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Using balanced scorecard to build a project focused org (no logo)
 

Using balanced scorecard to build a project focused org (no logo)

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Integrating Balanced Scorecard based strategy with a Program Management Office execution culture.

Integrating Balanced Scorecard based strategy with a Program Management Office execution culture.

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    Using balanced scorecard to build a project focused org (no logo) Using balanced scorecard to build a project focused org (no logo) Document Transcript

    • Using Balanced Scorecard to Build a Project Focused IT Organization Driving high performance teams with Balanced Scorecard and a Program Management OfficeThank you for the invitation to speak today on Balanced Scorecard andproject management 1
    • Our Customer Is Not Your Normal Commercial Business Producing Household Items, Consumer Products, Or Business Equipment The Nuclear Weapons Complex (NWC) is a nationwide group of government–owned and contractor operated laboratories and production plants operated by the National Nuclear Security Administration under the U.S. Department of Energy. Rocky Flats Environmental Technology Site (RFETS) was one of those plants. It was shut down in 1989 in order to bring it in line with environmental regulations. It never restarted Clean up and closure has been its mission since then This effort has been managed by Kaiser–Hill Company LLC Closure is scheduled for late 2005 2/38Much of the discussion of Balanced Scorecard is around improvements inprofitability, market share, share holder value and the like. We have some ofthose metrics, but before that comes the mission of closing a former nuclearweapons site with a fixed budget, unknown technical risks, and the spot lightof the government and the public stakeholders. 2
    • Rocky Flats Environmental Technology Site, Golden ColoradoRocky Flats Environmental Technology Site (RFETS) is located alongColorado Highway 93 between Golden and Boulder.It is a pristine piece of the front range, surrounded by Metro Denver, and itssuburbs. 3
    • The Nuclear Weapons Complex Sites Which Produced “Devices” From WWII To The Late 1980’s. The Cleanup Is Now The National Priority 4/38Rocky Flats is one of 114 former and active weapons sites in the continentalUnited States. Cleanup of these sites is now the primary mission of theDepartment of Energy. The National Nuclear Security Administration (NNSA)budget for FY 04 is $8.835 Billion. The budget for EnvironmentalManagement (EM) is $7.2 Billion. Since inception in 1989, $60 Billion hasbeen spent without a corresponding reduction in risk.Prior to 2001, $220 Billion was programmed for cleanup. Acceleratedcleanup will save $50 Billion to $100 Billion (as a stretch goal).Of all this our puny contract is funded to the tune of $663,959,000 for FY 04. 4
    • A Distributed Production and Assembly Systems has Created A Distributed Cleanup Problem, Without a Shared Strategy at the IT Level 5/38Many states, counties, and cities have a vested interest in both cleaning upthese sites as well as preserving the job base created by the WeaponsComplex. 5
    • A Quick Background Of Our Business Environment, Clients And Business Model CH2M HILL is a $2.2B project completion services firm Our current engagement is a $12M annual IT services contract with the Department of Energy We provide information and communication technology (ICT) services to Rocky Flats Environmental Technology Site The closure mission supports D&D efforts for all waste clean up All activities are mission critical Steady reduction in budget and staff in support of closure is our “normal” business environment Closure projects have accelerated cost reduction budgets until they reach ZERO Our goal is to turn Rocky Flats into dirt, prairie dogs, and 10TB of data 6/38I come to Balanced Scorecard not as a business executive but as a ProgramManagement Officer My role in our IT organization is to turn our strategy intoactionable outcomes. I participate in the development of strategy as amember of the executive management team. In the end though the PMO ison the delivery end of the objectives, portfolios and projects that make up theportfolios.Our work environment is unique from the experience of most of you here. Ourbusiness is to go out of business – we manage the IT processes for DOEweapons plant closure projects. There 114 of these sites in the continentalUS, ranging from 650 square miles to small rooms in the basements ofuniversity physics departments.These projects are like construction projects but in reverse. All the buildings,nuclear and chemical wastes, all the infrastructure, and any remnants of thesite are removed, shipped to various sites or disposed of in some way. Forour site at Rocky Flats all that will be left in 2005 is 6,500 acres of clean dirt,prairie dogs, and 10 TB of data. 6
    • Information and Communication Technology (ICT), Balanced Scorecard, and Program Management ICT provides Server and network operations Applications Desktop support Telecommunications Core ICT strategies Use technology in place of labor Never be an impediment to progress toward site closure Withdraw services that follow closure processes 7/38The connection between our ICT operations at Rocky Flats and other closuresites and Balanced Scorecard involves our mission – close the site with theleast cost, fastest schedule, without injuring or killing anyone, and withoutbeing on the critical path for any other project task.This goal could easily be met with simple seat of the pants projectmanagement and maintenance and operations IT processes. The problemsarise when our customers – those doing the physical removal of the sitematerials – come into the picture.Like any real construction project, changing requirements is an everydayoccurrence. Adapting to change is the mantra of any IT organization. But inorder to adapt to change a foundation from which to make change is needed.This is usually called “governance.” But governance alone is not enough. Astrategy for adapting to change is required. This strategy needs to considernot only technologies and customers, but also the broader mission of the ICTfunction – why are we here? 7
    • Inverting The Balanced Scorecard Pushes Strategy Down Into The Organization To The Project Management Level Many speakers here will be talking about using Balanced Scorecard to implement strategy up and down the organization Our approach includes the above, but also the use of BSC to improve the performance of a project based organization This is a Program Management Office view of BSC rather than a CXO view This closes the gap between “vision” and “execution” Where should dollars be invested to achieve value? How can this delivery be measured? How can investments be connected to strategy as well as the tactical side of PM? 8/38Our approach to balanced Scorecard is most likely different than others. Wedid not start with a broad business goal like – grow this company to a largersize. Our goals started with the question “how can we provide more withless?”Since we live in a project based operation, the second question was “howcan we better deliver our projects to meet the strategic needs of ourcustomers?”This was an inside out view of Balanced Scorecard. 8
    • Program Management View of Balanced Scorecard Performance metrics Actual cost Earned Value Earned Value Performance Performance Project Project Risk Risk Management Management Management Management Management Management Balanced Scorecard Risk related project data Direction Strategic data Strategic metrics Lessons Lessons Learned Learned Strategy is a hypothesis Metrics are the data for testing the hypothesis 9/38The forces on project management are show here. Let’s take a quick tour forthose not familiar with government contracting performance managementpractices. By the way these practices are applicable to any projectmanagement environment not just DOE and DoD. Especially in the softwaredevelopment world, where the question “when will we be done and how muchwill it cost” is asked everyday.•Performance management is our balanced scorecard. I’ll show one versionlater in the presentation•Earned value management is the core processes for managing projects. Itasks and answers the question what is the cost at completion, when will bewe be done, and what have you delivered in terms of value for the moneyyou’ve spent.•Risk management is how adults do project management.•Lesson learned is a core process improvement process. With looking backand asking free and frank questions about improvements, moving forward isdifficult. 9
    • Talking about project driven organizations means walking the walk as well. The Project Driven Organization Strategy Stakeholders Balanced Scorecard Objectives Requirements Governance Methods Business Scope Organization Processes Deliverables Teams Portfolios Activities Milestones Risks Techniques Roles Responsibilities Projects Resources Skills Models Budget Data Costs Locations Applications Earned Value Databases Hardware Tools One Up Reviews Exec Standards Servers Desktops Entr PMO Apps Telecomm Networks Security All 10/38First lets look at the processes involved in managing a project inside an ITorganization. What at first seems like a straight forward tasks of “get theprojects out the door on time, on budget,” involves many people andprocesses. 10
