Make Performance Improvement Strategic


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Strategic Performance and Change Management by IQPC Exchange

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Make Performance Improvement Strategic

  1. 1. Make Performance Improvement Strategic Howard Rohm, President and CEO, the Balanced Scorecard Institute May 2010Have you ever wondered if your performance improvement interventions are aligned with corporatestrategy? Would you like to better align interventions at “the shop floor” with corporate goals and vision?Would you like to have prioritized improvement initiatives that are easier to budget justify because theyare based on strategic analysis, not “argument by vigorous assertion”?Your answer is probably “yes”. Most performance initiatives I’ve seen aren’t very strategic, because they were developed with a “lowaltitude” view. To make performance improvement more strategic, you have to start at a higher strategicaltitude, work down in altitude logically, and let performance initiatives be the end of a strategic thinkingprocess.Let’s look at a strategic approach to identifying and closing performance gaps that will help organizationsexecute their strategy effectively. The approach starts by thinking critically about “what” and “why”,before “how”. Performance improvement initiatives are “how’s”; organization vision, goals, and strategyare “what’s” and “why’s”.To derive “how’s” from “what’s” and “why’s”, you need a strategic framework for building andconnecting pieces of a strategic puzzle. The framework starts with development of organizationalstrategic elements (e.g., vision, mission, values, customer value proposition, and strategic themes). Thenstrategic objectives and a strategy map are developed based on the strategic elements. Finally,performance improvement initiatives are developed to close performance gaps in the objectives.Most organization’s have some pieces of the puzzle completed and understood, usually as a result of ayearly strategic planning process. But not as many organizations have developed all the necessary piecesand connected them in an aligned way. The pieces that are usually not present -- developing high-altitudestrategic objectives and strategy maps – are critical to becoming a more strategy focused organization.Strategy mapping is a powerful tool. Strategy maps show graphically how organization value is createdfor customers and stakeholders. Good strategy maps communicate strategic intent internally andexternally, and are one of the most effective communication tools an organization can use to buildalignment, accountably, and a focus on results. Strategy mapping starts with creation of a few strategicobjectives that are the building blocks of strategy…….strategy DNA, so to speak. The objectives are thenlinked in cause-effect relationships to create a “map”. Once strategic objectives are developed and themap created, performance measures and performance gap interventions can be identified for eachobjective.The figure below is based on an airline and shows how the pieces come together to “tell the strategicstory”. The first column shows a simplified strategy map, and the second column lists the strategicobjectives. Objectives are placed in the strategic perspectives (the rows of the table) that they support. Inthe next two columns, strategic performance measures and targets are identified to measure objectiveperformance, and in the last column, strategic performance initiatives that will improve objectiveperformance are shown. By following the “routes” of the map, the individual and cumulative effect of
  2. 2. individual performance interventions can be correlated to the desired outcome – increased profitability ofthe company. By tying everything together logically, we have line-of-site alignment among corporatevision, corporate and department strategy, and personal goals and accomplishments.The generic example above is based on a business, but this approach works equally well for governmentsand nonprofits. For these organizations, strategy map logic is changed to reflect different desiredoutcomes. In governments and nonprofits, the end of the value chain is not profitability -- it’s theeffectiveness of services and delivery to government customers (e.g., citizens) or, in the case ofnonprofits, the effectiveness of service delivery to members and other stakeholders. In governments andnonprofits, the customer/stakeholder perspective is placed at the top of the strategy map, and the financialperspective becomes a cost-effective resourcing or stewardship perspective. Performance measures reflectunique results, such as member satisfaction and retention, advocacy, service effectiveness, and resourceutilization.By focusing on strategy first, organizations can make better performance improvement choices that arealigned with corporate goals. A completed scorecard system aligns the organization’s picture of thefuture (shared vision), with business strategy, desired employee behaviors, and day-to-day operations.Other benefits include measuring what matters, identifying more efficient processes focused on customerneeds, improving prioritization of initiatives, improving internal and external communications, improvingalignment of strategy and day-to-day operations, and linking budgeting and cost control to strategy.How strategic are your performance initiatives?++++++++++++++++++++++++++++++++++++++++++++++++Howard Rohm is President and CEO of the Balanced Scorecard Institute, a training, certification, facilitation, and consultingorganization. The Balanced Scorecard Institute’s Strategic Scorecard System™ is an integrated strategic planning andmanagement system built on balanced scorecard principles. Widely used in business, government, and nonprofit organizations in22 countries, this framework helps prioritize the most important things an organization must do to be successful. Learn moreabout the Institute at the number one site on the Internet for balanced scorecard information: