SKILLS, STRUCTURE AND CULTURE REQUIRED FOR …quantumtransformationtechnologies.com/wp-content/...SKILLS, STRUCTURE AND CULTURE REQUIRED FOR SUCCESSFUL BALANCED SCORECARDING By Ted

SKILLS, STRUCTUREAND CULTURE REQUIRED

FOR SUCCESSFULBALANCED SCORECARDING

Organizations that want to utilize Balanced Scorecardpractices need to understand why some organizations are very successful; what the “lessons learned” are fromthose who only experienced marginal gains in performance; and, why up to 70% of healthcare organizations that have implemented a process that they have called a “Balanced Scorecard” have in factfailed to make any real improvements.

This essay is for those who want to get a better under-standing of a decade worth of “lessons learned” and theemerging “best practices” in balanced scorecarding in thehealthcare sector.

The bottom line from the research and from our

collective experience: scorecarding is about people, and howto mobilize them, as much as it is about strategy, and how tomeasure the outcomes or results of strategy.

In our view, there is nothing “magical” about the BSC as a tool. Successful scorecarding is about mobilizingpeople, managing change, measuring performance andgetting results.

The “people part” of this is sometimes called the “softmessy human stuff”. Hammer and Champy, the reengi-neering gurus of the 1990s used to say: “the soft stuff isreally the hard stuff”.

So, what is the “soft stuff” that makes the “hard stuff”work?

M A N A G I N G C H A N G E , S P R I N G 2 0 0 4 1

HEALTHCARE SECTOR MANAGEMENT TRENDS

SKILLS, STRUCTUREAND CULTURE REQUIRED

FOR SUCCESSFULBALANCED SCORECARDING

By Ted Ball, Bruce Harber, Ken Moore & Liz Verlaan-Cole

While traditional, industrial-age strategic planning methodologies

commonly used in the healthcare sector only succeed 10% of the time, the

evidence on the success rate of large-scale change initiatives like the Balanced

Scorecard indicate that between 30% and 50% of organizations actually achieve

meaningful and measurable improvements in performance with this strategy

implementation methodology.

The “soft stuff” includes: how people think and behave –the organization’s human dynamics; the extent to whichpeople experience a safe, supportive environment wherethere is respect, empathy and compassion; the degree ofinternal capacity and skills for strategic and leveragedthinking; and, whether top management has masteredthe art and science of organizational alignment.

At the core of all this “soft stuff” is the discipline of systems thinking.

Systems Thinking

The best practice Balanced Scorecarddeveloped by Kaplan and Norton andtracked by Harvard’s Balanced ScorecardCollaborative since 1990 is a systemsthinking-based process for developingand executing strategy based on the“relationships of effect” among the fourperspectives of finance, customer, internalprocesses and learning & growth.

Because of the ingrained linear and fragmented thinking styles, systemsthinking can be a struggle for those whoare trapped by industrial-age manage-ment methodologies, incentives andsystem designs.

Systems thinking is a way of thinkingabout, and a language for describingand understanding the forces and interrelationships thatdrive the behavior of complex systems.

Peter Senge says that “the art of systems thinking lies inseeing through complexity to the underlying structuregenerating change.”

“Systems thinking does not meanignoring complexity. Rather, itmeans organizing complexityinto a coherent story that illumi-nates the causes of problems, andenables people to discover howthese organizational dilemmascan be remedied in enduringways.”

He described the skill of systems thinking as “the abilityto see the whole picture, of seeing interrelationshipsrather than things, and of seeing patterns of change,rather than static fragmented snapshots.”

Three systems thinking tools thatprovide frameworks that enableteams to focus on the key rela-tionships and actions that, whenchanged, will propel the organiza-tion forward are: The BalancedScorecard for strategy implemen-tation; the Strategic AlignmentModel for complex system design;

and the SystemsLeverage Model for discovering the lever-aged actions required for success.

In the language of the BalancedScorecard, strategy is a set of hypothesesabout cause and effect.

In The BalancedScorecard, Kaplanand Norton ex-plain the cause-and-effect rela-tionships withinthe strategyframework. Theysay “the mea-surement systemshould make the relationships (hypoth-esis) among the outcomes (and mea-

sures) in the various perspectives (financial, customers,internal processes, learning & growth) explicit – so thatthey can be managed and validated. The chain of causeand effect should pervade all four perspectives of aBalanced Scorecard.”

Simply put, if we: 1. Make the appropriate investments inthe learning and growth of our people; 2. Then we willbe able to design and manage internal value-addedprocesses that will; 3. Enable us to achieve the outcomes,or results, that we are seeking in the customer andfinance quadrants of our Balanced Scorecard. (Followthe arrows to trace the logic of the cause-and-effect relationships in Figure #1).

S K I L L S , S T R U C T U R E S & C U L T U R E R E Q U I R E D F O R S U C C E S S F U L S C O R E C A R D I N G


“Systems thinking is about the ability to see the whole picture, of seeinginterrelationshipsrather than things,

and of seeing patterns of change,rather than static

fragmented snapshots.”

The quadrants provide the components of a systemthrough which people can determine their outcomes(the top two quadrants); and how they can best achievethem (the bottom two quadrants).

Systems thinking is one of the core disciplines of a learn-ing organization.

Learning Organization Skills & Competencies

Senge described a learning organization as a “group ofpeople who are continually enhancing their capacity tocreate the results they want”, and a place “where peopleare continually learning how to learn together”.

Organizations that have had the best success rates withBalanced Scorecarding are those that engaged in a “learn-ing journey” and a capacity-building program as theydeveloped their BSC.

The challenge in the healthcare sector is overcoming theangst, fear, cynicism, anxiety and lack of trust within thesystem. Until and unless there is a “safe environment”,there will be no learning and no change.

If the Board and the CEO are aligned on a strategy imple-mentation process that includes the BSC and learningorganization methodologies, the learning journey can

start with the senior team, who, when they are ready, canprovide developmental facilitation and coaching to middlemanagers as they engage in the balanced scorecardingprocess.

In the healthcare sector, this approach has required a fun-damental shift in the way people think and interact. Byadopting a common language and common frameworkfor talking about, planning for, and implementingchange, healthcare managers can begin to achieve amuch higher degree of alignment and strategic focus.

The Five Disciplines of a Learning Organization (see Figure#2) are essential for successful scorecarding. These disci-plines need to be developed through continuous internalcapacity-building programs rooted in adult learningmethodologies (learning-by-doing/just-in-time) as peo-ple participate in the development of their OrganizationalBalanced Scorecard.

Organizational leaders really need to understand thescale of the change that we are talking about, and theamount of time and effort required to launch what willbecome a continuous learning/change journey.

Changing the thinking and behaviour inside traditional,hierarchical, command-and-control, industrial-age orga-nizations requires a relentless commitment to a processof “just-in-time learning” – where people develop thecapacity to tap into their collective intelligence to solvecomplex problems.



FINANCIAL• Balance Revenue and Costs• Asset Utilization• Efficiency /Effectiveness• Leveraged Use of Resources

VALUE-CREATING PROCESSES• Core Process: Quality Care• Support Processes• Integrated Service Design

CUSTOMER• Accessibility• Quality Care / Outcomes• Seamless Services• Customer Satisfaction

LEARNING & GROWTH ENABLERS• Human Capital and

Strategic Competencies• Accountability and Strategic Budgeting• Information Capital• Alignment & Culture

ORGANIZATIONAL BALANCED SCORECARD

Figure #1

In Figure #3, on the next page, we have listed many of theskills and competencies that are required by senior andmiddle managers for successful balanced scorecarding.

Healthcare organizations that ran “training programs”for TQM/CQI and reengineering need to reflect on their“lessons learned” from these experiences and incorporateadult learning methodologies that enable people toacquire the skills they will need to create a better quality-of-worklife for themselves – while successfully achievingthe organization’s outcomes and vision.

