How to Drive Organizational
Alignment to Strategy Using
Balanced Scorecards
Presented by Chris Heflin
© 2009 ActiveStrategy, Inc.
Presentation Overview
Strategic vs. Operational Goals
Setting Strategic Goals
Creating a Balanced Scorecard
Deploying Scorecards to Execute Goals
Aligning & Prioritizing Improvement Initiatives
Linking Strategy to Action Plans via
Scorecards
 Best Practices
 Tying this back to WSQA Criteria
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© 2009 ActiveStrategy, Inc.
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Strategic vs. Operational Goals
Supervisor
Manager
Director
Executive
Amount of time spent on
strategic efforts (typical)*
Increased time spent on
strategic efforts (ideal)
Operational
(Including operational measures &
incremental improvement plans)
* Includes critical few objectives & measures that need to be
improved plus key strategic improvement initiatives
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Setting Strategic Goals
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Defining Strategic Goals
Strategic Goals have the following components:
 Perspectives –high-level focus areas
 Objectives – verb-noun statements that reflect the
strategic plan (e.g., “Improve Customer
Satisfaction”)
 Measures/Metrics - #, $, or % that indicates
performance against an objective
 Targets – what the measure should attain
 Initiatives – improvement projects (e.g., “Improve
Cycle Time”)
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Making Strategic Goals Actionable
SWOT
Analysis
Strategic Goals
Strategy
Map
Visual simplification
of Strategic Plan
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Key Strengths,
Weaknesses,
Opportunities &
Threats
Top-Level
Balanced
Scorecard
Operational framework to
communicate, deploy and
execute plan
p. 6
Prioritized
Initiatives
Aligned
improvement
Create a Strategy Map
What is a Strategy Map?
 Visual simplification of strategic objectives
 Shows cause and effect relationships
 Helps ensure you’re not missing any key
drivers
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Steps to Creating a Strategy Map
1. Prioritize SWOT outputs & convert to
“verb noun” strategic objectives
2. Group objectives by “perspective” or highlevel focus area
3. Identify cause-and-effect relationships
with arrows
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“Perspectives”
Traditional Scorecard
Perspectives
The Anatomy of a Strategy Map
High-level
“objectives”
(verb/noun)
Links showing
relationships
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Example Strategy Map for Public Sector
Note:
Perspective names
and their cause &
effect order change
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Next, Create a Balanced
Scorecard
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Creating a Balanced Scorecard
Step 1: Transfer from Strategy Map
 Transfer Perspectives and add Index numbers
(1.0, 2.0)
 Retain cause & effect hierarchy
 Transfer Objectives into proper Perspective
and add Index numbers (1.1, 2.1)
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Keep in Mind
 Can use more or different perspectives
(if appropriate), BUT BALANCE IS CRITICAL
 Objectives must contain a verb (grow sales,
reduce complaints, etc.)
 Keep objectives focused (7-12 max per
scorecard)
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Perspectives & Objectives on BSC
Perspective
Objective
Index Number
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Creating the Top-Level BSC
Step 2: Determine Measures
 Should represent the best indication that an
objective is being met
 Ask what outcomes your stakeholders desire
from the objective:
 Quality or defects
 Revenues
 Cost or productivity
 Responsiveness or Cycle Time
 Employee or Environmental Safety
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Creating the Top-Level BSC
Step 2: Determine Measures
 Keep to 1-3 measures per objective
 One objective may be measured with two or
three dissimilar units of measures, e.g.
Customer Satisfaction may be measured by:
 Survey Results (Very Good)
 Number of Complaints (4 per quarter)
 Turnaround time (2 days)
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Lagging Measures
 Lagging measures are reported
infrequently, too late to prevent a problem
 Examples are a company’s critical high-level
outcome measures:




Sales
Service Quality
Expenses
Customer Satisfaction
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Breaking Down a Lagging Measure
 First Step – Dimensional Measures
 These break down a measure by its component
parts using the same units (e.g. Sales by
Division or Geography)
 Note: dimensional measures alone do not get
at the root causes of a problem
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Leading Measures
 Leading Measures
 break down an important measure into what
drives it (e.g. # of quotes or size of pipeline)
 Also called Cause & Effect or Process
Measures
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Leading Measure Examples
 Examples:
 Customer Satisfaction leads Revenues
 Service Response Time leads Customer
Satisfaction
 % Service Rep Availability leads Service
Response Time
 Leading/Lagging are relative terms
 A leading measure in one area is likely a
lagging measure to another area
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Top-Level Scorecard with Measures
p. 21
© 2008 ActiveStrategy, Inc.
