7
Strategy Maps
Roadmap for Chapter 7 This is a good point in the book to pause and reflect both on where we’ve been and where we’re going. The early chapters provided background on the Balanced Scorecard, and how you can adapt the model to fit your government or nonprofit agency. We then explored the elements necessary to construct a solid foundation for your Scorecard effort: determining your “burning platform,” building your team, gaining executive support, and training, to mention just a few. Then we turned to the building blocks of any Balanced Scorecard: mission, values, vision, and strategy. Now, it’s on to Strategy Maps!
Describing his North African adventures, Mark Jenkins had this to say about maps in his book To Timbuktu: “Maps encourage boldness. They make anything seem possible.”1 And you thought a map was just something to get you from point A to point B! For many organizations, executing strategy can feel like an impossible task, one in which boldness, while often in short supply, is in great demand.
In this chapter, we’ll discuss the development of Strategy Maps. We’ll explore how these devices provide a powerful method of graphically describing your strategy, bringing your performance objectives to life, and boldly proclaiming your intent to implement your strategy. We’ll outline what a Strategy Map is, why you need one, and determine which perspectives are right for you. We’ll then conduct a deep dive into how you’ll construct your own Strategy Map. Step by step, instructions will be provided on everything, from whom to invite to the session to how to create objectives in each perspective to how you can review the completed Map with your stakeholders.
WHAT IS A STRATEGY MAP?
To help answer the question just posed, let’s break it down into two parts. First, we’ll examine the word “map,” and then we’ll take another look at “strategy.”
A map provides a graphical representation of the whole or part of an area. As we all know, a good map is essential to help us navigate unfamiliar terrain. Speaking of unfamiliar terrain, although I make my home in California, I’m originally from the province of Nova Scotia, in Canada. Perhaps some of you have visited my beautiful homeland. For those of you who have not, consider this an invitation. Let’s say for a moment you decide to follow my suggestion and plan to visit Nova Scotia during your next vacation. I suggest that if you fly to Nova Scotia, drive from Halifax, the provincial capital, to my hometown of Sydney, on Cape Breton Island. You’ll find the scenery breathtaking. Now look at the two maps I’ve provided of the province in Exhibit 7.1. With the map on the left, do you think could you find your way from Halifax to Sydney? Without some advance knowledge of the province, the answer is probably no. The picture becomes much clearer with the graphic on the right, because now, in addition to a map of the province, you have landmarks to guide you from place to place, simplifying your navigational challenges significantly. Following the landmarks will lead you to your chosen destination.
Let’s now return to the word “strategy.” Like your fictional visit to Nova Scotia, strategy is a new destination for most organizations, one to which they have never traveled. As much as it is discussed and debated, it is frequently not implemented with any degree of success. In many ways, strategy is reminiscent of the map on the left side of Exhibit 7.1. It’s a guide of where we would like to go, but the landmarks to guide us on our journey are missing. This is where performance objectives come in. The objectives on a Strategy Map serve as the landmarks on the road to strategy execution. Scorecard architects Kaplan and Norton explain: “Strategy implies the movement of an organization from its present position to a desirable but uncertain future position. Because the organization has never been to this future place, the pathway to it consists of a series of linked hypotheses. A strategy map specifies these cause and effect relationships, making them explicit and testable.”2 The “linked hypotheses” Kaplan and Norton reference are represented by the performance objectives you choose as translations of your strategy. With a Strategy Map in place, you possess a clear and concise one-page graphical representation, outlining what you believe is most critical in the effort to execute your strategy.
What are Performance Objectives?
Before you begin the development of your Strategy Map, I want to clarify the meaning of the term objective, since it is objectives that comprise a Strategy Map. Consider objectives a bridge that spans your strategy of broad overall priorities and measures, which are the quantitative means by which you will gauge success. Performance objectives describe what you must do well in order to effectively implement your strategy. They are more specific than what is contained in your strategy, but less precise than performance measures. Objectives typically begin with an action verb.
Exhibit 7.1 Landmarks are Critical to Any Map
Objectives translate strategic priorities that are often vague and nebulous into directional and action-oriented statements of what must be done to execute the strategy. The objectives are then further translated into more granular performance measures. It would be quite difficult to develop meaningful performance measures without the context established by objectives. For example, it is not uncommon for an organization to adopt a strategy of “maximizing people resources.” Given that approximately 75% of value in today’s organization is driven by intangible assets, developing the people in an organization makes great sense. Consider the dilemma facing Scorecard developers at an institution should they be required to leap directly from a strategy as broad as this to specific performance measures. Their choices are practically unlimited, and those measures ultimately selected may not represent the true essence of the strategy. In contrast, a focused discussion of what must be done well to capture the essence of the strategy—in other words, the objectives on a Strategy Map—will lead to more focused and refined performance measures. Upon reflection, this organization might determine that maximizing people means “increasing skill sets,” “improving communication,” and “building organizational alignment.” These objectives on the Strategy Map now set the stage for precise measurements appearing on the Balanced Scorecard.
Exhibit 7.2 graphically displays the bridging function of objectives and provides a sample of action verbs.
Why You Need a Strategy Map
As discussed in Chapter 1, Strategy Maps are powerful communication tools, signaling to everyone in the organization the critical drivers of success and providing a means for all stakeholders to determine how they will contribute to strategy execution. Well-constructed Strategy Maps breathe life into the stale rhetoric that tends to populate most sleep-inducing strategic plans, those with 50 to 100 pages of graphs, charts, and endless eight-point fontcomposed paragraphs. Most employees will probably never have the chance to thoroughly examine your strategic plan, but even if they were granted that privilege, given the state of most plans they’d probably take one suspicious glance at the weighty tome, make sure nobody in their vicinity was looking, and then toss the thing in the nearest dusty corner.
A Strategy Map, on the other hand, can transform employee understanding and buy-in of your strategy since a well-designed map combines text and graphics, as well as colors, and is consistent with your culture. I’m not suggesting your employees need pretty pictures with small words, not at all. I’m simply putting forth the notion that, given the “noise” in most organizational environments, people need something that cuts through the clutter, a tool that dismisses with the usual jargon-filled memos and presents your story in a clear, compelling, and simple fashion. Strategy Maps do just that!
Exhibit 7.2 Performance Objectives
Author John Gardner suggested that “most ailing organizations have developed a functional blindness to their own defects. They are not suffering because they cannot resolve their problems but because they cannot see their problems.”3 In a very literal fashion, working in concert with the measures on a Balanced Scorecard, Strategy Maps bring problems and issues from darkness into light, allowing them to be combated and mitigated. The Map acts as an early warning system for the organization’s strategy, signaling trouble when indicators suggest a problem with any element of the plan that has been designed to elevate the organization to prosperity.4
An example Strategy Map of a city library is shown in Exhibit 7.3. I emphasize the word “example” because as you’ll discover, no two Strategy Maps look the same, which is exactly what we would expect since each document should faithfully translate the unique strategy of the organization it represents.
Exhibit 7.3 Example Strategy Map of a City Library
DEVELOPING YOUR STRATEGY MAP
Feeling a little parched? I’ve got a fire hose of information coming your way over the pages ahead that will definitely quench your Strategy Map thirst. We’re going to completely dissect this topic into its critical parts, providing all the tools you’ll need to develop a powerful Strategy Map that clearly and convincingly tells your story.
I’m sure you’re anxious to build your Map, but before the first scented scribbles of a marker hit a flip chart in your mapping workshop, we need to consider some prerequisites to that process. Our first step is pondering the fundamental question whether in fact the four perspectives of performance are right for you. With that issue put to rest, we’ll engage in a review of background materials, the careful deciphering of which will greatly ease the task of creating your Strategy Map. The bulk of the chapter is devoted to helping you develop objectives in each of the four standard perspectives of the Strategy Map, and we’ll look at possibilities and anecdotes for each. The concluding sections of the chapter are devoted to critically examining your work of art, considering how many objectives are appropriate, and most importantly, the value of simplicity in telling your strategic story.
CHOOSING YOUR STRATEGY MAP PERSPECTIVES
Are the Four Perspectives Right for You?
A fundamental question to ask prior to building your organization’s Strategy Map is, “which perspectives will we use to tell the story of our strategy?” As you know, Scorecard architects Kaplan and Norton originally conceived of four perspectives: Financial, Customer, Internal Processes, and Employee Learning and Growth. However, they did so with the private sector in mind. As use of the Scorecard methodology has evolved and expanded over many years, the founding fathers realized their original perspectives may not be appropriate for all organizations. They have since suggested the four perspectives “should be considered a template, not a straitjacket.”5
Ultimately, the choice of perspectives should be based on what is necessary to tell your strategic story. When you examine your strategy and attempt to translate it, who or what are the key constituents necessary to describe it? The original four perspectives are broad enough to capture most constituents. However, if you feel your advantage derives in large measure from a group or area not represented, you may wish to develop an entirely new perspective. For example, you may conclude that your ability to create value results from your innovative use of strategic partnerships. In that case, you may choose to include a perspective devoted to that topic, thereby signaling its extensive worth to your agency. Suppliers and elected officials represent other groups that could, depending on their importance to your success, be assigned distinct Scorecard perspectives.
As important as the articulation of custom perspectives is, don’t make the mistake of creating a “stakeholder Strategy Map.” This model outlines everyone even remotely connected to your organization and virtually ignores the other Scorecard perspectives. The danger in doing this lies in missing the “how” of success. You may list noble objectives related to every group, but remember that a well-constructed Strategy Map dictates how you’ll achieve success through the interplay of processes in the Internal Processes Perspective, resources in the Financial Perspective, and enabling infrastructure in the Employee Learning and Growth Perspective. When combined, these objectives will drive the success you desire for identified stakeholders. The true test is whether you can easily intertwine your perspectives to tell a coherent story. Stand-alone perspectives that describe a constituent group but fail to link together with the other perspectives don’t belong on a Strategy Map.
Interestingly, one study of public sector Balanced Scorecard usage discovered that approximately two-thirds of respondents used the same four perspectives typically found in the corporate world.6 However, as noted, many organizations find it necessary to make modifications to the Scorecard perspectives in order to fit their culture or unique circumstances. Frequently, the changes are in name only, with new monikers more readily accepted within the organization. For example, the Customer Perspective may be referred to as “Serving the Customer,” or the “Client Perspective.” The Financial Perspective is frequently renamed the “Budget Perspective,” or “Resources Perspective.” Internal Processes are sometimes labeled “Operations,” or “Enabling Processes.” Finally, the Employee Learning and Growth Perspective may be repositioned as “People Enablers,” “Building for our Future,” or “Internal Infrastructure.”
One potential change to the Strategy Map nomenclature warrants special treatment—the placement of a possible Mission perspective at the top of the Map. That provocative topic is addressed in the next section.
Mission May Appear at the Top of the Strategy Map as a Fifth Perspective
Unlike your colleagues in the private sector, public and nonprofit organizations don’t exist to produce wealth for shareholders. Financial objectives still have a place in your Strategy Map, and financial measures should be a part of your Balanced Scorecard, but they don’t represent the final destination you are striving toward. You exist to serve a higher purpose, for example, to “improve the prospects of youth living in low-income communities,” or “reduce discrimination.” Therefore, you might consider placing a mission objective at the top of your Map and Balanced Scorecard to signify the socially important goals you are striving toward.
Some public and nonprofit agencies may hesitate to include such lofty objectives on their Strategy Map, claiming “we don’t have total control over our mission,” or “we can’t influence the outcomes.” Both points have merit, but should not preclude you from citing such objectives on your Strategy Map and subsequently attempting to measure the impact you are having on your key constituencies through your Balanced Scorecard. It’s only through the act of measurement that you can gauge real difference in the lives or circumstances of those you aim to serve. Of course, you won’t achieve your mission overnight, and in fact may see only periodic movement. This is precisely why the other perspectives of the Strategy Map and Balanced Scorecard are so vital. Monitoring performance, and learning from the results, in the Customer, Internal Process, Employee Learning and Growth, and Financial perspectives will provide you with the short- to medium-term information you require to guide you ever closer to achievement of the mission.7
REVIEWING BACKGROUND MATERIALS ON STRATEGY MAP RAW MATERIALS
Gathering Background Information
Very soon, you and your team will gather enthusiastically around a conference room table, and someone will say, “Okay, so what are our key objectives?” The first few will come with great ease—after all, you’re experts on the operations of your organization and undoubtedly have years of experience. However, after the initial euphoria that results from identifying the “no-brainer” objectives, the room will get quiet. Identifying the true drivers of your success is more difficult than it first appears. For that reason, it’s important to provide the team with as much background on the organization as you can reasonably muster given your time and staff resource constraints. Each of the sources outlined here will provide input that may be used when developing the Strategy Map:
Mission statement. Chapter 5 outlined the importance of mission to the Balanced Scorecard system. Your objectives should act as faithful translations of the sentiments reflected in the mission.
Values. Has your organization established its guiding principles?
Vision. The vision represents a word picture of what the organization ultimately intends to become. Use this picture of the future to help populate your Map.
Strategic plan. Chapter 6 was dedicated to the discussion of strategy and strategic planning. Use the broad priorities articulated in your strategy to guide the development of your Strategy Map.
Annual plans. Many nonprofits, and an increasing number of public agencies, will issue annual plans or reports to key constituents. The document will outline key stakeholders, financial resources, and current metrics used to gauge success. All can be considered raw materials for the Strategy Map.
Consulting studies. Consultants have been known to generate their fair share of paper. Fortunately, a lot of it contains valuable information that may provide relevant background material for your review process.
Mandates/bylaws. What are the parameters that guide the operations of your organization? Your Strategy Map should be firmly rooted in reality, as reflected by the mandates within which you’ve been chartered to operate.
