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Now that the Execution Premium book by Drs. Kaplan and Norton has been out in the market for a number of years, let's take a look at the benefits that can be realized through the XPP implementation in your organizaiton. Let's take it a couple stages at a time. Stage 1 and 2 looked at Develop the Strategy and Translate the Strategy, stages 3 and 4: Align the Organization with the Strategy and 4: Plan Operations. Now let's look at stages 5: Monitor and Learn and 6: Test and Adapt. In these last two stages, strategy becomes part of the fabric of the organization's management process and governance model right alongside operational review meetings. A business intelligence capability nees to be formalized and linked to the strategy. As part of testing the strategy, new insights should be shared, and strategic and operational processes can be altered to ensure maximum effectiveness. This feedback loop brings you back to strategy refresh, translation and alignment, thus closing the loop on the XPP management system. Some of the benefits realized in these final stages include:
STAGE 5: MONITOR AND LEARN
- Develops a BI competency center to assure accurate, timely data to improve decision making
- Develops an analytic information architecture to harness data, information, and insight
- Creates a governance process and calendar to manage strategy as a process that delivers results
- Conducts strategy and operational review meetings to ensure strategy execution is on track
STAGE 6: TEST AND ADAPT
- Confirms effectiveness of the strategy
- Models business and operational processes to optimize ability to execute the strategy
- Analyzes results in order to make necessary modifications to achieve performance outcomes. Provides direction on what is working and what needs improvement
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Balanced Scorecard,
BSC Hall of Fame,
Business Leadership,
Client Success,
Competitive Advantage,
Decision Making,
ESM General Information,
Initiative Management,
Innovation,
Reporting,
Sustainability
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Posted
9/14/11
@ 3:42 PM
by ESM Team ESM Team
Now that the Execution Premium book by Drs. Kaplan and Norton has been out in the market for a number of years, let's take a look at the benefits that can be realized through the XPP implementation in your organizaiton. Let's take it a couple stages at a time. Stage 1 and 2 looked at Develop the Strategy and Translate the Strategy. Now let's look at stages 3 and 4: Align the Organization With the Strategy and 5: Plan Operations. In these stages, the strategy has been clarified with scorecards and strategy maps at the enterprise level so now they need to be cascaded down into the business and support areas to ensure vertical alignment. Individuals might employ personal Balanced Scorecards and development plans to link the performance review process with the strategy. A communication program around the strategy is also paramount. The organization can begin to link strategy to key processes, driver models, and dashboards. Rolling forecasts and dynamic resource allocation are often found around the operational planning step.
STAGE 3: ALIGN THE ORGANIZATION WITH THE STRATEGY
- Defines the corporate role so that organizational units receive strategic guidance & direction
- Cascades strategy maps and scorecards to ensure organizational alignment to the strategy
- Leverages synergies between corporate, SBU, shared services, and other units to ensure alignment
- Communicates the strategy so that everyone understands his/her role in executing it
- Aligns team and individual goals and incentives to ensure the behavioral changes required for success
STAGE 4: PLAN OPERATIONS
- Identifies critical processes required to execute the strategy
- Establishes cross-functional business teams to drive performance across organizational boundaries
- Develops rolling forecasts and dynamic resource allocation to link strategy and operations
- Implements driver based planning to identify the critical levers of performance
- Creates operational dashboards that identify the key performance indicators that drive performance
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Balanced Scorecard,
BSC Hall of Fame,
Business Leadership,
Client Success,
Competitive Advantage,
Decision Making,
ESM Development Team,
ESM Features,
ESM General Information,
ESM Tips and Tricks,
Initiative Management,
Innovation,
Operational Reporting,
Personal Balanced Scorecard,
Reporting,
Risk Management,
Software as a Service,
Strategy Maps,
Sustainability
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Posted
9/7/11
@ 2:25 PM
by ESM Team ESM Team
The Royal Botabic Garden Edinburg will be showcased as a public sector performance management solution implementation at the CIMA World Conference in October 2012 in Cape Town. Dr. Alasdair J Macnab captured it's organization's successes in a recent paper titled: Public Sector Performance: A Global Perspective.