Before launching into any type of BSC program, CEOsand their senior managers need to reflect on the historyof how the organization has managed change in the past.The managerial leadership needs to reach some consen-sus on the “lessons learned” from what worked, andwhat didn’t work so well in the past.

How will you demonstrate that you have learned fromthe mistakes of the past? How will you move forward inways that will mobilize broad support for sustainable,continuous change?

What will your unique learning journey be like?

Experience tells us that success will depend upon anorganization’s courage to openly and honestly addressthe health sector’s most common learning disabilities.

Health SectorLearning Disabilities

In his essay “The Challenge of Stewardship: BuildingLearning Organizations in Healthcare”, Alain Gauthierlists six learning disabilities common to the healthcaresector that present serious barriers to best practiceBalanced Scorecarding.

These include:

1. High Level of Fear & Anxiety

Gauthier points out that fear and anxiety among health-care workers and frustration and anger among physicianshave produced organizations that are emotional molotovcocktails driven by the blame and blame avoidancedynamics that have become ingrained in healthcare’shierarchical command and control structures and waysof “being” (culture).

In the Drucker Foundation’s recent Leader-to-Leaderperiodical (Winter, 2003) Larraine Segil’s essay “LeadingFearlessly” points out that fear is damaging. It causes insecure behavior that can run from defensiveness andnegativity to paranoia and operational paralysis.

“If an organization breeds fear, it soon slides into corpo-rate sclerosis. Process is used to create a series of hurdles– not for the purpose of learning, or the validation ofideas and projects – but rather as a means for denyinginnovation and slowing change”, according to Segil.

As Deming said, if you chose to change, your first priority must be to “drive out fear”.

2. Entrenched Reactive Behaviours

Alain Gauthier points to the hospital sector’s well-knownaddiction to what system thinking scholars call the “fixes-that-fail” system dynamics archetype. This recurringpattern is used in order to get by each successive crisis.



FIVE DISCIPLINES OF A LEARNING ORGANIZATION

SYSTEMS THINKING A way of thinking about, and a language for describing and understanding, the forces and interrelationships that shape the behaviour of systems. |This discipline helps us see how to change systems moreeffectively, and to act more in tune with the larger processes of the natural and economic world.

TEAM LEARNING Transforming conversational and collective thinking skills, so that groups of people can reliably develop intelligence and ability greater than the sum of individual members’ talents.

SHARED VISION Building a sense of commitment in agroup, by developing shared images of the future we seek to create, and the principles and guiding practices by whichwe hope to get there.

MENTAL MODELS Reflecting upon, continually clarifying,and improving our internal pictures of the world, and seeinghow they shape our actions and decisions.

PERSONAL MASTERY Learning to expand our personalcapacity to create results we most desire, and creating an organizational environment which encourages all itsmembers to develop themselves toward the goals and purposes they choose.

The Fifth Discipline, Peter Senge

Figure #2

Mr. Gauthier says of hospitals: “they have practiced costshifting, across-the-board cost cuts, and restructuringwithout understanding the consequences of theiractions.”

He says, “when they are confronted by new challengessuch as outcome measurements, they look at reengineer-ing, continuous improvement teams and visioning asjust another wave of ‘quick-fixes’ – without realizing thephilosophy and organizational alignment that theseapproaches imply.”

Under stress, the healthcare sectortypically tends to exhibit one oftwo different behaviors: (1)immediate action, as in responseto a crisis; or, (2) bureacratizationby drawing processes out for solong, they finally disappear –while providing policy-makersand operational managers withthe temporary illusion that

“everything’s under control”.

Neither of these habitual “normal responses” will pro-duce good balanced scorecarding results.

3. Fragmented Organizational Designs & Processes

Gauthier points out that “most hospitals are highly

fragmented organizations, where an extreme degree ofspecialization is compounded by very different mentalmodels of reality”.

Among the traditional polarizations that he addressesare: primary care practitioners vs. specialists; physiciansvs. nurses; clinicians vs. support services; acute vs. non-acute care; and, institutional vs. community-based care.

We design both the macro healthcare system and theinternal organizational systems/structures/processes at theservice delivery level as a series of poorly connected silos.

The result: consumers experience gaps in services, a lackof co-ordination and increasing rates of clinical errors –particularly at the hand-off points in the service deliverysystem.

Without a common language and framework for thinkingtogether, experience tells us that many of the professionssimply “talk past each other” – holding onto completelydifferent assumptions, beliefs and mental models abouttheir shared circumstances, their shared reality.

Without a shared understanding of the realities that mustbe faced, and without a shared vision for the whole organization; an organization will simply remain withinits silos – with little understanding of how each siloimpacts on the other, or even how other silos impact on them.



• Dialogue & Reflection

• Team Learning

• Systems Thinking

• Framing & Reframing Problems

• Leadership/Management Balance

• Stewardship

• Adaptive Leadership

• Values-Based Thinking & Behaviour

• Group/Team Process

• Developmental Facilitation & Coaching

• Finding leverage in complex systems

• The Art & Science of OrganizationalAlignment

• Strategic Budgeting

• Strategy Execution/Implementation

• Learning-How-To-Learn

• Self-Awareness/Emotional intelligence

• Designing for Outcomes

• Personal Responsibility & Accountability

• Leveraged Use of Time

SKILLS & COMPETENCIES REQUIRED FOR BALANCED SCORECARDING

Figure #3

The rate of change picks up, and measurable progresswill be made, only when a critical mass of managers cansee “the big picture” – from multiple perspectives – ratherthan simply seeing fragmented pieces of the puzzle.

In Back to Basics, Gordon Dryden provides the followingadvice to those who are drowning in complexity. He says:“Remember jigsaw puzzles: they’re much easier whenyou can see the whole picture first.”

4. Management/Physician Conflict

Provincial policy-makers and healthcare organizationshave designed the existing systems/structures/processesin ways that produce conflict between physicians andmanagers – often because of diametrically opposedincentives that have been designed into the system at theprovincial level.

While nobody intentionally designed the macro-health-care system architecture to produce conflict, the designsthat have evolved over the years werecreated to deal with the small “p”,short-term politics of the healthcare sys-tem. This jumble of fragmented andpolitically inspired designs have pro-duced what systems thinkers call: the“unintended consequences” of manage-ment/physician conflict.

It is primarily the design of systems thatproduce the outcomes we get – not thepersonalities of the CEO and their management team,nor the character of the Chief-of-Staff and the physicianswho work at the hospital.

While provincial governments are responsible for macro-system design, hospitals can – at the operating level ofthe system – design their own internal strategy develop-ment and strategy implementation processes to facilitatepartnership, respect, and, a better balance of empower-ment and accountability among management and thehospital’s physician leadership group.

The reality is that we cannot transform hospitals intoproductive, efficient, high-quality organizations withoutfully engaging physicians in the strategy developmentand implementation process.

Through the Chief-of-Staff, Medical Chiefs and theMedical Advisory Committee, hospitals need to engagetheir physician leadership group to provide their best thinking – from a medical perspective – on theOrganizational Balanced Scorecard.

5. Confused Governance

Gauthier points to the confusion that occurs when“Board members have been mostly driven by somewhatnarrow financial considerations, and have not consis-tently expressed the voice of the community.”

In Canada, when provincial governments focused theirprimary attention on the financial quadrant of the BSC,the unintended consequence was for Boards to “let go” ofthe other perspectives: the customer outcomes, the inter-nal processes and the learning & growth enablers for staff.

Where Boards dutifully focused their CEO’s attention onfinance alone – without the balance – the typical strate-gies brought forward by management and approved by boards were: reengineering, downsizing, and reorganiza-tion of the silos.

