NARMC Commanders Conference Balanced Scorecard LTC Judy Harger, NARMC Clinical Operations NARMC Commanders Conference Balanced Scorecard LTC Judy Harger, NARMC Clinical Operations Balanced Scorecard COURSE DESCRIPTION: An introduction to the Balanced Scorecard designed to introduce the concepts and critical success factors of developing and implementing a measurement system using the BSC strategy planning tool principles and methods. COURSE OBJECTIVES: Achieve working knowledge of the Balanced Scorecard concepts Understand components for successful implementation of measurement and BSC strategy Demonstrate learning by developing a BSC strategy tool and an analysis of implementation for an organization. Balanced Scorecard COURSE OUTCOMES By the end of the course, participants will be able to demonstrate learning in Balanced Scorecard Four Perspectives SWOT Analysis Cause and effect linkages between strategies and measures Performance Drivers Leading and lagging indicators Elements for an effective scorecard Critical Processes for effective implementation of a Balanced Scorecard Balanced Scorecard COURSE REFERENCES: The Balanced Scorecard, Translating Strategy Into Action Robert S. Kaplan and David P. Norton Harvard Business School Press The Strategy Focused Organization, How Balanced Scorecard Companies Thrive In The New Business Environment Robert S. Kaplan and David P. Norton Harvard Business School Press. 2001 FRIDAY: Thunderstorms/Hail 75 High/ 62 Low Light wind/Fog SATURDAY: Mostly Cloudy 79 High/60 Low NE Wind 5-10 Ive always reckoned that a camel is a horse designed by a committee - Freddie Laker Quality Gurus Ronald Fisher Shewart Morgensen Deming FeigenbaumAkao Crosby Kano G.S. Radford Sarasohn Juran Ishikawa Mizuno Taguchi Tribus David Norton Robert Kaplan 1996 BALANCED SCORECARD 2001 STRATEGY - FOCUSED ORGANIZATION Balanced Scorecard 1.Shewhart: Significance of Variation/Control of Quality 2.Sarasohn:Basic beliefs Commitment,Ownership, Feedback 3.Deming:Plan, Do, Check, Act 14 Point Theory of Management Seven Deadly Diseases and Obstacles 4.Juran: Juran Trilogy-Quality=Planning,Control,Improvement 5.Ishikawa:Fish Bone Diagram: Cause and Effect Analysis 6.Taguchi: Six Sigma Improvement of Processes and Products 7.Norton/ Kaplan:The Balanced Scorecard The Strategy Focused Organization Balanced Scorecard A management system that can channel the energies, abilities, and specific knowledge held by people throughout the organization toward achieving long-term strategic goals to guide current performance and target future performance using measures in four categories: financial performance, customer knowledge, internal business processes, and learning and growth. Success ! a robust learning system for testing, gaining feedback on, and updating the organizations strategy. invest in the long term rather than manage the bottom line to pump up short- term gains. Ultimate Goal, to Become a: STRATEGY-FOCUSED ORGANIZATION MISSION Why we exist VALUES Whats important to us VISION What we want to be STRATEGY Our game plan BALANCED SCORECARD Implementation & Focus STRATEGIC INITIATIVES What we need to do DESIRED STRATEGIC OUTCOMES Satisfied SHAREHOLDERS Delighted CUSTOMERS Efficient and Effective PROCESSES Motivated & Prepared WORKFORCE PERSONAL OBJECTIVES What I need to do FinancialCustomers Internal ProcessLearning & Growth STRATEGY Our game plan Balanced Scorecard Provides the Bridge from Strategy to Operations MISSION VISION STRATEGY CUSTOMER: To achieve our vision, how should we appear to our customers? INTERNAL BUSINESS PROCESSES: To satisfy our shareholders and customers, what business processes must we excel at? LEARNING AND GROWTH: To achieve our vision how will we sustain our ability to change and improve? FINANCIAL: To succeed financially, how should we appear to our shareholders? A FRAMEWORK TO TRANSLATE STRATEGY INTO OPERATIONAL TERMS The Balanced Scorecard Focuses an Organization on its Strategy The creation of value, consistent with the mission, is the overarching purpose of organizations Strategy defines the unique organization approach to creating value Conclusion A measurement system designed to influence behavior should describe the strategy A good Balanced Scorecard describes the organization strategy The Premise Measurement Motivates Strategy Balanced Scorecard Integrate your SWOT and Your Long Range Strategic Plan Into Your Strategy Map SW OT Financial Customer Internal L&G Theme 1Theme 2Theme 3Theme 4 SWOT analysis presents an opportunity to express Strengths, Weaknesses, Opportunities, and Threats in the context of the Balanced Scorecard LONG RANGE STRATEGIC PLAN Strategic Objective Strategic Objectives: What the strategy is trying to achieve. Target 82% Targets: The stated level of performance or rate