Organizational histories. Chapter 6 discussed the importance of developing context for the strategic planning effort by looking back at your organization’s history. The story often reveals programs and services you’ve offered, milestones reached, any shifting priorities, and external events such as demographic or legislative changes. When time comes to populate your Strategy Map, this trek down memory lane may yield many useful insights.
Customer surveys. Taking the pulse of your key customers is a popular and proven technique in the private, public, and nonprofit sectors. Information gleaned from these surveys may lead directly to Strategy Map objectives.
Published studies. Both the nonprofit and public sectors are closely scrutinized by ravenous watchdog groups waiting to pounce on your tiniest of missteps. Despite the often-critical nature of the material these groups produce, it will undoubtedly come in hand during the development of a robust Strategy Map.
Benchmarking reports. One of the best attributes of the public and nonprofit sectors is their willingness to openly share and learn from colleagues. This is a refreshing change from the secretive and hyper-competitive world occupied by most for-profit enterprises. Benchmarking studies are available on a wide variety of sectors and functional specialties. While these documents provide useful background, and may stimulate discussion of potential objectives, I caution against a reliance on them. Your Strategy Map should tell the story of your strategy. The objectives you choose to represent that strategy may in some cases mirror those of other organizations, but it’s the determination of the key drivers for your particular organization that will ultimately differentiate you from other agencies.
The sources of information cataloged above are not intended to represent an exhaustive list, but they will definitely provide you with a much needed leg up as you begin to contemplate the objectives that will comprise your Map. As you begin collecting this material you’ll notice its volume increasing rapidly, and before you know it, you’re surrounded by a wall of reports, plans, and studies reaching halfway to the ceiling. Managing the prodigious pile of virtual and tangible material you’ll accumulate throughout the implementation requires a filing system of its own. I have provided ideas for a filing structure you can quickly establish to tame the data beast before it’s unleashed upon you and your team:
A Filing System for Your Balanced Scorecard Implementation
No matter how small or large your organization, any initiative of this magnitude is sure to generate a lot of information. Simplify your efforts by creating both paper and electronic filing methods to capture, store, and share the knowledge you develop. I suggest creating binders and electronic file directories that mirror the specific steps in your plan. For example, you may have a directory or binder titled “Background Information.” Tabs in your binder and subdirectories on your computer could be labeled, “Executive Interviews,” “Strategy Information,” and so on.
The electronic filing is especially important since each member of your team will have preferred methods of naming and storing files. Develop a process everyone can agree on and insist that all relevant files be posted on a shared drive the whole team can access. Consider adding a date to every file created, or use another form of version control, to ensure you’re always working with the most recent copy of your document.
For those of you with the resources, why not create a portal to capture all of your Balanced Scorecard information. That’s exactly what the Information Technology Division of Worcester Polytechnic Institute did, creating a shared space that houses all Scorecard information including discussion groups and the latest announcements. A screen shot from their portal is provided in Exhibit 7.4.
This may seem like a small and logical step, but in my experience it is often overlooked until an abundance of documentation has been created and nobody seems to know where anything is located. Developing a Balanced Scorecard is tough enough; don’t make it even tougher by hampering your efforts through poor data management.
One final caveat regarding the review of background information: Look for consistency in the messages you’ve discovered. For instance, if yours is like most organizations I’ve either worked for or consulted with, you’ll unearth a number of documents that reference your mission or vision statement. Do they all say the same thing? Some discrepancies are easily swept aside in the name of timing, newer documents simply containing revised and updated statements. If, however, you dig a bit deeper and find there has been no reconsideration of your mission for the past ten years but you’ve found at least two different versions, it’s time to toss the red flag in the air. Inconsistency is the silent killer of organizations: saying one thing but doing another, providing mixed messages, and so on. In crafting a Strategy Map, and later a Scorecard of measures, you’re attempting to create a harmonious strategic story that faithfully translates your mission, values, vision, and strategy, the critical building blocks we covered in Chapters 5 and 6. If you’re finding multiple versions of each, you should give serious consideration to calling a time-out on the Scorecard implementation and going back to the drawing board with these raw materials. To invoke one last cliché in ending this section, everyone has to be singing from the same sheet of music should you hope to create a system that truly guides thought and action within your four walls. If you’ve discovered inconsistencies, correct that deficiency now.
Exhibit 7.4 Sreen Shot from “My WPI,”
Conducting Interviews to Gather Executive Input
The sources outlined in the previous section will help you unearth many possible objectives for your Strategy Map, and, later, measures for your Balanced Scorecard. But there is one additional source that may be more potent than any other: the knowledge, experience, creativity, and desire that resides within the minds of your senior leadership team.
Interviewing your top leaders provides a number of benefits: First, as noted previously, you’ll receive your leaders’ input on the key drivers of your success. Second, this is a tremendous opportunity to directly engage your leadership in the process. To earn their support for the Balanced Scorecard implementation, they must first learn what this tool is all about, how it can produce results, and what specifically it can do for your organization. This is your chance to answer all these questions, and more—whether they’re asked or not! Interviews are also a great way to detect potential trouble spots that may lie ahead. You’ll be able to tell after a short period of time whether a leader is truly committed to the idea of performance measurement and the Balanced Scorecard system or is merely paying it lip service. A quorum of lip servers will necessitate action on your part to demonstrate the value of the tool.
To get the most out of these interviews, it is absolutely critical that your leaders feel comfortable and be willing to share. For that reason, it’s preferable to have the interviews conducted by an outside facilitator or consultant. While the questions are certainly not controversial, the answers provided could shed light on some sensitive topics and lead the executive to take a position of reticence should they not feel psychologically safe in divulging such information to a Scorecard team member. Using a consultant is not a steadfast requirement, however. Many fruitful executive interviews have been conducted by members of Scorecard teams. Again, the key to success lies in ensuring that the executive feels psychologically safe in sharing information with the individual. A Balanced Scorecard team member who is well respected throughout the organization, and has ample experience liaising with senior leaders, will normally be welcomed openly.
I suggest this outline for your interviews, discussed in the following subsections.8
Review Purpose In most implementations, your executive team will be among the first people in the organization to receive Balanced Scorecard training, and you don’t want to expose this time-constrained team to 20 slides of theory. However, it is important to at least display the Scorecard framework you’ll be adopting and to solicit questions. Perhaps this executive was unsure about the meaning of an objective, or didn’t quite grasp what was meant by a Strategy Map. This is the time to win his or her support by providing clear and concise answers to any and all outstanding questions. Also take the opportunity to share the objectives for the interview (receiving the executive’s input); briefly outline what will be covered and define the expected duration.
Mission, Values, Vision, and Strategy These are the building blocks of the Strategy Map and Balanced Scorecard so it’s important to determine how executives feel about each. Unless directly asked, don’t share what you’ve uncovered in your research. You’re attempting to determine how your leaders view these items and, as discussed earlier, whether alignment exists among your senior team. Ask the following questions:
• Has the mission for the organization been defined? If so, what is that mission?
• What core values are essential in pursuit of the mission?
• Has the organization developed a vision statement? If so, what is the vision?
• Which key strategies will lead us to the achievement of our vision?
You may need to define specifically what you mean by these terms in order to receive any feedback. Mission, values, vision, and strategy are often confused even at the highest echelons of the organizational hierarchy. If confusion seems to be reigning, consider directly asking these questions:
• Why do you feel we exist as an organization? (mission)
• What core values do we hold? (values)
• Where do you see us in 5, 10, or 15 years? (vision)
• What must we do to reach that desired future? (strategy)
The goal of this component of the interview is to determine the level of consensus that exists across the organization in relation to mission, values, vision, and strategy. Should you find that every executive is saying something different, it will be exceedingly difficult to engineer a Strategy Map that suits all of their individual preferences and perceptions. In this case, reverting back to a discussion of mission, values, vision, and strategy at the senior level may be necessary before the implementation can continue.
Balanced Scorecard Perspectives By this point in your implementation, you should have determined the perspectives that will comprise your Strategy Map and Balanced Scorecard. Ask the executive for his or her input on each of the four (assuming you’re using four) perspectives. Use this component of the interview to compile the executive’s thoughts on which objectives and measures are critical to the organization’s success.
• Customer. Who are our customers (or clients), and what must we do well to satisfy them?
• Internal Processes. At which processes must we excel if we are to meet customer and client needs?
• Financial. Financially, what is most critical to us; growing revenue, enhancing productivity, utilizing our assets more efficiently?
• Employee Learning and Growth.
• What skills or competencies do we require to succeed and execute our strategy?
• Do our employees have the technology tools they require to meet customer requirements, and execute our strategy?
• Do we have the proper organizational climate (culture, alignment, teamwork) necessary for success?
• Which measures do we currently use to gauge our success?
The last question does not relate to an individual perspective but seeks to determine how this executive currently tracks success. Objectives and measures repeated consistently here should form part of your Strategy Map and Scorecard.
Implementation and Use In this phase of the interview, you’re attempting to move away from the Scorecard implementation as an academic exercise to probe what it will actually mean for your organization. A constant communication theme for Scorecard-implementing organizations has to separate the idea of the Balanced Scorecard as a theoretical construct from that of the tool as a practical management solution. Ask these questions:
• How would you like to see the Balanced Scorecard used here?
• What are some of the barriers we may face in implementing the Balanced Scorecard, and how do we overcome them?
Chances are, unless they campaigned for the Scorecard, this is the first time your executives will be pressed to consider how they would like to use the tool and how the roadblocks might be overcome. This is valuable input for a couple of reasons. One, the answer to “how would you like to see the Scorecard used?” will provide some parameters for the actual Strategy Map and Scorecard the team designs. If, for example, five out of five executives say they want a complex management reporting tool, then your Scorecard development team will most likely construct a Map and Scorecard consisting of many objectives and measures. Conversely, if “communication tool” is the answer most commonly cited, a Strategy Map and Scorecard with fewer objectives and measures will most likely satisfy executives. Asking executives which barriers you face not only challenges them to enumerate issues, but puts psychological pressure upon them to be part of any solution.
Interviews should be scheduled for one hour, and questions limited to between 10 and 15. Always choose questions that are most vital for your implementation. You don’t want to lose the rapport you’re establishing with an executive by stopping them midsentence with, “Okay, I’m sorry but we have to move on now.” Of course, you have to ensure the interview remains focused as well, which can sometimes prove to be a delicate balancing act. For example, I like to start my interviews on a casual note, engaging the executive on a comfortable topic like the weather, general business news, or sports. This method can be a great icebreaker, but there have been occasions in which 15 minutes have passed and I’m still hearing about the executive’s last round of golf! Be on guard for “hot button” issues as well. One executive I interviewed felt passionate about a casual dress policy. Suffice to say that at the end of our time together I knew far too much about the organization’s dress code and too little about its key objectives!
Once all of the interviews have been completed, have your consultant or Scorecard champion sort, summarize, and compile all responses. Names, of course, will be removed, as will any quotes that could easily identify a specific individual. Distribute the condensed notes to the Scorecard team for reference purposes during your development sessions. Executive interviews can prove to be tricky business. To help you through the process, a number of tips are provided in Exhibit 7.5.
Exhibit 7.5 Tips for Conducting an Effective Interview
DEVELOPING STRATEGY MAP OBJECTIVES IN EACH PERSPECTIVE
In the pages ahead, each perspective of the Strategy Map will be explored. Based on my years of experience in the field, during which I’ve seen hundreds of Strategy Maps, I will provide suggestions for possible objectives to populate each perspective. Don’t feel, however, that your Strategy Map must include the objectives I cover. While I would expect a degree of overlap, since the observations that follow are based on extensive practical experience, you must never forget that your Strategy Map is just that, yours. The objectives you choose for each perspective must represent translations of your strategy, and depict the story you’re telling. Thus, it won’t be surprising to discover that you’ve created unique objectives or considered elements of the Mapping experience not outlined here.
DEVELOPING OBJECTIVES FOR THE CUSTOMER PERSPECTIVE
Who is the Customer?
First things first. Prior to outlining possible objectives for this perspective, you have to wrestle with what may be the most difficult question you’ll have to answer throughout the entire Balanced Scorecard process: Who is your customer? Back in Chapter 2, I noted that in the public and nonprofit world, unlike the for-profit arena, different groups design the service, pay for the service, and ultimately benefit from the service. This web of relationships makes determining the customer a considerable challenge.
The initial, and most simple, step to take in answering the question of who is your customer is to list all possible candidates for your nonprofit or public sector agency. Six short hours later and you’re ready to move on. Just kidding ... sort of. Once you have the inventory of possibilities exhausted, I would offer the following two questions to serve as filters through which you should analyze your list:
1. Which of those listed fit the actual definition of a customer? To answer that, you’ll need a definition of customer, and I would suggest you use this: “A person or group that directly benefits from our products or services.” The emphasis in that definition rests squarely on the word “directly.” There are many people or groups who may indirectly benefit from the important work you’re undertaking, but your task here is to raise the intellectual bar to a much higher level and critically examine who is directly impacted by your work. An example should help clear things up. I once worked with the head office of an international relief agency that was charged with, among other things, fundraising and then dispersing those dollars and goods. The actual work of the agency was carried out by national offices situated on the ground in the mostly third world where they operated. When constructing their head office Map, the spirited debate duly began: Was the customer the poor child in a developing nation that ultimately received the food or clothing provided? Or, was it the national office that knew the situation and was able to allocate available resources based on that knowledge? After lengthy discussions, the team decided it was the national office that directly benefited from their service, in this case fundraising and support. Their rationale was convincing: If they provided the national offices with resources (money, people, support, information), the national offices could then effectively serve the children that urgently needed the care. This was the most efficient chain of events to ensure an effective use of donor funds and, most importantly, positive outcomes for the children. The Girl Scouts of the U.S.A. (GSUSA) offer another example. Stroll the corridors of their headquarters and you’ll discover cubicles decorated with scouting paraphernalia, walls adorned with pictures of girl scouts, and materials throughout that leave little doubt about whom they exist to serve—the girls. Yet, those same girls are not their customers. Rather, their target customer is the local council that facilitates delivery of the Girl Scout program.9
2. Which person’s or group’s disappearance would cause us to be irrelevant or unnecessary? Many organizations, for instance, will include funders as part of their potential database of customers, and some will argue vehemently that since this group is providing the actual cash necessary to sustain operations on a day-to-day basis, they have to be customers. But if your current funders or donors went away, would that force you to close your doors for good? I will argue that it would not. Chasing alternate revenue streams is a distinct possibility for most, if not all, public and nonprofit agencies. Pursuing grants, selling products or services, and offering consulting assistance, are just a few of myriad possibilities for enhancing coffers that deviate from traditional sources. Apply this filter to all of your potential customers and you are sure to winnow the list in a hurry.
To borrow once again from our discussion in Chapter 2, tackling this question head-on and arriving at consensus on an answer may represent one of the most significant benefits you’ll derive from implementing the Balanced Scorecard. A failure to determine the true customer could lead you right down the slippery slope to an “all things for all people” approach that eventually means mediocre service for everyone. However, opening the envelope and finding the answer to this query will be as refreshing as a cool breeze on a stifling mid-summer afternoon. Allocating resources will be clearer, assigning people to tasks can be done in a more focused and strategic manner, and all organizational conversations can center on serving the identified customer.
I love being a consultant: There’s always a “but” conveniently located somewhere at the periphery of every possible discussion, just lurking about waiting for the right time to pounce. This situation, I’m afraid, calls for the unleashing of a “but.” Having said everything I did about isolating the customer, I’m not suggesting you must engage in protracted discussions that could take days and many cases of Red Bull to finally experience the “aha!” clarity that comes from finding the one final answer to the question of who is the customer. Some clients will determine more than one customer group that is vital to their success and thus include two in the Mapping and measures discussions. I know of at least one nonprofit Balanced Scorecard Hall of Fame member (yes, there actually is a Balanced Scorecard Hall of Fame, but it’s virtual—no stately museum-like building, guided tours and a gift shop—yet) that has included three customers in their Strategy Map. The point is this: Don’t dilute your efforts by introducing on the Strategy Map every single person or group that holds even a remote stake in your success. The Balanced Scorecard is concerned primarily with translating strategy, and at the core of strategy we find an elusive pearl, one all organizations should strive to uncover: focus.
What Do Customers Expect or Demand?
Once you’ve tamed the “who is the customer” beast, and assuming your team members are still on speaking terms, you’re ready to move on and create objectives for your target audience. Start the process by simply asking what those customers expect or demand from you as an organization. Timely service, access to information, low costs of doing business, enhanced functionality of products and services, and knowledge are all possible contenders.
Completing this exercise will require you to have a deep knowledge of customer wants and preferences, and distinguishing between those two elements is an important area to contemplate as you’re devising your Map. Once again, the issue is focus: Recall that strategy is as much about what not to do, as it is what to do. As you’re getting to the bottom of say, your fifth flip chart page of customer demands, hopefully someone will stop the dance and say, “We can’t possibly do all this!” No you can’t and no, you don’t want to because doing so would be in direct violation of the laws of strategy to which you’re most likely precariously clinging at this point. Go back and review your list with the precision of a Swiss watchmaker, carefully considering each item to determine whether it is a legitimate customer expectation and fits with your ongoing strategy.
Assumptions should be continually challenged as you ransack your way through the pile of possible customer expectations lying before you, with all preconceived notions left at the doorstep. As an illustration of assumption busting, I’ll end this section with a story about one Los Angeles entrepreneur who discovered that fixing a leaky pipe isn’t the only thing people want from a plumber.
Mike Diamond was frustrated. He had established himself as technically savvy—able to fix in a jiffy anything that leaked, burst, or ruptured—but his plumbing business was stagnant. That’s when he had an epiphany. Diamond recalled the image of plumbers in popular culture, epitomized by the Dan Akroyd character in Saturday Night Live famous for his, how shall we say this delicately, “plumber’s smile.” Plumbers were often considered wrenchwielding Neanderthals with all the polish and refinement of a Roman Gladiator. Diamond decided the industry, or at least his company, was ripe for an image change—the “Smell Good” campaign was born. All Mike Diamond plumbers would now show up at your house on time, cleanshaven, wearing a crisp white shirt, and donning fresh white booties lest they leave a stain on your floor. The response was astounding. Mike Diamond has become the largest plumbing contractor in Los Angeles and has been called “L.A.’s most famous plumber.” Customer referrals are now the number one source of new business. Determining what customers really want unlocked the mystery, as Diamond notes: “The key to this growth is that we listened to our customers and began to measure ourselves like they did: fixing the leak was the least important part of the service.”10
Customer Value Propositions
Value proposition is a term frequently bandied about in the for-profit world. In that sector, many organizations have embraced the work of Michael Treacy and Fred Wiersema, as articulated in their book The Discipline of Market Leaders. Exhibit 7.6 outlines the following three value disciplines they have seen used in practice:
1. Product Leadership. These organizations constantly push the envelope of product and service design. While you might expect to pay a little more for their offerings, you expect a superior product or experience. Sony is an example of a product leader.
2. Operational Excellence. Wal-Mart is the classic operationally excellent company. You probably don’t shop there for outstanding customer service or cutting edge products. What you expect is a huge selection and great prices. They can offer you this value because of flawless execution of hundreds of operational processes affecting your store experience.
3. Customer Intimacy. Organizations pursuing a customer intimacy strategy strive to provide total solutions to customer needs. Rather than focusing on a transaction as a one time event, they strive to build long-lasting relationships with customers. Home Depot prides itself on providing helpful solutions to customers’ needs.
Exhibit 7.6 Customer Value Propositions
The question is, do the value propositions apply to nonprofit and public sector organizations? The answer is yes. All organizations, regardless of structure, must attempt to forge meaningful bonds with their customers. This is the case even if your service is currently a monopoly. Hence, customer intimacy readily applies to governments and nonprofits. Operational excellence too, is a natural fit. Given shrinking funding and increasing demands, efficient internal operations are a must should you hope to continue to garner the support of your constituents. Finally, even product leadership is possible in public and nonprofit sectors. Approaching your customers in a new way, providing new services to meet demands, and creatively applying technology to simplify the customer experience are all examples of product leadership propositions. The Michigan Department of Transportation used the notion of value propositions when developing their Balanced Scorecard. They described the benefit this way: “Using the value proposition concept was one of the most insightful pieces for us. We learned a lot about things we could do more of, and it drove home more quickly the importance of building relationships, communicating value, and focusing on innovation. It’s not only applicable, but was one of the real benefits of doing this.”11
Do We Need to Focus on One Value Proposition?
When the idea of value propositions hit the mainstream in the mid- to late-1990s, it was quickly applied by those organizations developing Strategy Maps and Balanced Scorecards. The challenge of identifying a value proposition and determining appropriate objectives and measures seemed very well suited to the demands of the Customer Perspective. However, organizations quickly realized they could not focus exclusively on one value proposition to the exclusion of the other two. Rather, they concluded, at least a baseline of acceptable performance must be achieved in two propositions, with a focus of efforts devoted to the third.
Take Wal-Mart as an example. They have to be considered the very exemplar of an operationally-excellent organization, with their laser-like focus on costs and productivity. However, in a strategic shift that signals a transition to the borders of both customer intimacy and product leadership, they recently announced a plan to drop their one-size-fits-all approach at stores across the country. Now, the retailer will custom-fit their merchandise based on demographic patterns of the communities they serve. Specific store designs and product placements have been selected for African-American shoppers, Hispanics, empty-nesters, suburbanites, rural residents, and even affluent customers.12
Engaging in the value proposition discussion and, inevitably, debate is an important component of the Customer Perspective objective setting experience. In my travels, I’ve found that most organizations have not sufficiently examined this enabler and thus have not exploited the value that comes from a clear emphasis on how you choose to create value for your customers. As with mission and vision, the shared understanding of a value proposition can serve to energize the entire workforce and provide the impetus for improved decision-making, resource allocation, and strategy execution.
DEVELOPING OBJECTIVES FOR THE INTERNAL PROCESS PERSPECTIVE
If your aim is to drive continuous value for customers and clients, and ultimately work towards your mission, process excellence is a must. Every organization is unique and will derive value from a different combination of processes. However, there are several core processes you should consider when developing objectives for the Internal Process Perspective. Each is discussed on the pages that follow.
Understand Your Customers
A researcher in the private sector recently conducted an online survey of a number of well-regarded companies asking them, among other things, “Do you understand your customers?” A paltry 25% of the respondents believed they did. In a related study, participants were asked to identify the most important capabilities that companies could acquire to trigger a new wave of growth. Topping the list of responses was “capabilities to understand our core customers more deeply.”13 It’s a fundamental, but often disregarded, premise of successful operations: To develop meaningful products and services, and to satisfy customer expectations and demands, the first step is to simply understand customers—their composition, wants, preferences, and trends. Pulling back the curtain on this baseline exercise creates context for product and service development and delivery.
Innovate Constantly
Your customers are changing, the environment in which you operate is changing, your own staff is undoubtedly changing, the question is; Are you responding? Constant innovation must be built into every organization, from the smallest local nonprofit to the largest federal government department. Embracing the status quo is no longer an option for organizations that wish to be relevant today, tomorrow, and years into the future. Here are some characteristics practiced by organizations excelling at the art of innovation:14
• Innovation is treated as a process. A structured process is put in place for the systematic practice of innovation. This imposes a discipline and allows for measurement, and ultimately, improvement.
• Cross-functional teams are used. Leading innovators recognize that creative insights are often struck from the eclectic exchanges among participants representing every discipline.
• Customers are at the center. Organizations committed to innovation learn primarily from their current customers and clients, analyzing their needs, wants, and “must-haves.”
• Support passion and creativity. Some pundits describe the role of leadership as that of establishing the conditions for success to flourish, and then getting out of the way. Innovating organizations recognize this tenet of leadership and put in place structures and environments conducive to creativity.
Organizations excelling at innovation also tend to value the concept of experimentation, recognizing that while not every new idea will represent a potential breakthrough, many seeds must be planted if you hope to reap a bountiful harvest. As one staffer at the National Association of Counties (NACo) colorfully put it: “We think of programs as pancakes. You ought to be able to throw the first two away.”15 These agencies are willing to burn a few flapjacks in the quest for the next big thing. Of course, not all ideas prove to be successful. Even those occupying the loftiest positions in corporate America occasionally stumble. Take IBM that once patented a system for taking airborne restroom reservations. U.S. patent #6329919—now, sadly, the former patent #6329919—was granted on December 11, 2001, bearing this summary: “The present invention is an apparatus, system, and method for providing reservations for restroom use. In one embodiment, a passenger on an airplane may submit a reservation request to the system for restroom use. The reservation system determines when the request can be accommodated and notifies the passenger when a restroom becomes available. The system improves airline safety by minimizing the time passengers spent standing while an airplane is in flight.”16 I don’t know, from the cramped confines of 23B in which I often find myself, this sounds like a great idea to me. The point is: With their storied history of novel ideas and approaches that can be traced all the way back to founder Thomas Watson, IBM didn’t let this minor setback derail their innovation engine in the least.
We tend to focus on the end result of innovation: the tangible item that exits the process such as shiny new function-packed gadgets, or transformative services executed flawlessly by extensively trained personnel. What precedes these breakthroughs, of course, is innovation in thought. Our challenge every single day we roam this planet is to critically examine the landscape around us, eyeing it with a fresh perspective in the quest to perhaps see what really lies before us for the very first time. Doing so can yield remarkable results. Television personality and über entrepreneur Donald Trump describes how such a paradigm shift once saved him millions of dollars.
Overlooking Trump’s golf course in California and offering unobstructed views of the Pacific Ocean is a beautiful ballroom, designed to accommodate high-end corporate functions and society weddings. Unfortunately, the room was unable to house many of the functions originally conceived during the design phase because it was simply too small, holding less than 300 people. Wishing to avoid the now famous cry of “you’re fired!” delivered in a dark and cavernous boardroom from their demanding boss, Trump’s eager management team set about to solve the problem. Their solution: Enlarge the ballroom. Sounds simple enough, but Trump recognized that this fix would translate to months of chasing down permits, construction nuisances for guests, and millions of dollars drained from his coffers. Contemplating his options in the ballroom one sunny afternoon, Trump noticed a woman experiencing difficulty getting up from her chair. The chair was very large and she was having a hard time extricating herself from it while simultaneously moving it away from the adjacent table. Trump looked around and immediately noticed the room was filled with these oversized chairs. Why not remove them and bring in smaller chairs? This simple solution not only saved him millions but in the end enhanced revenue. The company earned more money selling the old chairs than it spent on the new smaller versions, and the room could now comfortably hold more than 440 people. Aspiring Apprentices should keep this story in mind!
As a final tribute to the power of innovation, consider the case of the Youth Voice Collaborative (YVC).17 An innovative after-school program of media literacy and leadership training, YVC provides young people between the ages of 13 and 18 with the information they need to become critical consumers of media and the skills to create and distribute messages that reflect their realities. This innovative idea was the brainchild of the Boston YWCA, and resulted from their commitment to getting at-risk kids off the streets after school hours. Upon hearing one young woman explain that her life was changed by “walking into a boys and girls club and picking up a camcorder,” YWCA president Marti Wilson-Taylor sprang to action. She spoke to other kids, organized a collaborative effort with other youth service agencies, and set about to develop a program dedicated to the natural attraction of kids and media. The YWCA had never done anything quite like this in the past, but was committed to improving society and used innovation to help them achieve their goals.