Evidence in the U.S. from E.C. Murphy indicates that200% to 400% increases in mortality and mobidity rates

were common outcomes of such finan-cially-focused strategies in the hospitalsector.

If Boards exist to represent the authenticinterests of the “owners” and “cus-tomers” (provincial taxpayers and com-munity members), they need to holdthe balanced set of perspectives that are contained in a best practice BSC.

With a Board-endorsed Organizational Balanced Scorecardand a Balanced Governance Scorecard, the traditional roleof governance shifts to a focus on outcomes or results –for which they, on behalf of the owners and customers,will hold the CEO, the Chief-of-Staff and themselvesaccountable.

6. Silo-Based vs. Customer-Focused

Many of the existing systems, structures, processes andincentives designed by provincial governments encourage healthcare organizations within a local delivery system to focus on their independence, ratherthan facilitate or encourage interdependence.

While provincial governments often lecture the health-care sector on the need for integration, coordination andcooperation, the fact is that their own core designsentrench fragmentation, competition and politicalbehaviour as the principle means of survival and growth.



“Remember jigsawpuzzles: they’re much

easier when you can see the whole

picture first.”

At the Board level, Gauthier points to “the lack of deeprelationships with the community as a larger system” asthe ultimate outcome of our existing designs.

If Alain Gauthier has accurately described the “larger pic-ture”, and the true context in which healthcare organiza-tions operate today, it should not be surprising that thereis confusion, a lack of focus, and unbalanced approach-es at both the governance and managerial levels.

What a best practice balanced scorecard process offersCEOs, their senior managers and their Boards is a processin which the larger picture will emerge – as the organiza-tion develops the appropriate strategies and determinesthe right leveraged actions that will be required to shiftthe system’s focus onto the customer – rather than on theorganizational, departmental or unit silos.

Becoming a Learning Organization

How can an organization overcome the six learningdisabilities listed by Gauthier?

Learning organizations invest in the learning & growthof their people – so that they have the internal capacityto achieve their organization’s vision with focused,

well-executed strategies that leverage resources andmobilize people to achieve the results required.

Peter Senge believes that building learning organizationsrequires basic shifts in how we think and interact. Thejourney involves an exercise in personal commitment tobeing “open to learning”.

Without communities of people who are genuinely committed to learning together, there is no real chance of moving forward.

According to David Carnevale, author of TrustworthyGovernment, one of the most detrimental aspects of traditional controlling organizations “is a deeplyingrained defensiveness characteristic of low-trust, traditional bureaucratic organizations that underminesnecessary learning. Trust expedites learning.”

Carnevale says that “healthy learning organizations aremanaged with the objective of liberating and usingemployee know-how to improve work processes. Theemancipation of employee know-how is enabledthrough a different philosophy of organization and jobdesign, communication patterns, labor-managementrelations, participatory methods, and other processesthat reduce the climate of fear and allow staff the necessary psychological peace of mind to fully engagetheir work”.

Charles Handy argues that learning organizations mustbe built on an “assumption of competence” – meaning that“each individual can be expected to perform to the limit of his or her competence, with a minimum ofsupervision.”

Traditional bureaucratic organizations are dominated bythe need for control and conformity – assuming thatworkers are incompetent, and therefore must be carefully managed. In turn, this creates high degrees of mistrust, defensiveness and fear – all of which undermine learning.

In learning organizations, the assumption of competenceis supported through the encouragement of openness,transparency, curiosity, creativity, innovation and stewardship.

Middle managers and teams of front-line healthcareproviders are provided with systems, structures andprocesses that enable them to use their know-how toimprove work processes.

1. High level of fear and anxiety.

2. Entrenched reactive behaviours.

3. Fragmented organizational designs and processes.

4. Management/physician conflict.

5. Confused governance.

6. Silo-based vs. customer-focused.



Figure #4

HEALTH SECTOR LEARNING DISABILITIES



LEARNING ORGANIZATIONS• People feel they’re doing something that matters – to them personally, and to the

larger world.

• Every individual in the organization is somehow stretching, growing or enhancingtheir capacity to create.

• People are discovering that they are more intelligent together than they areapart. If you want something really creative done, you ask a team to do it –instead of sending one person off to do it on his or her own.

• The organization continually becomes more aware of its underlying knowledgebase – particularly the store of tacit, unarticulated knowledge in the hearts andminds of people.

• Visions for the direction of the organization emerge from all levels. The responsibility of top management is to manage the process whereby new emerging visions become shared visions.

• Everyone is given the opportunity to learn what is going on at every level of theorganization, so they can understand how their actions influence others.

• People feel free to inquire about each others’ (and their own) assumptions andbiases. There are few (if any) sacred cows or undiscussable subjects.

• People begin to see themselves as part of a ’system’ – they learn more abouthow they impact on others and how others impact on them.

• People treat each other as colleagues; there’s a mutual respect and trust in theway they talk to each other, and work together – no matter what their positionsmay be.

• People feel free to try experiments, take risks, and openly assess results. No one is harmed or in trouble for making a mistake.

Peter Senge, Fifth Discipline

Learning organizations invest 1% to 5% of their payrollbudget to provide capacity-building and skills develop-ment that will enable the organization to achieve theirBSC outcomes and vision.

While successes are a cause for celebration, learning orga-nizations accept and forgive mistakes as part of the learn-ing process. Indeed, they must be open to learning fromtheir “best mistakes”. A learning organization must be builton trust, togetherness and a sense of true community.

Senge points out that “few, if any of the problems orga-nizations face nowadays can be handled by one personacting alone. The need for togetherness, or team learning,both to get things done and to encourage the kind ofinnovation that is essential to any grow-ing organization creates the conditionsfor trust.”

Trust, in turn, improves togetherness andcreates a culture and a community inwhich learning can flourish.

None of this can happen until and unlessthe senior management team, the CEOand the Board are authentically “practic-ing what they preach”.

The fact is that most BSC failures fail atthe top when:

• Senior managers experience the re-quirement for personal learning andgrowth as a negative judgment on them.

• Senior managers “play” at providing organization-wide strategic direction, but maintain their silo-focusbecause “that’s their real job”.

• CEOs do not themselves engage in personal learningto improve facilitation and coaching skills; listening and dialogue skills; adaptive leadership skills – as wellas modelling emotional intelligence and stewardship.

• Physician leaders are not included.

• Boards are stuck in micro-management, or, really have no idea what their actual governance role is. What happens when a Board doesn’t want to change itself, but wants everyone else to adapt to the emerging realities? Cynicism and more anxiety among the staff!

Becoming a learning organization is a journey in which theleaders must make deep commitments to personal and

organizational change. The organization’s governanceand managerial leadership must be prepared to modelthese behaviours in everything they do.

Trust-Building

In Trustworthy Government, David Carnevale describestrust as “an expression of faith and confidence that a person or an institution will be fair, reliable, ethical,competent, and non-threatening”.

Trust has also been explained as having faith that some-one is able to, and wants to control their “dark side” as it

would affect oneself or others.

All too often, however, work organiza-tions destroy their employees’ trust.Carnevale writes that many people go towork “with guarded, suspicious, and cyn-ical attitudes. They have lost faith in theirorganizations. Their hopes and expecta-tions have been mismanaged.

The costs of mistrust and cynicism arehigh. These emotions corrode organiza-tions and destroy high-performance.”

“Trust is social capital. It reduces conflict,improves communication, eases coopera-tion, enhances problem-solving, reducesstress, enables people to realize more sat-isfactory relationships, amplifies organi-

zational learning, and advances change.”

David Carnevale explains the importance of participativeprocesses for building high-trust, cooperative and highperformance organizations.

