Why benefit management fails in the NHS

The NHS IT delivery programme has a dreadful track record. It is not surprising when you look at their methodology and the techniques the NHS and the ISIP programme recommend for benefit mapping, benefit management and benefit realisation. They are fundamentally flawed.

Here are some of the many reasons why they fail:

1. They ignore the landscape and context, confusing benefits at different levels


2. They ignore impact and consequence


3. Being uncluear where change needs to happen


4. They treat enablers as the same as impact


5. Projects and enablers are confused


6. It makes following the timing and tracking deliverables difficult

First lets look at the NHS benefit management material. You can either look at the approach in the NHS ISIP benefits mapping or look at the alternative approach in the ISIP Benefit dependency network masterclass material.

1) Understanding the landscape and context

The first thing you will notice is that although the talk about benefits to particular parties, they are not specific about those parties and how they relate.

Imagine you are in a PCT. You are delivering technology to GPs so they can access a more complete view of patient records for a particular care pathway. It is important to realise that there are dependencies across that pathway that will involve other healthcare professionals such as tests in pathology labs, x-rays, hospital discharge records, and perhaps even records in Social services and district nurses. It is only when you have all of these in place that you will start to give benefits to patients. Until then you need to be clear who is involved and how they interact. Without this complete view of the landscape, the next step is impossible.

What you have is a sequence: PCT, GP, patient. What you need is to be clear about the benefits at each level.

2) Distinguishing between impact and benefit.

The second mistake that the NHS benefit approach makes is not to distinguish the difference between impact and benefit at each level. So for a GP, you can implement the system but other pieces of work will be necessary to ensure that the benefits for the GP and at the GP level, are implemented. So you actually need two levels of "benefit" for each body: "How am I affected/What is changed for me" and (separately) "What is the benefit for me".

Notice there is ALWAYS a timing difference here. You implement a system and the benefits of that implementation at the point of implementation come later (if at all).

It is the same at the patient level. There are always two "benefits". The first is the impact, "I can now make my own booking" and the consequence "Which means I can choose when I want and appointment". These are often assumed to be the same but they are not. The patient may be able to make their own booking but something in the system may stop them getting the appointments they want (or even getting through). If this is the case the "benefit" of being able to make your own booking becomes more of a nuisance than not being able to.

It is "impact" and "consequence" at each level, for each party, that needs to be considered. The models within the ISIP and NHS benefit maps do not make this clear. Again you have to have the NHS landscape clear here as well, to do this.

3) Enablers vs impact.

This is a really important distinction. Again confused by the way the material is presented and the lack of context in any examples.

If I am in a PCT and am introducing a Long Term Conditions system across multiple healthcare providers then I am putting in place some enablers of this technology, perhaps software, training, new hardware or infrastructure, interfaces between systems, protocols, new working practices, that are used across multiple healthcare professional groups (Acute, GPs, Social services, community nurses, polyclinic, etc.) .

These are enablers that work across the various parties involved, BUT ARE NOT directly impacting those involved. For instance the link between the GPs systems and the central Long Term Care system is an enabler. The impact is that GPs can then see the more complete pathway and other Health care professionals can also see what the GP has put on their referral forms more easily (provided you have also rolled it out to all the GPs, given them access and trained them).

It is an enabler. Think underlying capability or common infrastructure.

4) Being clear where change work needs to occur

Now everywhere there is an arrow between these enablers, impacts and benefits and then onto further impacts and benefits, you need action and change.

So why does the ISIP benefit dependency network go:

Enabler -> Projects (and Actions to change) -> Outcome -> Benefit -> Priority objective?

It does not make sense. Projects deliver enablers. Actions turn outcomes into benefits. All operate at different levels.

What we have been drawing is clearly a set of dependencies where actions for change are needed at many levels across the NHS landscape and environment. In fact everywhere an arrow exists, some change intervention is required. If you don't think about this you are at best leaving things to chance and at worst destroying any chance of the project actually delivering the benefits at any level.

5) Projects and enablers are confused

Lets be clear here. Projects do need enablers (give me some funding, resources, technology and an enthusiastic clinician to make things happen). But the enablers are different at different levels. This whole model seems confused about this.

However it is useful to talk about enablers. It is the Infrastructure or common enablers that are delivered by projects. The project will also deliver impact on the health care professionals or care pathways and help then enable their own benefits.

Another example of strange labels is Priority objectives. The way they draw the sequence of boxes there is "priority objective" at the end. In other words the sequence should ultimately lead to this priority objective. I agree, but that is not how to represent things.

What you will have when you develop these benefit maps across the landscape is perhaps several for the Long Term Care priority objective. One set of projects for Diabetes, another for heart conditions, another for COPD etc etc. What we are doing here is explaining how a priority is delivered by the chains of enablers, impact, immediate benefit across the various levels . By the time you reach the benefits for the patients you may have 4-6 ultimate significant benefits (that result from the impact of the project on their care). Now you don't want to have to draw a link from each of these to a box called "priority objective".

The whole benefit map is a description of how the priority objective will be delivered. So it should be a label on the benefit map, rather than a linked ultimate outcome. Think of the wrapper around the benefit map, or simply its title.

6) The implication for phased delivery and timing

So this is a more structured approach that is sensitive to how the impact and benefits work at any level of the health landscape. This is where the real advantage comes in. With this richer picture you can track the stated benefits at any level across the landscape you have drawn.

First have you got the enablers in place? Then have you put in place that which will immediately impact the care professionals? What are you doing about the benefits you promised for them? Have they occurred or are they not using the system because it is a pain, slow or "just another system to log out of and into". And when will it be delivered?

Having this clear cause and effect model in your benefit map enables you to clearly show what has been delivered and what is holding up progress. Having a muddle that mixed outcomes and benefits at each level makes it impossible to draw, impossible to use and impossible to manage.

I have been using such benefit maps in the NHS for over 5 years now. Whenever i present them I first get them to check the landscape before showing them the benefit model laid over the top. This way they agree the landscape before they start to think about the benefits, consequences and impact of the project. It works.

Shame they did not do this before they wasted $6bn on the programme for change and subsequent NHS IT programmes.

By the way, you will have realised that this approach is basically strategy mapping. Therefore it is really easy to make the step to "How would we measure this" and developing a modern NHS balanced scorecard for the operation of the care pathway or service. Really easy, but to find out how to do this you'll have to talk to me.

Phil Jones

Rapidly evolving and changing strategy

How do you handle rapidly evolving and changing strategy with a balanced scorecard?

Today I opened my email and found out that my "BT yahoo search is now powered by the nations favourite search engine - Google!". Yes Yahoo uses Google. It is hard to believe that these rivals from only a few years ago are now in such close cooperation. But that is the nature of Internet technology.

The environment and the strategy are changing rapidly and you need an approach to strategy planning, communication and implementation that can accommodate this rate of change.

Likewise with the credit shortage (I refuse to call it a crisis). Again it came upon us quickly and probably more severely that we expected. We also still have the uncertainty of when it will recover and how it will recover. Again thick business plans will be hard to change.

This is why I like strategy maps. They describe the strategy in short (1 page) documents. You can easily put a business plan behind them that sets out the details of the financials, markets, competitions, competitors and what you are going to do.

When I was on the management team of a dot.com the strategy completely flipped inside six months. We moved from a net market providing auctions for commodities in an industry, to a collaborative supply chain solution in the same industry. The strategy map could see that coming: On the main strategy map for the net market auction model, we introduced the supply chain capability, initially as a small theme to the right. Over six months the auctions business slid into a thin sliver of a theme on the left as the collaborative supply chain solution took hold with the customers and became the focus of attention (and the source of money).

The business plans, finances, resources, staff all followed behind as the organisation rotated through 90 degrees to provide a completely different solution to the same customers.

Strategy mapping helps you explain startegy as it evolves. It provides a quick and effective way to describe the strategy, that is rich and powerful in its description yet at the same time can also change and evolve far more easily than a written document.

That is why strategy maps are often used to describe alternative strategies when they are being tested and thought through. It is also useful to develop a strategy map when acquisitions are on teh horizon. It means thatyou concentrate on the main business whilst developing your startegy for the acquisitions and can then feed the integration often two businesses into the strategy map.

Having the staretgy map allows you to then develop the measures, targets, projects, actions and responsibilities (The balanced scorecard) beneath the startegy map. That way as the strategy map evolved you can more easily refine the balanced scorecard with reference to the strategy map.

For more on strategy maps and balanced scorecards, read our introduction to strategy maps on the main website http://www.excitant.co.uk/pages/strategy_mapping.htm

Phil Jones

Cascading balanced scorecards

I saw a question on cascading balanced scorecards recently and here was my reply

Here are some simple rules that I employed when I worked with Norton & Kaplan and have applied since

1) Cascade objectives rather than measures.

While some measures cascade many do not naturally translate across organisational boundaries or down through the organisation. However by cascading objectives you cascade the characteristics you want to measure and can allow each to use measures that are relevant and meaningful at that level. (Having objectives before measures was a basic improvement that moved balanced scorecards from measurement systems to a more strategic tool and should be your standard approach. - we adopted then in 1994)

2) Cascade themes of the strategy map.

In other words make sure you cascade the cause and effect model from your strategy map. Think of this as a vertical slice. So for the marketing department you want to cascade the financial impact (revenue and costs) the customer impact, the marketing processes and the learning and growth objectives that will improve the marketing process, influence the customer and deliver revenue whilst managing the costs.

If you cascade objectives in perspectives in isolation then you lose the performance driver model that the strategy map and the cause and effect model describe. The objectives and measures lose context and the whole philosophy breaks down.

3) Choose your pivot point of cascade

This is more subtle. If your strategy map is primarily designed around processes then they become the point of cascade. So divide up the strategy map into themes for each process. The cascade is sliced into the processes identified in the strategy map.