Market and Brand Yourself
Getting the word out about your organization has never been more important. However, it seems every organization is clamoring for attention these days, leaving precious little room for individual voices to cry out above the din. Marketing is a long-standing method of telling your story, your way. Here are the “four Ps” of marketing, each of which could lead to important performance objectives on your Strategy Map:18
• Product. The product of service offered. In order to stand out, it must at least live up to, if not exceed, what customers and clients demand.
• Promotion. Going from the best-kept secret in town to a household name is the goal of promotion. Products, services, and image are all potential targets of promotional campaigns.
• Price. Price in this context refers to perceived value. Ironically, in the nonprofit world, bewildered consumers often associate greater value with higher price.
• Place. Where the product or service is delivered. Public and nonprofits must ensure they develop an effective distribution system for their products and services. In other words, if clients can’t come to them they should go to the clients.
The goal of your marketing efforts is to distinguish your unique brand from all of the others screaming at your customers from a hundred different channels every single day. Traditionally, the view of marketing and branding was that of a carefully constructed image delivered mainly through advertising, and to that end companies have spent billions promoting their brands each year. Today, however, the notion of brand equity is emerging as the rallying cry of organizations attempting to leverage this most valuable of intangible assets, with a concentration on the brand’s image, performance, and added value.19
Offer a Quality Product or Service
Total Quality Management, or TQM, became a household (or at least organizational) word in the 1980s. This unrelenting focus was long overdue as many organizations saw eroding results due to substandard quality. As with many things, however, the quality movement bore an unintended consequence for some devotees. Their maniacal attention to this one variable of performance led to less attention on customer satisfaction, innovation, and in many private sector examples, financial results. Many quality standouts of the 1980s paid the ultimate price for their lack of balance and ended up in bankruptcy. Using a Balanced Scorecard approach allows you to mitigate this substantial risk. You can do so by balancing the admirable goals of quality improvement with objectives and measures that demonstrate whether the improvement is leading to increased value for customers or clients.
Work Efficiently
Virtually every organization with which I have consulted over the years—pubic, private, or nonprofit—has included a process efficiency or improvement objective on their Strategy Map. And why not? There is not a single enterprise in business today that would not benefit from squeezing extra productivity out of their operations.
This objective comes with a boulder of a caveat, however: Be realistic when crafting it. I’ve had organizations over the years brainstorm objectives on this topic and ultimately land on something akin to “improve and streamline all our processes.” Inevitably, the discussion this spawns could go on for days as inspired participants recount scores of broken processes just waiting to be sanctioned by the new Strategy Map. And then along I come, carrying my reality prod, which I try to administer gently, but it stings quite a bit when you’re contemplating how you’re going to reengineer everything that has ever littered your path to success.
Even if your organization is relatively small, you could have dozens of critical processes, each cross-functional in nature and so broken that they’ve got more band-aids than Mr. Bean after a stint as a sushi chef. Trying to fix them all just isn’t realistic. Better to err on the side of caution here and pursue a more manageable objective, such as “identify and improve three key processes this year.” Now you can focus on identifying which bottlenecks are in fact preventing you from effectively serving your customers and align your scarce resources on tackling them.
Partner for Success
Partnering has become emblematic of modern private sector organizations. The technology sector in particular has grown in large part due to powerful and synergistic unions between organizations. Partnering offers many opportunities for public and nonprofit organizations as well. One area of emerging interest for nonprofits is the potential link to corporate philanthropy efforts. Private sector organizations are beginning to realize they can use their charitable efforts to improve their “competitive context”—the quality of the business environment in the location where they operate.20 They are beginning to seek out nonprofit (and government) partners in order to improve their business prospects. Consider for example the State Museum of Auschwitz-Birkenau in Poland. They have partnered with Grand Circle Travel, a leading direct marketer of international travel for older Americans. Grand Circle provides donations to the museum, allowing it to maintain the aging facilities, and offer innovative exhibitions. Grand Circle patrons benefit from the relationship by receiving special visiting and learning opportunities at the museum.
More traditional partnering efforts find public sector and nonprofit organizations attempting to fill voids by reaching out to others who possess specific and complementary skills or offerings. For example, the American Dental Association (ADA) discovered its members had a need for more sophisticated practice-management knowledge. In recognition of this need, and acknowledging its own limitations, the ADA turned to the Kellogg School of Management at Northwestern University to develop a mini-MBA program geared specifically towards dentists.21
As partnering has swept briskly into the mainstream for all forms of enterprise, the number of dubious or ill-conceived ventures is correspondingly on the rise. We’ve all read headlines in the business press lamenting corporate mergers gone horribly wrong, and the millions in shareholder value that evaporated as a result of the weakly-considered unions. But poor matches can just as easily take place in the public and nonprofit domains. Due diligence is critical here; look for partners with complementary missions: organizations that share your core values, hold similar expectations, and can contribute to your ability to better serve your constituency.
Raise Funds Effectively and Efficiently
It would be difficult, if not impossible, to get to know your customers, raise your profile, provide quality products and services, attract potential partners, and constantly innovate without a steady stream of revenue. Many sources of objectives exist throughout the fundraising process—from finding potential donors, to developing proposals, to building budgets.
Monitor Your Reputation22
On June 13, 2002, the Wall Street Journal ran a story chronicling the insider trading charges brought against Samuel Waksal, the ex-CEO of Imclone. Buried deep within the text was this seemingly innocuous reference to a friend of Waksal’s: “Also implicated is Martha Stewart, who sold 3,928 shares on December 27th, the day before ImClone announced the FDA’s rejection.” 23 Within days, a hurricane of controversy was pounding the domestic diva with cable news shows, the business press, and pundits around the globe glued to the sensational story, transmitting every detail to an absorbed public. As we all know, Martha Stewart was eventually convicted, spent several months in jail, and later underwent several months of house arrest. Stewart’s once revered reputation had been crushed in a million little pieces by the arrest; or more appropriately, hundreds of millions of little pieces as the market value of her company Omnimedia plummeted in the days following her indictment. Remarkably, thanks to a world willing to give her a second chance and a team of high-priced image consultants longer than a city block, Martha Stewart has re-emerged. But hers is certainly a cautionary tale of the power of reputation risk.
The public and nonprofit sectors are certainly not immune to reputation risk. An entire industry of oversight bodies and watchdog groups, poring menacingly over every line of public information available, stand ready to pounce at the most innocent of your blunders. Creating an awareness of the existence of your reputation as a vital intangible asset and cultivating its positive attributes is critical to every public and nonprofit enterprise.
Manage Your Risks
Beyond the vanilla challenges that present themselves every day, modern organizations are subject to a number of unpredictable and often threatening disruptions: financial-market meltdowns, extreme weather, political tumult, even terrorism. While, admittedly, these are all dramatic examples of risk that can affect your agency, it’s critical that you carefully delineate the risks, both mundane and potentially horrific, that could impact your operations. Not calculating your risks can lead to extremely nasty outcomes. For example, the British Automotive company Land Rover put over 11,000 jobs in jeopardy in the 1990s when the sole manufacturer of its chassis went bankrupt.24
Other Sources of Internal Process Objectives
Objectives in the Internal Process Perspective should flow directly from your choices in the Customer Perspective. After all, you’re attempting to tell the story of your strategy through the objectives you choose, and to do so they must link together in a cause and effect chain throughout the four perspectives. Once you’ve developed your customer objectives, ask yourself, “At which processes must we excel in order to meet these customer goals?”
Finally, consider adopting a value chain approach to your analysis of this perspective by asking, “Where does the process begin and end for our products or services?” What is the very first thing to occur: raising funds perhaps? What’s next, investigating customer needs? And then what? By mapping the entire process from start to finish, you’re presented with a menu of potential processes from which to populate your Internal Process Perspective.
DEVELOPING OBJECTIVES FOR THE EMPLOYEE LEARNING AND GROWTH PERSPECTIVE
In his foreword to The HR Scorecard, David Norton wrote, “the worst grades are reserved for (executives) understanding of strategies for developing human capital. There is little consensus, little creativity, and no real framework for thinking about the subject ... The asset that is the most important is the least understood, least prone to measurement, and, hence, least susceptible to management.”25 Research has indicated that upwards of 75% of value in today’s organization is derived from intangible assets, principally human capital. However, as Norton aptly asserts, the failure to recognize and respond to this undeniable fact has reached epidemic proportions.
My experience as a consultant echoes Norton’s findings. In conducting Strategy Mapping sessions with a wide variety of clients, I have detected a worrisome pattern. Enthusiasm abounds as we discuss customer objectives. Internal processes and financial objectives can be tough going, but the groups consistently remain tenacious and generate active discussion on the points until consensus is reached. Inevitably, Employee Learning and Growth issues will be the last area of dialog. Perhaps I’m mistaking fatigue for disinterest, but in a disturbingly high number of cases, when I introduce this perspective I’ll be greeted with, “oh, HR will take care of those objectives for us” accompanied by a chorus of chuckles. The majority of organizations, while paying constant lip service to the importance of employees, have yet to make the realization that the value of human capital truly is the distinguishing feature among today’s organizations. Public and nonprofit leaders must pay particular heed to this warning since the yield from human capital and intangible assets in your organizations is particularly high.
In this section, we’ll look at three areas that comprise the objective setting challenge of the Employee Learning and Growth Perspective: human capital, information capital, and the organizational capital.
Human Capital: Aligning People with Strategy
Here is some papal wisdom from his Excellency, the late John Paul II: “Whereas at one time the decisive factor of production was the land, and later capital ... today the decisive factor is increasingly man himself, that is, his knowledge.”26 There you have it, direct from Vatican City, the late Pope expounding an undeniable fact of modern enterprise. The means of production have swung dramatically over the past century, from screeching, hulking machines in the industrial age to the agile minds of men and women, operating in perfect choreography to the rhythms of modern commerce. The corporate world has long recognized this dramatic shift, investing significantly in knowledge development and sharing systems, to the tune of billions of dollars. On a very encouraging note, public sector and nonprofit organizations, not to be left forlorn at the station in this knowledge revolution, have begun to make similar investments. For instance, as part of the bill that created the U.S. Department of Homeland Security, every federal agency must hire a Chief Human Capital Officer whose responsibility is to ensure their agency’s strategic alignment and maintenance and to direct Human Resources policies and programs.27 Outlined below are some possible candidates for the human capital dimension of your Strategy Map.
Closing Skills Gaps in Strategic Positions Are all jobs created equal? Every person on every rung of your organizational ladder undoubtedly possesses unique talents and skills, but do they all contribute equally to your ability to execute strategy? Many organizations, predominantly in the private sector, believe the answer is no. While recognizing the worth of all people in their business, they’ve come to the conclusion that certain positions within the corporation are more vital in the fight to execute their specific strategy. Kaplan and Norton term these vital players and positions “strategic job families,”28 and suggest that isolating, analyzing, and closing gaps within them is a critical enabler of strategic success. To determine your strategic job families, begin by examining the objectives in your Internal Process Perspective, and critically review the positions necessary to enable those processes. Ask yourself: Are there any high-leverage positions currently not staffed? Do particular employees, while dedicated to the mission and enthusiastic in their endeavors, lack a number of the necessary skills to perform at the highest level in these roles? Closing skill gaps in the most vital positions throughout your organization will spark significant productivity and effectiveness gains.
When people are matched with the right position and equipped with the tools they require to carry out their work at peak-performance levels, you’re enabling the possibility of flow to enter the workforce. Flow is a state characterized by complete immersion in a task, during which it’s not uncommon to briefly lose the concept of time, with hours seeming to pass in the span of minutes as you apply all your creative energies to solve the challenge that lies before you. We’ve all experienced flow moments, whether it’s settling in under the hood of an old car we’re restoring, creating a photo album of digital memories, or getting lost in a dance routine we’ve been practicing for weeks. Flow can apply to virtually any endeavor, work included, if the conditions are right. Here is the best description of flow I’ve ever come across. It comes not from a business book or psychology text, but a novel: “For the past two hours he’s been in a dream of absorption that has dissolved all sense of time, and all awareness of the other parts of his life. Even his awareness of his own existence has vanished. He’s been delivered into a pure present, free of the weight of the past or any anxieties about the future. In retrospect, though never at the time, it feels like profound happiness. This state of mind brings a contentment he never finds with any passive form of entertainment. Books, cinema, even music can’t bring him to this. Working with others is one part of it, but it’s not all. This benevolent dissociation seems to require difficulty, prolonged demands on concentration and skills, pressure, problems to be solved, even danger. He feels calm, and spacious, fully qualified to exist. It’s a feeling of clarified emptiness, of deep muted joy.”29 Imagine the power we could unleash if only we could always enable the conditions of flow to be present in the workplace.
Training for Success Training is a staple of Strategy Maps spanning the entire spectrum of organization breeds, with virtually every enterprise recognizing the necessity of constantly upgrading skills should they expect to compete in our crowded and ultra-competitive marketplaces. A word of caution is appropriate, however, as you hastily adopt this seemingly obvious objective. Foreshadowing Chapter 8 just a bit, think carefully about the accompanying measure you’ll use to gauge your training success. Training is certainly an important component of employee success, but what really drives that success are the results of training, not the simple act of attendance—what is sometimes referred to as the “BIC” metric—butts in chairs. Therefore, measures of employee training must balance participation with results. What specific skills or behaviors do you expect to see demonstrated as a result of the training? Measuring and monitoring those will help you see the whole picture of training. So, before the ink is dry on this objective, look ahead to the next step of measurement, and make an honest assessment of your ability to create a meaningful metric.