He writes, “participation elevates feelings of personalefficacy by granting staff more control over their worklives. Involving employees meanstrusting them with information,power, authority and responsibil-ity. They interpret their enhancedcontrol over the conception andexecution of their work as expres-sions of confidence, and theyrespond accordingly. Trust is areciprocal attitude”.



“Having empathymeans being

sensitive to others’feelings and

concerns, takingtheir perspective,

and respecting differences that people may feel

about things.”



Carnevale says “the message is clear – trust and high per-formance are impossible if the organization deals withemployees just in terms of their work roles, puts updefenses that impair free expression, uses manipulativemethods to motivate workers to do what it wants, andattempts to control everything and everyone.”

“Staff who are suspicious and cynical become absorbedin self-protective practices. They are less likely to takerisks, to speak out when it is called for, to question ideasthat need examination, to participate during meetings, ortake a chance that a fresh approach might be the answerto a problem. They fear speaking truth to power. Who,after all, is going to expose themselves to risk or committo an organization that weakens their sense of efficacy or threatens their very existence? Who identifies with asystem that keeps them small?”

So, how do you restore trust? This is perhaps the mostsignificant challenge facing the Canadian healthcare sector today.

Figure #5 provides recent data from the CPRN-EkosEmployment Survey in which the healthcare sector rankslast place on trust in a field of fifteen work categories.

As we can see, trust – or the lack of it – is the healthcaresector’s “burning platform”. What healthcare managersand front-line workers want and need is empathy andrespect.

Respect begins with our acceptance that each individual is inherently valuable. By focusing too much on problem-solving, we often have difficulty accepting one another. We not only want to “fix” things – we oftentry to “fix” each other.

The greatest challenge in building respectful relation-ships is to support someone’s struggles and their differ-ences, to hear and acknowledge the way they feel andthink – even when they are scared or angry – and not tryto change or fix it.

We need to allow each other our unique struggles, to lis-ten without judgment, and without taking responsibilityfor each other.

This is true respect – accepting one another for who weare, believing in our inherent worth and capability,allowing each other to be human and make mistakes,while holding each other fully responsible and account-able for our behaviour and our communications.

When we are empathetic, we have the capacity to perceivethe subjective experience of another person. We demon-strate empathy when we imagine another person’s feel-ings, emotions, and sensitivities, think about how wemight feel in their situation, and then behave in anappropriate way.

To be empathetic, it is necessary to be self-aware. Whenwe are self-aware, we are in touch with our own emo-tions, and therefore are more able to read others’ feel-ings. Empathy leads to quality relationships, integrity,trust, and good communication.

Balanced scorecarding dialogues with middle managers,teams and front-line service providers must be conduct-ed in a “safe environment” – one in which people canspeak freely, telling the whole truth without blame, in asupportive environment where learning from our “bestmistakes” is valued.

Where there is empathy, respect and a safe environment,balanced scorecard dialogues are opportunities to “learn-by-doing” on a “just-in-time” basis as people learn throughthe BSC development process how to execute leveragedactions which will propel the organization forward.

FIGURE 1: EMPLOYEES' TRUST IN THEIR EMPLOYER, BY OCCUPATION, CANADA, 2000

MEAN SCORE ON TRUST SCALE*

SOURCE: CPRN – EKOS CHANGING EMPLOYMENT RELATIONSHIPS SURVEY, CANADA, 2000

HEALTH PROFESSIONALS

SKILLED SALES/SERVICE

UNSKILL MAN

SKILL MAN

ALL PROFESSIONALS

SEMI-SKILL MAN

PROF. IN SOC SCI. , EDU, GOV'T

TOTAL

PROF. IN BUSINESS/FINANCE

CLERICAL

PROF. IN NATURAL/APPLIED SCIENCE

ELEMENTAL SALES/SERVICE

TECH/SEMI-PRO

MGMT

INTERMEDIATE SALES/SERVICE

SKILLED ADMIN & BUSINESS65 7 8 9

6.51

7.16

7.20

7.35

7.46

7.50

7.61

7.61

7.69

7.70

7.72

7.77

7.80

7.84

7.86

7.88

Figure #5



Strategic Capacity-Building

Developing sev-eral iterations ofan OrganizationalBalanced Scorecard

provides the opportunity to build theinternal capacity for strategic thinkingand strategy execution.

In Reinventing Strategy: Using StrategicLearning to Create & Sustain Break-through Performance, Willie Petersenstates that “strategy determines how youwill use your scarce resources in the bestpossible way.”

Strategy means deciding how to use yourhuman and financial resources for maximum impact. Strategy is the leverag-ing of resources to make our goals andvision a reality.

While many organizations can point to aformal document labelled “The Strategy”,the fact is that, without a process to actu-ally execute strategy, organizations willfail (see typical results Figure #6).

Traditionally, healthcare managers have treated strategyas something apart from the organization’s operations

and the results produced. But the evidence on failure isremarkably high. Only 10% of organizations ever actual-ly execute their strategy. Figure #7 from the BalancedScorecard Collaborative lists the common barriers toimplementing strategy as: vision, people, management,resources.

Why is failure so common? Not becausethere isn’t a powerful vision or an intel-lectually coherent strategy. Strategiesmost often fail because they were not well executed.

Execution is fundamental to strategy.Indeed, a strategy is doomed to fail if itdoes not take into account the organiza-tion’s ability to execute it.

For a coherent strategy to survive andthrive in a constantly changing andchaotic environment, it must be flexibleand pragmatic. Over the course of a bal-anced scorecard learning journey, anorganization will continually evolve theirstrategy – adjusting and readjusting it to meet the new external and internalrealities as they emerge.

This sometimes means that an organiza-tion will be living with some chaos and

some ambiguity while the answers to their most perplex-ing problems are still emerging. While we would all likea stable environment and a fixed strategic plan that

“Respect is aboutaccepting another for who they are,believing in their

inherent worth andcapability, allowingthem to be human

and make mistakes,while holding them

fully responsible and accountable fortheir behavior and communications.”

Most health care organizations do not have adequate processes to manage strategy.Consider the following:

95% Of a typical workforce does not understand their organization’s strategy

90% Of organizations fail to execute their strategies successfully

86% Of executive teams spend less than one hour per month discussing strategy

70% Of organizations do not link middle management incentives to strategy

60% Of organizations do not link strategy to budgetingBalanced Scorecard Collaborative, Health Care Summit 2003

Figure #6

WHAT HAPPENS WITHOUT A PROCESS TO EXECUTE STRATEGY?



shows us exactly what we should be doing, the reality isthat successful scorecarders learn how to be flexible andadaptive in responding to their ever-changing circum-stances.

Traditional strategic planning approaches do not workprecisely because they fail to adjust to the dynamic andconstantly shifting environment of the world we live in.

In a strategy-focused organization, managers are able towork collaboratively together using systems thinking-based frameworks to explore the whole system, and todiscover the key leverage points in the systems, structuresand processes that will drive change.

They take leveraged actions, learn from the results thatthey achieve and make continuous improvements.

In our view, strategy must ultimately be about executionand implementation: the whats and hows of change.

Bossidy and Charan, in their book Execution: TheDiscipline of Getting Things Done describes execution as“a systematic process of rigorously discussing hows and

whats, questioning tenaciously,following through, and ensuringaccountability.”

Strategy Development/Implementa-tion Teams – with input frommiddle managers and fromfront-line service providers –need to determine what changes

to make (and how to make them) in order to producesignificantly improved outcomes.

Senior and middle managers use the Balanced Scorecarddialogue to explore the multiple perspectives of peopleon the most leveraged “whats” and “hows”.

Leveraged thinking is the ability to identify the actionsrequired to create “maximum impact for the minimumamount of effort”. The ability to find the leverage in complex systems is an essential skill for successful organizational transformation.