If your strategy map is more subtle than that and you have linked the organisation around customer objectives or customer groups, then cascade around them. This means that each department will have to ask, how do we support this customer objective and it will force (encourage/facilitate) joined up thinking and working.

If you follow these basic rules you won't go too far wrong

Some examples that will help.

You can see examples of cascades on the strategy mapping pages of my website http://www.excitant.co.uk/pages/strategy_mapping.htm

The Local government case study shows a cascade by customer objectives that achieved joined up working. http://www.excitant.co.uk/pages/case_studies_access.htm

The Dimensions fourth generation balanced scorecard case study is a cascade that is straight forward for regions in a company.

The Princess of Wales Diana Memorial Fund case study is where the overall Fund strategy is cascaded into each of the fund's "Initiatives" and where each initiative adopts the overall strategy. However as the initiatives are at different stages of implementation and maturity, each initiative has a different emphasis.

The cascade through a technology group on the first page of the strategy mapping pages shows how the group's overall strategy was adopted and refined slightly for each of 5 companies in different countries that made up the group. This one is a case where synergies were identified from the strengths and weaknesses of each company against the overall group strategy.

Some warnings

a) Beware cascading measures especially where the are not consistent

b) Do not aggregate measures into meaningless ratios and combined composite measures (eg we are at 76%) as these hid any meaning and cause and effect that drives performance

c) Ensure you communicate what you are trying to achieve as well as how you plan to measure it so people do not have to mind read what you thought of when you create a measure.


d) Don't dictate but look for ownership. If people understand what they are being asked they will find ways to achieve it

Hope this helps

Phil

How to get buy in for Balanced Scorecards and Performance Management

The question is very current as I had the most amazing compliment from a Balanced Scorecard client last month. When we first met, this Director was as sceptical and cynical of poor measurement approaches as any person I have met. We have just exptended the pilot balanced scorecard programme to a full roll-out. After a recent presentation to the board, he said:

“I have never come across an approach where there is so much acceptance. If fact I cannot think of a single person who is against the approach. You have overcome all resistance.”

I must admit it took me by surprise. I knew it had gone well, but this, as I am sure you will agree, is an exceptional comment. This isn’t a one-off. Going back another balanced scorecard client’s Director said,

“I have never come across an approach that has produced so much change inside six months”.

This was the Director of a City Council that had a reputation for being difficult to change.

This most recent quote came from work with a lovely and fascinating organisation. They are a third sector organisation that supports people with learning difficulties so is an interesting combination of a commercial, social service, that cares passionately about helping the people they support, and keeps a sharp eye on the money as well. It’s a very interesting organisation.

They had also chosen some managers for their pilot regions that were very different in style of management and approach.

I was thinking what I had done (quite deliberately) to achieve such buy in to the balanced scorecards with these varied regional directors. It came down to:

1. Draw the sting of bad measurement systems, poorly designed balanced scorecards, measures mania and the tyranny of targets. The poor experience of bad implementations and poorly executed “scorecards” needs to be over-ridden with a more modern, strategic and positive approach, as I use.
   
2. Explain how there are different types of performance management for different needs (see types of performance management) and make sure we are using the right approach for this client’s needs
   
3. Ensure I address the simple logic of the business and the cause and effect model
   
4. Don’t start with measures, but start with what they want to achieve and their objectives. Use this to describe their strategy in their words.
   
5. Position the approach and performance management as something to learn from that will evolve.
   
6. Ensure it is useful to those on the ground who are using it. (In this case we were primarily addressing Regional managers and it had to make sense to them and their staff. This was so successful that other regions demanded to join the pilot and some regions started to cascade to their staff and individual services with no prompting.
   
7. Mix judgement and facts (measures). Acknowledge the experience of managers and tap into it. Go further and demonstrate trust by acknowledging their judgement and helping them build it.
   
8. Use the approach to encourage dialogue and conversation. Even before we reached the measures they were having dialogues and discussions between the regional managers and within the regions that were rich, valuable to the managers and helped them to share ideas. They also helped them to assess and compare their own judgements and to learn from each other.
   
9. Tap into the multiple thinking styles and patterns that people use. If you fail to do this with the approach and with the way it is introduced you will lose many of the team.
   
10. Develop champions and influential advocates. Find people in the organisation who will champion the cause. The more sceptical to start with the better. Not just the high and mighty, but those who are respected managers in the organisation who are listened to by others. You can’t pick them, they will choose themselves, but you can develop them.
    
11. Use models of change and improvement, explicitly. There are many built into the balanced scorecard approach. Leaving them implicit means that they are often missed or not managed. Explicitly managing them, and being aware of the stages of thinking and ownership that people are going through, helps immensely. In other words, know the process and trust the process.
    
12. Recognise that needs will evolve. For instance boards demand more info and then once they have built trust and confidence step back, so their demands on the strategy map and balanced scorecard will change, naturally. It is expected.
    
13. Some final tests:

• “Does it make sense?”
• “Can I explain it to my staff?”
• “Do I want it on my wall to remind me and others what we do?”
• “Is it useful?”,
• "Does it help me?”, and
• “Can I be a better manager, with a wider view, concentrating on what matters, better?
  