Incidentally, that advice holds for every objective we’re discussing on these pages. While you certainly don’t want to curtail your ingenuity in any way by second-guessing every chosen objective over the perceived lack of potential measures, you should at the very least be cognizant of the fact that every objective must be accompanied by a robust measure in order for this system to produce the value you expect.
Recruiting the Right People How important is hiring the right people? Here’s a story featuring chocolate magnate Milton Hershey that sheds some light on the question:
In the mid 1890s Milton Hershey turned to a cousin, William Blair, to manage his caramel company. Blair was a competent but bull-headed man who resisted many of his boss’s suggestions. He was sarcastic and had a way of speaking that made Hershey lose his temper. After one particularly heated argument, Blair quit. Shortly thereafter, Hershey traveled to New York, where he had dinner with a sugar salesman one evening. The man ordered a house specialty, a big slab of beef served on an oiled piece of hardwood. With a flourish he demonstrated how a planked steak should be carved. Impressed by the man’s sophistication, Hershey hired him on the spot to replace Blair. Unlike Blair, the new fellow was willing to innovate. Unfortunately, a key decision of his to use corn syrup and cut back on the amount of cane sugar in Lancaster caramels, backfired badly. Customers could taste the lesser-quality sweetener and soon the wagons that carried freshly made candy to the railroad depot were coming back fully loaded with caramels returned by unhappy retailers. Hershey lost $60,000, a tidy sum in the 1890s. The man from New York was fired. Blair was rehired. And Hershey came to understand the risk of emotional decisions. At one dinner meeting with his top men, Hershey ordered a planked steak and as he started to carve, instructed his men to watch closely because ‘it cost me $60,000 to learn this.30
In a world dominated by knowledge, relationships, and networks, people are what distinguish outstanding companies from also-rans, and, therefore, getting the right people on the bus, as Jim Collins instructs in his blockbuster bestseller Good to Great, is imperative for every organization. Most organizations recognize this, as reflected in an American Management Association survey that revealed a whopping 82.4% of leaders believe recruiting and retaining talent is a top corporate concern.31
Of course, getting the right people on the bus can present a substantial challenge for public and nonprofit organizations; even getting people to the bus stop is tricky, considering the sector’s lack of financial incentives, and other compensation-related bells and whistles that private sector firms are eagerly waving in front of prospective employees. But, as with all challenges, a dash of creativity, combined with good old fashioned tenacity can lead to tremendous results, as the story of Roger Briggs illustrates.
As he taught in the Boulder, Colorado school district, a persistent nagging accompanied Briggs; the thought that their schools could be much better. But he wasn’t superintendent, governor, not even principal; what could he do? When he became head of his school’s science department, he made the commitment to change the world by changing his small piece of it, and specifically his tactic of choice was recruiting the right people into the department, people who shared his zeal for teaching, and were 110% committed to their students’ success. He then changed the structure of the department so that tenure was not rubber-stamped after three years, but had to be earned by proving yourself an exceptional teacher. The turning point arrived when a good teacher came up for tenure. Good, but certainly not great. Much to the dismay of his colleagues, Briggs denied tenure, and clung to this unpopular stance despite their loud protests. Shortly thereafter, a spectacular young teacher became available and Briggs hired her, sending the crystal clear signal that mediocrity was not to be tolerated. Over time, with each new hire, the system continued to evolve and grow until, like a stone rolling downhill, it reached a critical mass and the culture of the entire department became one of discipline and greatness.32
Retaining the Right People and Succession Planning The federal government in the United States is at its lowest staffing level since 1950. At approximately 1.8 million people, the ranks have been diminished by almost 325,000 since 1993.33 Proponents of smaller government will applaud, but those of you charged with managing programs realize the tremendous challenges you face. You’re not alone. Inspectors General at nine major federal agencies have listed workforce problems among the top ten most serious management challenges facing their agencies. Only 7.5% of the federal workforce is under age 30, while 38% is over age 50. If you’ve never considered retention and succession an issue, this is your wake-up call.
While the statistics are alarming, they are just that, statistics. You may prefer the approach utilized by the Australian Department of Defense. They too face the challenge of an aging workforce. Their Balanced Scorecard champion recognized this fact and felt it must be addressed in the Department’s Strategy Map and Scorecard. Rather than quoting dry statistics to reflect the crisis, she showed the senior leadership team a group picture of themselves. Then she asked what they saw. A picture truly does tell a thousand words, or in this case one word: gray! Faced with the stark reality of their aging ranks, the Department rallied to support her cry for succession objectives and measures.
Information Capital: Aligning Information with the Strategy
In the preceding section, I mentioned that the federal government has significantly reduced its workforce over the past several years. Less people means the government must do everything it can do enhance productivity; do more with less, as they say. In keeping with that credo, the federal government has become the world’s largest consumer of information technology (IT). Estimates suggest the government spent a whopping $45 billion in 2002 alone.34 The problem, a significant one, is that despite this prodigious infusion of IT, there have been no measurable gains in productivity. At least part of the blame can be pinned on the tail of performance management. Agencies tend to assess the performance of their IT applications according to how well they serve the agency’s requirements, not how well they meet customer needs. Reversing this situation represents a simple, yet profoundly fundamental shift in perspective. IT serves your organization in order for you to better serve your customers better, it’s that simple. Performance objectives and measures must balance the extent to which IT investments improve your ability to serve, and the corresponding influence on customer results.
The Bureau of the Census offers a glimpse into how technology may improve performance. The agency uses an electronic hiring system that provides managers with online access to applicant resumes. Within 24 hours of receipt, managers can be reviewing the latest candidate resumes. Using the new system, the Census Bureau has reduced the time required to fill some positions from six months to as little as three days. The next challenge for the Bureau is developing performance objectives and measures that track customer service in an attempt to ensure their new found internal capabilities are boosting results for their customers.
Information represents more than just the ability to log on to the latest IT applications. Access to information is every bit as critical. Employees must have the ability to access information about key customers, donors, and other stakeholders in order to make informed decisions. However, investments of this nature are considered “overhead” by many nonprofits and as a result are shunned in deference to an allocation of the same funds to direct service provision. This may prove to be a short-sighted decision. In the short-term, funds will be directed towards clients and customers, but in the long run, as conditions inevitably change, if employees don’t have critical information on customer trends, funder preferences, and environmental shifts, future service delivery is placed in severe jeopardy.
Organizational Capital: Creating the Climate for Growth and Change35
History provides many vivid portraits of men and women toiling against seemingly insurmountable odds and facing what appear to be overwhelming obstacles, only to turn sure defeat into stunning and glorious victory. Military sagas are replete with such tales of heroism and cunning as is the field of exploration—it seems incomprehensible that Lewis and Clark, for example, should lead an expedition into virtually uncharted territory, spanning a vast continent and lasting two years with precious few supplies, to return with a treasure trove of scientific and cultural knowledge and suffer only one casualty! The human spirit is beautifully indomitable and can literally move mountains when inspired by a worthy cause. Within the organizational capital dimension, we are seeking to draw upon the infinite resources of human strength and capture both “the hearts and minds” of our employees, in an effort to make sustainable growth and prosperity a literal reality. Three key elements you may consider when drafting objectives for this section of the Strategy Map are:
Culture Let’s begin our discussion of this most elusive of topics by attempting to define the term. One of the most useful explanations of culture I have come across is that offered by Stan Davis from the Columbia University Graduate School of Business, who suggests “culture is a pattern of beliefs and expectations shared by an organization’s members. These beliefs and expectations produce norms that can powerfully shape how people and groups behave.”36 While this is a very helpful definition, we can sweep away a layer of confusion surrounding the term by simply thinking of culture as “the way we do things around here.” Using that descriptor as a lens, listen to how a very young John F. Kennedy describes what awaits incoming Senators: “Americans want to be liked—and Senators are no exception. They are by nature—and of necessity—social animals. We enjoy the comradeship and approval of our friends and colleagues. We prefer praise to abuse, popularity to contempt. Realizing that the path of the conscientious insurgent must frequently be a lonely one, we are anxious to get along with our fellow legislators, our fellow members of the club, to abide by the clubhouse rules and patterns, not to pursue a unique and independent course that would embarrass or irritate the other members. We realize, moreover, that our influence in the club—and the extent to which we can accomplish our objective and those of our constituents—are dependent in some measure on the esteem with which we are regarded by other senators. ‘The way to get along,’ I was told when I entered Congress, ‘is to go along.’37 That is without a doubt the best depiction of culture that I’ve ever encountered.
If culture isn’t the most “touchy-feely” of all management topics, the roll call in its class certainly would not take long to conduct. But how important is culture to an organization’s success? Turns out it is a vital contributor. In their book, Corporate Culture and Performance, authors Heskett and Kotter discovered that over a 12-year period, firms with effective cultures achieved stock price growth of 901% compared to just 74% for those with ineffective cultures. Over that same span, those with effective cultures saw revenue growth of over 680% while the ineffective group managed only 166% gains.38
As a consultant, I have the unique opportunity to peer through the window of culture at each of my clients, and believe me the vistas provided are very enlightening indeed. For example, take this “Tale of Two Clients.” At the first client, an organization priding itself on teamwork, positive feedback, and innovation, it is not uncommon for spontaneous rounds of applause to erupt in management meetings as executives note the accomplishments of others in helping the company reach its lofty targets. They openly cite their culture as a competitive advantage in their success. At the other end of the culture spectrum, the second client is characterized by a combative management and meeting style, an insular view of the world, and a CEO who is renowned for withholding information—even from direct reports. Several insiders have confided in me that they believe this culture is holding them back and taking a severe toll on employees, many of whom appear to be actively disengaged. If you accept the proposition that people are your most critical resource, then you owe it to yourself to gauge your current culture and determine whether it is aligned with your strategic direction.
The misalignment of culture and strategy is a volatile cocktail capable of disastrous results, as the story of Encyclopedia Britannica illustrates. For much of the firm’s venerable history, its 32 volumes were considered the ultimate repository of knowledge from art to zoology. As the world transitioned from bound books to personal computers in the quest for information, Encyclopedia Britannica was initially well-positioned to make the transition. In 1989 they introduced one of the earliest multimedia CD-ROM encyclopedias, Compton’s MultiMedia. The culture of the company, however, stood in the way of them maintaining their leadership position. That culture was dominated by a nationwide force of home salespeople, the very force that had made Encyclopedia Britannica a trusted household name. No one dared to tinker with the traditional sales format on which his or her livelihood depended. The sacredness of the direct sale force business model was the company’s Achilles Heel. As a result, Encyclopedia Britannica failed to develop a serious strategy for electronic products until it was too late. Annual unit sales collapsed from a high of 117,000 to about 20,000. It took the intervention of an outside investor and the abandonment of the direct sales approach to save what was left of the company.39
Although shaping or manipulating a culture, which can take years of habitual and patterned behavior, is well beyond the scope of this book, I can offer a few concrete steps you can take to help manage and change your culture to ensure it exists in harmony with your strategy. The first is recruiting and selecting people you believe embody the culture you are either attempting to sustain or create, as Roger Briggs did in his Boulder, Colorado science department. Who you choose to carry out your work and liaise with your team is completely within your sphere of control, so take the opportunity to select those individuals who will further your cultural aspirations. Second, you can manage your culture through intense socialization and training initiatives, demonstrating what you expect from employees. The means of accomplishing this are many, varied, and sometimes downright bizarre. As an example of the latter, consider the online brokerage and banking firm E*Trade. During their first meeting at this innovative company, new employees are required to stand on a chair and tell everyone in attendance something embarrassing about themselves. Doing so knocks down a lot of barriers and creates a bond between employees allowing them to open up and feel comfortable asking questions of coworkers, since appearing to lack a little esoteric corporate information pales in comparison to the loss of face suffered from revealing deep dark secrets. Finally, culture may be advanced using the formal reward systems of the organization. If you value teamwork, a customercentric approach and attitude, and innovation, those traits should be tangibly rewarded in an effort to have that culture deeply entrenched.40
Our last word on culture comes from Lou Gerstner, the former CEO of corporate titan IBM who saw the company’s revenue soar by over $20 billion during his watch. Reflecting on his days at the helm of one of the world’s largest and respected companies, Gerstner recalled: “I came to see in my time at IBM that culture isn’t just one aspect of the game—it is the game.”41
Recognition and Rewards Over the years, I’ve discovered there are two types of people in the world: those who treat books with the care and reverence of a vase from the Ming Dynasty and those who use them like a bookworm’s scribbler, recording every thought even marginally related to the text on its soon to be very worn pages. I fall into the latter category. Given my pagemarking proclivities, you should see my copy of Dale Carnegie’s classic self-help yarn, How to Win Friends and Influence People. There is so much homespun wisdom in that book that, if challenged, I could probably support every notion in this book with a supporting quote from Mr. Carnegie. Here is a particular favorite that fits our discussion of recognition perfectly: “I once succumbed to the fad of fasting and went for six days and nights without eating. It wasn’t difficult. I was less hungry at the end of the sixth day than I was at the end of the second. Yet I know, as you know, people who would think they had committed a crime if they let their families or employees go for six days without food; but they will let them go for six days, and six weeks, and sometimes sixty years without giving them the hearty appreciation they crave almost as much as they crave food.”42
In case you find that story a little dramatic, consider this nugget from a recent study of departing employees: 79% of those who resign their positions cite perceptions of not being appreciated as a key reason for leaving.43 So often, public and nonprofit leaders will lament the fact that many variables are out of their control, and frequently that is the case. Recognition, however, is completely within your direct sphere of control, and is a muscle that should be exercised in a sincere fashion every single day. One article I read in researching this subject spoke about the importance of recognition and appreciation beginning on an employee’s very first day on the job, since, as we all know, first impressions last a long time. I put the article down and set about conjuring up all of the first days over my working life. Most were pretty typical: I was shuttled around the office at the speed of a blitzing linebacker, introduced to dozens of people, most of whom gave me tight-lipped half smiles and limp handshakes, given a computer that didn’t work, taught how to use the phone, and filled out more paperwork than I need to apply for a car loan. But one first day stood out as brightly as the Las Vegas Strip. At this company, my manager personally guided me through the mundane administrivia, made sure I had a companion all day long, went to great lengths to thank me for joining the company, and at the end of the day presented me with a company sweatshirt. It was a small token, but at that moment it capped what I considered to be a near perfect first day, and I’ve never forgotten it. Such is the profound value of simple appreciation and recognition.