    • One Critical Understanding Missing From Many Strategy Discussions Is – “What Is Strategy In The Context Of IT Delivery Projects?” Strategy creates fit among a firms activities The success of strategy depends on doing many things well, not just a few All things that are done well must operate within a close knit system If there is no fit, there is no strategy Management then becomes the search for operational excellence Improving operational excellence is necessary but it is not the same as strategy 11/38The approach to strategy usually starts with the Mickey Rooney school ofmanagement from “Broadway Kids.” “Hey gang let’s put on a show.” Let’s goget a strategy. This is clearly not the right approach, but it happens more thanyou think.First off the definition of “strategy” is not well understand in the IT domain.People talk about architectural strategy, network deployment strategy, sharedservices strategy.Defining strategy in terms of hardware, software, and processes is notstrategy – it’s operational effectiveness. Confusing these two is a commonpractice. 11
    • So What Is Strategy And How Can It Be Deployed In A Project Management Context? Operational effectiveness involves continual improvements that have no trade off opportunities The operational effectiveness agenda is the proper place for constant change, flexibility, and relentless efforts to achieve best practices The strategic agenda in the place for making clear tradeoffs and strengthening the fit between the business components Strategy involves the continual search for ways to reinforce and extend a firms position in the market place This includes the IT “firm” within the business firm As well as a department within the IT organization 12/38The difference between strategy and operational effectiveness is critical tothe deployment of Balanced Scorecard and the management of projects thatfulfill the strategy. 12
    • Strategy Is About Creating Fit Among The Various Components, Participants, And Forces Driving An IT Organization Fit creates incentives and pressure to improve Poor fit means poor performance Weaknesses are exposed by this poor performance Increasing fit improves performance in other areas as well as at the source of the improvement Strategy is making a hypothesis about a desired outcome, constructing the measures to test the hypothesis, and deploying the experiment to test the hypothesis 13/38The concept of strategy as a hypothesis and the experiments to test thehypothesis may be new to many. But this approach puts strategy in adifferent light.Strategy is not something you do then go off to execute the plan. It is acontinuous feedback process. Always testing the strategy with metricsderived from projects. 13
    • A Framework For IT Strategy In The Absence Of Balanced Scorecard Fails To Answer Many Questions Needed For Success What ––is the system made of? What is the system made of? Who ––does what relative to these Who does what relative to these How ––does the system work? system components? system components? How does the system work? Where ––are the components of When ––do things happen in the When do things happen in the Where are the components of system? the system located relative to one the system located relative to one system? another? another? Why ––are various system Why are various system choices being made? choices being made? What is the information systems strategy? What is the information systems strategy? How is the information technology strategy deployed? How is the information technology strategy deployed? Who owns is the information management strategy? Who owns is the information management strategy? Why is the organizational strategy seen as viable? Why is the organizational strategy seen as viable? 14/38One place to start building an IT strategy framework is with the followingstructure.By asking these questions, it search for strategy is started. Many of thesequestions will not have answers in the beginning. But as the strategydevelops and the BSC evolves, answers will become for focused. 14
    • There Are Four Elements Of IT Strategy That Must Be Present To Fully Assess The Connection Between Objectives And Projects Organizational Strategy – WHY Information Technology Strategy – HOW The wherefore and rational for the strategy The mechanism of the strategy Organizational components – choose the structure Scope – which technologies are to be formally or design, management control systems and formal included in the information strategy. policies. Architecture – the technology framework which Business Components – the corporate strategy drives, shapes, and control the Information concerned with mission. Strategic business unit technology strategy. strategy concerned with competitive advantage. Information Systems Strategy – WHAT Information Management Strategy – WHO The components of the strategy The participants in the strategy Alignment – identify the applications required to Roles – who has what responsibility for information support the business strategy. resources and policies and actions. Opportunity – search for innovative uses of IT to Relationships – how are relationships built between enable business to perform better. the CIO and others to assure success over time. 15/38There are four elements of elements of an IT strategy show here.1. Why2. How3. What4. WhoAnswering these questions is the starting point for building a strategy. But answering them alone is necessary but not sufficient. Turning these answers into actionable outcomes the sufficient part. Delivering on the actionable outcomes is the role of project and program management. 15