These are not one off comments. Being systematic about change and helping people understand how and why it will improve things, make the approach a success. So our clients tell us.

To embed your balanced scorecards so they make a difference, just contact the Balanced Scorecard specialist consultants.

Phil Jones,

Excitant Ltd

Principles of Effective Balanced Scorecard Part 7

"The ability to learn faster than your competitors may be the only sustainable competitive advantage." Arie de Geus

Whilst chatting with a manager of a largish organisation I suggested it was useful to think about organisations and how they learn, in the same way we think about people and how they learn. She said she would think about that and went off to her next meeting. Two weeks later we bumped into each other again and she said, "I thought about your idea. I came to the conclusion it was silly, as this organisation does not learn." So I asked, in that case if you met a person with such an inability to learn, how would you classify their learning disability? At that point she replied, "Oh err - highly autistic". The penny had dropped.

I use this analogy a lot, though most organisations would not have such a high degree of learning disability. Some organisations, plough on regardless of what the outside world is telling them. Some organisations do not listen to the inner voices of their people. Some appear to have split personalities depending upon which department or manager you are talking with. Some have invested so much time in their strategy that they believe it must be right.

Yet their strategy is "Just an hypothesis". It is not provable. It's an idea. It's a set of beliefs about what the environment is like, what the customers want, what the organisation is capable of delivering and how it can change. You can't guarantee it will work like a law of nature. It may be based upon research and experience, but its still a belief, and hopefully more than hope and magic.

So, like every hypothesis, making it happen is a test. A test of whether it really is true that implementing that system, changing that product, serving those customers, cutting those costs, will succeed.

So the quicker you get feedback on your hypothesis the better. This is because the sooner you get feedback, listen to it, evaluate it, make mode decisions, the sooner you will be able to refined, develop and update the strategy. You would not set sail across the Atlantic on the basis on the weather forecast at the time you left. You know the weather will change in that time and you may even come across a few storms. If you assume the wind is always in the same direction you are likely to end up way of course (if not sunk) by the end.

Likewise, strategy is a hypothesis. The sooner you test it and refine it the better.

You have probably already started to think about your strategy, scorecards, measures and targets. As you have realised they are just the same. They too start off with an initial design (and usually a lot of effort, energy and time goes into that stage). Yet with time those measures and targets, those strategy map objectives, will become wrong. Yet so many performance management systems start off with an initial scorecard and leave it in place. You find the same set of measures 1-2 years later. Ironically what often happens is that the use of the scorecard drops away as the managers realise it no longer serves their purpose. In reality the strategy has evolved and the scorecard has not evolved with it.

That is why it is really important to build into the management team meetings and performance management processes, the mechanisms to refine and update the strategy maps and scorecards as the strategy is executed. So out 10th principle is:

10 Strategy evolves, you learn from its execution: Management is about testing and learning from its execution. Performance management needs to reflect this.

But bear in mind who's job, who's responsibility it is to maintain this. It is not the role of planners and performance managers. It's the role of the management team. So the degree of ownership, understanding and usefulness they have is directly related to their ability to use it and maintain it. Which in turn is related to the life expectancy of the performance management approach.

You have probably realised that introducing performance management is a change management project. You have to be clear who needs to change, how that change is to be brought about and explicitly what you need to be doing to make that change happen. As you would expect, the skills of managing change have a massive effect.

In our next series of newsletters, we will explore how to make strategy happen, quicker. We'll also explore how the other practices, processes and systems in an organisation can undermine your performance management ambitions and what you can do about them.

In the meantime look critically at your own performance management approach, where it is used, how it is used and what it is used for. Ask around your management team to see if they believe in the strategy map and scorecard. Ask them are they using it, do they talk about it, do they expect their teams to use it and manage with it? Is it giving them useful information? If you aren't getting the right sort of vibes, then you know what kind of experience you need to help you, don't you?

More soon

Phil Joneshttp://www.excitant.co.uk/

Strategy maps for different purposes

I recently spoke at a conference on the balanced scorecard and where Paul Niven was also speaking. When he did an explanation of strategy maps and did an exercise the audience produce three very different types of strategy map.

One version was the true cause and effect version where their is a clear cause and effect logic between the perspectives of the balanced scorecard. So money is driven by customers needs being met. Their needs are satisfied by what you do well which is driven by your skills knowledge, capability, culture etc (Learning & Growth).

The criticism of this was that they often contained too many objectives and arrows.

The second version the audience produced were much more symbolic. They were more pictures that showed the essence of the strategy, still had perspectives, but only perhaps six or nine boxes. No arrows. They were dramatically simplified strategy maps.

These were promoted as being useful to explain the strategy better.

The third type were almost metaphors. They were pictures in onto which the elements of the strategy were attached. For instance, dealing with an airline, the picture of the plane have the finances on the front, the two themes of the strategy as the wings, customers as passengers (naturally) and the learning and growth messages as the tail planes and fin.