Senge describes leveraged actions as small, well-focusedactions that can sometimes produce significant, enduringimprovements if they’re in the right place.

For example, the “trim tab”, or small “rudder on the rudder” of a ship is an excellent metaphor for leverage.This tiny tab is what makes it easier to turn the rudder,which in turn makes it easier to turn the ship.

Just like the trim tab, high-leverage changes are usuallyhighly non-obvious to most people in the system.

“Unless you understood the force of hydrodynamics, it isunlikely that you would think of pushing a tiny trim tabat the back of a huge ocean tanker in order to make itmove in the direction you wanted.

The more obvious course of action might be to push thebow of the tanker to the left if that was the direction youwanted it to go. Yet, the amount of force required to

ONLY 10% OF

ORGANIZATIONS EXECUTE

THEIR STRATEGY

THE BARRIERS TO IMPLEMENTING STRATEGY

BARRIERS TO STRATEGY EXECUTION

ONLY 5% OF THE WORK-

FORCE UNDERSTANDS

THE STRATEGY.

ONLY 25% OF THE MAN-

AGERS HAVE INCENTIVES

LINKED TO STRATEGY.

85% OF EXECUTIVE

TEAMS SPEND LESS THAN

ONE HOUR PER MONTH

DISCUSSING STRATEGY.

60% OF ORGANIZATIONS

DON’T LINK BUDGETS TO

THEIR STRATEGY.

VISION BARRIER PEOPLE BARRIER MANAGEMENT BARRIER

Figure #7

Balanced Scorecard Collaborative, Health Care Summit 2003

RESOURCE BARRIER



move the tanker would be tremendous. Instead, theleverage lies in going to the stern and pushing the trimtab and the rudder to the right in order for the bow topoint to the left.”

Like the trim tab, leveraged actions are usually not “closein time and space” to obvious problem symptoms.

A best practice systems thinking tool that can be used in conjunction with the BSC is the System Leverage Model (Figure #8) – for continuouslydetermining the most leveraged actionsrequired – taking action, measuring the feedback, learning from it, and determining the next leveraged action (or combination of actions) that willclose the “gap” between your current reality, and where you want to be in the next 3 to 5 years (i.e. your shared visionof the future).

Leveraged actions are those actions thatwill propel the organization forwardtoward its shared vision of the future.

In order for an organization to develop the internalcapacity for strategic thinking, it must be continuouslydeveloping people’s skills for dialogue, reflection and teamlearning.

As these skills are developed, an organization can beginto tap into the collective intelligence of its people.

Skills for Collective Intelligence

Organizations that view the Balanced Scorecard as amethodology for mobilizing people (rather than as a

limited performance measurement tool)need to develop their capacity for tappinginto the collective intelligence of the orga-nization with a combination of “top-down” and “bottom-up” processes thatwill facilitate the knowledge and wisdomthat is within the organization to solveproblems.

In order to tap into the collective intelli-gence of a team or an organization, peopleneed to intentionally develop and expandtheir capacity to work with, and thinkwith others.

Skills for dialogue, reflection and team learning, and learn-ing organization practices for high performance teams, areall essential for successful balanced scorecarding.

Dialogue is a reflective learning process in which groupmembers seek to understand one another’s points-of-view and deeply held assumptions.

Within a safe environment, teams use a wide variety oflearning organization process and practices to collective-ly develop a “bigger picture” of reality and to discoverwhat key leveraged actions, and combination of actions,will propel them towards their objectives and targets.

Team Learning is also a critically important skill for suc-cessful Balanced Scorecarding. Team learning is the disci-pline for building on each others’ ideas to the pointwhere the intelligence of the team exceeds the intelli-gence of the individuals on the team.

Senge writes that “when teams are truly learning, notonly are they producing extraordinary results, but theindividual members are growing more rapidly thancould have occurred otherwise”.

Teams acquire team learning by practicing dialogue andintentionally overcoming the ingrained habit of frag-mented thinking.

“Leveraged actionsare those actionsthat will propel the organizationforward toward its shared vision

of the future.”

SHARED VISIONGAP

DIALOGUE &REFLECTION

OPTIONS

SHARED REALITY ASSUMPTIONS

LEVERAGE

FEEDBACK

THE LEARNING ORGANIZATIONSYSTEM LEVERAGE MODEL

Figure #8



In The Wisdom of Teams, JohnKatzenbach et al. studied hun-dreds of teams working in a vari-ety of settings. They found that,among other things, memberson truly highly performingteams had shared goals, a sharedapproach, and demonstrated ahigh level of interpersonal skillin working with one another.

Senge stresses how vital team learning is – “teams, notindividuals, are the fundamental learning units in mod-ern organizations, unless teams can learn, the organiza-tion cannot learn”.

When a Senior Management Team has successfully trans-formed itself into a high performanceStrategy Development/ImplementationTeam that knows how to tap into their own collective intelligence, the mem-bers can then provide developmentalfacilitation and coaching to tap into thecollective intelligence of middle man-agers – who in turn learn how to workwith their staff teams as they too “learn-by-doing” balanced scorecarding.

Balanced scorecarding is a process forimplementing change – somethingmost humans don’t really like. Toenhance your chances of success, thescorecarding processes needs to facili-tate alignment among middle man-agers, senior managers, the physicianleadership group and the Board.

If the organization is expected to adapt to change, it muststart at the top – with the leadership.

Adaptive Leadership

Balanced Scorecarding is a methodology for holdingstrategy conversations, making decisions and managingchange in real time. However, a BSC does not, by itself,create change.

The key to managing change is adaptive leadership: theleadership model that facilitates people’s capacity toadapt to changing circumstances. (See Figure #9)

Traditional command and control styles of leadershiphave focused on having personal power and authorityover others. This style of leadership has been reserved fora few key individuals – whose role has been associatedwith behaviors of control, direction and “knowing whatis best” for others.

This approach to governance and management does notsupport an empowered, accountable, and responsiblework force – the type of workforce which is necessary tobuild and maintain a flexible, innovative, dynamic andsuccessful organization.

In transformed organizations, people throughout thehospital or community agency have the ability, and theresponsibility, to lead.

Ron Heifetz, in his seminal work onadaptive leadership, points out that thetest of true leaders is in how theyrespond to adaptive problems – thoseproblems that challenge us to learn anentirely new way of "being" and "doing".

Most crises in human systems can’t besolved with an easy technical fix – theyare adaptive problems.

Nonetheless, people usually want leadersto respond with a “quick fix”, and manyleaders, eager to please, respond accord-ingly by taking the problem on theirshoulders and coming up with a solutionthat typically alleviates a symptom, notthe underlying problem.

Heifetz points out that “a major pitfall ofleadership is assuming that somehow

you’re the one who’s got to come up with the answers –rather than develop the adaptive capacity, the capacity ofpeople, to face hard problems and take responsibility forthem.”

Adaptive leadership involves “raising tough questions,rather than providing answers; it means framing theissues in a way that encourages people to think different-ly, rather than laying out a map of the future; it means co-creating with people their new roles, power relationships,and behaviors, rather than orienting them in a new direc-tion and giving them a big push.”

“In order for an organization to

develop the internalcapacity for strategic

and leveraged thinking, it must be continuously

developing people’sskills for dialogue,

reflection and team learning.”



It also means orchestrating conflict, rather than quellingit. Conflict is a tremendous source of creativity. Heifetzpoints out that “leaders in the midst of adaptive changemust be able to artfully guide their people through a bal-ance of disorientation and new learning.”

“They need to hold the group in an optimal state of tension and disequilibrium that stimulates a quest forlearning, without jarring people so much that they sim-ply aren’t able to learn,” according to Heifetz.

