Organizational Strategy and The Balanced Scorecard

Strategic Management
and
The Balanced Scorecard
Susan T. Blake
Organizational Strategy
Ravenswood
Family Health Center
CENTER
FOR THE HEALTH PROFESSIONS

1 Susan T. Blake Consulting
Overview
• Welcome and Introductions
• Strategy Planning
• Defining our terms
• RFHC Examples
• Why Strategic Plans Fail
• The Balanced Scorecard
• Key Concepts
• Applying the Balanced Scorecard to Healthcare
• Applying the Balanced Scorecard to RFHC
• Wrap-Up

Welcome and Introductions
• Who am I?
• Who are you?

Please tell a story about a time something
happened that made you say,
“I LOVE my job!” or “I had a GREAT day!”
or
“This is why I do this.”

• The work you do plays an
integral role in with filling
human needs, both directly
and indirectly.
• Nursingcrib.com puts it well:
“Maslow’s framework of
basic needs is based on the
theory that something is a
basic need if:
• Its absence results in illness
• Its presence prevents or
signals health
• Meeting an unmet need
restores health”

You are leaders in the community, supporting
their basic needs of physical health and
security and, by your living by your principles,
supporting their higher needs as well.
How can you do that more effectively, and
without burning out?

Strategy Planning
Strategic Management is the difference between
Image: Surachai / FreeDigitalPhotos.net
and

Strategy Planning
Image: Apple’s eyes Studio / FreeDigitalPhotos.net

Strategy Planning
• As the health home for your community,
you are a place that provides:
• Resources for fighting health-related fires
when needed
• Resources for preventing those fires as much
as possible
• Education and encouragement to develop
good habits that prevent those fires
True?

Strategy Planning
• Strategic Management provides you with:
• Resources for fighting fires when needed
• Resources for preventing those fires as much
as possible
• Encouragement to develop good habits that
prevent those fires
It’s difficult to provide a health home for
your people if you don’t build and maintain
an organizational health home.

Strategy Planning
Strategic Management “entails specifying the
organization’s mission, vision and objectives,
developing policies and plans, often in terms of
projects and programs, which are designed to achieve
these objectives, and then allocating resources to
implement the policies and plans, projects and
programs. A balanced scorecard is often used to
evaluate the overall performance of the business and its
progress towards objectives.”
Source: Wikipedia

Strategy Planning
Definitions:
• Mission (Why?): The role of the organization
in society, the reason for its existence
• Vision (What?): The long-term view of the
organization being successful in its Mission
• Objective (What?): A goal, result or
destination intended to bring the organization
closer to achieving its Mission and Vision

Strategy Planning
• Initiative (How?): A specific effort or project
whose outcome moves the organization
toward achieving its strategic objectives
• Measures (How do you know?): Collection
and analysis of data that is used to provide
systemic feedback about the progress toward
achieving an objective

Strategy Planning
• Target (How do you know?): Ideal results for
Measures
• Should be specific and achievable
• Should be thresholds and timeframes associated
with targets
• Useful Targets are associated with cause-and-
effect relationships (if we hit this target, that will
happen; if we do not hit this target, that will occur)

Strategy Planning
• Objectives, Initiatives, Measures and Targets
may be adjusted frequently
• The Mission and Vision change far less often
• Initiatives and Measures are frequently
confused with Objectives, but they are
actually tools for achieving the Objectives.

Strategy Planning
• Flashback: SMART Goals
• Specific
• Measurable
• Attainable
• Relevant
• Timely

Strategy Planning
Let’s apply this to RFHC:
• Mission (Why?): Improve the health status of the
community we serve by providing high-quality,
culturally competent primary and preventive
health care to people of all ages regardless of
insurance, immigration status or ability to pay
• Vision (What?): Everyone in the communities we
serve will have access to a patient-centered
health home

Strategy Planning
• Objective (What?): Maintain a positive patient flow to
reduce no-shows in dental clinic
• Initiative (How?): Implement a no-show policy
• Measure (How do you know?): Track monthly number
of appointments missed without notice
• Target (How do you know?): Baseline #X, Target #Y

Strategy Planning
Exercise: State an objective of your organization (or
department) with an example of an initiative and a
measurement. (Tip: The verbs are important!)
• Objective (What?):
• Initiative (How?):
• Measure (How do you know?):
• Target (How do you know?):

Strategy Planning
Why Strategic Plans Fail

Strategy Planning
“In a recent survey of senior executives at 197
companies conducted by management
consulting firm Marakon Associates and the
Economist Intelligence Unit, respondents said
their firms achieved only 63% of the expected
results of their strategic plans.”
“Three Reasons Why Good Strategies Fail: Execution, Execution…”
Published August 10, 2005 in Knowledge@Wharton

Strategy Planning
Why?