As these were being presented it was obvious there was some value in all three. In fact all three are equally valid for different purposes and audiences.

The symbolic picture (Not really a strategy map) is good to get the message across in a friendly manner where people make The connection through the picture to the strategy. Clearly it is not the whole strategy. I know one client who used cartoon aircraft with their management moving from the pilot's seats to the wings to symbolise how managements role was to keep the plane airborne whilst others set the direction.

The simplified version of a strategy map is great for board members, and annual statements to shareholders. Here is a simplified picture of the shape of our strategy. Nothing two complicated. Including pictures to remind you of the important elements. Often useful to communicate the essence of the strategy to the staff.

The detailed strategy map is what the board and management team use. It has the richness and detail that they need and they know as the true complexity and complications of the organisation. It is also the one that gets cascaded through the organisation. because it is more meaty (and has detailed beneath it) it is easier to cascade to the various departments or divisions so they can develop their strategy map that explicitly supports the corporate version.

So it is not a case of either or for these types of strategy map. It is a case of horses for courses and asking, "What is the purpose of my strategy map?" I know of plenty of situations where compressing and forcing the richness of a detailed strategy map into a small number of objectives effectively lost the meaning and created a whole set of nominalisations that people could say "yes" to, but not know what specifically to do as a consequence.

So horses for courses, but do design teh detailed one first with the structure in mind so that you can move to teh others easier.

For more advice on developing strategy maps, that work for you and your organisation, just contact me

Phil Jones

How do you get joined up services in city councils that operate like silos?

I saw such a question on a discussion forum recently, and this was my reply. It relates to a balanced scorecard engagement with a UK City Council looking to create joined up thinking and working.

You have correctly spotted that city councils (we we call them in the UK) seem to operate like at least six different organisations. Eg social services, planning, education (children’s services) cleaning, Adult services, etc etc.

As a result they tend to adopt different cultures. They tend to be funded separately. To be measures separately. To have separate political ownership (different members). My experience is that in the board room, their discussions are often focused on their department rather than the collective as well. Hence silos.

So how to change this? One Chief Executive was willing to bite the bullet and insist that her Directors operate more cooperatively. The way we did this was three fold
a) Concentrate on objectives, not for the department, but for the community. Bear in mind, no user of their services sees them as separate departments. I just want the council to sort this out.

b) Then to ask which directors influence this. Classic customer faced thinking. So “I want to live in a safe community” was owned by the Adult services Director (who has drug teams etc,) the planning department Director (who design the environment that makes it feel safe), and the Contract Director (Who runs the street cleaning services that visit the street every week and clear up burnt cars and graffiti).

c) This meant that the three directors needed to talk to each other OUTSIDE the meeting and get their collective act together. It also meant that the Directors needed their staff to talk with other departments. Rather than re-organising (9 months work – elephants mating – large expense – no change) we insisted that the teams meet and worked together as well.

Another example is the corporate parent of a child in care. Again the responsibility is not just with Social services but adult learning and education and other parts of the Council. And in fact other services.

All this is about “Joined-up thinking and working”. We represented this in startegy maps for the council as a whole, before asking how each department contributed to the overall picture.

The client changed their business plans so that they were structured around these outcomes rather than departments. They actually realigned their political committees to reflect the same thinking and structure. They produced their business plans in 4 weeks after this engagement rather than 3 months with lots of effort and fighting in the previous year.

In the UK, the “Local Area Agreements” and “Local Partnership Boards” also encourages each of these departments of the Council to work with other agencies (eg Police, Health, Charities) as well. So this approach opens up the wider thinking.

However Central Government then scupper the idea. They may have similar objectives, but these parties (and departments) are given individual agendas to follow that are less joined up.

The catch is that central government often send out “strategies” and Incentives that are more silo based causing a localisation and separate approach to planning. For instance in one council I worked with the Children’s services insisted on following their own business planning approach “because we were so different and driven by the latest changes and legislation”. Of course this scuppers the issue and it takes a strong Chief Executive to say, “Oh no you don’t”

In addition budgetary pressures and the “10% cuts” approach causes each department to locally optimise rather than say, “If we did this it would save us both money and improve performance for our customers”. In one case I know Gershon (10% cuts by central gov) scuppered all discussion of cooperation between departments.

So a strong tension is not just between the departments but that caused by central gov pressures.

The Chief Exec I worked with used this to ask her team to step up to the mark of joined up thinking and working as well as thinking longer term. It was no surprise to me that within 9 months two directors had changed and three years later only three of the seven were still there. (No names – no pack drill).

Strong Chief Exec. Bigger picture. Collective ownership and responsibility and individual delivery. And a willingness to stick two fingers up to central gov occasionally.

Hope this helps. By the way, this was a balanced scorecard engagement….."

As you can see, it shows how looking at the bigger picture helps the organisation tackle the underlying performance management issues, with a strategic balanced scorecard.