of improvement desired Increase # of MTFs with web access to appointments Initiatives: Breakthrough action programs initiated to achieve targets Initiative Measure % appointments meeting TRICARE access standards Measures: How success or failure (performance) against objectives is monitored. Strategic Theme : Focus on our Customers Internal Process Financial Customer Learning & Growth Operate within Budget Quality, Compassionate Care Streamline Access to Care Eliminate the Hassle Factor Predict & Secure Levels of Funding Required Streamline Access to Care Safe Patient Care Train the Medical Force Recruit & Retain a Quality Medical Force Manage the Care of the Soldier and the Military Family AMEDD Strategic Goal #3: Strategic Objectives : Developing the AMEDD BSC Balanced Scorecard I sensed that the person actually doing the job probably knows more about the job than anyone else and is therefore the one person best suited to improve it Allan Morgensen 1928 S W O T 1. SWOT Analysis Strengths: (These are internal to your organization) - What are your advantages? - What do you do well? - What are your core competencies? Weaknesses: (These are internal to your organization) What could be improved? What is done badly? What conditions lead to poor performance? Opportunities: (These are external to your organization) Where are the outside conditions that you can turn to your advantage? What are the interesting trends? Threats: (These are external to your organization) What obstacles do you face? What is your competition doing? Are the required specifications for your job,products or services changing? 1. Think of the SWOT Issues in Terms of the BSC Perspectives What are my financial strengths, weaknesses, opportunities and threats? From the customers perspective, what are my strengths, weaknesses, opportunities and threats? Internally, consider your processes; what are the strengths, weaknesses, opportunities and threats? From my employees perspective regarding culture, technical infrastructure and competencies/ skills, what are my strengths, weaknesses, opportunities and threats? StrengthsWeaknessesOpportunitiesThreats Financial Customer Internal L&G PIONEER CEDAR MILL AND PENCIL MANUFACTURING, LTD Pioneer, California Located in foothills of the magnificent Sierra Nevada Mountain Range, this company is one of three U.S. companies producing cedar shafts for pencils. This traditional company operating since the Gold Rush in 1849, hires local highlander, mountain folk as employees but recent trends have for urban migration have challenged there workforce population. Additionally, environmental regulations and re-foresting requirements have put a stranglehold on financial growth and resources. Competition is encroaching from overseas interests. The company is a major employment and finance tax base for this rural community. MEGA-GOVERNMENT COMPREHENSIVE HEALTHCARE A non-profit, tax supported governnmental agency having an immense, changing beneficiary population which requires enrollment and dependent upon fiscal legislation and gross national product for program growth. Historically, this agency has been flush with staff and fully funded but now faces the challenge to streamline to accommodate budget shifts and popular opinion as to effectiveness and efficiency. AREA 51 SPACE-AGE COMPUTER SCIENCE DEVELOPMENT CORPORATION New in the computer science, e-business community, this company has the challenge to make a quick, efficient, forward innovative approach to communication. Its goal is to bring the marketing and capital engendered business community together with the opportunities discovered in space industry. Its challenges involve government regulation, security, high-cost equipment, education of personnel, attracting competent workforce and selling their product and service. 1. SWOT + Scorecard = SWOT CARD StrengthsWeaknessesOpportunitiesThreats Financial Customer Internal L&G Theme 1Theme 2Theme 3Theme 4 The Swot card presents an opportunity to combine the SWOT analysis with BSC leveraging the four perspectives as defined with in the Scorecard to build a bridge between the two concepts. Aligned functional, team, and individual performance objectives, measures, goals, and action plans AMEDD Strategy MSC Strategic Plans Unit Strategic Plans Functional, Team, Individual Plans Strategy Maps and Scorecards Formulate and Align Communicate and Allocate Measure and Manage Learn and Improve Obje ctive s Mea sure s Goal s Initia tives Obje ctive s Mea sure s Goal s Initia tives Obje ctive s Mea sure s Goal s Initia tives Objecti ves Measur es Goals Initiativ es Strategy ObjectivesMeasuresTargetsInitiatives Internal Perspective To satisfy our customers/ stakeholders, in which internal business processes must we excel?" Cycle Time