

• Defining our terms• RFHC Examples• Why Strategic Plans Fail

• The Balanced Scorecard• Key Concepts• Applying the Balanced Scorecard to Healthcare• Applying the Balanced Scorecard to RFHC

• Wrap-Up


Welcome and Introductions

• Who am I?• Who are you?



Please tell a story about a time somethinghappened that made you say,

“I LOVE my job!” or “I had a GREAT day!”or

“This is why I do this.”



• The work you do plays anintegral role in with fillinghuman needs, both directlyand indirectly.

• Nursingcrib.com puts it well:“Maslow’s framework ofbasic needs is based on thetheory that something is abasic need if:• Its absence results in illness• Its presence prevents or

signals health• Meeting an unmet need

restores health”



You are leaders in the community, supportingtheir basic needs of physical health andsecurity and, by your living by your principles,supporting their higher needs as well.

How can you do that more effectively, andwithout burning out?


Strategy Planning

Strategic Management is the difference between

Image: Surachai / FreeDigitalPhotos.net

and


Strategy Planning

Image: Apple’s eyes Studio / FreeDigitalPhotos.net


Strategy Planning

• As the health home for your community,you are a place that provides:• Resources for fighting health-related fires

when needed• Resources for preventing those fires as much

as possible• Education and encouragement to develop

good habits that prevent those firesTrue?


Strategy Planning

• Strategic Management provides you with:• Resources for fighting fires when needed• Resources for preventing those fires as much

as possible• Encouragement to develop good habits that

prevent those fires

It’s difficult to provide a health home foryour people if you don’t build and maintainan organizational health home.


Strategy Planning

Strategic Management “entails specifying theorganization’s mission, vision and objectives,developing policies and plans, often in terms ofprojects and programs, which are designed to achievethese objectives, and then allocating resources toimplement the policies and plans, projects andprograms. A balanced scorecard is often used toevaluate the overall performance of the business and itsprogress towards objectives.”

Source: Wikipedia


Strategy Planning

Definitions:

• Mission (Why?): The role of the organizationin society, the reason for its existence

• Vision (What?): The long-term view of theorganization being successful in its Mission

• Objective (What?): A goal, result ordestination intended to bring the organizationcloser to achieving its Mission and Vision


Strategy Planning

• Initiative (How?): A specific effort or projectwhose outcome moves the organizationtoward achieving its strategic objectives

• Measures (How do you know?): Collectionand analysis of data that is used to providesystemic feedback about the progress towardachieving an objective


Strategy Planning

• Target (How do you know?): Ideal results forMeasures• Should be specific and achievable• Should be thresholds and timeframes associated

with targets• Useful Targets are associated with cause-and-

effect relationships (if we hit this target, that willhappen; if we do not hit this target, that will occur)


Strategy Planning

• Objectives, Initiatives, Measures and Targetsmay be adjusted frequently

• The Mission and Vision change far less often• Initiatives and Measures are frequently

confused with Objectives, but they areactually tools for achieving the Objectives.


Strategy Planning

• Flashback: SMART Goals• Specific• Measurable• Attainable• Relevant• Timely


Strategy Planning

Let’s apply this to RFHC:• Mission (Why?): Improve the health status of the

community we serve by providing high-quality,culturally competent primary and preventivehealth care to people of all ages regardless ofinsurance, immigration status or ability to pay

• Vision (What?): Everyone in the communities weserve will have access to a patient-centeredhealth home


Strategy Planning

• Objective (What?): Maintain a positive patient flow toreduce no-shows in dental clinic

• Initiative (How?): Implement a no-show policy• Measure (How do you know?): Track monthly number

of appointments missed without notice• Target (How do you know?): Baseline #X, Target #Y


Strategy Planning

Exercise: State an objective of your organization (ordepartment) with an example of an initiative and ameasurement. (Tip: The verbs are important!)• Objective (What?):

• Initiative (How?):

• Measure (How do you know?):

• Target (How do you know?):


Strategy Planning

Why Strategic Plans Fail


Strategy Planning

“In a recent survey of senior executives at 197companies conducted by managementconsulting firm Marakon Associates and theEconomist Intelligence Unit, respondents saidtheir firms achieved only 63% of the expectedresults of their strategic plans.”

“Three Reasons Why Good Strategies Fail: Execution, Execution…”Published August 10, 2005 in Knowledge@Wharton


Strategy Planning

Why?