Phil Jones

Customers and the Balanced Scorecard

I recently came across an article on the balanced scorecard on the website mycustomer.com. However I think it missed an awful lot out about how to handle customers appropriately in a balanced scorecard. Here was my reply.

There are a few points I would add to from a customer perspective:

1) It is better to start with objectives in each perspective rather than measures. Develop the objectives and then ask - how to measure them. This way you measure what you want to manage. This is what strategy maps are about. If you start with measures you constrain your thinking to what you think you can/should measure. You end up managing what you believe you can measure, rather than measuring what you want to manage.

2) When developing Customer objectives (and measures) ask, from their perspective. You will get a much richer answer than asking, “what should we provide them?” As a rule, put “I want…” in front of the objective description. This forces you to think from the customer’s viewpoint. If you don’t you may describe what you provide rather than what the customer wants.

3) Think not only about the value proposition, but about the customer’s process. What is their process, to which you contribute? This opens up the thinking about how you could add value in different ways. Also different parts of their organisation will have different value propositions (eg purchasing vs operations).

4) Quite often you will have layers of customers where you product contributes through the supply chain. Ensure you represent these.

5) A great advantage of thinking from the customer perspective and then aligning the organisations objectives (and also later measures) around the customer perspective is that it concentrates attention on the customer’s needs. It also breaks down silos, to addresses what the customer wants, rather than the pieces we think they should provide. This leads to better customer orientation.

Getting the customer perspective clear is the key to good balanced scorecards and strategy maps. These principles work in both the commercial and public sector. They align the thinking and actions of the organisation. Done well you can read your strategy from them and you can use them to discuss strategy and service with your customers.

It you want to know more, go to www.excitant.co.uk or you can contact me directly Phil@excitant.co.uk or 07 711 711 123

Phil Jones, Strategy & performance Specialist
Excitant Ltd

Prof Bob Kaplan:
Strategy maps and themes as aids to communicating strategy

Last night I attended Bob Kaplan's presentation in London on his latest thinking around scorecard development. His talk was entitled "Communicating strategy and managing the strategy execution process with strategic themes".

In the first part of his talk he explained how companies are using the strategy map approach together with getting the message out through a variety of rich channels, to get people to think strategically and act locally. He is still using the statistic that only 5% understand the strategy, that I like from the survey conducted back in 1997, when I worked with him.

He was explaining how good management teams are doing at least five things when communicating the strategy:

a) Getting the strategy onto a single page with a strategy map so it is easy to understand and explain

b) Getting the message out using multiple rich channels. As he (and many others) say, communicate it "seven time in seven ways"

c) Ensure you help people relate the strategy to their jobs.

d) Reinforce the message with your actions to ensure people realise that their role is to contribute to the strategy.

e) Having clear strategic themes and programmes of change.

I am going to pick up two elements from this today and return to the others in a later posting. These two are the strategy map and the strategic themes, as they are closely related.

The strategy map is a really powerful tool in the Balanced Scorecard approach and one which many seem to miss out on. In the room, many organisations had "Balanced Scorecards" but when asked how many used strategy mapping, barely a third raised their hands. Yet strategy mapping has been around since 1997 or so. I have completed around 50 of them in a whole variety of organisations and their power is characterised by a conversation I had with an IT Director last month.

I was showing him a draft strategy map that one of his IT Account managers had developed in our workshop. It was only a first cut and had taken about a couple of hours to put together. I was using it to illustrate the output and the process we had been following. However he immediately jumped in and started talking about the strategy of this business unit, how whilst some parts were reflected in the strategy map, others were missing and that we needed an extra objective or two to represent that. It was a classic illustration of how strategy maps get the strategy across very quickly and explain it in a rich picture. I had barely had the sheet of paper out for 15 seconds before he started.

The IT Director quickly realised how powerful a technique this was for creating conversations with his fellow directors about the strategy; conversations that he had previously described as difficult to hold easily.

The strategic themes point links closely to the strategy map. If you can tease out the major themes of the strategy you start to orientate the organisation around the delivery of these programmes of change instead of thinking in functional departments, products or silos.

Examples of strategic themes might be cost reduction and revenue growth, or refining existing products whilst developing new ones. Another set of themes might be safety, operational excellence and planning for tomorrow. These themes transcend the perspectives of the strategy map. Each theme should contain elements of each perspective: the financial implications, the implications for customers, the processes and the learning and growth components.

Many people identify themes and start substituting these for perspectives so you end up with a innovation or quality perspective. This misses the cause and effect part of what capabilities do we need to develop to improve innovation or quality, what objective does this achieve for our processes, how will innovation or quality affect the customers and what are the financial implications in terms of revenue or costs?

Once you have these themes clear, it is far easier to communicate the strategy. It is also easier to manage as you are able to orientate the thinking of the organisation and the management of the strategy, around the strategy rather than the existing organisation.

I have come across at least eight different ways to categorise and represent strategic themes, depending upon how you are thinking about them and where the emphasis is on your strategy. Each approach has its pros and cons, depending on the focus of your strategy and what is important for you.

If you would like to know more about the power and value of strategy mapping and strategic themes please contact me.