Quality Productivity ObjectivesMeasuresTargetsInitiatives Learning Perspective " To achieve our process goals, how must our organization learn and innovate? Market Innovation Continuous Learning Intellectual Assets ObjectivesMeasuresTargets Customer Perspective Image Service Price/Cost To be successful, what customer/stake- holder needs must we serve? Initiatives ObjectivesMeasuresTargets Financial Perspective "To meet our organizational goals, what resources will we need and which constraints must we consider? Profit- ability Growth Share- holder Value Initiatives The Balanced Scorecard converts strategy into an integrated system of objectives, measures, targets, and initiatives defined across four organizational perspectives Internal/Process Customer/ Stakeholder Learning and Growth Financial How Do You Measure Strategy? Balanced Scorecard Measurement System Goals 1. Understand current state 2. Manage by fact 3. Encourage communication 4. Promote focus and alignment XYZ Measures Linkages Draft (8/7/99) F inancial Customer Process Learning&Growth Critical Perspective Measure Actual monthly expenses as a % of budgeted expenses Earned value analysis - Cost and schedule variances Customer satisfaction rating Reporting process - project status % of customers and suppliers identified with defined interdependencies Cost Model defined and implemented Resource Allocation - cycle time to fill requests for resource Resource Planning - staffing levels available to fill requests for resource CMM levels achieved # of Best Practices implemented Prioritization - # of projects with established priority NBI Process - % NBIs with assigned and engaged XYZ representative # of Best Practices identified % of project solutions implemented within required quality and performance levels Scope Management - # of scope change requests % of required meetings attended % of scope changes effecting schedule and budget % XYZ employees w/completed skills analysis % identified XYZ positions w/ completed competency models % XYZ training scheduled & completed % increase in XYZ skill levels XYZ employee satisfaction Increase XYZ process effectiveness & efficiencies Actual project expenses as a % of budgeted expenses XYZ turnover rate Needs assessment gap - required vs. actual skills required % of XYZ employees with access to required tools # of Post Implementation Reviews conducted % of projects with defined and managed project plans Balanced Scorecard Measurement Systems Top Ten Problem List 10. Data Overload 9.Short-Term Focus 8.Lack of Detail 7.Measuring Whats Easy 6.Measuring What Doesnt Matter 5.Focus on Behavior not Process Results 4.Measures that Discourage Teamwork 3.Customer, What Customer? 2.Wrong Performance Drivers 1.Doing It Because Everyone Else Is ! Balanced Scorecard MEASUREMENT LIFE CYCLE: Select Measure Specify Definitions Plan for Deployment Collect Data Take Appropriate Action Retire Measure Validate Data Analyze Report Integrated Strategic Management System (SMS) Vision Goals Strategy Subordinate MSC Balanced Scorecard AMEDD POM Budget R & A 3-5yrs 0-1.5yrs -Objectives -Measures -Targets -Initiatives AMEDD MSC Subordinate Business Case Analysis Business Plans National Security Strategy MHS Strategic Plan Optimization National Military Strategy The Army Plan Army Transformation Strategy TSG Vision Mission Values Joint Vision 2020 AMEDD BALANCED SCORECARD Streamline Access to Care Mission Customer / Stakeholder Financial Army Medical Department Strategy Map 19 Apr 01 Predict and Secure Levels of Funding Required Operate Within Budget Achieve Fiscal Responsibility Healthy Soldiers Protected From Disease and Injury Financial Lower Armys Medically Related Costs Project and Sustain A Healthy and Medically Protected ForceDoD/Army/Soldiers Trained Medics Flexible Medical Forces Reduce Cost of Ownership of the Deployable Force Deploy a Trained and Equipped Medical Force That Supports Army Transformation DoD/Army Smaller Footprint Financial Quality, Compassionate Care Passion for Eliminating Wasted Time Maximize Total (MCSC+ Direct) System Efficiency Manage the Care of the Soldier and the Military FamilyBeneficiary/DoD/Army Healthy Patients and Families Are #1 Financial Eliminate the Hassle Factor Learning & Growth Enable Mission Readiness Recruit & Retain a Quality AMEDD Force Leverage Information Management and Information Technology Train the Medical ForceDevelop Leaders Focus on Our Customers Leverage Science and Technology Internal/ Process Develop, Fast Accurate Analysis, Forecasting, Modeling and Planning Maintain a Reliable Facility and Installation Infrastructure Integrate Direct and Network Care Market the Army Healthcare System Internal Provide State of the Art Health Risk Assessments and Countermeasures Products to Market to Support