Strategy Planning

There are many articles listing potential reasonsfor organizations’ failure to successfully implementtheir strategies. Here are just a few reasons:

• Poor synchronization (lack of alignment)• Poor communication• Resistance to change (habit)• Cultural factors (internal and external)• Follow through (lack of)• Poor visibility (related to poor communication)• Hidden or competing priorities


Strategy Planning

• Conscious self-knowledge(MBTI/360 feedback)

• Motivational Skills• Giving and Receiving

Feedback• Negotiation• Conflict Management• Time Management• Enhanced Perspective and

BalanceImage: m_bartosch/FreeDigitalPhotos.net

Good News! You have lots of tools, including:


Strategy Planning

• Hidden and Competing Priorities can beamong the most difficult causes of failedstrategic plans to deal with. Why?


Strategy Planning

“When you are up to your ass inalligators, it is difficult to

remember your original missionwas to drain the swamp.”


Strategy Planning

Strategic Plans are likeNew Year’s Resolutions.


Strategy Planning

Case in Point:

• I have a core value of being healthy.Healthier. I love being outdoors. I amindependent and don’t want anyone to haveto take care of me.• Mission (Why?): To be healthy and fit, so I am

able to live an active, healthy, independentlifestyle.

• Vision: (What?): I am a size 10, definitely not pear-shaped, and I walk at least one leg of theAppalachian Trail when I am 70.


Strategy Planning

• Objective (What?): Get more exercise• Initiative: Buy a bicycle and RIDE it.• Measure: Ride to work (3 miles each way) 2-3x / week

This objective is in alignment with my Mission andVision, and when I worked 3 miles from home, I waspretty successful for about a year - until I was laid off.

With more time on my hands, I actually rode more,and rode 14 miles 2x a week.

Since launching my consulting business, workingfrom home and having less time (I have competingpriorities), I have to come up with a new Initiativeand Measure to support this objective.


Strategy Planning

• Objective (What?): I resolved to lose 10 lbs andkeep it off.

• Initiative: Stop eating processed food• Measure: Eat salad with lots of leafy greens every day• Measure: Get on the scale

This has worked pretty well, except for one thing…


Strategy Planning


Strategy Planning

• What’s the first thing we do when we fail at aNew Year’s Resolution?


Strategy Planning

• What’s the first thing we do when we fail at aNew Year’s Resolution?• Judge ourselves, beat ourselves up

• I have no willpower• I’m weak• I’m a failure

• Give up


Strategy Planning

• Instead of judging, get curious.• Ask, “What’s going on?”

• Mac & Cheese = The Ultimate Comfort Food• I love creamy, unctuous, comforting salad dressing• Chocolate makes me feel good


Strategy Planning

• Healthy Lifestyle

• Hourglass figure

• Ant

• Comfort

• Instant gratification

• Grasshopper

I have competing objectives, some of which are hidden:


Strategy Planning

• The first step to success is making what ishidden visible.

• The second step is suspending judgment• Then you can use your other skills to either

• Work out a solution- or -

• Change your objective


Strategy Planning

• Conscious self-knowledge(MBTI/360 feedback)

• Motivational Skills• Giving and Receiving

Feedback• Negotiation• Conflict Management• Time Management• Enhanced Perspective and

Balance• Don’t judge - be Curious!

Image: m_bartosch/FreeDigitalPhotos.net


Strategy Planning• A conscious attitude says:

• Health & comfort are both important; can I haveboth?

• Negotiate and balance competing priorities• Set targets that accommodate both

Negotiate for low-fat salad dressings Negotiate for Mac & Cheese no more than 1x/week Switch from chocolate cake to Dove Promises and

allow myself no more than two per night. (And don’tkeep the jar next to the sofa!)

• This is not possible if I judge and am notcurious


Strategy Planning

• Organizational objectives are not achievedwhen there are competing objectives that arehidden or are forbidden to discuss

• The act of making the invisible visible allowsyou to prioritize, negotiate, manage time…


Strategy Planning

• Discussion: Can you identify something thatyou or your group does (or is required to do)that makes it difficult to achieve statedobjectives?• What is the competing priority that is at play?

• Should it be made visible as an objective?• Is one more vital than the other?• What negotiation would be useful?


Strategy Planning

Strategy renders choices about what not to do asimportant as choice about what to do. Indeed,se8ng limits is another func;on of leadership.