Strategy Team’s Role

A key critical success factor for Balanced Scorecardingis leadership commitment – and the modeling of learn-ing, integration and dedication to best practices by thepeople at the top of the organization.

Senior management teams – usually structured as silorepresentatives who meet regularly to bargain forresources among each other and to deal with the mosturgent operational issues – are transformed into StrategyDevelopment/Implementation Teams as they develop thefirst several iterations of their Organizational BalancedScorecard.

What the scorecard process offers is a best practice framework to guide the on-going dialogue on the organization’s evolving strategy.

There is no longer an event called “strategic planning”that results in a document called the “strategic plan”, ora set of “strategic directions” that are the product of abrainstorming session.

Strategy is an ongoing process that often requires twodays per month for focused Balanced Scorecard dialoguesby the senior managers of the organization, and, one-dayper month for strategy development/implementationdialogues between the senior and middle managers.

In many organizations, such changes are dramatic. Inthis model, senior managers are collectively and individ-ually accountable for providing strategic direction andleadership to the whole organization – while ensuringthat the silo that they lead is also in alignment with theorganization’s overall strategy.

As the learning journey progresses, the StrategyDevelopment/Implementation Team needs to continuallyexamine how to better align the organization’s structure,skills, and culture – so that these organizational compo-nents are designed to achieve the specific outcomes setout in their Organizational Balanced Scorecard.

Direction

Protection

Orientation

Managing Conflict

Shaping Norms

Define problems and provide solutions

Shield the organizationfrom external threats

Clarify roles and responsibilities

Restore order

Maintain Norms

Identify the adaptive challengeand frame key questions andissues

Let the organization feel external pressures within a range it can stand

Challenge current roles and assumptions and resist pressure to define new rolesimmediately

Expose conflict or let it emerge

Challenge unproductive normsand behaviors

RESPONSIBILITIES

From Heifetz & Laurie, Harvard Business Review

TRADITIONAL LEADERSHIP ADAPTIVE LEADERSHIP

Figure #9



Deming, the father of TQM/CQI said that 93% of all theproblems faced by organizations are rooted in the designof their systems, structures and processes.

Because that's true, another paradigm shift is required:the Strategy Implementation Team is the lead “organiza-tional design team”. They provide the macro design andestablish the initial mandates and scoping statements forcross-functional redesign teams whodesign aligned core and supportprocesses that will achieve the organi-zation’s targets.

While the Balanced Scorecard providesorganizations with a proven methodol-ogy for implementing strategy, the fact is that most strategies will fail and performance outcomes will be sub-optimal until, and unless, there isorganizational alignment – a concept thatis not very well understood in thehealthcare sector.

As a noun, alignment refers to thedegree of integration of an organization’s core systems,structures, processes, skills and the connectedness of peo-ple to the organization’s strategy. As a verb, aligning is aforce – like magnetism, it is what happens to scatterediron filings when you pass a magnet over them.

The Strategic Alignment Model (see Figure #10) is a system design tool and dialogue structure that enables ateam to discover how to align the key leverage points incomplex and dynamic human systems.

The key system leverage points are: strategy, structure,culture and skills. Achieving alignment on these keypoints will result in transformation.

That’s the science. The art is in deter-mining how that can be achieved ateach organization – because every organization is different.

The alignment model provides a power-ful way to look at an organization todetermine if there are misalignmentsthat are preventing it from functioningeffectively, or from achieving its vision.

The model provides a dialogue frame-work that will enable a strategy team todetermine how they can best align theorganization’s STRUCTURE (design,

decision-making, accountability process, information systems,rewards/incentives and strategic budgeting); CULTURE(norms, behavior, values, language, leadership and steward-ship); and SKILLS (technical, analytical, people, organiza-tional and communications); in ways that will enable the

“Leaders in the midstof adaptive change

must be able to artfully guide their

people through a balance of

disorientation and new learning.”

CUSTOMER & FINANCIAL STRATEGIC OUTCOMES

STRATEGIC THEMES IN A BALANCED SCORECARD

STRATEGY

CULTURE

SKILLS STRUCTURE

• TECHNICAL• ANALYTICAL • PEOPLE • ORGANIZATIONAL• COMMUNICATIONS

• DESIGN• DECISION-MAKING

& ACCOUNTABILITY• INFORMATION SYSTEMS• REWARDS/INCENTIVES

& STRATEGIC BUDGETING

• NORMS • VALUES • LANGUAGE

• BEHAVIOUR • LEADERSHIP • STEWARDSHIP

SHARED VISION

STRATEGIC ALIGNMENT MODEL

Figure #10



organization to achieve: the STRATEGIC THEMES intheir Balanced Scorecard; their CUSTOMER ANDFINANCIAL OUTCOMES; and, ultimately their organiza-tion’s SHARED VISION of the future.

While the path taken in every organization will differ, the most common leverage points in organizationaltransformation are: governance; integrated management;aligned incentives; strategic budgeting; system-wideinformation technology; investing in the strategic capac-ity of managers; shifting organizational culture; achiev-ing the appropriate balance of accountability processesand structures; and, the genuine empowerment of thosewho actually deliver services.

Structural Alignment

Structure is like the DNA of an organization: whatever it contains produces the outcomes/results that itachieves.

An organization’s structure is about theinterrelationships between its compo-nent parts.

As an element of the StrategicAlignment Model, structure, cultureand skills must be aligned with thestrategy – if an organization is toachieve its outcomes.

Too often, organizational changeefforts focus solely on structure, andavoid considerations of alignment. Thewrong assumption in the healthcaresector has been that work practices canbe changed, jobs cut, departments reor-ganized, or nurses shifted from full-time to part-timewithout any significant adverse consequences.

Practical experience teaches otherwise. The fact is thatunaligned structural change can significantly damage anorganization’s culture – creating a climate of resentmentand mistrust that can take a long time to heal.

Structure can be thought of as having several compo-nents, including: Design, Decision-Making and Account-ability, Information Systems, Rewards & Incentives andStrategic Budgeting.

Design: An organization’s design is composed of what itdoes (its functional design); who does what (its structuraldesign); and, how work is done (work process design).

To maintain proper alignment, the organization’s func-tional design must be consistent with its strategies. Itneeds to examine how well its offerings meet the needsof the people who use them. It may need to add orremove services or capabilities to its functional design tomeet strategic changes.

In doing structural design, the organization determineswho will be involved in carrying out the work identifiedin the functional design – and determining how the work

will be done.

Work processes also need to be designedand aligned to achieve the targets thatare set.

Typically, an organization will select themost leveraged processes, structures andsystems and assign cross-functionaldesign teams to design them to achievethe specific results required.

The traditional silo-structure that existswithin healthcare’s industrial-agedesigns stress the importance of functional excellence, but result in alack of cooperation between functions,departments, jobs and tasks. In con-trast, the customer-driven model looksat work from a different perspective –the customer.

Decision-Making System: This compo-nent of structure includes what deci-sions are made; who is involved in making them – and who is accountablefor what outcomes. It is really an

expression of how power and authority are distributed inan organization.

Again, organizations use design principles in setting theirdecision-making systems. In bureaucratic organizations,managers take responsibility for the work of their subordinates and make decisions that affect their work.In learning organizations, teams are responsible for their own work and are involved in decisions that affecttheir work.

“Senior managersare collectively and individuallyaccountable for

providing strategicdirection and

leadership to thewhole organization –while ensuring that

the silo that they lead is also in alignment with

the organization’s overall strategy.”



Best practices suggest that organi-zations can create the right bal-ance of empowerment andaccountability with AccountabilityAgreements that reflect the overallstrategic outcomes set by theStrategy Implementation Team,and approved by the Board with-in an Organizational BalancedScorecard.

Information Systems: How information flows is animportant component of structure. Groups in organiza-tions are often connected byinformation flows that enablework to be done.