Army Transformation Monitor Medical Threats and the Fitness of the Force Return Soldiers to Duty Expedient, Compassionate Disposition of Medically Unfit Soldiers Safe Patient Care Implement Clinical and Business Best Practices Align Resources With Population Requirements Leverage Capabilities of Institutional AMEDD NARMC BALANCED SCORECARD Vision Statement Americas leading Regional health system focused on readiness and academic excellence while providing well-coordinated care for the worlds best Army. Building health care teams and medical leaders of competence and character for a lifetime of service to the nation Building Trust, Earning Respect Serving the Area of our Colonial Beginnings and the Nations Capitol with Pride, Competence, and Character Our Operating Principles Patients First! Customer focus Committed leaders Organized teamwork Strong learning Ethic Open, honest communication Dignity and respect in all relations Caring and concern for all our staff Excellence in resource stewardship Data-driven, information smart, involved clinical decision makers North Atlantic Regional Medical Command Supporting Theme: Excellence in Resource Stewardship F-5 Predict and secure levels of resources required by producing timely, accurate, and prospective business case analyses, Budget Estimate, POM, and Mid- year Review submissions. F-6 Ensure all MTFs operate within a budget commensurate with mission and buying power. Objective StatementTarget FY 01MeasuresStrategic Theme: Predict and Secure Levels of Resources Required F5 Operate within Budget F6 Financial NARMC PRIORITY #18 Learning & Growth Mission/ Customer / Stakeholder Financial Predict and Secure Levels of Resources Required F5 Operate within Budget F6 Assist Commanders to Recruit, & Retain a Quality Force L1 Develop Leaders L3 Leverage Information Management/Information Technology IP16 Improve Access IP5 Ensure Quality Patient Care IP4 Facilitate MTF Accreditations IP9 Align Resources with Changing Mission and Population IP18 Improve Facilities Infrastructure IP14 Expedite Medical Disposition of the Soldier IP3 Manage Data Quality Program IP10 Internal/Process Facilitate Marketing of Army Healthcare System IP6 Identify and Implement Best Practices IP17 Project and Sustain A Healthy and Medically Protected Force Healthy Soldiers C1 Protected from Disease and Injury C2 Leverage NARMC Capabilities to Support Institutional AMEDD IP13 Improve MTF Business Process IP11 DoD/Army/Soldiers Quality Compassionate Service C6 Healthy Patients and Families are #1 C5 Ready Active and Reserve Units C3 Trained PROFIS Soldiers C4 Clear Direction and Priorities C10 Innovative Solutions C11 Resources to Support Missions F4 Lower Armys Medically Related Costs F1 Reduce Cost of Ownership of the Deployable Force F2 Monitor, Analyze and Interpret Regional PM Data IP1 Optimize Total (MCSC+ Direct) System Efficiency F3 Ensure a Trained Workforce L2 Improve Training and Readiness Management IP8 Eliminate the Hassle Factor C8 Passion for Eliminating Wasted Time C9 Manage the 91W Transition IP2 Integrate Direct and Network Care IP12 Building Trust & Earning Respect Meet Line Cdrs Expectations C7 Improve Equipment Acquisition IP15 Plan & Implement a Medical Force Protection Program IP7 Ensure Quality Education & Training Programs IP19 Demonstrate Caring & Respect For Soldiers & Civilian Workforce L4 Improve WRAMC Garrison Operations IP21 A Word About Data. Balanced Scorecard Initiatives FY Review and update Mobilization Support Plans and medical annex at RMC PPP/PSP installations 2. Conduct Readiness and AT Site Support Conferences 3. Improve PROFIS Readiness/Tasking Management 4. Improve monitoring and reporting of security threats 5. Improve implementation of Army Training Management System : CTG, Long-range calendar, MRR workshop 6. Maximize training opportunities North Atlantic Regional Medical Command Building Trust, Earning Respect Fully Implement Balanced Scorecard in NARMC ACoS Objective Champion: (Legend): Operations Clinical Logistics Information Management/Information Technology Resource Management Personnel Garrison 7. Develop Comprehensive Clinical Business Plan maximizing MTF utilization 8. Improve predictability and stability of patient care manpower 9. Implement Data Quality Program: validate and monitor DQ process and reports 10. Implement process to monitor and improve DoD Patient Safety Program compliance 11. Develop and implement Complex Care Coordination Plan 12. Improve quality management program compliance in areas of JCAHO, CCQAS, HIPAA, and Patient Safety Program Building A Balanced Scorecard Major Premise: Each organization is unique 1. Preparation: Define the appropriate business unit 2. Interviews: First Round - Senior manager/s with BSC intro and background materials 