    • The BIG Question of Strategic Fit Becomes The Focus of the Alignment Process If strategy and structure must fit each other, then what is not stated is: Which aspects are to fit with other aspects? Business / Information relationships? Information / Business relationships? The answer to these should be obvious, but the consequences of the answer needs to be understood: The business strategy “drives” the IT Strategy The IT Strategy drives the Technology Strategy A loop must be created between the technology strategy and the business strategy before any measurable value can be created. 16/38The real question though is how to define “fit” in terms of strategy.How does the IT strategy “fit” with other business strategies?What if the other business units don’t have a strategy?What if other business units don’t really know what you’re talking about whenyou speak of strategy? 16
    • Balanced Scorecard And Project Management Are Natural “Soul Mates” In An IT Organization, But Connecting Them Is Difficult Balanced Scorecard provides a strategy focused view of the IT operation Projects and Project Management provide a tactical view of the IT operation Putting these two together creates a synergy not found in the individual views Tactics enable the fulfillment of strategy Strategy validates tactical decisions 17/38By combining Balanced Scorecard and Project Management strategy andtactics can be combined 17
    • Project Management Is More Than Managing Projects, It’s AboutManaging The Right Projects, And Dropping The Wrong Ones Traditional view of a “project” Defined start and end Defined resources, cost, and delivered value Define the customer, technology, and delivery processes Balanced Scorecard view of a “project” What objective of the strategy does this project support? If the project were implemented, what goals would be fulfilled? When will the cost of the project be earned back by a specific objective in the strategy? These questions and their answers are also found in project portfolio management 18/38 18
    • Project Portfolio Management Is A Continuous Process Of Assessment, Corrections To Plans, And Reassessment Identification Identification • •Needs Needs • •Source of ideas Source of ideasTiming Timing Project Project Evaluation Evaluation • •Competitiveness Competitiveness Portfolio Portfolio • •Feasibility Feasibility • •Resource Availability Resource Availability • Benefits • •Logical sequence Management Management • Benefits • Evaluation Criteria Logical sequence • Evaluation Criteria Selection Selection • Performance Metrics • Performance Metrics • Strategy connection • Strategy connection 19/38 19
    • Project Portfolio Management Is An “Implementation Process,” ButAlone It Is Not Sufficient To Answer The Strategy Questions PPM has many of the tools to answer the previous questions PPM alone is not sufficient to assure success Project selection criteria are typically financial and technical Strategic impact analysis is needed as well What are the units of measure of the “strategic impact?” Economic value added? “Real options” exercisable value? Market opportunities? The business situation defines the units of measure But most importantly connecting strategy and tactics can be done through projects 20/38 20
    • Projectizing IT Organizations Is Harder Than It Looks, EveryoneHas “Enlightened Self Interest” For The Use Of Their Budget The curse of the “level of effort” project “Train watching” is a common term As time passes resources are consumed, services delivered, but delivered value is not always measured How to measure “value” of a project Expected Monetary Value (EMV) Project “profit,” ROI, IRR, etc. Opportunity costs These all have static monetary units of measure with little or no connection to strategy It’s the interaction between “value” and ”strategy” that must be evaluated 21/38 21
    • What Is The “Value” Of Fulfilling A Specific Strategy And How CanThis Value Be Monetized In The Same Units As Development Costs? There are many ways of measuring “value” Expected Monetary Value Return On Assets Earned Value Payback Period Real Options Return On Investment Internal Rate Of Return Economic Value Added All these methods are useful, but care needs to be taken not to put too much “faith” in the absolute numbers The “value” aspects not only need to fit the strategic needs, they need to be acceptable to both the finance team as well as the customers 22/38 22