Alignment 44 The problems of misalignment are frequently and colorfully reflected by parents of youngsters participating in soccer leagues. If you’ve ever been to one of these “matches” you know what I’m referring to: a blur of frenzied activity around the ball with not a single player venturing more than a few feet from that maelstrom of action. There is no coordination of activities, just a mad scramble covering a few square yards of the pitch. Of course, this is quite amusing if you’re watching from the stands with your camcorder catching the moment for posterity; after all the stakes are relatively minor. But for organizations, a lack of alignment can prove extremely hazardous to any hope of executing strategy. Employee actions must be aligned with mission, values, vision, and most importantly, strategy should you wish to fully exploit the advantages of intangible assets such as culture and knowledge. The first step on the road to an aligned organization is ensuring employee understanding of the building blocks of mission, values, vision, and strategy. Only through understanding will action follow. A simple and effective method of ensuring alignment is reviewing cascaded Strategy Maps and Balanced Scorecards from throughout your organization. While most will rightly contain unique objectives and measures, they should be aligned towards a common strategy should you hope to have all oars rowing in a winning direction. We’ll discuss the notion of alignment and cascading in greater depth in Chapter 9.
DEVELOPING OBJECTIVES FOR THE FINANCIAL PERSPECTIVE
It seems as though not a day will pass without newspaper articles and television reports delivering doomsday predictions of how budget shortfalls will inevitably affect public service. For self-preservation alone, public and nonprofit agencies must demonstrate their effective stewardship of what limited financial resources they have to a confused and skeptical public as well as funding bodies.
Objectives in the financial perspective of the Strategy Map demonstrate how you are providing your services in a manner that balances effectiveness with efficiency and cost consciousness. Here are some elements to consider.
• Cost of product or service delivery. Operating efficiently and safeguarding resources is critical to all organizations, whether they are private, public, or nonprofit. In an era of diminishing budgets and cries for accountability, cost and productivity objectives take on a prominent role. Analyzing this dimension should force a paradigm shift for pubic and nonprofit Map developers, because as Jim Collins notes: “In the social sectors, the critical question is not how much money do we make per dollar of invested capital? But, how effectively do we deliver on our mission and make a distinctive impact, relative to our resources?”45 Resource consumption must be considered in the context of your mission.
• Revenue enhancement. What opportunities exist for broadening our sources of revenue? Do we currently provide services for which we could charge a fee? How diversified are our funding sources?
• Financial systems. Regardless of how you view the accountants in your organization, financial systems are the backbone of most operations. Reliable, relevant, and timely financial information feeds virtually every type of decision you’ll make. Financial errors can amount to huge sums of money and waste. For example, the Department of Agriculture estimated $976 million in food stamp overpayments and $360 million in underpayments, for a total of $1.34 billion in erroneous payments in 2000. Their payment error rate was an astonishing 8.9%. Robust and reliable financial systems not only produce accurate data, they can also enhance your credibility.
DEVELOPING A SHARED UNDERSTANDING WITH OBJECTIVE STATEMENTS
By this point, you’ve reviewed copious amounts of background information, validated your mission, values, vision, and strategy, interviewed your executive team and developed objectives for each of the four Strategy Map objectives. Very impressive! But, you’re not quite done yet.
If your Strategy Map in any way resembles the hundreds I’ve seen over the years, it will most likely contain at least a couple, if not a handful, of objectives that border on the vague and nebulous, such as “enhance productivity.” During your animated discussions, the meaning of enhance productivity was undoubtedly clear to everyone in the room as you enumerated the specific issues and potential solutions that ultimately led to including it on your Map. However, the Map is meant to serve as a communication tool for your entire stakeholder body and the vast majority of that group didn’t have the good fortune to be at the table when you chose the objective and, thus, although its meaning may be plain to you, to them it could mean countless things. Even seemingly straightforward objectives such as “cut costs” may engender confusion among your workforce as people apply their own filters of perception and experience to the phrase.
Objective statements clarify and elaborate on the objectives displayed on the Strategy Map. These two to three sentence narratives clearly articulate what is meant by the objective, while providing guidance as to what type of performance measures may be appropriate. Well-written objective statements provide precise clarification of the meaning of each objective, outline why the objective is important, and briefly discuss how it will be accomplished. Here are two examples of well-written objective statements:
From a Nonprofit Industry Association:
Close skill gaps through training, hiring, contracting, or outsourcing
Our team must possess industry and association-leading knowledge, skills, and competencies. This is critical in our efforts of working towards our mission of helping our customers be professional, successful, and profitable. We will achieve this objective by identifying the skills we need, the skills we have, and then filling gaps by training, hiring, contracting, or outsourcing.
From a government-owned utility:
Innovate to reduce energy cost
Fuel represents a major percentage of our expenses. Managing this significant expense is the responsibility of everyone in the organization and will require innovative responses to mitigate increasing world energy prices. To achieve this objective we must: minimize fuel acquisition costs, strengthen our hedging, and ensure support functions and services are as streamlined and cost-effective as possible.
As important as objective statements are, getting people to take the time to write them can, admittedly, be like pulling teeth—not a fast and painless process. Some organizations will impose a two-week deadline for the submission of all statements. Though the looming deadline poses some urgency, most people will wait until the fourteenth day to craft something, and the results will often reflect a lack of time and attention. I advocate small teams of two or three people writing the objectives statements as soon after the initial crafting of the Map as possible; while the sentiments and meanings you shared in the workshop are still easily accessible in your memory.
One of my clients came up with an innovative solution to keep objective statements at the forefront of everyone’s attention. This organization holds a morning management meeting each day and decided that, until the objective statements were completed, updates would be shared at the meeting. Each day, a small team of two or three was assigned to present at least one objective statement for review with the group. This is a great idea for a couple of reasons: First, and practically speaking, it ensures that objective statements are crafted in a timely fashion; second, and equally important, by following this method, the entire management team can hear and see what is being developed and discuss it as a team. The feedback offered helps the writers tighten their statements, while others in attendance learn the “best practices” of objective statement writing and can apply it to their endeavors.
TIMEOUT
If this chapter were a television show, I’d definitely throw in a commercial or two about now—you deserve a break! I know what you’re thinking, commercials are more of an annoyance than a break, and with DVRs and TiVo they’re on the road to irrelevance anyway. The point is the break—so put down the book, go grab a coffee, sandwich, shoulder massage, martini, Tylenol, whatever you need. I know this is a long chapter, the longest in the entire book by a healthy margin, but it was important to present you with the entire Strategy Map tapestry; one flowing and interwoven story. Breaking it up into two chapters seemed disconnected to me, and despite a string of words that could span the Great Wall of China, I believe seeing the entire landscape will help you immensely as you create your own Strategy Map. So, hang in there, we’re almost home.
CONDUCTING AN EFFECTIVE STRATEGY MAPPING WORKSHOP
Years ago, at one of my first jobs, I recall strolling casually into a colleague’s cubicle one morning and being visually assaulted by an enormous banner that read “plan your work, work your plan, your plan will work!” This coworker understood that before the promised land of execution comes the blocking and tackling of careful planning. So it is with the Strategy Mapping workshop: A successful event hinges in large measure on the planning that precedes it. Let’s look at what you must consider before, during, and after your session to ensure your team develops a Strategy Map that clearly depicts your story.
What To Do Before the Strategy Mapping Workshop
During his nearly three decades of coaching the men’s basketball team at UCLA, John Wooden, affectionately known as The Wizard of Westwood, led his Bruins to an unprecedented ten national championships. In 2000, he was recognized by the National Collegiate Athletic Association (NCAA) as the Coach of the Century and in 2003, the Presidential Medal of Freedom was bestowed upon this humble man. Pretty outstanding credentials, and what was one of the Wizard’s secret weapons? Planning. Here’s how he describes his philosophy: “When I coached basketball at UCLA, I believed that if we were going to succeed, we needed to be industrious. One way I accomplished this was with proper planning. I spent two hours with my staff planning each practice. Each drill was calculated to the minute. Every aspect of the session was choreographed, including where the practice balls should be placed. I did not want any time lost by people running over to a misplaced ball bin.”46 As you can see, meticulous attention to detail was a hallmark of Wooden’s principles for success. Here are some items, conveniently packaged as 5 Ds, you should consider if you hope to plan like a champion:
• Decide who will facilitate the event. No, this is not a commercial for the services of my company, The Senalosa Group, but ... I do believe that you should engage a professional consultant or facilitator to lead your Strategy Mapping (and later, measures development) workshop. A seasoned professional will bring years of experience, proven techniques, and tips for sparking creativity at 4:15 when everyone has one weary eye on the flip chart and one on the nearest exit.
• Determine who will attend. Ideally, your executive team should own the Balanced Scorecard, and hence, they should be gathered eagerly around a U-shaped table ready to hammer out your Strategy Map. Or, if not your most senior team, the cadre of folks you’ve assembled to lead your Scorecarding effort should be leading the charge. Either way, don’t turn the workshop into an impromptu town-hall gathering by allowing the participants to bring their own binder-touting entourages, or by including “invited guests.” I’ve been part of Strategy Mapping events in which the leaders felt it was important, as they constructed the Map, to hear the voices of customers, or board members, or citizens. Never in my experience has the end product benefited from their contribution. In most cases, the team, whether intentionally or unintentionally, end up pandering to the isolated views being advocated aggressively by the one or two observers, resulting in a skewed Map that in no way reflects the strategic identity of the organization. As we’ll discuss, others will have opportunities to kick the Map’s tires.
• Distribute materials in advance of the session. If you’ve followed the advice provided earlier in the chapter, you’ve already reviewed Hummer-sized piles of background information so you should be well-equipped to hold an intelligent conversation on objectives.
• Deliberate on where to hold the meeting. I recently read The Monk Who Sold His Ferrari, a great little book with an array of timeless wisdom, and, according to the author’s Web site at least, Jon Bon Jovi’s favorite book. In the text, a character is given the gift of enduring wisdom from a group of monks living in a beautiful Shangri-la setting high atop a mountain somewhere in the Far East. As the character later expounded his insights to another protégé, I got to thinking: It must have been so much easier to grasp and become one with the teachings in that setting, as opposed to having them delivered during, say, a weekend seminar at a Holiday Inn just off the freeway. The setting does matter, whether you’re absorbing the everlasting path to personal liberation and happiness or building a Strategy Map. And while I don’t have any statistical evidence to bolster my case, I believe Maps created in offsite locations tend to be of a higher-quality than those cranked out in a sterile corporate meeting room. For many people, office meeting rooms carry with them the stigma of long, dry, and useless information exchanges, and wastes of never-to-be-retrieved time. Why not tip the balance in your favor by taking your group to a fresh new place, one stripped bare of any preconceived notions or baggage, where creativity and insight can blossom? You don’t need to go to Tibet, just break up the routine a little, that’s all. Over the years, I’ve held sessions in rustic log cabins, restored manors, country inns, and, of course, many hotel conference rooms. For an amusing look at how setting played a role in the creation of the United States, see the inset following the 5 Ds.
• Decorate the room. Plaster the meeting room walls with your mission and vision statements, values, strategy, and any interesting or provocative quotes you captured during your executive interviews. Such visual cues will stimulate creativity, reinforce the purpose of the session, and provide practical guidance when necessary. Also, don’t forget the details: Stock up on flip chart paper, markers, tape, pens, and notepads.
In The Domestic Life of Thomas Jefferson (1871), author Sarah Randolph recounts this interesting footnote to American history: Mr. Jefferson said, “While the question of Independence was before Congress, it had its meeting near a livery-stable. The members wore short breeches and silk stockings, and with handkerchief in hand, they were diligently employed in lashing the flies from their legs. So very vexatious was this annoyance, and so great an impatience did it arouse in the sufferers, that it hastened, if it did not aid, the great document which gave birth to an entire republic.”
Randolph received this anecdote from Mr. Jefferson in Monticello, and noted that he seemed to enjoy it very much, as well as to give great credit to the influence of the flies. “He told it with much glee, and seemed to retain a vivid recollection of an attack, from which the only relief was signing the paper and flying from the scene.”47
During the Strategy Mapping Workshop
If you were inspired by the setting advice provided above, then perhaps by now your Himalayan Sherpa guide has navigated the treacherous path before you, and you’re clearing the lenses of your polarized sunglasses to catch the first glimpse of your impromptu meeting room 5,000 feet above base camp. Or, if you chose a less adventurous course, the barely conscious night auditor at the local Hilton Garden Inn may be directing you down the corridor to the Baja Room that has been fully stocked and ready for your entrance. Whichever the case, the big day has arrived and you’re ready to begin drafting your Map. Here are a number of things to consider during the meeting itself:
• Getting started. Standard meeting protocol dictates the opening monologue from the facilitator: location of amenities (if you’re offsite), a big thank you to all participants for their work thus far, and their commitment to the exciting challenge that lies ahead, ground rules for the session, and timing. Some organizations, and it depends entirely upon your culture, will open meetings of this nature with some sort of game or activity. Personally, I fall in line with the camp led by Gordon MacKenzie, who wrote in his wacky account of corporate life Orbiting the Giant Hairball: “Games are the force-feeding of some cockeyed activity to a captive audience with intent to generate joviality.”48 A little hostile and cynical perhaps, but I tend to agree. So the decision rests with you. If you do choose a light-hearted opening activity, ensure it is relevant to the task at hand. For example, one group I worked with gave everyone attending a piece of 8 ½-by-11 paper with one or two words written on it. The words comprised the agency’s mission statement and the group’s challenge was to assemble themselves in order within 60 seconds to display the statement.
