Strategy Map: Capture a Cause Effect Strategy Map: Capture a Cause Effect Relationship from the Bottom UpRelationship from the Bottom Up

Inte

rna

l P

roc

es

sS

tak

eh

old

er

Le

arn

ing

& G

row

th

Reduce Re-Activities thru

ABC/M

Establish Web Based Self Services

Knowledge Management

Human Capital

Improved Returns on Investments

More rapid and accessible services

Leadership Development

Inv

es

tme

nts

IT InfrastructureFacilities and Fixed Assets

Economic Model Process

Expand Global Facility Reach

Detailed statement of

what is critical to successfully achieving the

strategy

How success in achieving the

strategy will be measured and

tracked

Key action programs

required to achieve

objectives

The level of performance

or rate of improvement

needed

Objective Description

Target

2 per setup per month each Outlet Office

InitiativeMeasure

Number of Reworks

Strategy Map

Sta

ke

ho

lde

rIn

tern

al

Pro

ce

ss

L&

G

Faster Service Access

Self Service Applications

Web Enable Technologies

Process and ValueMap Analysis

Lean Processes

Inv

es

tme

nts

Invest in IT

Extend the Map into Measurements, Targets and Initiatives

Lean / Six Sigma

Eliminate waste, reworks, and

other errors in our processes

Make sure the components of your scorecard fit together. We want to create a tight model for driving execution of your

strategy.

Goal Objective Measurement Target Initiative

Achieve Agency

operational efficiencies with best

practices in the private

sector

Reduce Operational

Service Costs by 50% over the next

5 years

Cost per Outlet Office, Cost per

Region, Cost per FTE

5% - Year 1

10% - Year 2

15% - Year 3

Activity Based Costing /

Management

Reduce identified re-activities within primary processes by 80% over the

next 3 years

Waste Volume Charts, Rework Tracking, Cycle Time End to End in S-LX (5 of 7

Regions)

Waste stream reductions of 5%

each year, Reworks cut in half for next 3

years, cycle time cut by 75%

Lean / Six Sigma

Alignment of Scorecard Components

Leading

Definition

Lagging

Input

Output

Outcome

Objective / Quantitative

Example

Intermediate outcomes that predicts or drive bottom-line performance results

Measure Type

Bottom-line performance results resulting from actions taken

Amount of Investments, assets, equipment, labor hours, or budget dollars used

Units of a product or service rendered - a measure of yield

Resulting effect (benefit) of the use or application of an output

Empirical indicators of performance

Subjective / Qualitative

Perceptions and evaluations of major customers and stakeholders

Employee turnover rate

Employee satisfaction rating

Number of Value Meal orders fulfilled

Customer satisfaction rating

Wait time

Customer complaints received as a % of total customers served

Number of cashiers

Types of Measurements

Shareholder / CustomerShareholder / Customer Internal ProcessesInternal Processes

Learning and GrowthLearning and Growth InvestmentsInvestments

• % of facility assets fully funded for upgrading

• % of IT infrastructure investments approved

• # of new hire positions authorized for filling

• % of required contracts awarded and in place

• Percentage employee absenteeism• Hours of absenteeism• Job posting response rate• Personnel turnover rate• Ratio of acceptances to offers• Time to fill vacancy

• Number of unscheduled maintenance calls• Production time lost because of maintenance

problems• Percentage of equipment maintained on

schedule• Average number of monthly unscheduled

outages• Mean time between failures

• Current customer satisfaction level• Improvement in customer satisfaction• Customer retention rate• Frequency of customer contact by

customer service• Average time to resolve a customer

inquiry• Number of customer complaints

Examples of Measurements by Perspective

Measurement Relevant Measurable Actionable

% of Global Outlets that follow the end to end process defined in IRPS

3 1 2

Number of score studies completed 3 2 3

% of Region Centers using ABC Models to manage 65% of their allocation costs

3 2 3

% of eligible employees who are participating in the Competency Model Development Program

3 2 2

% of map points loaded and operational in GPS Tracking

3 2 2

A “0” or “1” in any column indicates that you need to revisit this measurement before implementation.

0 = Does not apply 1 = Poor 2 = Acceptable 3 = Good

Scoring Measurements Against the Three Selection Criteria

Some Tools for Determining What to Measure

InputsProcess/System Output

IntermediateOutcomes

EndOutcome

Program Logic Model

DesiredOutcome

Causal AnalysisProcess Flow

ResultsOf

Testing

Not AcceptableAcceptable

PrototypeProduct

Back to Laboratory

To Market

How Does the Balanced Scorecard Work?Mission

Why we exist

ValuesWhat’s Important to Us

VisionWhat We Want to Be

StrategyHow We Achieve Our Vision

Strategy MapTranslate the Strategy

Balanced ScorecardMeasure and Focus

Targets and InitiativesWhat We Need to Do

Strategic Outcomes

FinancialViability

Satisfied InternalAnd External Customers

EffectiveProcesses

Enabling Investments

Cascading Scorecards and InitiativesWhat Our Teams and Departments Must Do

Personal ObjectivesWhat “I” Need to Do

Adapted from Strategy Maps, Kaplan and Norton, HBS Press 2004

When you first launch your Initiative, you probably want to use an Output Measurement. Once the Initiative is up and running, change your measurement to an Outcome to see if the Initiative is really having strategic impact.