    • Our Method Of Measuring “Value” Involves Discovering The ExpectedCost Of The Project With A Degree Of Certainty: Earned Value $1,000K Authorized Budget = $1,000K This is a simple project in which the first This is a simple project in which the first reporting period has completed. reporting period has completed. $750K $300K was planned to be spent, $300K $300K was planned to be spent, $300K was actually spent, but only $200K of was actually spent, but only $200K of Planned Cost = BCWS= $300K physical progress has been made. physical progress has been made. $500K In the traditional project management In the traditional project management method, “we’ve spent to our plan,” so method, “we’ve spent to our plan,” so Actual Cost = ACWP = $300K we’re right on track. We’re OK. we’re right on track. We’re OK. $250K Earned Value = BCWP = $200K In EV “we’ve spent to plan, but under– In EV “we’ve spent to plan, but under– delivered, by $100K. We’re in trouble. delivered, by $100K. We’re in trouble. 1 2 3 4 Now we need to increase our efficiency Now we need to increase our efficiency just to get back on track and increase even just to get back on track and increase even Traditional Project Management Traditional Project Management more to stay ahead. more to stay ahead. By reducing the reporting period to finer By reducing the reporting period to finer and finer granularity, software and finer granularity, software Planned Cost = $300K Variance from development methods like Extreme development methods like Extreme Programming and SCRUM can be laid Programming and SCRUM can be laid Actual Costs = $300K Plan = ($0K) over the Earned Value system. Adding over the Earned Value system. Adding Testable requirements to these methods Testable requirements to these methods re-connects EV with software re-connects EV with software Earned Value Project Management Earned Value Project Management development, closing the loop between development, closing the loop between traditional and agile management traditional and agile management processes. processes.Planned Cost = $300K SV = BCWP – BCWS: Schedule variance from Plan = (–$100K)Earned Value = $200K CV = BCWP – ACWP: The true cost variance = (–$100K) Actual Cost = $300K 23/38 23
    • Our Balanced Scorecard, Based On A Strategy Of “Going Out OfBusiness” On December 15th, 2005 Getting all participants accountable for the outcome is critical Strategy is developed both top down and bottom up Matrixed approach to projects, portfolios, and metrics – not dictated by management but collaborative development Projectizing all activities with specific measurements creates a focused team, but metrics must match the underlying behavior of the process Bottom up cost and schedule estimates Deliverables management continuous rather than stages 24/38 24
    • Turning Strategy Into Tactics Connects The Strategic Planning ProcessWith The Delivery On That Strategy Using the PMO The Strategy Focused IT Organization Mobilization PhaseInitiate the Process of Change – Gain Consensus and Momentum from Participants Migration Phase Create Focus – Create Focus and Establish New Performance Culture Management Phase Institutionalize Change – Deploy Changes and New Management Processes BALANCED PROJECT MANAGEMENT CYCLE Strategies Objectives Measures Targets Initiatives Business Case Strategic Critical Success Performance Performance Objectives Factors Drivers Indicators Project Objectives Balanced Scorecard PMO Business Project Process Growth Critical Success Factors EVMS Outcome Needs Improvement Training Performance Metrics Balanced Scorecard Database Proj Srvr (Drivers and Indicators) Budget Customer CSS SQA SNO Skill Project Measures Measures Measures Measures Measures Measures Portfolio(s) PROJECT PLANNING Targets and Budgets AND BUDGETING Project Managers Participants Project Implementation IT Functional Project PERFORMANCE AND CRMs Supervisors APPRAISAL PROCESS Directors Managers Managers Internal and External Performance Evaluation Communications Dec 15, 2002 Jan 30, 2003 Mar 31, 2003 Value Delivery 25/38 25
    • Assembling The Components Of Strategy And Tactics Turning the strategy into projects requires a project oriented organization Project organizations start with changing the role of the functional managers Self directed teams Project Manager led teams Functional manager led teams = level of effort teams Cascading strategy to the functional managers Ownership of objectives now a a low level Roll up the objectives from the bottom Combine top down and bottom up 26/38 26
