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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
2 Susan T. Blake Consulting
Welcome and Introductions
• Who am I?• Who are you?
3 Susan T. Blake Consulting
Welcome and Introductions
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.”
4 Susan T. Blake Consulting
Welcome and Introductions
• 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”
5 Susan T. Blake Consulting
Welcome and Introductions
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?
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Strategy Planning
Strategic Management is the difference between
Image: Surachai / FreeDigitalPhotos.net
and
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Strategy Planning
Image: Apple’s eyes Studio / FreeDigitalPhotos.net
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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?
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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.
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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
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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
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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
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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)
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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.
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Strategy Planning
• Flashback: SMART Goals• Specific• Measurable• Attainable• Relevant• Timely
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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
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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
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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?):
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Strategy Planning
Why Strategic Plans Fail
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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
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Strategy Planning
Why?
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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
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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:
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Strategy Planning
• Hidden and Competing Priorities can beamong the most difficult causes of failedstrategic plans to deal with. Why?
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Strategy Planning
“When you are up to your ass inalligators, it is difficult to
remember your original missionwas to drain the swamp.”
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Strategy Planning
Strategic Plans are likeNew Year’s Resolutions.
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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.
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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.
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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…
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Strategy Planning
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Strategy Planning
• What’s the first thing we do when we fail at aNew Year’s Resolution?
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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
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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
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Strategy Planning
• Healthy Lifestyle
• Hourglass figure
• Ant
• Comfort
• Instant gratification
• Grasshopper
I have competing objectives, some of which are hidden:
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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
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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
37 Susan T. Blake Consulting
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
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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…
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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?
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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
Break
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The Balanced Scorecard
• 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
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The Balanced Scorecard
“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
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The Balanced Scorecard
• External measures:• Shareholders• Customers
• Backward Looking:• Financial Measures
• Internal measures• Business Processes• Innovation• Learning & Growth
• Forward Looking• Business Processes• Innovation• Learning & Growth
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The Balanced Scorecard
• A Balanced Scorecard has two primarycomponents:• Strategy Map (Why and What)• Dashboard (How are we doing?)
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The Balanced Scorecard
• The Strategy Map is a visual tool forarticulating and seeing the relationshipsbetween the organization’s• Mission• Vision• Objectives
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The Balanced Scorecard
A Strategy Map organizes Objectives intoPerspectives and Strategic Themes…
…and makes cause-and-effect relationshipsbetween objectives visible.
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The Balanced Scorecard
• 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.”
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The Balanced Scorecard
• 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
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The Balanced Scorecard
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The Balanced Scorecard
• 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.
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The Balanced Scorecard
“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
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The Balanced Scorecard
The following figure shows how the Customer Perspective iselevated for many nonprofit organizations:
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The Balanced Scorecard
• 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:
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The Balanced Scorecard
• 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:
56 Susan T. Blake Consulting
The Balanced Scorecard
• 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?
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The Balanced Scorecard
• 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?
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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:
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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!