The report looks at the specific performance challenges faced by public sectors, what lessons can be learnt from other countries or private sectors, and a specific strategic performance management solution.
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Now that the Execution Premium book by Drs. Kaplan and Norton has been out in the market for a number of years, let's take a look at the benefits that can be realized through the XPP implementation in your organizaiton. Let's take it a couple stages at a time. Stage 1 and 2 of 6: Develop the Strategy and Translate the Strategy. These stages are where the organization performs S.W.O.T. analysis, Gap and shift statements, identifies key overarching strategies, clarifies the mission and vision and key risks. Then the strategy is developed into Balanced Scorecards and strategy maps. Typically an Office of Strategy Management (OSM) or other like group/individual is tapped to manage the strategy implementation and execution.
STAGE 1: DEVELOP THE STRATEGY
- Defines how shareholder value will be created to achieve new levels of performance
- Identifies required changes from current to future state so the organization understands it
- Quantifies vision, values, mission, objectives, and risks so they are measurable
- Analyzes strengths, weaknesses, opportunities, and threats to determine course of action
- Formulates strategy so that the entire organization can execute it
STAGE 2: TRANSLATE THE STRATEGY
- Clarifies strategy with a strategy map to produce a one-page action plan that works
- Develops a Balanced Scorecard to specify objectives, targets, measures, and initiatives
- Identifies key risk indicators that must be managed to avoid failure to execute
- Focuses on initiatives with the greatest impact to accelerate time to results
- Allocates resources dynamically to produce the most effective outcomes
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Balanced Scorecard,
BSC Hall of Fame,
Business Leadership,
Client Success,
Competitive Advantage,
ESM Features,
Initiative Management,
Innovation,
Operational Reporting,
Personal Balanced Scorecard,
Reporting,
Strategy Maps,
Sustainability
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Posted
8/31/11
@ 3:19 PM
by ESM Team ESM Team
Organizations, in each of their many dimensions, are fascinating to explore. One of my favorite subject matter experts, Gary Cokins, notes: “[J]ust like our grandmothers each had their own recipe for a holiday fruit cake, organizations are concocting their own customized versions of the performance management framework”.
Recently, I had the pleasure of taking a two-month reprise from Boston’s cold, wet, winter weather to go on assignment in sunny Australia.
The purpose of this trip was to provide technology and consulting support to a new ESM client, alongside a team of colleagues from our APAC region. It was my first trip to the country, and first direct exposure to several other client organizations in that corner of the world.
Each company I worked with had a unique set of ‘ingredients’, but sought the same outcome: success. Despite their specific differences, it’s quite remarkable to find time and time again that organizations across the globe, and in a wide variety of industries, tend to experience similar issues and seek common answers.
After learning more about how each of their programs were being operated, we discussed new ways to embrace and benefit from the software’s capability; helping each to apply its tools the method best suited for their unique situation.
Stay tuned for specific lessons in the next blog post.
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Throughout the world, governments at all levels are adopting the Balanced Scorecard system to clarify social, economic, and political goals.
Nearly two years ago the ESM team first documented the success of one such city, San Fernando. Located in the heart of the Philippines, San Fernando, is participating in the governance movement called, “Philippines 2030.” In a this grand vision, the Institute for Solidarity in Asia (ISA) and the Public Governance System (PGS) are implementing a bottom up and top down approach across all sectors of Philippine society to accelerate the country’s progress toward nationhood. Since 2010 ten other national agencies (NGAs); the Department of Education, Department of Health, Department of Public Works and Highways, Department of Transport and Communications, Bureau of Internal Revenue, and the Philippine National Police, Department of Social Welfare and Development, the Civil Service Commission, the Philippine Arm, and the Development Academy of the Philippines, have joined the PGS in their goal to reach strategic success.
