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Strategy-Aligned Management Keys to Strategy Execution

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Title: Strategy-Aligned Management Keys to Strategy Execution


1
Strategy-Aligned Management Keys to Strategy
Execution
Presented to Association for Strategic
Planning February 27, 2007 Bill
Barberg Insightformation, Inc.

2
Insightformation Founded 1991
Strategic Consulting
Balanced Scorecard Software
Business Intelligence
3
Agenda
  • What is Strategy-Aligned Management?
  • Understanding the BSC methodology
  • The evolution
  • Overcoming Misconceptions
  • Different types of Strategy Maps
  • Roadmap of the Process

4
Strategy-Aligned Management
  • Its not a brand new Management Fad
  • Its an umbrella term that covers carefully
    selected best principles from 20 years of
    management consulting
  • It will evolve as new supporting tools and
    techniques emerge
  • Its not just a Scorecard or Strategy Map
  • Its not a software package
  • Its a set of tools and techniques to make
    powerful business theory more practical to apply
    in the real world
  • Its about a process for creating and sustaining
    organizational alignment and strategy execution

5
Can you Execute?
Our research of over 2,000 firms over more than
a decade indicates that executing a firms
strategy successfully had a six-times greater
impact on shareholder value than did the choice
of that strategy. Brian Becker, Professor and
chairman of the Department of Organization and
Human Resources at the State University of New
York, and co-author of The HR Scorecard Linking
People, Strategy and Performance. HR Magazine,
Dec. 2003
6
A Root Causes of Poor Execution
Does every employee understand where your
business is going? Are the steps necessary to
reach the goal plain to see? Is there a good
line of sight between the companys mission and
what your people do? Finally, does your team
support the direction of the business?
Forty-eight percent of the 12,000-plus top
executives, middle-managers and front-line
employees surveyed for WorkUSA 2002Wyatt
Watsons annual research report on employee
attitudescould not honestly answer yes when
asked those questions.
7
The Importance of Alignment
Poor Organizational Alignment
Vision Goals
8
The Strategy Execution Gap
Source Kaplan, 2002
MissionWhy we exist
70 to 90of strategiesare NOTsuccessfullyexec
uted
ValuesWhats important to us
VisionWhat we want to be
StrategyOur game plan
How do you communicate and operationalize
strategy?
Operational Quality Management, Process
Improvement, etc.What we want to improve
Empowerment / Personal Objectives (PDPs) What I
need to do
9
Overcome Organizational Stratification
10
Key Challenge Silos
IT
Marketing
Medical Staff
Nursing
Qualityand PatientSafety
Finance
Service Lines
HR
11
Problems with Budget-centered Mgmt
  • Budgeting rarely well-linked to strategy
  • Lack of effort (or clear strategy)
  • Lack of tools and techniques
  • Budgeting reinforces organizational silos
  • Cross-functional dependencies poorly represented
  • Budgeting inhibits strategic change
  • Tweak last years budget
  • Funds often not available for strategic
    initiatives
  • Key levers of change may be poorly understood
    by those deciding on budget levels

12
Problems with Budget-centered Mgmt
  • Promotes a rearview window mentality
  • Insufficient emphasis on environmental changes
  • Assumptions often make the budget obsolete
  • Little emphasis on causal drivers
  • People often unclear about how to impact success
  • Intangible assets that create shareholder value
  • Budget process fails to promote alignment
  • Most persuasive (or well-connected) leaders win
  • The fastest feet get the discretionary dollars
  • Hitting the Budget can motivate destructive
    behavior

13
A Framework Built around BSC Principles
Strategy Aligned Management
Leadership, Teams and Change Management
SAM-basedStrategic Planning and Strategy
Refining
Disciplines ofAlignment, Execution
andFollow-through
Translating Strategy into Operational Terms
Software to Support the Entire Process
14
Agenda
  • What is Strategy-Aligned Management?
  • Understanding the BSC methodology
  • The evolution
  • Overcoming Misconceptions
  • Different types of Strategy Maps
  • Roadmap of the Process

15
The Evolution of the BSC Methodology
Measurement Reporting
StrategicCommunication
1992
1996
2000
2003
2006
Harvard Business Review Articles The Balanced
ScorecardMeasures that Drive Performance
Jan-Feb 1992 Putting the Balanced Scorecard
to Work Sept-Oct 1993
16
Adapting the BSC for Public Sector
17
The Evolution of the BSC Methodology
Measurement Reporting
StrategicCommunication
1992
1996
Harvard Business Review Articles The Balanced
ScorecardMeasures that Drive Performance
Jan-Feb 1992 Putting the Balanced Scorecard
to Work Sept-Oct 1993
18
Strategy Maps (Sample Theme)
Citizen andStakeholder
Improve Citizen Satisfaction
InternalProcess
Learning Growth
FinancialResources
19
Strategy-Aligned Management
Built Around the Proven Principles for Creating
Alignment and Strategy-Focused Organizations
Alignment (Apr. 2006) Robert KaplanDavid Norton
20
Definition of the Balanced Scorecard
The Balanced Scorecard is a framework that helps
organizations put strategy at the center of the
organization by translating strategy into
operational objectives that drive both behavior
and performance. The Balanced Scorecard
Collaborative, 2004
21
Understanding the Balanced Scorecard
The Balance Scorecard Methodology
The Balanced Scorecard Categories
22
A Common BSC Mistake
  • The biggest mistake that organizations make is
    thinking that the scorecard is just about
    measures. Quite often they will develop a list
    of financial and non-financial measures and
    believe they have a balanced scorecard. This,
    I believe, is dangerous. David Norton

23
Understanding the Balanced Scorecard
Dont go on a hunt for the right KPIs. That is
not the answer. We didnt understand that in
1992 Robert KaplanIMA Conference June 2005
24
Understanding the Balanced Scorecard
A successful Balanced Scorecard program starts
with a recognition that it is not a metrics
project ITS A CHANGE PROCESS Robert
KaplanBalance Scorecard Collaboratives
Government Summit. Sept. 2004
25
Why Adopt the BSC Methodology?
  • To refine and execute a strategic plan
  • To communicate and get leaders, staff board on
    the same page
  • To leverage and align performance drivers
  • To systematically prioritize projects and
    resource allocation
  • To measure, monitor and manage strategic
    performance
  • To overcome silos and work as a team

26
Balanced Scorecard Architecture
Quality Patient Safety
Advocacy Communication
Research
Operational Excellence
Finance
Clinical Program Growth/Development
Customer
Operational Processes
High Quality Staff
Infrastructure
27
Strategic Theme Development
Financial
Objective
Objective
Customer
Objective
  • Objectives
  • articulate what needs to be achieved
  • Brief Statement
  • Description
  • InfoSheet

OperationalProcesses
Objective
Strategic Theme
PrioritizingtheLevers ofChange
High QualityStaff
Objective
Infra-structure
Objective
28
Strategic Theme Development
Financial
Objective
Measures
Objective
Customer
Measures
Measures clarify desired impact, and enhance
accountability Measures allow for
adjustments Measures have Descriptionsand
Targets
Objective
Measures
OperationalProcesses
Objective
Strategic Theme
Measures
PrioritizingtheLevers ofChange
High QualityStaff
Objective
Measures
Infra-structure
Objective
Measures
29
Strategic Theme Development
Financial
Objective
Measures
Initiatives
Objective
Customer
Measures
Initiatives impact targeted levers of change
thatneed strategicfocus Initiatives have
schedules and budgets
Objective
Measures
OperationalProcesses
Initiatives
Objective
Strategic Theme
Measures
PrioritizingtheLevers ofChange
Initiatives
High QualityStaff
Objective
Measures
Initiatives
Infra-structure
Objective
Measures
30
Overcome Organizational Stratification
Carefully-Selected Theme Teams
High-level Strategic Priorities
Executive Leadership Team
Much richer clarity and communication of
priorities
Active Involvement in Defining the Keys to
Successful Execution (and Accountability to
Follow Through with Changes)
Dramatically Improved Strategy Execution
Front-Line Workers
Details of Strategy Execution
31
Collaboration among Silos
Collaboration to Achieve Well-defined Strategic
Objectives
Excel at Patient Safety
32
Agenda
  • What is Strategy-Aligned Management?
  • Understanding the BSC methodology
  • The evolution
  • Overcoming Misconceptions
  • Different types of Strategy Maps
  • Roadmap of the Process

33
Simple Outline Map of Minnesota
Good for Initial Orientation Not confusing or
intimidating Not very helpful onceyou
understand the picture
34
Minnesota in Context of the USA
35
Satellite Image of Minnesota
The Reality Doesnt providefocus Overwhelming
detail if you zoom in.
36
Map Showing Major Cities
Useful if you want a generalunderstandingof
where citiesare. Not useful forgetting to them.
37
Map Showing State Parks and Regions
Useful if you are focusingon selecting astate
park to visit. Not useful forgetting to the
park.
38
Abstracted Map Showing Major Highways
Abstractionsoften improveusability Choose
adirectionalroute
39
Metro Area Minneapolis/St. Paul, MN USA
An orientation to a local area guides choices on
where to zoom
40
Detailed Street Map
The operational details for actions to succeed
41
Which Map is the Best Map?
  • That DEPENDS!
  • There are Different Needs depending on
  • Familiarity and context of what you know
  • How are you going to use them?
  • Level of detail needed
  • Purpose
  • Initial understanding?
  • Choices?
  • Detailed actions?
  • Ability to navigate, zoom, and change
  • No Map is perfect
  • Abstractions add value, but reduce precision

