Whenever people talk about cascading, the graphic that often accompanies it is a peaceful cascading waterfall. Since our topic today is about cascading and we are here at the beach, Susan and I decided to have some fun with water today.
Sometimes, cascading isn’t as peaceful and orderly as a waterfall.When I first met Susan, it was through people from her org who were continuing to show up in our public training courses and were clearly struggling with cascading. I learned that BSCBSA had taken a huge leap of faith and launched 26 simultaneous cascades, relying on people scattered throughout BCBSA, who had been trained, to lead their various units through the process. In hindsight, they learned a lot of lessons from this “all in, leap of faith” approach. And I appreciate Susan being here today to openly share those lessons.
I first met Susan a few years ago when BCBSA was in the midst of cascading. First, I should tell you that BCBSA is what we here at the Institute refer to as a DIY client. If you shop at Home Depot or Lowe’s, you know that term. It means “Do It Yourself”. BCBSA had sent many people through our public training and were using our Nine Steps to Success in a DIY mode...they were Doing it Themselves, without our consulting assistance. Just to be clear, BCBSA had built a solid Tier 1 strategy called Focus on 14. This strategy was their roadmap to transition the organization to maintain its strong competitive position after Obamacare came online. Susan and I have presented together before, but those presentations have focused more on how BCBSA developed its transitional competitive strategy...a strong and insightful strategy. And I can assure you that their Tier 1 scorecard was solid and ready to cascade when the organization embarked on its cascading process. Today, we are going to focus on their cascading experience. So Susan, you had a solid strategy in place to achieve the organization’s transition needed by 2014. And you had followed the Institute’s Nine Steps to Success to do this.
As I mentioned, BCBSA had a solid Foundation in their Tier 1 scorecard.Those of you who have used the Institute Way: Nine Steps to Success, are familiar with this graphic. This represents the strategic elements that are the underpinnings of a Tier 1 balanced scorecard. We always emphasize the components in the foundation, especially Engaged Leadership. In fact, the leadership portion is so critical that when consulting, we won’t begin an engagement until we have spoken with and are sure of the leadership buy-in. It’s that critical for success.So while building their Tier 1 Scorecard, BCBSA paid attention to this and did a good job to ensure leadership was engaged and vested in their Tier 1 strategic scorecard.
But when it came to cascading, they learned a valuable lesson.Does anyone here do any sort of climbing? Rock climbing, mountain climbing, etc? Any good climber knows that accidents are more likely to happen on descent, so it’s important to set your anchor firmly at the top to have a controlled and safe descent.The same principle applies to cascading. Leadership Engagement does not end after the Tier 1 scorecard is completed. It is JUST AS CRITICAL during the cascading process. Susan, would you like to tell us what you guys learned about this?
Executive Buy-in, Participation and AccountabilityAnchored ExecutiveAccountabilityin the Tier One CardDivisional Officers and Directors each assigned to Pillars2 Co-Chairs2 Senior AdvisorsRecent reorg of Pillars to re-energize and get new ideasUse of sub-committees to bring information to the Pillars – spreads knowledge and understandingSenior VPs actively engagedOwn the ObjectivesCEO spontaneously reinforces accountability
Is everyone here familiar with world-class competitive swimmer Michael Phelps? You may remember him from the London Summer Olympics. To date, he has won more Olympic medals than any athlete in any sport (22) and has shattered countless swim records. I love this quote by his coach. Michael did, indeed win his first Olympic medal in 2004. But it took him years of fiercely driven competitive training to achieve what he has achieved.At the Institute, we have a saying that “Best is the Enemy of Good” and the “80% is Good Enough for Now” One thing that can derail a scorecard effort, at any level, is striving for perfection immediately instead of starting with small victories and slowly learning and improving over time. In other words, there’s no shame in using water wings. Susan, would you like to explain how this lesson applies to cascading?
I’ve been leading very large scale corporate projects since the early 90s.One truth has always stayed with me throughout all of them – and that is to take it one step at a time. A good plan will set the expectations right and you can change the company with you as you take your individual steps.We actually started changing our corporate strategy from the typical yearly strategic planning process to a more dynamic process in 2009. There were a lot of “fires” to put out in 2009. By the end of 2010, we had developed the three themes or pillars for our corporate strategy. 2011 focused on building the Balanced Scorecard Tier 1 card. I asked for three years to build the Divisional Cascade before we considered linking individual performance to the scorecards. So we started the cascade by mid 2011 – HA! The next two years will be spent refining the alignment of the Divisional Cards to the Corporate Card and also establishing linkage from the individual to their divisional cards. The ultimate goal would be to reinvent our incentive program around the balanced scorecard. I have two more years. So basically, we didn’t start off using the cards to drive behavior – we had time to work the process, get the company familiar and comfortable with the balanced scorecard and to ingrain it into our culture – before we start using it to set divisional or individual performance.
Susan, we mentioned that you guys took a leap of faith and just launched yourselves into cascading. You often refer to that as the “Cliff Dive” and you learned 3 key lessons from that, didn’t you?