Strategy Planning
There are many articles listing potential reasons
for organizations’ failure to successfully implement
their strategies. Here are just a few reasons:
• Poor synchronization (lack of alignment)
• Poor communication
• Resistance to change (habit)
• Cultural factors (internal and external)
• Follow through (lack of)
• Poor visibility (related to poor communication)
• Hidden or competing priorities

Strategy Planning
• Conscious self-knowledge
(MBTI/360 feedback)
• Motivational Skills
• Giving and Receiving
Feedback
• Negotiation
• Conflict Management
• Time Management
• Enhanced Perspective and
Balance
Image:
m_bartosch/FreeDigitalPhotos.net
Good News! You have lots of tools, including:

Strategy Planning
• Hidden and Competing Priorities can be
among the most difficult causes of failed
strategic plans to deal with. Why?

Strategy Planning
“When you are up to your ass in
alligators, it is difficult to
remember your original mission
was to drain the swamp.”

Strategy Planning
Strategic Plans are like
New Year’s Resolutions.

Strategy Planning
Case in Point:
• I have a core value of being healthy.
Healthier. I love being outdoors. I am
independent and don’t want anyone to have
to take care of me.
• Mission (Why?): To be healthy and fit, so I am
able to live an active, healthy, independent
lifestyle.
• Vision: (What?): I am a size 10, definitely not pear-
shaped, and I walk at least one leg of the
Appalachian Trail when I am 70.

Strategy Planning
• Objective (What?): Get more exercise
• Initiative: Buy a bicycle and RIDE it.
• Measure: Ride to work (3 miles each way) 2-3x / week
 This objective is in alignment with my Mission and
Vision, and when I worked 3 miles from home, I was
pretty successful for about a year - until I was laid off.
 With more time on my hands, I actually rode more,
and rode 14 miles 2x a week.
 Since launching my consulting business, working
from home and having less time (I have competing
priorities), I have to come up with a new Initiative
and Measure to support this objective.

Strategy Planning
• Objective (What?): I resolved to lose 10 lbs and
keep it off.
• Initiative: Stop eating processed food
• Measure: Eat salad with lots of leafy greens every day
• Measure: Get on the scale
 This has worked pretty well, except for one thing…

Strategy Planning

Strategy Planning
• What’s the first thing we do when we fail at a
New Year’s Resolution?

Strategy Planning
• What’s the first thing we do when we fail at a
New Year’s Resolution?
• Judge ourselves, beat ourselves up
• I have no willpower
• I’m weak
• I’m a failure
• Give up

Strategy Planning
• Instead of judging, get curious.
• Ask, “What’s going on?”
• Mac & Cheese = The Ultimate Comfort Food
• I love creamy, unctuous, comforting salad dressing
• Chocolate makes me feel good

Strategy Planning
• Healthy Lifestyle
• Hourglass figure
• Ant
• Comfort
• Instant gratification
• Grasshopper
I have competing objectives, some of which are hidden:

Strategy Planning
• The first step to success is making what is
hidden visible.
• The second step is suspending judgment
• Then you can use your other skills to either
• Work out a solution
- or -
• Change your objective

Strategy Planning
• Conscious self-knowledge
(MBTI/360 feedback)
• Motivational Skills
• Giving and Receiving
Feedback
• Negotiation
• Conflict Management
• Time Management
• Enhanced Perspective and
Balance
• Don’t judge - be Curious!
Image:
m_bartosch/FreeDigitalPhotos.net

Strategy Planning
• A conscious attitude says:
• Health & comfort are both important; can I have
both?
• Negotiate and balance competing priorities
• Set targets that accommodate both
 Negotiate for low-fat salad dressings
 Negotiate for Mac & Cheese no more than 1x/week
 Switch from chocolate cake to Dove Promises and
allow myself no more than two per night. (And don’t
keep the jar next to the sofa!)
• This is not possible if I judge and am not
curious

Strategy Planning
• Organizational objectives are not achieved
when there are competing objectives that are
hidden or are forbidden to discuss
• The act of making the invisible visible allows
you to prioritize, negotiate, manage time…

Strategy Planning
• Discussion: Can you identify something that
you or your group does (or is required to do)
that makes it difficult to achieve stated
objectives?
• What is the competing priority that is at play?
• Should it be made visible as an objective?
• Is one more vital than the other?
• What negotiation would be useful?