In the May – June 2011 edition of the Balanced Scorecard Report, Jesus P. Estanislao, Chairman of the Institute of Solidarity in Asia, reports on the progress of this grassroots movement. Estanislao discusses how the ISA has adopted the Execution Premium Process (XPP) to fit their culture, and the success and challenges they face in the implementation process. In reviewing the interview I was most struck by the connection between the PGS effort and the reduction of corruption in the Philippines. According to Chairman Estanislao, corruption had been a longstanding problem in the Philippines. Within the Armed Forces of the Philippines (AFP), “It is clear from current testimonies given to the Senate and House of Representatives that from 2001 to 2006, corrupt practices prevailed. The same testimonies show that through various reforms, several of which came through the PGS, those corrupt practices have already been stopped.” Moreover, an element of trust has been formed between the citizens and municipalities. In fact, “city mayors with a performance record earned though the PGS have had no trouble getting reelected.” Many times we learn about the fiscal successes of organizations, but in this case I find it rewarding to read about the social responsibility and leadership formed through the implementation of the Balanced Scorecard. It is evident that the accomplishments achieved through the XPP permeate the numbers and imbed into the culture.
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ESM continues to make it's mark on earth, positively impacting governments and private organizations around the world with their ability to execute strategy.
The purpose of our trip to Kuwait was to install ESM, interface with government leadership, discuss project objectives, and create alignment between the process and technology so that the government is positioned well for success. Although the Balanced Scorecard and ESM has been heavily used within governments around the world, there have been very few implementations for the entire country's government. Kuwait Government is on the Vanguard with strategy execution and with it's implementation of the Balanced Scorecard program.
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Judging from recent interviews and articles, it appears Balanced Scorecard co-creator Bob Kaplan’s new favorite case study is Volkswagen Brazil. In particular, he is impressed with the company's ability to communicate strategy to its 22,000 employees.
Kaplan is particularly charmed by a Volkswagen robot that roams the corporate premises and “talks” to employees about strategy. Giga, who has the face of a VW Beetle’s hood and wheels as feet, makes star appearances at employee gatherings and also shows up in comic strips to affirm strategic goals for employees.
This thoughtful and creative approach to strategy communications humanizes the idea of strategy, makes it fun and accessible, and gets people talking about it. It has also contributed to a cultural change inside the company, which, in turn, enabled a major financial turnaround.
For companies that can't afford to build a robot, there is a less expensive and more interactive approach available—if interactivity is measured by the vibrancy of human-to-human, rather than human-to-robot, dialogue. With the right selection of social media tools, you can leverage your corporate intranet (or a 3rd party platform) and raise strategy communications to a whole new level. Let’s look at some of the more common social media tools to see how they can be used in the strategy communication process:
Blogs… for Strategy Execution
According to Wikipedia, “Blogs are usually maintained by an individual with regular entries of commentary, descriptions of events, or other material such as graphics or video.” If the purpose of your strategy communication intranet is to communicate strategy, you don’t want to let every employee blog on it (just as you wouldn’t let every employee on stage at a company meeting to discuss strategy). Only your CEO and other executives responsible for communicating strategic objectives should launch a blog series under the banner of strategy communications. Depending on how “young-at-heart” your executives are, they may create and post the blogs themselves. More likely, your communications department will manage the operations of the blog. For example, if an executive is more comfortable speaking than writing, your communication team can film him and post the video entries as a video blog.
Online Discussions…for Strategy Execution
Company employees can comment on executive blogs, but the primary purpose of the strategy blog is for leaders to broadcast the message to the field. An online discussion forum is different. Discussion forums are inherently a more democratic, interactive form of exchange. There is an expectation that the person who begins the discussion will carefully listen to responses and continue to engage as the discussion unfolds. The best discussions begin with an honest question and an appeal for help. These forum discussions are the perfect complement to a more structured application for Balanced Scorecard creation and control.
Private Groups Collaboration…for Strategy Execution
You might not be ready to communicate the strategy to the entire organization. For example, Scott Nadler describes ERM’s strategic communication program in stages, starting with a private discussion between a dozen executive insiders, then to a group of 40, and finally to all 3,000 at the company. The access rights to your online collaboration space should mirror this off-line reality. For example, you might choose to launch a private group for the 40 people inside your own intranet or as a private subgroup in a more public community such as Palladium XPC.