3. Executive Workshop: First Round - Top management develop scorecard Linking Measurements to Strategy 4. Interviews: Second Round - Tentative Scorecard 5. Executive Workshop: Second Round attend by groups middle managers, champions, measures, targets 6. Executive Workshop: Third Round: Executive Final consensus 7. Implementation Team SPEED ALTITUDE DIRECTION PITCH YAW Three Financial Themes: Revenue Growth and Mix Cost Reduction / Productivity Improvement Asset Utilization / Investment Strategy Three Core Customer Value Propositions: The key concept for understanding drivers of the core measurements of satisfaction, acquisition, retention, and market and account share Product / Service Attributes Customer Relationship Image and Reputation INTERNAL BUSINESS PROCESS Critical internal business processes in which the organization must excel: Deliver on the value propositions of customers in targeted market segments Satisfy shareholder expectations of excellent returns Measures should be focused on internal process that will have the greatest impact on customer satisfaction and achieving organizations objectives Organizational Learning and Growth come from three principal sources: People Systems Organizational Procedures Financial, customer and internal process perspectives of BSC will reveal large gaps between existing capabilities of people, systems, and procedures and what will be required to achieve targets for breakthrough performance 1. Properly constructed BSC should tell the story of the organizations strategy - single strategy 2. The measurement system should make relationship among objectives explicit so they can be managed and validated 3. Articulate the theory of business - competitive excellence 4. Cause and effect should pervade all four perspectives 5. Short term targets 6. Too many measures = too comp;icated for organization to absorb Return on Capital Employed Customer Loyalty On-Time Delivery Process QualityProcess Cycle Time Employee Skills FINANCIAL CUSTOMER INTERNAL LEARNING & GROWTH Cause and Effect Linkages Example Financial ROI Revenue Mix Growth Customer Satisfaction Retention Relationships Process Dev Cycle Hrs w/Cust New Prod Rev L & G Rev/employee Job Coverage Goals Aligned Broaden Revenue Mix Customer Satisfaction Increase Customer Confidence Understand Customer Segments Develop the Offering Employee Satisfaction Improve Customer InformationBroaden SkillsReward Alignment Improve Returns Organizations should have hundreds, thousands of measures that they can monitor to ensure that they are functioning as expected and that will signal when corrective action must be taken. BUT these are not the drivers of business competitive success as are outcome and performance driver measures on BSC Diagnostic Measures: monitor whether business in control Strategic Measures: Define a strategy designed for competitive excellence, direct focus Lead Indicators: Focus management Attention on the Drivers of Performance e.g. Claims Quality Audit Staff Development Plan Lag Indicators: Core Outcome Measures e.g. Claims Frequency Staff Productivity Claims Severity Loss Ratio Financial Profitability Growth Shareholder Value Cash Flow Profits Sales Growth ROI, ROE & ROA Customer Response Service Quality Cycle Time Accuracy On Time Error Rates Organization Innovation Cont. Improve Intellectual Assets New Prod/ Sales Time Reduction Mkt Value Processes Cycle Time Quality Retention Turn Around Time to Mkt Error Rates Turnover Source: Professor. Kaplan and David P. Norton Linking Perspectives To achieve our vision, how should we appear to our customers? To achieve our vision, how will we sustain our ability to change & improve? To succeed financially, how should we appear to our stakeholders? To satisfy our customers, what business processes must we excel at? BSC CHAMPIONS/LEAD 1. Responsible for specific Strategic Objective 2. Identify required coordination 3. Assign subordinate support and tasks Data Sources Collection Method Data Availibility Frequency of reporting Initiatives Supporting Strategic Objective 4.. Monitor progress to target MEASUREMENT SYSTEM TEMPLATES Scorecard Health Check Capability to Drive Change Measures are Non-Conflicting Clear Linkages Between Measures Aligned to Strategic Objectives Balance of Measures Scorecard Health Check Support and Ownership Established Results are Analyzed and Reported Baseline and Targets Identified Measures are Actionable and Tied to Initiatives Comprehensive Definitions Established LTC Judy Harger North Atlantic Regional Medical Command Chief Quality Management, Clinical Operations Comm: (202) DSN: soon to be as of 1 September 2002 Judy Harger (LTC-Retired) North Atlantic Regional Medical Command Quality Standards Coordinator Same contact numbers and The End! Thank you