Creating the Top-Level BSC
Step 3: Align & Prioritize Initiatives
 Initiatives are time-bound projects
 They have defined resources
 Also called Projects, Action Plans
 Some are derived from the SWOT Analysis
 They should be prioritized based upon:
 alignment to an identified performance gap in a
strategic area
 size of the performance gap
 resources required to improve
 ROI, etc.
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Prioritize and Align Initiatives
 Align current initiatives (time-bound
improvement projects) to measures
 Cease initiatives that do not align and any that
align to measures that are meeting goals
 Consider new initiatives to address
underperforming measures
 Aligned initiatives drive results by addressing
root causes
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A Prioritization Matrix
Column 1
Column 2
Column 4
Prioritization Factors
Column 3
(Enter 1, 3, or 5 in each – see instructions below )
Initiative Under
Consideration
Desired
Outcome of
Initiative
How Outcome
Will be
Measured
Degree of
Alignment
1.
2.
3.
4.
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Need to
Improve
Urgency
Total Cost
Organizational
Readiness
Column 5
Priority
Score/Departments
= product of factors from
Column 4 (multiply all 5).
Also list key dept.
needed to achieve it
An Example Completed Matrix
Column 1
Column 2
Column 4
Prioritization Factors
Column 3
(Enter 1, 3, or 5 in each – see instructions below )
1. Improve
margins
Desired
Outcome of
Initiative
Improved
profitability
How Outcome
will be
Measured
Percent of
products meeting
margin goals
5
5
2. Improve
productivity in
manufacturing
Improved
throughout and
reduced costs
Percent of
5
departments that
meet productivity
goals
3. Implement new
CRM system
Improved
relationships
with key
customers
Improved
knowledge of
key customers
% of customers
renewing annual
service plans
Initiative Under
Consideration
4. Open new
customer training
facility
© 2009 ActiveStrategy, Inc.
Degree of
Alignment
to BSC
Column 5
Priority
Score/Departments
= product of factors from
Column 4 (multiply all 5).
Also list key dept.
needed to achieve it
Total Cost
Organizational
Readiness
5
5
3
1875
Operations
5
3
3
3
675
Manufacturing
3
5
3
5
3
675
IT
% of customers
1
attending training
3
1
5
1
15
Customer Education
& Facilities
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Need to
Improve
Urgency
Great, the BSC is Finished!
 Well…actually, this is just the beginning
 The next step is to create a “cascaded”
framework of scorecards
 Create linked scorecards down & across the
organization
 This is where you really start to deploy your
strategy and make it actionable
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What It Looks Like (Long-Term)
Top-Level
Scorecard
Divisional or
Business Unit
Scorecards
Department
or
Functional
Scorecards
Individual Employee Goals
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Why is Cascading Scorecards Critical?
 It results in a proactive performance system
 it communicates and translates the strategy to all
levels
 when a critical top-level lagging measure is
underperforming, lower level causes can be easily
identified
 allows you to fix important problems before they
become high-level issues
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How to Cascade – an Overview
 Create linked, related (but not identical)
scorecards for next organizational level
 As you go, translate objectives to make them
meaningful to that area
 e.g., “Improve Customer Satisfaction” might
become “Reduce Wait Times for Customers”
 Align measures to the translated objectives
 e.g., % of Customers waiting more than 5 minutes
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Cascading Objectives &
Measures Using a Process
Matrix Approach
© 2009 ActiveStrategy, Inc.