In summary, you have a great new set of inexpensive social tools to help you communicate strategy. If they are deployed carelessly, they will be a waste of time and a distraction. However, with the right matching of specific social tools and oversight to keep the discussions focused, you will find an effective new communication program. This channel will only become more powerful – even transformative -- as more “digital natives” come into the organization.
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First Commonwealth Financial Corp (NYSE: FCF), a $5.8B financial holding company (banking, insurance, investment) in Pennsylvania, and a Palladium ESM client, recently issued a press release about its best practice approach to governance, which includes using a Balanced Scorecard to manage and assess the performance of First Commonwealth and its board of directors.
This week the ESM team had the opportunity to partake in Palladium's strategy practice day. The two day-session allowed the strategy practice team to share Balanced Scorecard (BSC) best practices uncovered in recent projects.
Dr. David P. Norton joined the strategy practice session to listen in on the latest happenings in strategy implementation and execution. He supplied the practice team with additional insight into “harvesting the benefits of strategy execution.” Dr. Norton spoke directly about organizations' desire to view immediate results of the Execution Premium Process (XPP). Following the XPP, organizations will typically see tangible results in up to two years. Two years may seem like a long time to wait for results, but as Dr. Norton explained, "before every story of 'shareholder value,' there is another story of 'value creation.'”
Palladium has recognized 150 Hall of Fame organizations for their succeess in strategy execution using the Balanced Scorecard. Success can be marked in significant achievements such as doubling market share or having #1 brand recognition in the industry. While these outcomes may have multiyear timelines, the short term results are the driving function that kept the momentum of strategy alive. An objective like, “Easy to do business with” can be measured by a customer satisfaction rating. Scheduled customer satisfaction surveys will idenfity the performance on the road to increased market share and brand recognition. As short term gains, like “increased revenue per customer,” are reached the organization is one step closer to the fulfillmeant of their strategy. On the road to strategy execution, remember to take the time to assess your organization's gains and losses, be they big or small.
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Several of our product experts recently returned from Palladium’s 2010 Americas Summit, held this year in La Jolla, CA. It was a great conference – strong attendance, great speakers, and considerable insight to be gained from both the case studies presented, and personal conversation.
As our experts provided attendees with live demos, they recount numerous occurrences of present clients passing by, and joining in to offer first-hand testimonials. Thanks to them, and to all of you, for being such being such strong proponents of ESM. Hearing the stories of your successes is valuable to those looking for more information, and also makes us truly proud to be a supporting part of your strategy management programs.
Recurrent obstacles identified by attendees we spoke with included 1) employee engagement and 2) effective communication of strategy and strategic performance. As indicated in the third step of the XPP, Alignment requires organizations to align business units AND employees alike to the strategy. In doing so, they often times overlook the most critical component of alignment– communication. Communication is paramount in a Strategy-Focused Organization to develop buy-in and commitment to the strategy at an individual level.
Over the last decade, ESM has made addressing this commonly shared weakness a priority. In continually improving the product to support evolving need, two new features were released this month: a second generation release of ESM’s Personal Balanced Scorecard component – PBSC 2.0, as well as a capability for integrating ESM with SharePoint.
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For more than 100 years the national investigative force now known as the Federal Bureau of Investigation has fought corruption and crime in the U.S. The terrorist attacks of September 11, 2001 resulted in a change in strategic priorities, the first being protecting the U.S. from future terrorist attack. For an agency with an $8 billion budget and 34,000 employees, this required a significant change in culture, strategy, organization, processes, and systems. A strategic change agenda paved the way. The Bureau’s Strategy Management Office—now 10 professionals strong—manages strategy with the help of divisional strategy coordinators who are responsible for deploying strategy maps and scorecards. Performance results have dramatically improved. These include enhanced intelligence capability, the degree of intelligence sharing with other agencies, the quality and timeliness of intelligence information, increased surveillance capacity, critical incident response effectiveness, and talent and technology readiness. "The complex threats we face have required a fundamental change in the way we work together," says Robert S. Mueller, III, director. "We created the Strategy Management System to drive and manage change, articulate specific objectives, and measure progress toward those objectives. SMS has been incredibly useful to the FBI, providing the means to focus on long-term goals, while balancing the need to address crime and terrorism, everyday."