I'll return to the important topic of communicating strategy (which is also the subject of a forthcoming book) so people get it in my next posting.

Regards

Phil

phil@excitant.co.uk

The Balanced Scorecard in small and owner managed businesses

I often get asked about how applicable the Balanced Scorecard is in small and owner managed (family) businesses. The answer is very, but not primarily as a set of measures; more as a strategic focus, thinking and planning tool.

You have probably realised I have changed the emphasis from Balanced Scorecard to strategic planning. I have helped a lot of small and/or owner managed businesses use the "Balanced scorecard" but not for performance measurement. These have ranged from £70,000 businesses to £4-5m organisations employing 70-100 people.

Let me explain the process:

a) I use a future picture to help the owner understand and picture what they believe the future will be like.

b) I develop with them a strategy map that works all the way from what do they want to achieve financially, through the implications for customers, to the operational focus and then the underlying capabilities. The objectives on these strategy maps provide things that help then discuss their objectives (and if they want measure them).

It is this common understanding of what we are trying to achieve in the business, (rather than how we shall measure it) that is most important.

Also, I see many owner managers who are so operationally focused (fiddling with the business) that they prevent their people managing their bit. Actually, they start by telling me they are operationally focused. The effect is that the owner is not "strategic" and their managers are dis-empowered: not trusted (their words, not mine).

So for me, the advantage of the strategy map (not the measure orientated balanced scorecard) is to help the whole team, but especially the owner, keep a perspective on the big picture and allow them to step back from hand-on operational control. "Help me be more strategic" "Help them take more responsibility" are the two pleas I hear from these organisations. Actually it is usually about trust, but that is a far longer posting.

The third piece is usually not the scorecard of measures, but the investment profile of projects that need to be implemented to move the organisation forward, and the resource demands upon the organisation to deliver this.

Finally, the measures are useful, but only once presented in the context of the strategy as articulated by the future vision of the environment and industry, the strategy map and the programme of investment. They naturally fall out at this stage.

If you try and start with the measures (the Balanced Scorecard) the business thinks it needs, you end up down a rabbit hole of measures and targets that start to resemble the problems the NHS has created for itself: managing by measures, not measuring what you want to manage. You have to do all the thinking that I have described above, but it is never articulated, recorded or discussed. All that comes down is a control mechanism of measures without a context (but of course we were not trusted to know the the so that is just more of the same).

So, yes, yes, yes, the Balanced Scorecard can be used very effectively in small and owner managed businesses.

But, no, no, no, do not start with measures, otherwise you will just perpetuate the problems that the owner is trying to solve, such as how can I work on the business, and not in it? How can I trust my team? How can I be more strategic?

Am happy to discuss this with people if they want.

Phil

www.Beyondplanning.co.uk
www.excitant.co.uk
phil@excitant.co.uk
0870 420 7978

KPI Strategy workshop:
What is important for your organisation to measure, and How to construct meaningful KPIs

This is an advert more than a blog, but at least you will get to hear about it and talk to me directly

Are you concerned that your organisation is not measuring the right things to determine Performance and Alignment?

I am running a FREE KPI Strategy Workshop, with some colleagues about:

Providing Insight into

what is important for your organisation to measure

and how to construct meaningful KPIs

Over 90% of medium and large organisations have measurement systems in place to inform senior management of performance and to reassure the executive team that the organisation is aligning its activities to support corporate strategy. However, our research has shown that usually there is a disconnect between the information that senior managers receive and that seen by the executive team. The corporate strategy is probably on paper, was last looked at months ago, was never communicated past the senior management team, and is not a `living' document.

Your corporate strategy will likely have Quadrants, Themes or Major Objectives. If you were to place all of the activities that you measure into these boxes would you have some Themes without KPIs and some KPIs left over that don't underpin a Major Objective?

If so, you have a lot in common with most other companies. Measuring what people do is fine, but the fact that they know you are measuring them may change their behaviour in ways that may not be desirable.

If you are only measuring what you have the ability to measure, rather than what you want to manage, that may be fundamentally flawed and provide no insight to performance at all. What needs to be determined is what measures are important and how will you measure them? We don't know all of the answers, but we can explain how you can figure this out.

This free workshop on 24th July will help you understand some of these issues, and others, and help you get a clear picture of what you should do to determine what is important for your organisation to measure.

We will help you answer these issues:

• How to determine what is important for your organisation to measure?
• How to roll up KPIs in support of the overall corporate strategy?
• How to achieve balance and create forward looking KPIs?
• How to communicate the corporate strategy to everyone and change behaviour?
• What type of measurement framework is right for your organisation?

During the briefing, we won't necessarily answer all of your questions, but we can help you to better understand the underlying issues and provide insights into how you can answer these for yourself.

If you would prefer a one- on -one meeting, we would be delighted to arrange to come to your offices.

Who should attend?....

• Anyone who is part of the management or executive team who thinks this is important.
• Anyone who is part of the measurement process who wants to get this right or wants more insights into their management performance.
• Anyone who wants to hear from a specialist who has tackled these issues.