42
Agenda
  • What is Strategy-Aligned Management?
  • Understanding the BSC methodology
  • The evolution
  • Overcoming Misconceptions
  • Different types of Strategy Maps
  • Roadmap of the Process

43
The Foundation Your Unique Strategy
  • Step 1 Focus on Clarifying and Refining Your
    Unique Strategy
  • Your DESIRED Value Proposition to your targeted
    customers
  • Identify top Priorities for CHANGE so you can
    better DELIVER that Value Proposition
  • We bring in a proven framework and tools to
    simply that task

44
Process
Strategy Clarification
Agree on Themes
Theme Destination
From-To Descriptionfor each Theme
What will be the MAIN THEMESfor
StrategicChange?
Assorted Tools
45
Theme Destinations (From-To)
A Description of the current state of each Theme
and the envisioned Strategic Destination
46
Process
Strategy Clarification
Agree on Themes
Theme Destination
From-To Descriptionfor each Theme
What will be the MAIN THEMESfor
StrategicChange?
Assorted Tools
From-To Brainstorming
Raw Material for Objectives
Draft Theme Map
GatherResearch
47
Process Continued
Draft Theme Maps
Top-Level Strategy Map (and Objective InfoSheets)
48
Process Continued
Draft Theme Maps
Top-Level Strategy Map (and Objective InfoSheets)
Approved Theme Strategy Maps
49
Objective InfoSheets
50
Top-Level Theme Strategy Maps
Top-Level Strategy Map
  • Top-Level Maps provide
  • Communication and focus on the highest strategic
    priorities
  • Concise monitoring and accountability
  • High-level structure of causal drivers
  • Not enough detail for effective alignment

F
F1
F2
F3
C
C2
C3
C1
C4
P
P1
P3
P2
P4
LG
L2
L1
L3
Theme Strategy Maps are a critical element of
SAM. They are key to the Steering Mechanism
51
The Childrens Hospital (Denver)
  • Consulting Engagement
  • Training and Coaching
  • Facilitating Cascading Strategy Maps Scorecards
  • Implementing Software Support (InsightVision)

We started off calling our project an Executive
Dashboard but quickly realized that it was much
more than that. Insightformation brought an
integrated approach that recognized the
importance of the facilitation, the change
management, and the process for creating focus
and alignment. Jim Turnbull, CIO2006
52
Theme 1 Quality Patient Safety
Quality Patient Safety
Advocacy Communication
Research
Operational Excellence
Finance
Clinical Program Growth/Development
Customer
Operational Processes
High Quality Staff
Infrastructure
53
Theme 1 Quality Patient Safety
Solid Financial Performance Allows Mission Focus
Lead in Pediatric Outcomes
Excel at Customer Service
Excel at Patient Safety
Leverage CCGs and Technologyfor Quality
Patient Safety
Recruit and Develop High Quality Staff
Deploy E-Rex to Support Clinical Excellence
Enhance Data Integration, Analysis Delivery
Capabilities
54
Be a Leader in Patient Safety
Financial
Improve TCH financial performance to enhance
mission-focus
Prepare for Data Sharing Related
toPay-for-Performance, Ratings Rankings
Customer
Excel at Patient Safety
Reduce Risk of Nosocomial Infections
Improve Accuracyof Patient ID
Prevent MedicationErrors
Operational Processes
High QualityStaff
Infra-structure
55
Be a Leader in Patient Safety
Financial
Improve TCH financial performance to enhance
mission-focus
Prepare for Data Sharing Related
toPay-for-Performance, Ratings Rankings
Customer
Excel at Patient Safety
Prevent MedicationErrors
Operational Processes
Improve Med-relatedCommunication Processes
Implement Pharm.Use of CCGs
Consistently use twopatient identifiers
Reconcile MedsAcross a Continuumof Care
Improve Data Management andAnalysis for Better
Decision-making
High QualityStaff
Infra-structure
56
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59
Gain Benefits Early
  • We benefit from using the software as a central
    place to collaborate as we refine our strategy
    maps and scorecards. We dont have to wait until
    everything is finalized to begin to gain the
    benefits of alignment and focus.
  • Jerry Howell VP of Quality, Patient Safety
    Compliance
  • The Childrens Hospital

60
Strategy Map Cascading
  • Top-Level and Theme Maps provide
  • Clear strategic priorities (choices)
  • Understanding of the critical cross-functional
    drivers of success
  • Meaningful accountability
  • Efficient monitoring
  • Service Line or Customer-facing Units
  • Align their activities to achieve Theme and
    Top-Level Objectives
  • Execute on the most critical improvements
  • Focus on the measures that matter
  • Have Line of Sight on how they impact strategic
    change

61
Questions?
62
For More Information
  • Contact
  • Bill Barberg, President Founder
  • Insightformation, Inc.
  • Bill.barberg_at_insightformation.com
  • 763-521-4599 x13
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