Absolutely – we learned three of the most important lessons.First of all – you had to get the right people in the room – all at the same time. For the Divisional Cards, we needed to have the Vice President and all of his Direct Reports – or the Department Managers. Occasionally there is another “key” person who holds am important position in the Divisional hierarchy who also needs to be there. If anyone is missing, you take the risk of missing an important piece of the Divisional strategy – and you also miss out on the buy-in you get from having everyone there.Secondly – you need the right place – we have a Balanced Scorecard Room that is set up for this purpose. It has all of the materials we need to facilitate a good session – white boards, flip charts, a projector as well as large posters of the corporate strategy and all of the Divisional cards hanging on the wall. I can’t begin to tell you how many times the participants will get up to look at another Divisions card because they realized that they have functions that connect and they want to see how the other Division is handling it.Lastly – you need the right time. We never allow session to go past two hours. An hour and a half is actually best. People are at their freshest in the morning, but and early afternoon session would work as well. Never, ever on a Friday afternoon and never past three. It becomes a futile session of herding cats if you start too late.
Now that I’ve explained how cascading is supposed to work, Susan do you want to talk about how some of your divisions went overboard in that they dove too deep, and nearly drowned themselves?
The first time through, it seems that each Division wanted to “prove” their worth and cascaded as many of the corporate objectives to their card as they possibly could – even if the connection to that objective was very sketchy or loose. We also saw that the objectives that they were cascading to their cards looked more like their org chart than the strategic vision of the Vice President. Fix by narrowing down to the top three to five that the officer most closely contributed to. Starting on the third crank of the BSC wheel, we are finding that the more mature Divisions cards are showing the vision instead of the org structure. It just takes some time.Too many measures – whew – sometimes we saw 5 or 6 measures for one objective. We quickly realized that the intended result was the key here and many times we had to go back and narrow the focus of the intended result.One of the best parts of our culture at Blue Cross is our ability to execute. The first time through the cards, the team gathered at least three initiatives for each objective on every card. For a company that executes very well – this through us into execution overload! Our Top Leaders and the BSC Team decided to remove the initiatives until we had a better process in place to pinpoint the correct initiatives. We will start again this year with a structured business planning process.
If I said to all of you “let’s go swimming”, I bet we’d not all be in agreement on exactly what “go swimming means”. For some of you, swimming is an athletic sport and you are quite serious about strokes, and breath timing, and you might even shave your body so you can glide more quickly through the water. For others of us....”swimming” is more about the outfits and the ambience. I guess both images have a couple of things in common. There IS water involved....and shaving is recommended. But it’s going to take a lot to get us all in synch in that swimming pool...where we are both athletic AND stylish.Susan, you’ve had some synchronization problems and in hindsight realized the importance of consistency in order to achieve the alignment necessary to execute strategy well. Please tell us more about that.
The BSC team had to develop a process to make sure each of the Seven Internal Strategy Consultants were creating the cards the same way. We used the Balanced Scorecard 9 steps as a guide to developing the process adding our own gates for approval where necessary.Purpose StatementStrategy MapObjectivesMeasuresInitiativesBookletDraft Balanced ScorecardSenior VP ApprovalFinal Approval
OK...now that I’ve explained this BSC component that may be new to some of you....I’ll turn it over to Susan. You guys ended up going round and round in circles for many reasons...caught in whirlpools that threatened to pull you under.
Mixed Messages – language – like membership. Definitions.
Organizational changes happen. Some examples:Departments move from one VP to another (Typically because the BSCs showed where we actually could have a better structure!)New VPs are put into place – after some time – they may want to put their vision into the card.Divisions are combined – this may cause problems with the data – what do you do with the history – like admin cost?Strategy ChangesEspecially in the beginning – refining of measuresLessons learned We didn’t know it all, and we don’t know it all now. Sometimes you have an aha moment and it changes everything. Cascading makes all of this change a little more difficult. It’s never just one change – sometimes it is now 26!
In the Nine Steps to Success Framework, we recommend selecting and implementing a software system (or at least figuring out how you are going to manage an exponential growth in metrics) before Cascading. In your Leap of Faith, you guys didn’t worry about Automation right away. Tell me about that....
Started out with Booklets and spreadsheets. Waited 2 years – collecting data quarterly.Purchased tool Corporate first Divisions Second Released good – not greatImportant to have a solid change process in place Made problems much more visible Changing measures and cards dynamically Needs to be simple!!!Personal touch for training and acceptanceProvides complete transparency
Personal touch for training and acceptance
Speaking of sharing....let’s move on to the final lesson you guys learned.
Sometimes we couldn’t follow all of the rules – it just did not fit into our corporate culture. In those cases, we knew what rules we were breaking and what impact it might have on the strategy. This works well for us because typically have a plan to mitigate the risk of an adverse impact.Examples: Action verbs – manage, deliver Manage Costs Pillar Removing initiatives