The Hall of Fame award honors organizations that have achieved execution excellence through the use of the Balanced Scorecard (BSC), the world’s preeminent strategy and performance management system. The BSC is based on the simple premise that "what gets measured is what gets done." Created by Palladium Group co-founders Drs. Robert S. Kaplan and David P. Norton, the Balanced Scorecard links strategy to operations to drive business outcomes. A recent study published in the journal Advances in Accounting found that organizations "that adopt the BSC significantly outperform those that do not…over a three year period beginning with the year of adoption. These results provide strong evidence that the BSC is an effective strategic management tool that leads to improved shareholder returns."
The Balanced Scorecard is equally effective in driving results in government and not-for-profit organizations. A focus on performance is critical for any organization, especially during challenging economic times. "While the global economic environment is improving, many organizations, from private companies to government agencies, still face significant challenges," said Robert L. Howie Jr., Managing Director of Palladium and Director of the Hall of Fame program. "Organizations using the Palladium Kaplan-Norton strategy execution approach are well-equipped to gain the kind of insights needed to capitalize on new opportunities, mitigate risk, and improve organizational performance."
Founded in 2000, the Palladium BSC Hall of Fame program today has a roster of 153 honorees—including Infosys Technologies, Millipore Corporation, Motorola, Public Service Electric and Gas Company, and Volkswagen do Brasil—that span private and public sectors in more than 20 countries. Winners are selected based on the quality of their BSC implementation and the results they demonstrate over a period of at least two years.
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The mission of Boys and Girls Clubs of America—an association of more than 4,000 local clubs—is to enable youth, especially those in need, to reach their full potential as productive, responsible citizens. The Boys and Girls Clubs of Puerto Rico, a local affiliate, has since its inception nearly 50 years ago served tens of thousands of youth in this U.S. territory. In five years the number of youth serviced has grown 200%, their satisfaction with club programs has grown from 53% to 93%, the number of facilities has doubled, revenues have increased 227% and profitability (retained operating funds) has been achieved.
Each of the 200 professionals employed by the club has a personal scorecard aligned with that of the enterprise. "A small non-profit talking about strategy execution, process improvement, return on investment, and talent management is almost an abnormality," says José A. Campos, CEO. "But the focus and drive resulting from implementing the strategy mapping and scorecard approach allow us to meet the demands of our donors and stakeholders, and quantify and demonstrate our impact and positive return for their investments. We are confident that our strategy management system provides the framework for sustainable breakthrough results."
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Despite its value, most organizations' written, objective-level performance analysis is generally not very good. Most performance analysis does not explain the data, discuss its underlying causes and implications, or integrate it into a broader discussion of strategic performance and environmental trends. My recent reading of strategy review reports of a handful of Palladium Balanced Scorecard Hall of Fame for Executing Strategy® organizations proved to me that even exemplars of strategy execution sometimes fall short in their written performance analysis, thus missing valuable opportunities.
Fortunately, this problem can be remedied. Writing insightful, actionable performance analysis is a skill that can be learned. Through Palladium's work guiding dozens of organizations in strategy reporting, we've identified several common pitfalls in performance analysis that performance analysis writers need to learn to avoid.
Pitfall 1: Focusing Only on the Measure Data, without Explaining or Interpreting
Often, performance analysis merely regurgitates what the data already show, or simply explains the components of the corresponding measure(s). What good does that do? Analysis writers need to dig deeper for more contextual data that might explain the performance. What is the reason for the last period's measure performance? How do we explain any period to period trends? What does the measure's outcome tell you about the performance of its corresponding objective?
Pitfall #2: Omitting Qualitative Information
Numbers are concrete, and objective, and therefore make people more comfortable and confident. But they don't tell the whole story. And they can indeed mislead, whether inadvertently or not (think of all the ways statistics can be presented to support any side of an argument). Qualitative information can often reveal the reasons behind the numbers better than the deepest dive into the detailed data can. It would seem self-evident that qualitative information is a critical element for understanding what drives performance. Yet far too often, such information is absent in written analysis.
Pitfall #3: Ignoring the Reasons for the Performance Result
Sometimes all the analysis in the world won't yield a definitive explanation for a performance result. Yet even when there is no certain answer, it is always better to offer a hypothesis than to forgo explanation altogether. For decision makers, there is little that is more unsatisfying than to ask “Why” and be told “I have no idea.” Offering a thoughtful educated guess will at least get the conversation started.
Pitfall #4: Avoiding Any Discussion of Risk
No one likes to be the messenger of bad news, but addressing risk openly and accurately is the key to avoiding unexpected declines in performance and greater risk. Even in our age of heightened risk awareness, risk and strategy are still often viewed as separate areas, one involving all that could go wrong, and the other, all that an organization hopes for. In reality, the two are inextricably linked. The strategy represents a hypothesis of the way the business operates and what activities are crucial to attain the ultimate desired outcome. Each strategic objective is achieved by successfully managing its performance drivers. Since it's a given that there are specific risks that can impede each performance driver; why would such risks not be part of the strategic conversation?
Pitfall #5: Focusing on Details at the Expense of the Bigger Picture
For any number of reasons, performance analysis writers often delve into one aspect of an objective’s performance, overlooking the objective-level view. In fact, it is not uncommon for performance analysis to not even indicate whether the objective is being achieved. Writers must step back from all of the quantitative and qualitative data they have collected and approach objective-level performance analysis by first drafting a summary statement about the objective's overall performance.
To read the full length article, log into the ESM, select Resources: Libraries: BSR: Complete Issues: and select the following issues.
David McMillan, “Five Pitfalls of Writing Performance Analysis,” Balanced Scorecard Report, November – December 2010
…or…
David McMillan, with Barnaby Donlon, “How to Write Performance Analysis That Truly Enhances Decision Making,” Balanced Scorecard Report, November – December 2008
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I just came across an excellent account of the Balanced Scorecard effort undergone at the Royal Botanic Garden Edinburgh. In this paper, BSC champion and strategy director, Alasdair Macnab, along with Chris Carr and Falconer Michell from University of Edinburgh tell the implementation story. They focus their research on how the Balanced Scorecard approach can be successfully adopted for nonprofit businesses. The team also reviews why the Executive Strategy Manager was selected as the preferred solution and how it streamlined the data reporting and presentation while providing leadership and employees froma cross the organization critical line of sight into the strategy.
Key findings cited from the paper include:
Just as strategies are specific to an organisation, the balanced scorecard (BSC)/strategy map can and should be adapted to suit an individual organisation to leverage the full power of the BSC system.
• The effort and commitment required from senior management involved in transforming strategy management processes should not be underestimated as individuals/departments will become more accountable for their actions, particularly in the public sector, and resistance to change may be experienced as a consequence.
• If an effective costing system is developed, such as the one described in this report, management will see how their staff are directing their efforts, particularly important in knowledge based organisations.
• With their intimate knowledge of the organisation, the management accountant is well placed to become very involved or direct the transformation process to manage strategy execution leading to improved effectiveness/profitability of the organisation. In this way the management accountant becomes more of a strategic partner to the business.
• The research relates primarily to the practitioner who should find it helpful as the work is based on research subject to academic rigour but is translated into a pragmatic approach via the case study; thereby demonstrating its usefulness to a real organisation.
See:” Implementation of the balanced scorecard and an alternative costing system at the Royal Botanic Garden Edinburgh,” available at the following link:
Access the full report here
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Balanced Scorecard,
BSC Hall of Fame,
Business Leadership,
Client Success,
Competitive Advantage,
Decision Making,
ESM Development Team,
ESM Features,
ESM General Information,
ESM Tips and Tricks,
Initiative Management,
Operational Reporting,
Reporting,
Risk Management,
Software as a Service,
Strategy Maps,
Sustainability
|
Posted
7/22/10
@ 11:43 AM
by ESM Team ESM Team
Congratulations to Abu Dhabi Government with their induction into the BSC Hall of Fame for Executing Strategy on May 20, 2010 at the EMEA Summit in Madrid. This organization has been using ESM's eLearning for building and managing with the Balanced Scorecard for over two years.