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Tips on Using a Process Matrix Approach
 Used to align business processes to strategic
objectives
 Helps to identify their translated objectives &
leading measures
 Works best for functional and support areas
 Process owners must be involved
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IT’s Business Processes
List key
processes of
the area
Outcome
Create a Matrix for Each Area
Corporate Objectives
1.1 Grow
Profitable
Revenues
2.1
Improve
Cust. Sat.
3.1
Integrate
New Tech.
Internal
Network
Mgmt.
Cust.
Data
Center
Mgmt.
Technical
Support
p. 32
© 2008 ActiveStrategy, Inc.
Cust.
Data Ctr.
Mgmt.
Technical
Support
Outcomes
Corporate Objectives
1.1 Grow
Profitable
Revenues
2.1
Improve
Cust. Sat.
Availability
Internal
Network
Mgmt.
Data Ctr. Rev.
Cust. Sat.
Identify
processes
that most
strongly
support the
Objectives
3.1
Integrate
New Tech.
x
x
x
Resolved
calls
IT’s Business Processes
Identify Outcomes & Intersections
x
x
p. 33
© 2008 ActiveStrategy, Inc.
Cust.
Data Ctr.
Mgmt.
Technical
Support
1.1 Grow
Profitable
Revenues
2.1
Improve
Cust. Sat.
3.1
Integrate
New Tech.
3.1.1
Improve
network
reliability
Availability
Data Ctr. Rev.
Cust. Sat.
Internal
Network
Mgmt.
Corporate Objectives
1.1.1 Maximize
service
revenues
2.1.1
Minimize
customer
complaints
2.1.2
Improve call
resolution
Resolved
calls
IT’s Core Processes
Describe
Objective
using that
area’s terms
Outcomes
Translate the Objectives
3.1.2
Leverage
ticket
software
p. 34
© 2008 ActiveStrategy, Inc.
Align Measures Using the Matrix
IT’s Core Processes
Align measures
identified in the
processes to
the cascaded
Objectives
Corporate Objectives
1.1 Grow
Profitable
Revenues
2.1
Improve
Cust. Sat.
Internal
Network
Mgmt.
Cust. Data
Center
Mgmt.
3.1
Integrate
New Tech.
3.1.1 Update
network speed
% full
availability
1.1.1 Maximize
ASP revenues
$ service
rev/month
Technical
Support
2.1.1 Minimize
customer
complaints
# hours
downtime
3.1.2 Leverage
ticket software
% of calls
resolved
p. 35
© 2008 ActiveStrategy, Inc.
Place On Appropriate Scorecard
 Place objectives & related measures on the
appropriate scorecard
 Assign an owner to each to ensure
accountability
 Finally, establish goals for each measure to
track progress
 Cascaded objectives & measures create
alignment to top-level strategy
© 2009 ActiveStrategy, Inc.
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Going From Strategy to
Action Plan
An Example “Drill Down” from
the City of Coral Springs Scorecards
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Police Scorecard
Click to drill
down
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Drill down reveals
Measure Details
Contributing
lower-level
measures
Aligned
improvement
Initiatives
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Additional Measure
Details (trend charts &
graphs, comparisons)
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Chart Detail –
Crime by Type
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Chart Detail –
Crime Rate
Comparisons
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Initiative Detail
Click to see
commentary from
Initiative Owner
about the initiative
and Action Plans
© 2009 ActiveStrategy, Inc.
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Best Practices to Remember
 Start with your strategy
 Keep objectives to the critical few
 Pick measures you can actually measure –
and those that drive the right behaviors
 Cascade & deploy (scorecards are NEVER
perfect, so don’t wait)
 Review performance of scorecards regularly
© 2009 ActiveStrategy, Inc.
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How Does This Fit Into the WASQ Criteria?
 What WASQ categories does this type of
framework address?
 Why?
© 2009 ActiveStrategy, Inc.
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Questions?
© 2009 ActiveStrategy, Inc.
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Thank You for Participating
§“How to Drive Organizational Alignment to
Strategy Using Balanced Scorecards”
Presented by
Chris Heflin
cheflin@activestrategy.com
Please stop by the ActiveStrategy table
to learn more or visit www.activestrategy.com
© 2009 ActiveStrategy, Inc.
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