Strategy Planning
Strategy
renders
choices
about
what
not
to
do
as
important
as
choice
about
what
to
do.
Indeed,
se8ng
limits
is
another
func;on
of
leadership.
-‐
Michael
Porter

• The Balanced Scorecard is a methodology for
strategic management.
• Originally developed in the early 1990’s
• Applied first to businesses in the private sector
• Quickly spread to the healthcare sector

“The Balanced Scorecard should translate a business
unit’s mission and strategy into tangible objectives
and measures. The measures represent a balance
between external measures for shareholders and
customers, and internal measures of critical business
processes, innovation, and learning and growth. The
measures are balanced between the outcome
measures – the results from past efforts – and the
measures that drive future performance.”
The Balanced Scorecard, Robert S. Kaplan and David P. Norton

• External measures:
• Shareholders
• Customers
• Backward Looking:
• Financial Measures
• Internal measures
• Business Processes
• Innovation
• Learning & Growth
• Forward Looking
• Business Processes
• Innovation
• Learning & Growth

• A Balanced Scorecard has two primary
components:
• Strategy Map (Why and What)
• Dashboard (How are we doing?)

• The Strategy Map is a visual tool for
articulating and seeing the relationships
between the organization’s
• Mission
• Vision
• Objectives

A Strategy Map organizes Objectives into
Perspectives and Strategic Themes…
…and makes cause-and-effect relationships
between objectives visible.

• The Perspectives are the
“lenses” through which the
organization’s success can
be viewed.
Institute refers to them as
the “floors of the house.”
• The Strategic Themes are
high-level strategies that
guide the organization’s
efforts.
Institute refers to them as
the “load bearing walls.”

• Originally developed for organizations in the private
sector, the original four Perspectives are:
• Financial (Looking back)
• Customer (Looking from the outside in)
• Process (Looking from the inside out)
• Learning & Growth (Looking ahead)
• The Perspectives are usually shown in this order
because of the cause and effect relationships that
tend to exist

• Applying the Balanced Scorecard to
Healthcare Organizations
• Experts have determined that the Balanced
Scorecard does apply to healthcare organizations,
but that it requires modifications to be most
effective.
• The Perspectives are frequently tailored to fit the
needs of the organization, and this is especially
true for scorecards for nonprofit and government
organizations.

“The principle difference between these sectors (private
and government / nonprofit / healthcare) has been a
more careful consideration of customers. Customers
become elevated to the top of the Balanced Scorecard
strategy maps as, ultimately, effective delivery of
services to customers explains the existence of most
government and nonprofit organizations. Also the
financial perspective may be portrayed at the top of
strategy maps, concomitant with the customer
perspective, to signal the importance of satisfying the
donors and citizens who provide funding for the
services that the organization delivers.”
- Robert S. Kaplan and David P. Norton, The Strategy Focused Organization

The following figure shows how the Customer Perspective is
elevated for many nonprofit organizations:

• Not only can the order of the Perspectives
change, depending upon the nature of the
organization, but the Perspectives
themselves can change or be renamed.
• The following slide shows a few examples of
alternative balanced scorecard Perspectives
used by healthcare organizations:

• Development and
Community Focus
• Clinical Productivity and
Efficiency
• Patient Characteristics
• External Environmental
Assessment
• Stakeholders
• People, Knowledge &
Technology
• Quality of Care and
Services
• Mutual Respect and
Diversity
• Social Commitment
• Financial Performance
& Stewardship
• Outcomes
Alternative Perspectives Used in the Healthcare Sector:

• When selecting the Perspectives appropriate
to your organization, there are two key
considerations:
• Do you have one each for looking
• Forward
• Backward
• Inward
• Outward
• Do they describe cause-and-effect relationships
that exist?

• Exercise: Review the Mission,
Vision and Principles, and
answer these questions:
• Are the four original Perspectives
used by Kaplan and Norton
(Financial, Customer, Process, and
Learning & Growth) applicable to
RFHC?
• Should they be
• Renamed?
• Replaced?
• Reordered?
• If so, make recommendations.
• Exercise: Identify one Objective
for your department and answer
these questions:
• Is it truly an Objective? Or is it an
Initiative? a Measurement?
• What perspective does it belong to?
• What potential obstacles could
hinder achieving your Objective?
• What tools from previous trainings
can help you to overcome those
obstacles?
• Is this Objective in alignment with
the RFHC Mission & Vision? If not,
what mission is it supporting?

Wrap-Up
• This can all be pretty overwhelming.
• When you get overwhelmed, think about
those stories we opened with. Don’t forget
why you come to work every day.
• Then remember to pause and strategize. Use
your tools to minimize firefighting as much as
you can.
• Then remember this difference between
leaders and those who lead:

Wrap-Up
“There are leaders and those who lead. Leaders hold a
position of power or authority. But those who lead
inspire us. Whether they’re individuals or organizations,
we follow those who lead not because we have to, but
because we want to…
…By the way, he (Martin Luther King, Jr.) gave the ‘I
have a dream’ speech, not the ‘I have a plan’ speech.”
- Simon Sinek
TEDx Puget Sound 9/17/09

Organizational Strategy and The Balanced Scorecard

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