Abu Dhabi is the largest of the seven emirates that comprise the United Arab Emirates (UAE), as well as its rapidly growing capital city. The emirate is ruled by the UAE president. Abu Dhabi’s Vision 2030 is to create a confidant, secure society; build a sustainable, open, and globally competitive economy; and to become one of the five top governments in the world. A unified strategy execution framework for the whole of government was chosen to translate the vision into action and outcomes. Investments are rationalized and prioritized on the basis of their ability to deliver results in social and environmental sustainability, a knowledge-based economy, human capital, infrastructure, and government excellence. Agency performance contracts help ensure a focus on strategic objectives. Within two years, GDP increased 30%, growth accelerated 74%, trade surged 156%, customer satisfaction increased 33%, and the number of Emirati women in the workforce grew 35%. “Based on the adoption of the BSC and our achievements, we have become a strategy-focused government,” says His Excellency Mohammed Ahmad Al Bowardi, Secretary-General of the Executive Council. “The structured framework of the Kaplan-Norton approach has established the basis for cross-government alignment, transparency, and accountability.” For Abu Dhabi, the road ahead is paved with success.
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Congratulations to Folkhälsan on their induction into the Balanced Scorecard Hall of Fame for Executing Strategy at the EMEA Summit in Madrid on May 19, 2010.
Folkhälsan is a non-governmental organization providing social welfare and healthcare services in the Swedish-language regions of Finland. This NGO has 1,500 employees serving 17,000 people through outpatient clinics, day care centers, rehabilitation units, and elderly care facilities. Known for the quality of its care, it has leading programs in preventive medicine and genetics research. Increasing competition from lower cost providers, however, caused Folkhälsan to reassess how they could continue to provide competence, commitment, and care at levels their members had come to expect. They needed a new way to manage, and in 2004 adopted the BSC to clarify strategy, drive performance, and optimize data. They have learned to excel at reporting, which has improved their ability to make timely decisions. Membership growth is up 10%, revenues have increased 20%, and great-place-to-work rankings and employee trust scores have improved four basis points. “Our growth has not been achieved at the expense of quality,” says Stefan Mutanen, Folkhälsan CEO. “Our management system helps up pay attention to what’s really important, align our business lines and operating units, and—with the help of the strategy map and BSC compass, identify and improve the critical steps and processes necessary to achieve our vision.” As a result, Folkhälsan is two steps ahead.
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Bahrain, a small isle in the Persian Gulf has been fully engaged in their government-based economic plan, Vision 2030. Through Vision 2030, Bahrain hopes to transform itself from an oil rich nation to a fierce global competitor, shaped by the private sector and government infrastructure. The vision also encompasses plans to double the household disposable income and improve the quality of life by 2030.
With this transformation, government organizations such as the Ministry of Works (MOW) and the Electricity and Water Authority (EWA) had to change their strategy to fit Vision 2030. Due to Bahrain’s rapid growth, MOW, had difficulty in retaining high quality staff and cost reductions, while EWA struggled with their operating budget and increasing electricity consumption. Faced with these challenges, MOW and EWA adopted the BSC and ESM to align their strategic goals to the plan.
By employing the BSC via the ESM, MOW was able to better align their strategy to the 2030 vision. Through the integration of risk management and strategic management, MOW improved risk mitigation. To implement the integration, they established theme teams to analyze the risks in each theme. Furthermore, the BSC helped MOW in the modification of objectives. With SWOT analysis, it was found that they needed to find financing alternatives to manage their costs. Also, the refinement of objectives allowed for an improved representation of key areas of focus.