    • Organizing Around “Project Driven” Processes Means A Matrix StructureWith Teams, Functional Managers, And Project ManagementBalanced Score Card + Portfolios + Teams = High Performance Organization Business Domain Operations Manager (Caterham) IT Management Business Units Portfolio Architecture Business Policy & Purchasing Project Administration IT Leadership Development Administration Governance Accounting Management Controls (Murray) (Bontempo) Customer (Ploughman) Communications Stewardship Enterprise Advisory Services Shared Data Group Hittelman (CAG) Caterham Oshinski Martin Alleman Guthner Alleman Alleman Guthner Oshinski Radley Guthner Bontempo Oshinski Barefield Hittelman Alleman Henderson Oshinski Gwin Barefield Radley Martin Guthner Conan Barefield Teegarden Henderson Conan Swanson Caterham Barefield Martin Ploughman Guthner Teegarden Henderson Swanson Senior Management PMO Enterprise Managing Dir Applications Architecture & Management Manager CTO Manager Governance (Alleman) (Guthner) (Oshinski) Business DevCustomer & Stakeholder Community CTO Project & Infrastructure Portfolio Management Program Mgmnt Management Safety Telecommunications Administration Deputy CTO Applications Business Customer (Lewis) (Conan) (Gwinn) (Barefield) Solutions Solutions Relationship Enterprise (Henderson) (Martin) Managers Network Cyber Server SQA CM CSS Telecommunications PMO Operations Security Operations (Trivett) (Simon) (3) (Lindsey) (Goldberg) (Weber) (Russo) Vision Mission Culture Network Cyber Server Applications Business SQA/SV&V CM CSS Telecommunications Operations Security Operations Solutions Solutions Staff Staff Staff Staff Staff Staff Staff Staff Staff Project Delivery Team Initiatives Portfolio(s) Project Delivery Team Measures Initiative(s) Project Delivery Team Portfolio(s) Strategies Objectives Project Delivery Team Initiative(s) Project Delivery Team Targets Portfolio(s) Project Delivery Team Individual Business Units Balanced Scorecard Individual Business Units 27/38 27
    • Balanced Scorecard And Project Management Can Be Blended TogetherTo Build A Powerful Tool For Managing IT Projects The Balanced Scorecard components are necessary but not always sufficient for success Matrix of components Strategy map – tells the strategy story in one page Objectives – describes the deliverables from the strategy Measures – indicators of success Targets – goals Initiatives – collections of work efforts Projects – tactical work packages 28/38 28
    • The Hard Part Is When We’re Asked To Manage Projects ThatDon’t Fulfill A Strategy Connecting project costs with strategic value is critical Two different units of measure Two different spheres of influence – one looks outward, one looks inward Making visible the project’s “value” to the strategy Making the “value” of a project visible beyond cost and schedule One approach is to use “earned value” to manage IT projects EV is commonly found in construction, aerospace and government contracting environments But in IT development? The Balanced Scorecard is the place to start as well as end 29/38 29
    • Alignment Means “Actions Have Consequences” Alignment Actions Alignment Consequences Full engagement with the Servicing the customer is a “customers” at the detailed level “strategy” Aligning in “stages” by sorting Identifying the value of each out “going forward” applications application Shared strategic objectives that Capturing needs is a continuous start with the “customers” needs process Short–term tactical success can Continuous building on success mean long–term strategic is a difficult and fulltime job success Knowing about the business, Having the customer “inside” the but not making the business process, rather than as an decisions, this belongs to the external source of information. “customers” 30/38 30
    • Our Balanced Scorecard Follows This is a “traditional” Balanced Scorecard Four levels Bubbles, but no connecting lines of a map (too confusing) Some partitioning of functions on a horizontal scale There are other ways to represent the BSC Simple lists with metrics and goals Quadrants with everything on one page A current way is to list the objectives in a table, with metrics Assign portfolios of projects Cascade the Scorecard down to the functional manager level Tie “every thing” to an objective even the level of effort projects 31/38 31