How much will this cost? Just 3 Hours of Your Time.

How to Book:
Via email info@rosetta-stone.co.uk
By phone: 01932 724492
By fax: 01932 770808

The event will be run at Egham near Staines

BOOKING HOTLINE01932 724492

Looking forward to seeing you there.

Phil

PS if you are interested in a version of this presentation, drop me an email.

Environmental strategy and an environmental scorecard for measurement

I have just been in conversation on a performance management forum and wanted to vent my spleen a bit.

The discussion was, the Balanced Scorecard needs another perspective in addition to financial, customer, process and learning and growth to represent the environment.

I argued that you could put any environmental measure for an organisation within this framework as a theme and not destroy its structure.

He argued that "I know you were being illustrative in your answer, but your reply does not address the significance of something like Kyoto and its impact on management reporting. IMO everyone who has an interest in PM should beware specifically of chapter 40 of that agreement which sets out some national level PI's related to the environment and sustainability. As I see it, the key point about Chapter 40 is that the PI's are defined for use at Government level, and Government will pass the necessary measures into law that will force organizations, profit and none profit, into reporting on them. Indeed Chapter 40 effectively demands such reporting be placed on the statute book of signatory nations with much the same level of precedence as financial reporting. The UK Government and other signatories have already implemented a number of measures as a direct result of Kyoto. Other Governments are doing the same kind of thing. Search for "Sustainability Report" on Google, and the first entry (I found ) links to a Canadian government site, a home page graphic of which clearly states "measuring sustainability"

I am not at all sure that sustainability reporting, as a global issue, fits into K&N's scorecard model, which is ultimately profit driven, as it seems to me that sustainability is more about managing something that has a more general social impact (although I accept entirely that profits will be affected and therefore can be linked in the classic K&N sense). That aside, given the level of effort being focused on activities related to such reports on matters, it seems to me that it is legitimate, if only on a practical data management basis, to have"Environment" as a fifth perspective.

So I replied:

"Ok, thanks for the detail - must admit I spent 30 seconds making up that model with 4 perspectives. So, having read your more detailed description,for which I thank you, I would like to emphasize three points and demonstrate them with an example based upon what you have written".

a) Being systematic, what is the system we are referring to? It is the corporate that is in the context of government legislation. The system boundary is the corporate. Customers, suppliers and the government are outside it. So are the lawyers. (We can do the strategy map for government late if you get them to pay me lots of money)

b) What you are describing is Just a Theme of the perspectives. In fact I spot 5 potential themes here - all of which illustrate that the perspectives apply . Along side this companies themes of making some sales, managing costs, complying with health and safely and possibly another 5 themes to do with the environment. They might have an interest in

i) monitoring the legislation to ensure they comply

ii) complying with the legislation

iii) Innovate around how they comply with the legislation

iv) report statutory compliance

v) use PR to influence their customers and investors.

PS having worked with environmental specialists in a water utility I have made this work in practice - I am not making this up. Now let's look at the perspectives:

Financial:
Well, there is the cost of compliance (i & ii), the cost of innovation (iii), the potential cost/risk of non-compliance (iv) and the value of improved cost of capital as well as the social costs of environmental failure/improvement (Just simply think triple line accounting here - it works fine)

Customers:
There seem to be at least 4;
- Actual customers that give money - real customers!
- People in the community potentially affected by
- who might incur the social cost
- Legislators/Government - who want you to comply or pay up
- Investors - who might be influenced to lower the cost of capital

Processes - and their potential L&G pieces

Well that is trivial from the themes now (you see clever design of the themes means that these things just fall out)

One for monitoring legislation - you will need the skills and contacts to do that (L&G)

One for compliance (and the cultural piece of embedding environmental thinking in the activities of production/maintenance (L&G)

One for Innovation/R&D - though you could add more depending on the detail you want - and or course developing the environmental or R&D skills (L&G)

One effective reporting - I put it here to distinguish it from the compliance - again audit skills or something (bear with me I make this up to illustrate the story)One for PR - you get the picture and can work it out yourselves...

As you can see, they are JUST THEMES of the strategy. I may not have perfect content, as they are illustration - the important thing is we are using these to tease out the underlying structure and system. They lie vertically across the four perspective quite comfortably and don't need another perspective, as you can see.

c) Someone out there will be wondering whether this is just compliance or how you differentiate yourself and at which level in the hierarchy of corporate scorecard this lot applies.

The answer is on about selecting levers of control in an organisation - is this about compliance, reporting what we have to do, differentiating ourselves or a core belief.

That is up to the management to decide.

Finally, just to emphasise - it is just a (vertical) theme. Otherwise you will introduce new (horizontal) perspectives for financial compliance,Health and safety, innovation, customer service, sales, cost reduction and every other potential theme of the strategy (as people amazingly do). Guess what when you ask how are these related to the other themes in a cause and effect framework - there is not an answer. Why - because its orthogonal.

Anyway we'll see how it goes.

Phil