Consequently, it is very impor-tant that an organization haswell-functioning performancemeasurement information sys-tems (including suitable infor-mation technologies) that willfacilitate the smooth execu-tion of tasks.

Information systems also needto evolve to support leveragedmanagerial decision-making that propels the organiza-tion towards the achievement of each of its balancedscorecard outcomes in their customer and financialquadrants.

Effective and efficient organizations track their measures,set targets, monitor their progress and, continuouslymake adjustments to their strategy.

Decision-support information systems reflect evidence-based decision-making and best practices.

Rewards/Incentives & Strategic Budgeting: Compensa-tion, in all its forms, is also a component of structure.The culture of an organization – particularly its behav-ioral norms – is very much affected by what and how theorganization rewards people.

Consequently, it is important to ensure that the organi-zation’s rewards and incen-tives system is actually encour-aging the kind of behaviorsthe organization needs toimplement its strategies.

However, in recent years, orga-nizations that maintainedtheir traditional budgetingprocess, while implementing aBalanced Scorecard havefound that in combination,these can in fact be counter-vailing forces that signal theorganization’s desire to both

change – and to maintain the status quo.

Strategic Budgeting, as outlined by Jeremy Hope and

• Functional Design

• Structural Design

• Work Process Design

• Decision-Making & Accountability

• Information Systems

• Rewards/Incentives

• Strategic Budgeting

COMPONENTS OF STRUCTURE

Condition

Reaction

Solution

Responsibility and Complexity

Differentiate

Develop Areas of Specialty

Turf Issues

Focus on alignment of strategy, structure,culture and skills

Diffusion

Disperse

Middles move awayfrom each other

Politics/Power

Integrate cross-functionality, shift tostewardship and develop coaching skills

Vulnerability

Coalesce

Draw together to formthe “we”

Blame up

Empowerment balancedwith accountability,made possible by newskills

TOPS MIDDLES BOTTOMS

Figure #11



Robin Fraser in their book BeyondBudgeting, offers a revolutionarynew approach to traditional bud-geting that – when combinedwith the Balanced Scorecard – canpropel the organization forward.

The authors argue that cutting-edge tools and techniques likethe BSC will not achieve their full

potential as long as the traditional budgeting process iskept in place. They say that organizations that dispensewith budgets can unleash the full power of modern infor-mation systems and tools while freeing up the estimated30% of managerial time that is consumed by traditionalbudgeting processes.

Without organizational alignment (align-ing the structure, culture and skills toachieve the strategy), BalancedScorecarding will produce sub-optimalresults and will simply maintain all ofthe existing internal organizationaldynamics.

OrganizationalDynamics

Organizational design also needs totake into account all the very realunderlying human dynamics withinthe organization.

We need to understand that our organi-zations are profoundly human.

Barry Oshry, author of Seeing Systems,points out that what seems personal inorganizations is actually the result of conditions of the“space” that people occupy in the system.

He outlines the dynamics that take place between andamong three “spaces” in organizations: the top space, themiddle space and the bottom space. (See Figure #11)

The conditions of the space we’re in can be so powerful,and so constant, that we tend to respond to them with-out awareness or choice – what Oshry calls the “Dance ofthe Blind Reflex”.

The conditions of the top space in organizations areresponsibility, complexity and crisis management. The“blind reflex” to this condition is to suck up responsibil-ity and to feel burdened and overwhelmed.

To cope with this feeling, people in the top space differentiate – they retreat to their silos and protect theirturf. To change this, the top team needs to transformthemselves into a team accountable for providing strate-gic direction and the right balance of management/ lead-ership that will enable the whole organization to acceler-ate its transformation.

The condition of the middle space is diffusion. Oshrycalls them the “torn middles”. Middle managers are constantly being pulled in numerous directions by themany needs of their subordinates and bosses, as well asby the needs of their customers.

The “blind reflex” to this condition is todisperse – middles move away fromeach other and out towards the individ-uals that are pulling them. They feelalienated from one another. They areisolated, lonely and fearful of beingblamed.

To overcome dispersion, the balancedscorecard process can be used as anopportunity to integrate middle man-agers cross-functionally.

In transformed organizations, middlemanagers are the system integratorswho provide others with information,support and the resources needed toachieve the outcomes in theirOrganizational BSC.

They meet regularly as a Management/Leadership Team to coordinate the activ-ities and functions across the organiza-

tion. They provide developmental facilitation and coachingto create high performance teamsfor whom they remove barriersand provide the supportsrequired for them to succeed.

In what Oshry calls the “bottomspace” in hierarchical organiza-tions, the condition is vulnerabil-ity. Typically, the front-linehealthcare service provider lives

“Organizations thatdispense with

budgets can unleashthe full power of

modern informationsystems and tools

while freeing up theestimated 30% ofmanagerial time

that is consumed bytraditional budgeting

processes.”



in an environment of fear and anxiety. Oshry observesthe behavior in the bottom space is to coalesce – and to“blame-up”.

From the front-line perspective, the people “up there” ingovernment, and the people “up there” in management,and "up there" in governance, have had a lot to do withtheir existing quality-of-work-life.

The largest ever cultural research survey of 20,000 nurses(Ontario Nurses’ Association, May, 1996) found that86% of nurses feel that the provincial government has apoor understanding of healthcare issues; while 73% saidthat healthcare administrators do not have a hands-onawareness of problems in patient care (see Figure #12).

Provincial governments, governing boards and profes-sional managers must address the issues raised by front-line healthcare providers in very meaningful ways if theyare to successfully implement strategies to improve thesystem.

The most immediate challenge is: staff retention. InOntario, for example, the province is expecting 23,000nurses to retire by 2006 – out of 83,000 RNs. Since theyonly graduate 3,100 student nurses each year in Ontario,that province is about to hit a brick wall. What wouldhave to change for a nurse to decide to stay another twoor three years? How can healthcare organizations engageall that knowledge and wisdom that resides in the heartsand minds of these dedicated professionals?

What are the chances that a hospital will retain more staffif they are fully involved in creating the future?

When the organization's Board and management arealigned on their Organizational BSC, and the senior and

middle managers have the capacity to provide develop-mental facilitation and coaching for teams, then it will beready and able to tap into the collective intelligence oftheir professional service providers.

Successful strategy implementation is the product of high involvement processes and excellent strategic communications.

A best practice BSC strategic communications programbuilds strategic awareness, aligns behavior and influencesresults in order to make strategy execution a core compe-tency of the organization.

The Balanced Scorecard Collaborative suggests that commu-nications should be designed to:

• Foster an understanding of the strategy throughoutthe organization;

• Align the organization to a shared vision and com-mon direction;

• Create awareness of the Balanced Scorecard as a strate-gic management process;

• Demonstrate how individuals in an organization canhelp implement the organization’s strategy;

• Develop buy-in so that employees actively participatein and support the Balanced Scorecard process; and,

• Provide on-going information on the organization’sperformance and progress in achieving the strategy.

While there are a wide variety of methodologies for shift-ing thinking and behavior in organizations, the mostleveraged action may be the integration of the middlemanagers.

86%

8% 6%

DISAGREE UNCERTAIN AGREE

THE PROVINCIAL GOVERNMENT HAS A GOODUNDERSTANDING OF HEALTH CARE ISSUES.

ONA OVERALL MEMBERSHIPOntario Nurses Association Dialogue, May 1996

73%

7%20%

DISAGREE UNCERTAIN AGREE

MANAGERS OF HEALTH CARE FACILITIES HAVE HANDS-ON AWARENESS OF PROBLEMS

IN PATIENT CARE.

ONA OVERALL MEMBERSHIPOntario Nurses Association Dialogue, May 1996

Figure #12



In successful balanced scorecarding experiences in thehospital sector, this has been accomplished through reg-ular and on going meetings of middle managers with theStrategy Development/Implementation Team as they jointlydevelop and refine their Organizational BSC.