• Facilitating the session. In the public and nonprofit sectors, most organizations will begin the process by developing Customer objectives, followed by Internal Processes, Employee Learning and Growth, and finally, Financial. This order helps ensure you’re weaving a consistent tale as you progress through the process. I tend to shy away from pure group brainstorming despite its proven effectiveness and widespread use. Too often a few people tend to dominate the proceedings leaving the less verbose mute in their chairs. Even if you have a relatively small team, start by breaking them up into groups to stimulate some good-natured rivalry and create stronger ideas. For example, let’s say you have ten people participating in the session, begin by splitting them into three groups: two consisting of three people and the third of four. Each group will have 30 minutes to brainstorm as many objectives as they can muster, but must be prepared to come to consensus on their top four before wrapping up. When the 30 minutes has expired, the deck is shuffled and participants are placed in two groups of five. These groups, given approximately 40 minutes, spend their first several minutes reviewing the various objectives generated in the smaller groups, then brainstorm themselves to come to consensus on what objectives they feel should comprise that perspective. Finally, the facilitator asks each group to volunteer their final objectives, and leads a plenary discussion until the ultimate objectives are determined. If you find yourself struggling with a perspective and reaching an impasse, leave it and move on, with the promise to return later. Many great thinkers throughout history employed this technique; sow the intellectual seeds, and then revisit the problem later and receive a profound harvest. When he felt stuck, Albert Einstein was renowned for vacating his desk full of arcane equations to go off and play his violin. As he explained, “A new idea comes suddenly and in an intuitive way. But intuition is nothing more than the outcome of earlier intellectual experience.”49
• Dealing with distractions. I’ve lost count of how many times I’ve been just about to reach the crescendo of an important and inspirational point, one certain to elevate the group to the summit of new creative heights, only to be stopped cold in my tracks by the tinny sounds of the William Tell Overture or Britney’s Spears’ Toxic calling from someone’s bag. Cell phones and Blackberries have been an unquestionable boon to business productivity, but their untimely shrieks can quickly derail the momentum of a highly engaged team. Asking people to surrender these must-haves of business combat at the door is pretty much out of the question, I know. However, you should request that all devices be silenced or placed on vibrate, and only the most critical calls or e-mails responded to during the session. If your distractions manifest themselves in the human variety, most notably someone who clings to an argument like a stray dog with a bone, or a participant that insists on leading you down a path you know will yield nothing but discontent, consider the Rat card displayed in Exhibit 7.7. Yes, the Rat card. If you sense the conversation spiraling downward, and heading for a black hole, proudly toss your Rat card in the air, bringing an immediate halt to the proceedings. A client introduced this technique to me at a recent offsite and it worked like a charm. Even the CEO was wary of the rodent interjection device, prefacing one controversial remark with the words, “at the risk of having a Rat card thrown at me ...” It lightened the mood and served its purpose admirably—a great combination.
One last point on the workshop itself: Start and end it on time. If you say you’re going to begin at 8:30 and wrap up at 5:00, then welcome everyone at 8:29 and start summarizing at 4:30. A couple of reasons for this suggestion, beyond the obvious that it simply represents fundamental meeting management: First, the people you’ve selected to delve deeply into your organizational soul and create this Map will no doubt be your best and brightest, and you can be sure they all have calendars stocked fuller than a pantry at Thanksgiving. Respect their time and commitment to the process by adhering to the established schedule. Second, imposing a timeline will create a climate of subtle pressure, with people occasionally glancing at the clock realizing they have a finite amount of time in which to complete this task and, thus, must remain focused for every comment, question, and point of consensus.
Exhibit 7.7 The Infamous Rat Card
In the discussion of planning, I quoted legendary coach John Wooden. Let’s return to the hardwood sage once again to learn how he felt about sticking to a schedule, and the impact it had on his team: “I discovered that if practice did not end when it was supposed to end, players would hold back a little effort and energy. When I saw this happening, I became a stickler for stopping on time. Whether we practiced an hour and a half or two hours, my players knew exactly when we were going to stop and I stuck to it. They had no reason to hold anything back. As a result they worked harder during the scheduled time, and we got more done in a shorter amount of time.”50
After the Workshop
Quiz: What is your first assignment upon completing the draft Strategy Map? No, ransacking the first-aid kit for emergency supplies of pain medication is not the correct response. Hunting me down for writing all this? Nope, not even close. Your task is to craft the objective statements we discussed earlier in the chapter. Doing so quickly, while the nuggets you generated are still imprinted prominently on your cerebral cortex, will ensure you develop statements that foster a shared understanding of the objectives spanning your Strategy Map. You’ll also want to set in motion your Strategy Map review process that is discussed immediately after the following section.
HOW MANY OBJECTIVES ON YOUR STRATEGY MAP?
I really enjoyed the movie Finding Forrester. I saw it just as I had begun to write the First Edition of my private sector book, Balanced Scorecard Step-by-Step: Maximizing Performance and Maintaining Results ( John Wiley & Sons, 2002). At one point in the movie, author William Forrester, played beautifully by Sean Connery, advises his young protégé to always write a first draft “from the heart.” I remember very well how that advice, albeit from a fictional character, resonated with me. As I continued my writing, I did just as Forrester/Connery suggested and wrote my first draft from the heart. Fortunately, for you, you didn’t have to wade through those first drafts. The problem with writing from your heart is that virtually everything seems critical to the topic, and it’s very difficult to leave anything out when that topic is so very important (and close) to you. Like all authors, I benefited greatly from a skilled editor who helped me hone my lengthy drafts into a more concise final version that was bound between the covers of the book.
So, other than providing a movie review, what does the preceding paragraph have to do with your Strategy Map? Well, you and your Scorecard team are the authors of your strategy map. And, as such, that Map will undoubtedly convey the strongest feelings of all involved on what is absolutely important to the organization. Like the writer who feels compelled to empty his or her soul in a work, you won’t want to leave anything on the table. As a result, it’s not uncommon to see first-draft Strategy Maps that contain 25 to 30 objectives.
A number of factors conspire to see the number of first-draft Strategy Map objectives balloon to an unmanageable number. The atmosphere in the meeting room is generally very positive: after all, you’ve convened a team that was chosen for both their knowledge and enthusiasm. You’re all talking about what you do everyday, about your organization; and, truthfully, how often do you have the opportunity to spend an entire day analyzing your operations? It’s exciting, liberating, and fun! I’ve even seen chief executives get caught up in the frenzy. Prior to one strategy mapping session with a client, the Executive Director stressed to me the importance of keeping the total number of objectives capped at around ten. I agreed that a low number was better for this small organization, and together we vowed to curb any attempts at raising the objective total. But when we got into the session, his tune changed, and changed dramatically. He was the one I couldn’t rein in! Suddenly everything seemed critical to the company’s success, and before we knew it, there were 31 objectives on the burgeoning Map.
There is no hard-and-fast rule for the “right” number of objectives, but a useful guideline is “less is more.” Keep in mind that every objective on the Strategy Map will spawn an average of one-and-a-half performance measures to accurately capture the intent of the objective. So, for example, 20 objectives on the Strategy Map would equate to 30 measures for one Scorecard. Multiply that by several cascaded Scorecards throughout your organization and you could quickly ascend to hundreds of measures, resulting in a challenging and burdensome process to manage. To harness the power of the Balanced Scorecard system as both a measurement and communication system, you have to keep the number of objectives on your Map to a manageable level. Only you can make the determination of what is manageable, however. That said, I would strongly suggest you cap your objectives between 10 and 15. Doing so ensures a focus on the critical few versus the seduction of the trivial many, and limits the potential number of accompanying performance measures. One final thought on the subject comes to us from author and pioneer of international flight, Antoine de Saint-Exupery who reminds us: “Perfection is achieved not when there is nothing more to add, but when there is nothing more to take away.”51
REVIEWING THE STRATEGY MAP
Upon completion of the draft Map, it makes sense to test its efficacy in telling your story. A fun and creative method to do so is the “USA Today interview.” Suggest to your group that you’re now three years in the future. A reporter from USA Today would like to do a story on your organization because of the great success you’ve achieved. How would the headline for the story read? Do the objectives on your Map lead you to that headline?
If envisioning the future isn’t your thing, try evaluating the map with these probing questions:
• Is the cause and effect logic in the Map complete? Are all the necessary elements to tell our story accounted for?52
• Is the logic reflected in the Map theoretically sound? Do all the elements fit together logically?53
• Will the objectives outlined on the Map lead to the effective execution of our strategy?
• Does the Map represent balance in our efforts to achieve our vision?
Creating the Strategy Map is intense and fatiguing work. As much as we value the organizations in which we work, plumbing the depths of our knowledge on the subject of key objectives for an entire day can be draining even for the best of us. Therefore, give your Scorecard team some time to reflect individually on the Map before reconvening as a team. Between sessions, each team member can quietly review the Map, critically examine the logic it portrays with a fresh eye, and conjure up any possible modifications.
It’s always a good idea to circulate the draft Strategy Map among key stakeholders for review and feedback. Employees, senior management, funders, customers, and partners, to name but a few, should have the opportunity to test the logic of the document. Executive input is especially critical. As we all know, for the Scorecard methodology to gain a foothold in the organization, it must be embraced and viewed as a legitimately valuable tool by the senior management.
An effective Strategy Map should tell the story of your strategy, with the objectives chosen serving to make your story leap from the page. If upon review your stakeholders don’t understand or agree on the priorities you’re asserting, you should revisit the Map. The Strategy Map can serve as a powerful communication tool, signaling to everyone the key drivers of your success. If your Map is overly complex, poorly designed, or difficult to understand, your communication efforts may be severely compromised.
Once your team has had the opportunity to reflect individually on the Map, and you’ve gathered feedback from all key stakeholders, reconvene the team for a final discussion. Make any recommended changes and, if necessary, conduct a vote to determine the final objectives.
WHEN ALL ELSE FAILS: KISS
If you’re completely frustrated by this process, and just can’t seem to escape from a quagmire of confusion and despair, go to a quiet room, close your eyes, and wrap yourself in the soothing sounds of “Beth” by legendary rockers KISS ...“Beth I hear you callin’, but I can’t come home right now ...” You should be back on your feet and reenergized within two minutes and 48 seconds.
Oops, not that KISS, I meant, of course, the phrase rarely absent from the lips of software engineers, military strategists, and planners everywhere: Keep It Simple Stupid. Organizations are complex organisms, no question about it, a galaxy of moving parts, interfaces by the thousands, and enough red tape to adhere the earth to Jupiter. But there are guiding principles and higher callings that rise above the din of complexity and present themselves in a rainbow of simplicity across our skies. This notion of simplicity trumping complexity applies not only to business, but every far-flung field of endeavor from photography to physics.
Speaking of physics (can you tell I just read the new Einstein biography?), do you know how Einstein created the Theory of Relativity in 1905, a discovery that ripped the scientific world from its very foundation? Countless hours and forests of trees sacrificed to his equation scribbling, yes, but the fundamentals of the idea sprang from a thought experiment. Einstein loved to conjure vivid images in his head, bringing an endless sea of numbers to life in gripping detail, which he did to extraordinary impact with relativity. While sitting at his chair in the Bern Patent Office one day (Einstein was a patent clerk in Bern before becoming the über-celebrity and pop culture icon we remember him as today), he suddenly thought of a man falling to the ground, weightless, drifting. From that image came the greatest scientific breakthrough of all time. Einstein possessed the remarkable and enviable gift of transforming theories of mind-bending complexity into startlingly simple reality. Science writer Dennis Overbye describes one of Einstein’s most famous papers, “On the Electrodynamics of Moving Bodies” this way: “The whole paper is a testament to the power of simple language to convey deep and powerfully disturbing ideas.”54 Let’s conclude our survey of the Strategy Map landscape with the inspiring story of one organization that recognized, and took to heart, the power of simplicity.
THE STRATEGY MAP JOURNEY AT FOOD FOR THE HUNGRY U.S. (FHUS)
Food for the Hungry is an international relief and development organization, guided by the inspirational vision “God called and we responded until physical and spiritual hungers ended worldwide.” Founded in 1971, the organization works with churches, leaders, and families in 26 countries to provide the resources necessary to help communities become self-sustaining.
The Case for Change
Recognizing the necessity of change in the face of altered circumstances and increasing demands from all stakeholders, FHUS President Ben Homan issued this passionate directive to his team in July 2006:
God’s high standard of doing justice, loving mercy and walking humbly with Him calls us to steward the enormous blessing and responsibility of taking us beyond our early strategic plans and hoped-for influence. Not only are we in an era in which the world and the way we can best serve people around the world is dramatically different, we continue to face a daunting task that is so difficult and so large that, as an organization, we must not tolerate structural or strategic status quo. We cannot accept actions, assessment and strategy that is isolated by department, dominated by personality or shaped only by historical inertia. We are called to grow, to gain capacity and to reflect the excellent and majestic character of the Lord our God. We have been given much, therefore, much is required (Luke 14).55
FHUS exists to serve a towering need, but their work is carried out by human beings operating in an organizational climate, and thus an organizational improvement mechanism was necessary to propel the team forward in this time of great change. After canvassing the landscape of possible tools, FHUS chose the Balanced Scorecard as a performance management system they were certain would allow them to harness their powers of spirit and creativity, ultimately leading them ever closer to their vision of an end to physical and spiritual hungers worldwide.