Initiative Output Measurement

Outcome Measurement

Lean Process / Six Sigma

Number of Projects Defined by Region

Overall reductions in errors, reworks, and cycle times

Activity Based Costing / Management (ABC/M)

% of Service Center Outlets with ABC Models in place for Allocation Costs

Reductions in identified re-activities per process study

Employee Competency Models

% of Employees who have a Competency Model in place

Higher skill levels of employees using the models

Going from Output to Outcome

Strategic Vision

Financial Viability

Customer

Internal

Employees & Investment

IncreaseRevenue

Improve OurCost Position

Provide Patient Access and

Service

Ensure PhysicianSatisfaction With

Access and Qualityof Services

Remain aCommunity

Asset

Match Our Services to

Community Need

Achieve Organizational

Commitment to Services

Process Improvement:

Efficiency/Access

Develop Strong PCP& Referral

Partnerships

Exceed Quality& Safety

Standards

Ensurecommunity

focus

Recruit and Retainthe Right Employees

and Physicians

Establish an“Ownership” Culture

Ensure the Facility and Technology Meet

Requirements

County Community Hospital will contribute to thethe community by offering accessible

quality care tailored to the needs of our residents.

Making the connection to the Baldrige Criteria

Malcolm BaldrigeMalcolm Baldrige Balanced ScorecardBalanced Scorecard

LeadershipLeadership Learning & Growth PerspectiveLearning & Growth Perspective

Human Resource CapitalHuman Resource Capital

Business ResultsBusiness Results

Process ManagementProcess Management

Strategic PlanningStrategic Planning Strategy MapStrategy Map

Learning & Growth PerspectiveLearning & Growth Perspective

Internal Process PerspectiveInternal Process Perspective

Customer FocusCustomer Focus Stakeholder / Customer PerspectiveStakeholder / Customer Perspective

Measurements and TargetsMeasurements and Targets

Organization/ Learning

Perspective“People”

The ability to continually innovate and improve

CustomerPerspective“Satisfaction”

Measurements viewed through the eyes of customers and/or key stakeholders

ProcessPerspective

“Business Processes”

The performance of internal operational processes that have the greatest impact on customer satisfaction & product or service quality

FinancialPerspective“Financial”

Financial measures appropriate for internal and external audiences

The choice of perspectives need to work for your organization. For some applications others include: community, health & safety, and environment

Focus Areas for the Scorecard Perspectives

Private versus Public Balanced Scorecard

The Balanced Scorecard can be adaptive to serve both public and private organizations.

Customer

Learning and Growth

Internal

Financial

PublicSectorView

MissionPrivate Sector View

Financial

Customer Internal

Learning and Growth

A Strategic Framework for Action

“The Balanced Scorecard;” Robert Kaplan and David Norton, Harvard Business School Press, 1996

Strategic Feedback and Learning

• Articulating the shared vision

• Supplying strategic feedback

• Facilitating strategy review and learning

Communicating and Linking

• Communicating and educating

• Setting goals• Linking rewards to

performance measures

BalancedScorecard

Clarifying and Translating the Vision

and Strategy• Clarifying the vision• Gaining consensus

Planning and Target Setting

• Setting targets• Aligning strategic

initiatives• Allocating resources• Establishing milestones

Financial Perspective

How do we look to resource providers?

Customer Perspective

How do customers see us?

Internal Process Perspective

Are we productive and effective?

Innovation & Learning Perspective

How do our employees feel?

The Balanced Scorecard

Source: Kaplan and NortonSource: Kaplan and Norton

EVA Reporting at Best Buy

The EVA model:Revenues

(Oper Exp)

+/- Adjustments

=NOPBT

(Tax)

=NOPAT

(Cap Charge)

=EVA

ABC/ABM Cost View

Cost Assignment View

Resources

Cost Object(To what or for whom

work is done)

(Provides capacity to do work)

Activities(Work performed)

Drivers orFactors

ABC/ABM Process View

ProcessView

Objectives Performance Measures

(Why work is done)

Activities(Work

performed)

(How well work is done)

ABC/ABM Cost/Process

Activities

Cost Assignment View

Resources

Cost Object(To what or for whom

work is done)

(Provides capacity to do work)

ProcessView

Cost Drivers

Performance Measures

(Why work is done)

Activities(Work

performed)

(How well work is done)

Activity- Based

Management (ABM)

Activity- Based

Costing (ABC)

Resource

Drivers

ActivityDrivers

Cost Concepts

Direct Service Cost

General GovernmentIndirect Cost

Departmental and DivisionalIndirect Cost

Total Service Cost

Steps in the Process

Work UnitCosts

Costs on Behalfof Work Unit

State-Wide and Department-Wide Costs

Direct Costs Indirect Costs

CostsStep OneIdentify Costs

KIS Full CostOrAllocationMethods

Activity 1 Activity 2 Activity N

Activity 1Outputs

Activity 2Outputs

Activity NOutputs

Activity 1Unit Costs

Activity 2Unit Costs

Activity NUnit Costs

Step TwoAssign Costs

Activities

Outputs

UnitCosts

Step ThreeComputeUnit Costs

We cannot solve the problems we have by the

same methods by which we have created them.

Albert Einstein

EFQM EXCELLENCE MODEL

100

p L

ea

de

rsh

ip 1

0%

140

p P

roc

ess

es 1

4%

150

p K

ey P

erfo

rma

nc

e Re

su

lts 1

5%

Policy & Strategy80p-8%

People90p-9%

Partnerships &

Ressources90p-9%

Customer Results90p-9%

People Results

200p-20%

Society Results60p-6%

Cross-Functional Approach to Managing Core Processes

Cross-Functional Approach to Managing Core Processes

Cross-FunctionalProcesses

Functions

Research/Develop-

ment

Operations Sales/Marketing

Finance &Admini-stration

HR

Plan the Business Strategy

Innovation/Product - Service Generation

Order Generation

Order Fulfilment

People Management

Servicing Products/Customers

CustomerSatisfaction

E Q Award