EWA implemented the BSC by defining new initiatives. The redefinition of initiatives enhanced the capacity for consumption, thus better managing costs. IT played an integral part of cost management. Through IT billing and planning software and the ESM, allowed EWA to better anticipate future expenditures. To improve the overall employee satisfaction and performance management, EWA established My HR. My HR upgraded job roles and associated descriptions and helped EWA to find and retain qualified employees.
Bahrain’s Vision 2030 encompassed all areas of the economy in both the private and public sector. By employing the BSC, MOW and EWA aligned their organizational goals to the global vision, paving the way for success.
For the full text article, go to My ESM > Resources > Libraries > May/June 2010 BSR (v12#3).
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Seven years ago, Lagasse, Inc. struggled to manage inventory and deliver value to their customers in their supply-chain process. Lagasse, Inc. is a B2B wholesaler of commodity products, with suppliers such as Proctor & Gamble, Rubbermaid, and Kimberly Clark. Some of their key suppliers felt the impact of the overall supply chain inventory and inefficiencies in all steps of the order fulfillment process. By implementing the BSC and strategy maps, Lagasse, Inc. improved the supply-chain inventory process, as well as improving relationships with suppliers.
Lagasse, Inc. worked with one of their key clients, Superlative, to align their supply-chain management systems. Once Lagasse developed their strategy map, they shared it with Superlative, illustrating the supplier's supply chain, procurement, and financial meausures. Superlative built their own strategy map and they compared financial goals. By sharing supply chain and financial information, both companies were able to locate the flaws in their current business methods. Together, they identified areas of waste and opportunities to transfer savings, and teamed up on several efforts to create a joint initiative map. A joint initiative map is a spreadsheet-based BSC which lists key objectives with a checklist of initiatives and tasks, which link the objectives. Teams from every relative department of the organizations made a comprehensive plan to connect to the joint initiative map.
The collaboration between Lagasse and Superlative resulted in greater transparency, enhancing coordination of business processes. Within the first six months of implementing the collaborative strategy, Lagasse and Superlative saw an annualized distribution savings in excess of $1 million. Lagasse sped up inventory turnover and strengthened profitability, while Superlative benefitted from efficiency in transactions and improved forecasting. After the success seen in the joint initiative map, Lagasse decided to extend the practice to other suppliers, selecting those with the highest potential. Lagasse only aligns themselves with the top 20 suppliers and have similar strategic values. Essentially, alignment with suppliers was transformed into a long-term strategy. Lagasse's operational teams have greater internal visibility, engaging leaders in all areas of the process. Alignment with suppliers through joint strategy maps has become a competitive advantage for them, emphasized through their cost-to-serve program. The cost-to-serve program allows Lagasse to align and collaborate with suppliers to create mutually beneficial relationships.
For more information, please navigate to Resources in your ESM
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Norwegian oil giant, Statoil, has taken a new approach budgeting with the Balanced Scorecard management system. Statoil is a strong member of the Beyond Budgeting movement, replacing traditional accounting methods of forecasting with dyamic forecasting. Dynamic forecasting allows for predictions to be made on a continuous basis. It has become an integral part of their success in the weakening economy.
Statoil's implementation of dynamic forecasting has heavy implications on their Balanced Scorecards. They initiated an Ambition to Action program in 1997, which aims to drive performance and is the foundation of their performance management system. With the Ambition to Action program Statoil has over 800 Balanced Scorecards. Dynamic forecasting fits into their balanced scorecard methodology, due to its flexibility and ability to create alignment. Instead of having an annual budget, Statoil uses a continuous budgeting structure. They divide their approach into three categories: continuous resource allotment, target setting, and forecasting. Each are done independently, generating three different figures, as opposed to having a one-number budget. Essentially, dynamic forecasting allows companies to adjust to the real-world. It better predicts any fluctuations within organizations, allowing them to better prepare and anticipate for sudden changes. There are numerous limitations in annual budgeting, whereas in dynamic forecasting it is highly flexible and easily adjusts to any alterations. Coordination of company processes must be conducted on a continous basis.
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"Dynamic Forecasting: A Planning Innovation for Fast-Changing Times." By Bjarte Bogsnes, Vice President of Performance Management Development at Statoil
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