    • “Do the right things, do them well, do them with less, to…” Business Results ……reduce overall ……reduce overall …enable profitable …enable profitable …enable firm to accelerate …enable firm to accelerate operating costs -- R2 operating costs R2 operations -- R1 operations R1 market deployment -- R3 market deployment R3Expectations Competency Competency Credibility Contribution Contribution Project “Keep my “Keep my “Manage to “Manage to “Understand my “Implement timely and cost- “Understand my “Implement timely and cost- systems running” systems running” corporate goals” corporate goals” operation” -- E3 effective solutions” -- E4 operation” E3 effective solutions” E4 -- E1 E1 -- E2 E2 Operational Excellence Operational Excellence Project // IT Alignment Project IT Alignment Solutions Leadership Solutions Leadership Reduce the cost of Reduce the cost of Provide appropriate technology to Provide appropriate technology to Provide innovative Provide innovative providing services -- P1 providing services P1 enable success -- P2 enable success P2 solutions -- P3 solutions P3Internal Processes Deliver solutions Deliver solutions Manage Manage Leverage Leverage Improve Improve requirements -- P7 on schedule -- P6 on schedule P6 requirements P7 knowledge and knowledge and processes for processes for efficiency best practices -- P10 best practices P10 efficiency and quality -- and quality Centralize IT Centralize IT Enhance customer Enhance customer P4 P4 resources -- P5 resources P5 relationships -- P9 relationships P9 Strategically deploy services -- P8 Strategically deploy services P8People and Develop and Develop and Recognize team Recognize team Provide employees with Provide employees with Tools Build a high performance Build a high performance retain critical retain critical and individual and individual the tools and knowledge the tools and knowledge culture -- S2 culture S2 skills -- S1 skills S1 performance -- S3 performance S3 they need -- S4 they need S4 32/38 32
    • Lessons Learned From A “Fresh” Assessment Of Our CurrentBalanced Scorecard – Continued Training And Consulting Is Needed Some of the goals are hard to create metrics for “Manage requirements?” Who gets to say we’re managing requirements? The customer wording is too soft at times, since the metrics for satisfaction are hard to come by in our environment “Strategically deploy services” This is a tautology “Deliver solutions on schedule” This is easy, and having a program office makes it easier “Keep my systems running” This can be measured everyday 33/38 33
    • The Risks To This Approach Are Numerous,Our Experience Includes … Lack of time for the decision makers to focus on strategy Having strategy sessions on a continuous basis is difficult Running the business always comes first Confusion between operational efficiency and strategy This is a continual problem Always ask “do I have options?” if so then it’s strategy Difficulty in creating well defined metrics and connecting them to deliverables Scalar metrics with defined “units of measure” Cascading the objectives down to the staff that can deliver the results This is the hardest and where there is the most resistance 34/38 34
    • The Risks To This Approach Are Numerous,Our Experience Includes … Once the strategy has been defined, loosing the picture focus and delving into the details Continuous re-visiting of the strategy to test the hypothesis Adjusting metrics and measures to increase the confidence in the hypothesis tests Becoming enamored with the “pretty pictures, charts and graphs” The real measure is the improvement in the operational effectiveness of the organization This is the other half of strategy that needs to be delivered as well if not better Facing the reality that this is much harder than it looks Strong convictions are needed to overcome objections In the end delivery of the results MUST be done 35/38 35
    • The Balanced Scorecard School Of Management Is Not For TheFaint Of Heart The individuals and teams should: Be committed to making the scorecard process work across all levels of the organization Buy-in has to be gained up and down the organization Keeping the commitment is a full time job Seek to close any gaps that open in the process in the same way they manage their daily activities Make BSC a “project” like any other Plans, budget, and deliverables Understand that without the commitment and dedication, not only will Balanced Scorecard fail, the underlying business process will suffer as well 36/38 36
    • The Balanced Scorecard School Of Management Is Not For TheFaint Of Heart … The scorecard should: Measure performance against goals Determine if the goals are appropriate Determine if the strategy or measures should be changed Provide direct measurable outcomes traceable to the actions of individuals and teams These measures and metrics should Have scalar units of measure: dollars, defects/1000, percentiles, etc. Have metrics that are first order derivatives from the work process: quality, response time, budget compliance Have independent variables that can be controlled which are connected to the dependent variables 37/38 37
    • A Final Thought “One of the most dangerous forms of human error is forgetting what one is trying to achieve.” – Paul Nitze 38