Such meetings are opportunities forintentional dialogues about what needsto be done in order to successfullyimplement/execute the evolving strate-gy; and to use such occasions to buildthe capacity of everyone to acquire andenhance their skills and competencies tomanage and lead change.

However, without a shift in the tradi-tional healthcare culture, the potentialresults from balanced scorecarding willnot be realized.

Culture Shift

Culture is about all that “soft, messyhuman stuff”.

Culture describes the organization’s typ-ical way of thinking and behaving andincludes its norms, values, language,interpersonal behaviors, behavioral expectations andleadership styles.

Ten to fifteen years of unrelenting incremental changedriven more by politics and power than by evidence, has

created healthcare cultures that are often cynical andskeptical of “yet more change”, “yet another manage-ment fad” and “yet another promise that things willimprove.”

Front-line workers have “seen it, donethat, been there and got their t-shirts”.

While many change management schol-ars will say that it can take years to shiftan organizational culture, the ExtendicareCase Study (see Accelerated Change:Achieving a Dramatic Shift in CorporateCulture in Less than a Year, ManagingChange, Fall, 2001) demonstrates that accelerated changes in thinking andbehavior are possible within nine to 18months – when you integrate a varietyof best practices from learning organiza-tions and customize them to meet yourunique circumstances.

Experience suggests that before rushingout to deal with the pain and sufferingon the front-line of the healthcare deliv-ery system, senior and middle managersneed to first ask themselves: how are wegoing to change our thinking and behaviour?

While adaptive leadership capacity is one part of the solution on the skills component of the StrategicAlignment Model, these need to be aligned with a culture and a structure for stewardship – where people are

“Provincial governments,

governing boards and professional managers must

address the issuesraised by front-line

healthcare providersin very meaningful

ways if we are to successfully

transform the healthcare sector.”

BOTTOMS

MIDDLES

TOPSBOTTOMS

CUSTOMER

CUSTOMER

MIDDLES

CONTROLMODEL

STEWARDSHIPMODELTOPS

COMMAND

IN

SERVICE

SHIFT FROM "CONTROL" TO BEING "IN SERVICE"

Figure #13

in “service to”, rather than “in control of” people whoreport to them.

Drawing the upside down triangle (see Figure #14) has tobe much more than a change in structureand process, it must also become a mind-set shift.

In this model, the Board is “in service” tothe CEO – as a coach, guide and mentorwho is there to push the envelope onbehalf of the owners and customers. TheCEO, in turn, enables their direct reportsto be successful at accomplishing theiraccountabilities by focusing on how theycan add value, and provide the supportspeople need to be successful.

Tops are in service to middles, who inturn are in service to the front-line – whoactually deliver the services that reflectand embody the mission and vision of the organization.

So what are the key components of a culture that willsupport balanced scorecarding? We think the key ones

are: empathy, respect, truthfulness, forgiveness, personalresponsibility and accountability and a deep commit-ment to personal and organizational learning and

growth.

Investing in Learning & Growth of People

At some point, the penny drops: suc-cessful scorecarding mostly depends onthe internal capacity of an organizationto manage change continuously.

Unlike the rest of the knowledge-basedsector of the economy, healthcare organi-zations do not invest in the learning andgrowth of their people. Indeed, educa-tion and training budgets for staff are

always the first place to “save money”.

However, in knowledge-based industries, the assets of anorganization are located in the knowledge, experience



• Norms• Behaviour• Values• Leadership• Language• Stewardship

COMPONENTS OF CULTURE

MOBILIZINGPEOPLETo access this insightful essay on how the BSC can mobilize human capital, contact:[email protected]

Quantum Transformation Technologies517 Wellington Street West, Suite 201, Toronto, Ontario M5V 1G1 Phone (416) 581-8814, Fax (416) 581-1361

and creativity of the people who work there – theirhuman capital assets.

This is a radical shift from the industrial-age way ofthinking – where the real value of an organization waslocated in the machines, equipment, buildings, etc. –their tangible assets.

Thinking in terms of the intangible assets of their “humancapital”, instead of their “tangible assets”, is a majorreframe for the healthcare sector. But the reality is that85% to 90% of the actual value of a healthcare organiza-tion is located in the humans who work there.

However, if you reflect on the past decade – from the per-spective of the people who work in our hospitals andcommunity health agencies – their experience, asemployees, would not reflect the true value that theyactually bring to their employer, to their patients andclients, and to their communities.

Organizations that have become successful balancedscorecarders, are those that have made a fundamentalshift in the way in which they view and treat employees.

Boards, senior managers and middle managers who workthrough several iterations of their Organizational BalancedScorecard inevitably come to the realization of howimportant the Learning & Growth Quadrant is to the orga-nization’s ability to design the Value-Creating Processesthat will produce the results in the Customer and FinancialQuadrants – for which they are being held accountable.

If your organization is thinking about embarking on abalanced scorecard journey; or, if you are currently strug-gling with the BSC process, and are still producing sub-optimal results; you are well advised to think through theHuman Capital Outcomes that would be required for youto be successful. (See essay "Leading an OrganizationThrough A Balanced Scorecard Transformation Process",Managing Change, Winter, 2004)

CEO’s and senior managers who are thinking aboutembarking on a Balanced Scorecard learning journeyneed to first think deeply about the skills, structureand culture that will be required to get into the 30%group of organizations that have successfully trans-formed themselves.

Governing boards operating in stewardship to their orga-nizations need to take much more interest in the longer-term human capital assets development plan – as well asfor the longer term succession planning strategy for each ofthe key senior positions.

Governments must also start holding the “balanced perspective” of the scorecard – and stop focusing exclu-sively on the financial quadrant and their political needto maintain the “illusion of control” in their communi-cations, actions and policies.

When the penny drops for government policy-makers,Boards and senior operational managers, the “big aha”will be: the most leveraged action for successful balancedscorecarding is to invest in the learning & growth of people: again, the “soft, messy, human stuff”.



Ted Ball is a partner in Quantum Transformation Technologies, aToronto-based company specializing in building the capacity of organizations to transform themselves.

Ted has worked in collaboration with Quantum Innovations on R&D projects and assignments that have focused on developmentalfacilitation and coaching to governing Boards, CEOs and seniorteams to determine for themselves how they will transform.

Email: [email protected]

Liz Verlaan-Cole is a partner in Quantum Learning Systems whoserves as a coach and facilitator for strategy teams who are learning balanced scorecarding methods in learning-by-doing dialogue workshops.

Liz’s R&D background includes developmental coaching, strategicalignment, organization design processes and leadership develop-ment in the health, education and corporate sectors.

Ken Moore is President of Quantum Innovations, an Austin-basedconsulting and training company specializing in strategy, organization and leadership development. He was Corporate Vice-President for Strategic Planning, Consulting and Educationfor Columbia/HCA, Vice-President of Quantum Solutions and served

on the faculties of Northeastern University, UCLA, and CaliforniaState University.


Bruce Harber is the CEO of York Central Hospital. He was mostrecently the Chief Operating Officer (Vancouver Acute). Bruce hasbeen the Chief Executive Officer for the former North Shore HealthRegion; President and CEO of Peel Memorial Hospital and Presidentand CEO of Mount Saint Joseph Hospital. Bruce has led teams thathave produced outcomes/results that have been ranked among the best in the world.


THE AUTHORS TEAM



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SKILLS, STRUCTURE AND CULTURE REQUIRED FOR …quantumtransformationtechnologies.com/wp-content/...SKILLS, STRUCTURE AND CULTURE REQUIRED FOR SUCCESSFUL BALANCED SCORECARDING By Ted