The Strategy Map
As with most Balanced Scorecard implementations, FHUS began their journey by convening a team of senior leaders, charged with the responsibility of crafting their new management framework. Equipped with decades of combined service and experience, both in the field and at the head office, the dedicated team set forth immediately, scouring the FHUS archives, unearthing all they could find on the building blocks of a Balanced Scorecard: mission, values, vision, and organizational strategy. With those raw materials in place the team met, and over several sessions crafted the organization’s initial Strategy Map which is displayed in Exhibit 7.8.
In the spirit of information sharing and open communication, the Strategy Map was shared with managers and employees throughout the organization, and, later, measures were dutifully translated from each objective. The team was traversing the Strategy Map and Balanced Scorecard path, following the steps typically recommended during an implementation, and doing so with rigor and discipline. Yet, the reaction from employees was flat: very little enthusiasm, no breakthrough moments of alignment emanating from Map discussions, just a quiet resignation.
A Fresh Look
Not surprisingly, given the high expectations and allocation of resources devoted to the considerable effort of creating the Strategy Map and measures, FHUS leadership were disappointed by the reaction that greeted their initial model. Too much had been invested to abandon the implementation at this point, and the stakes of failure—both internally and externally—were simply too high: They had to succeed.
FHUS reached out to me in early 2007 to assist them in rejuvenating their Scorecard endeavors, specifically tasking me with reviewing and providing guidance on the Strategy Map they’d created. Shortly after coming to terms on our agreement, an e-mail arrived with the Map attached. I eagerly opened the document, anxious to see what was in store for our work together. Based on what you’ve read in this chapter, any guesses as to the nature of my reaction? Like a jet crossing a clear bright sky, the sound in my head became more and more resonant: simplicity. This Map had to be redesigned through the lens of simplicity. As it stood, there were far too many objectives to meaningfully manage, the perspectives didn’t speak to me as they should, and the cause and effect linkages were practically inexplicable: some direct connections, some dotted lines, and some isolated objectives.
Exhibit 7.8 Food for the Hungry U.S. Strategy Map (version 1)
When we met in April 2007, the mission was clear: Take advantage of the tremendous work generated by the team in their previous efforts, but apply a chisel to the overcrowded Strategy Map, carving away until FHUS’s authentic strategic story emerged. After a number of iterations, the team settled on the Map displayed in Exhibit 7.9.
Business pundit Tom Peters has suggested that any product, process, or service should adhere to the dimensions of beautiful design, which he articulates as simplicity, clarity, grace, and beauty.56 I believe the Strategy Map of FHUS qualifies on all counts. Let’s consider some of the significant improvements in the document:
• Branding. It’s not labeled a Strategy Map, rather, in the top left corner you see the phrase “Global Poverty Strategy” or “GPS.” FHUS recognized that for employee buy-in and support to accompany this work, it required a tagline that fit the culture. Everyone these days is familiar with GPS devices, guiding us to our chosen destination, and so it is with this document, guiding FHUS to the hallowed ground of its mission and vision.
• Mission and vision. Everywhere you go at FHUS, you are reminded of the vision; its presence greets you upon entering the building, when meeting with employees, and sitting in their assembly hall. That it was missing from their initial Map was a major omission that was not overlooked in this draft.
• Perspective names. During our deliberations over the Customer Perspective, Ben Homan had an epiphany. He realized FHUS doesn’t have “customers”; they’re working with a group infinitely more valuable: responders. FHUS wants people to respond to God’s call, and thus equipping responders was elevated to the very top of the Strategy Map. Additionally, the rather banal Employee Effectiveness Perspective was replaced by the uplifting moniker, Catalyst.
• Simplicity. Just ten objectives populate this Map, versus 25 on the original rendering. FHUS has literally seen the light, rejecting the alluring cries of the trivial and responding to the call of the critical few enablers of their success.
• Beautiful design. This Map captures the culture and personality of FHUS beautifully, from the simple and organic colors (which you of course can’t see) to the dedication in serving those in need as evidenced by the pictures framing the text.
Exhibit 7.9 Food the Hungry U.S. Strategy Map (version 2)
Okay, so I like it, but that means very little. How did FHUS managers and employees react to the Strategy Map’s second take? Soon after finalizing the Map, the Scorecard team held two sessions with FHUS staff, during which a short presentation was delivered on GPS, why it was critical, and what they could expect to see as the rollout evolved over the coming months. Then the Map was outlined in some detail, each objective shared with the group, its meaning and relevance to FHUS related in simple yet powerful language by a member of the Scorecard team.
While the first employee presentation was in full swing, a member of the Scorecard team named Peter, retreated to the back of the room and I noticed he was drawing what resembled two crude lines on a flip chart page. Each line was flanked by what I thought was a number. I had no idea what he was up to and, accordingly, returned my attention to the speaker. The mystery was solved as the session wound to its conclusion. As people were getting up from their chairs after a very fruitful question and answer session, Peter took center stage and asked everyone to do two things before leaving. On the flip chart were indeed two lines with scales from 1 to 10. Each person was to answer two questions: First (the first line), on a scale of 1 to 10 how well does this Strategy Map reflect the strategy of FHUS? And second, using the second line, on a scale of 1 to 10 are you able to see yourself in this Map? In other words, are there objectives appearing on it you feel you are able to contribute to in your daily work?
We held our breath as the first person approached the chart, held a marker to his hand and applied his evaluation to the empty line before him. A little apprehension could easily be understood, after all, months of work and preparation, and hours of debate and deliberation had been poured into this vessel, and the leadership team’s credibility was clearly on the line as much as the two questions Peter had penned just moments ago. Within five minutes we had our answer: over 90% of attendees (in both sessions as it turns out) rated the Map at 8 out of 10 or higher on both questions.
FHUS’s Balanced Scorecard implementation, while by no means complete—they’re never complete as you’ll learn later in the text—is progressing rapidly. They’ve refined their performance measures, have held management review meetings using the Balanced Scorecard, and recently began the cascading process. Amazing what a little simplicity can do.
NOTES
1 Mark Jenkins, To Timbuktu (New York: William Morrow & Company, 1997).
2 Robert S. Kaplan and David P. Norton, “Having Trouble with Your Strategy? Then Map It,” Harvard Business Review, September-October 2000, pp. 167-176.
3 Stephen R. Covey, The 8th Habit (New York: The Free Press, 2004), p. 271.
4 Paul R. Niven, Balanced Scorecard Step by Step: Maximizing Performance and Maintaining Results, 2nd Edition (Hoboken, NJ: John Wiley & Sons, 2006), p. 101.
5 Robert S. Kaplan and David P. Norton, The Balanced Scorecard (Boston: Harvard Business School Press, 1996).
6 Jake Barkdoll, “Balanced Scorecards in the Federal Government,” Public Manager, Fall 2000, pp. 43-45.
7 Robert S. Kaplan, “The Balanced Scorecard and Nonprofit Organizations,” Balanced Scorecard Report, November-December 2002, pp. 1-4.
8 Paul R. Niven, Balanced Scorecard Step-by-Step: Maximizing Performance and Maintaining Results, 2nd Edition (Hoboken, NJ: John Wiley & Sons, 2006), p. 108.
9 Michael E. Gallery, Chair, Measures of Success Task Force, 7 Measures of Success (Washington, DC: ASAE, 2006), pp. 26-27.
10 Chris Denove and James D. Power IV, Satisfaction (New York: Portfolio, 2006), pp. 66-68.
11 Interview with Nancy Foltz, September 19, 2002.
12 Ann Zimmerman, “To Boost Sales, Wal-Mart Drops One-Size-Fits-All Approach,” Wall Street Journal, September 7, 2006, p. A1.
13 Chris Zook, “Finding Your Next Core Business,” Harvard Business Review, April 2007, pp. 66-75.
14 Jean Philippe Deschamps and P. Ranganath Nayak, Product Juggernauts: How Companies Mobilize to Generate a Stream of Market Winners (Boston: Harvard Business School Press, 1995).
15 Michael E. Gallery, Chair, Measures of Success Task Force, 7 Measures of Success (Washington, DC: ASAE, 2006), p. 33.
16 Marina Tsipis, “Plucked From Obscurity: Restroom Reservations,” Annals of Improbable Research, March-April 2007, p. 18.
17 Christine W. Letts, William P. Ryan, and Allen Grossman, High Performance Nonprofit Organizations (New York: John Wiley & Sons, 1999), p. 67.
18 Thomas Wolf, Managing a Nonprofit Organization in the Twenty-First Century (New York: Fireside, 1999), p. 162.
19 Dean R. Spitzer, Transforming Performance Measurement (New York: AMACOM, 2007), pp. 223-224.
20 Michael E. Porter and Mark R. Kramer, “The Competitive Advantage of Corporate Philanthropy,” Harvard Business Review, December 2002, pp. 56-68.
21 Michael E. Gallery, Chair, Measures of Success Task Force, 7 Measures of Success (Washington, DC: ASAE, 2006), p. 61.
22 Paul R. Niven, Balanced Scorecard Diagnostics: Maintaining Maximum Performance (Hoboken, NJ: John Wiley & Sons, 2005), p. 9.
23 “ImClone’s Ex-CEO Arrested, Charged with Insider Trading,” Wall Street Journal, June 13, 2002.
24 Aaron De Smet, Mark Loch, and Bill Schaninger, “Anatomy of a Healthy Corporation,” The McKinsey Quarterly, May 2007.
25 David P. Norton in Foreword to: Brian E. Becker, Mark A. Huselid, and Dave Ulrich, The HR Scorecard (Boston: Harvard Business School Press, 2001).
26 Thomas A. Stewart, Intellectual Capital (New York: Currency Doubleday, 1999), p.12.
27 Reported in “In the News Briefs,” Balanced Scorecard Report, September-October 2003, p. 5.
28 Robert S. Kaplan and David P. Norton, Strategy Maps (Boston: Harvard Business School Press, 2004).
29 Ian McEwan, Saturday (New York: Random House, Large Print Edition, 2005), p. 382.
30 Michael D’Antonio, Hershey (New York: Simon & Schuster, 2006), pp. 72-73.
31 Adrian Gostick and Chester Elton, Managing with Carrots (Salk Lake City, UT: Gibbs-Smith, 2001), p. 19.
32 Jim Collins, Good to Great and the Social Sectors: A Monograph to Accompany Good to Great (Jim Collins, 2005), pp. 13-16.
33 From “The President’s Management Agenda,” at www.whitehouse.gov/omb/budget/fy2002/mgmt.pdf
34 Ibid.
35 Portions of this section are drawn from Paul R. Niven, Balanced Scorecard Step-by-Step: Maximizing Performance and Maintaining Results, 2nd Edition (Hoboken, NJ: John Wiley & Sons, 2006), pp. 129-132.
36 Drawn from an unpublished paper presented by Brass Ring LLC, 2005.
37 John F. Kennedy, Profiles in Courage (New York: HarperCollins, new edition, 2003), p. 4.
38 John Kotter and James Heskett, Corporate Culture and Performance (New York: The Free Press, 1992), p. 78.
39 Haig R. Nalbantian, Richard A. Guzzo, Dave Kieffer, and Jay Doherty, Play To Your Strengths (New York: McGraw-Hill, 2004).
40 Jennifer A. Chatman and Sandra E. Cha, “Leading by Leveraging Culture,” California Management Review, Summer 2003.
41 Tom Peters, Re-Imagine (London: Dorling Kindersley, 2003), p. 26.
42 Dale Carnegie, How to Win Friends and Influence People (New York: Pocket Books, Revised Edition, 1981), p. 27.
43 Adrian Gostick and Chester Elton, Managing with Carrots (Salt Lake City, UT: Gibbs-Smith, 2001), p. 20.
44 This section is drawn from Paul R. Niven, Balanced Scorecard Diagnostics: Maintaining Maximum Performance (Hoboken, NJ: John Wiley & Sons, 2005), p. 80.
45 Jim Collins, Good to Great and the Social Sectors: A Monograph to Accompany Good to Great (Jim Collins, 2005), p. 5.
46 John Wooden and Jay Carty, Coach Wooden’s Pyramid of Success (Ventura, CA: Regal, 2005), p. 34.
47 Quoted from The New Oxford Book of Literary Anecdotes, edited by John Gross (New York: Oxford University Press, 2006), p. 60.
48 Gordon MacKenzie, Orbiting the Giant Hairball (New York: Penguin Putnam, 2006), p. 118.
49 Walter Isaacson, Einstein (New York: Simon & Schuster, 2007), p. 113.
50 John Wooden and Jay Carty, Coach Wooden’s Pyramid of Success (Ventura, CA: Regal, 2005), p. 34.
51 Timothy Ferriss, The Four-Hour Workweek (New York: Crown Publishing, 2007), p. 65.
52 John A. McLaughlin and Gretchen B. Jordan, “Logic Models: A Tool for Telling Your Program’s Performance Story,” Evaluation and Program Planning, 1999, pp. 65-72.
53 Ibid.
54 Walter Isaacson, Einstein (New York: Simon & Schuster, 2007), p. 127.
55 From internal Food for the Hungry U.S. documentation shared with the author.
56 Tom Peters, Re-Imagine (London: Dorling Kindersley, 2003), p. 153.
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