-‐ Michael Porter



• The Balanced Scorecard is a methodology forstrategic management.• Originally developed in the early 1990’s• Applied first to businesses in the private sector• Quickly spread to the healthcare sector



“The Balanced Scorecard should translate a businessunit’s mission and strategy into tangible objectives

and measures. The measures represent a balancebetween external measures for shareholders and

customers, and internal measures of critical businessprocesses, innovation, and learning and growth. The

measures are balanced between the outcomemeasures – the results from past efforts – and the

measures that drive future performance.”The Balanced Scorecard, Robert S. Kaplan and David P. Norton



• External measures:• Shareholders• Customers

• Backward Looking:• Financial Measures

• Internal measures• Business Processes• Innovation• Learning & Growth

• Forward Looking• Business Processes• Innovation• Learning & Growth



• A Balanced Scorecard has two primarycomponents:• Strategy Map (Why and What)• Dashboard (How are we doing?)



• The Strategy Map is a visual tool forarticulating and seeing the relationshipsbetween the organization’s• Mission• Vision• Objectives



A Strategy Map organizes Objectives intoPerspectives and Strategic Themes…

…and makes cause-and-effect relationshipsbetween objectives visible.



• The Perspectives are the“lenses” through which theorganization’s success canbe viewed.• The Balanced Scorecard

Institute refers to them asthe “floors of the house.”

• The Strategic Themes arehigh-level strategies thatguide the organization’sefforts.• The Balanced Scorecard

Institute refers to them asthe “load bearing walls.”



• Originally developed for organizations in the privatesector, the original four Perspectives are:• Financial (Looking back)• Customer (Looking from the outside in)• Process (Looking from the inside out)• Learning & Growth (Looking ahead)

• The Perspectives are usually shown in this orderbecause of the cause and effect relationships thattend to exist



• Applying the Balanced Scorecard toHealthcare Organizations• Experts have determined that the Balanced

Scorecard does apply to healthcare organizations,but that it requires modifications to be mosteffective.

• The Perspectives are frequently tailored to fit theneeds of the organization, and this is especiallytrue for scorecards for nonprofit and governmentorganizations.



“The principle difference between these sectors (privateand government / nonprofit / healthcare) has been amore careful consideration of customers. Customersbecome elevated to the top of the Balanced Scorecardstrategy maps as, ultimately, effective delivery ofservices to customers explains the existence of mostgovernment and nonprofit organizations. Also thefinancial perspective may be portrayed at the top ofstrategy maps, concomitant with the customerperspective, to signal the importance of satisfying thedonors and citizens who provide funding for theservices that the organization delivers.”

- Robert S. Kaplan and David P. Norton, The Strategy Focused Organization



The following figure shows how the Customer Perspective iselevated for many nonprofit organizations:



• Not only can the order of the Perspectiveschange, depending upon the nature of theorganization, but the Perspectivesthemselves can change or be renamed.

• The following slide shows a few examples ofalternative balanced scorecard Perspectivesused by healthcare organizations:



• Development andCommunity Focus

• Clinical Productivity andEfficiency

• Patient Characteristics• External Environmental

Assessment• Stakeholders• People, Knowledge &

Technology

• Quality of Care andServices

• Mutual Respect andDiversity

• Social Commitment• Financial Performance

& Stewardship• Outcomes

Alternative Perspectives Used in the Healthcare Sector:



• When selecting the Perspectives appropriateto your organization, there are two keyconsiderations:• Do you have one each for looking

• Forward• Backward• Inward• Outward

• Do they describe cause-and-effect relationshipsthat exist?



• Exercise: Review the Mission,Vision and Principles, andanswer these questions:• Are the four original Perspectives

used by Kaplan and Norton(Financial, Customer, Process, andLearning & Growth) applicable toRFHC?

• Should they be• Renamed?• Replaced?• Reordered?

• If so, make recommendations.

• Exercise: Identify one Objectivefor your department and answerthese questions:• Is it truly an Objective? Or is it an

Initiative? a Measurement?• What perspective does it belong to?• What potential obstacles could

hinder achieving your Objective?• What tools from previous trainings

can help you to overcome thoseobstacles?

• Is this Objective in alignment withthe RFHC Mission & Vision? If not,what mission is it supporting?


Wrap-Up

• This can all be pretty overwhelming.• When you get overwhelmed, think about

those stories we opened with. Don’t forgetwhy you come to work every day.

• Then remember to pause and strategize. Useyour tools to minimize firefighting as much asyou can.

• Then remember this difference betweenleaders and those who lead:


Wrap-Up

“There are leaders and those who lead. Leaders hold aposition of power or authority. But those who leadinspire us. Whether they’re individuals or organizations,we follow those who lead not because we have to, butbecause we want to……By the way, he (Martin Luther King, Jr.) gave the ‘Ihave a dream’ speech, not the ‘I have a plan’ speech.”

- Simon SinekTEDx Puget Sound 9/17/09

Thank You!