insights on visionary strategic planning for non profit / non governmental organizations &...
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Insights on Balanced Scorecard-BasedStrategic Planning for Nonprofit / Nongovernmental Organizations
and Government Agencies
Arturo J. Bencosme-Dávila, PhDajbencosme@comcast.net
Strategic & Systems Thinking Consultant and
Affiliate Faculty, Global Nonprofit Leadership Department at Regis University
Arturo J. Bencosme, PhD 2
Introduction
NON PROFIT / NON GOVERNMENTAL ORGANIZATIONS AND GOVERNMENT AGENCIES:
• Typically aim at community interests, social change and the common good:
Philanthropic / social wellbeing motivation is their prime driver: Need to emphasize a vision that refers to the greatest good.
The uncertainty and complexity of the organization’s general environment require significant attention.: should utilize scenario planning.
Navigate in a complex environment beyond market forces: need to clarify the challenge and the uncertainty involved.
• Are characterized by being purpose & mission oriented: finance everything plays a utilitarian role when crafting strategy.
• Demand comprehensive guidance for the entire organization: should consider multiple perspectives to attain the necessary alignment.
Arturo J. Bencosme, PhD 3
Purpose & Mission
Values
Visionary Objectives
Vision
Strategic Themes & Strategy Maps
Balanced Scorecard
Cascading
Initiatives
Results
Introduction(Cont.)
BALANCED SCORECARD-BASED STRATEGIC PLANNING CONSISTS OF AN INTEGRATED PROCESS:IT GOES FROM ESTABLISHING A SENSE OF DIRECTION TO MONITORING RESULTS
AND HAS STRATEGY DEPLOYMENT AT ITS CENTER
The “WHY” and the Social Proposition
Core Ethical Beliefs
Aspired Long Term Results
Picture with Words of the Aspired Future
Strategy Pillars and Key Areas of Action
Strategy Indicators, Measures & Targets
Promoting Involvement via Cooperation
Projects & activities
Monitoring & feedback
Arturo J. Bencosme, PhD 4
BALANCED SCORECARD-BASED STRATEGIC PLANNING: Whole organization enrolment in and alignment with strategy
Visionary: Oriented toward the organization’s guiding ideas.
Challenge Detecting: Surfaces the challenges ahead for the organization.
Strategy Focused: Clarifies strategic thrusts to go past the challenges.
Holistic: Addresses multiple perspectives on the organization.
Strategy Visualizer: Deploys visually vision-strategy connections and the logic to enable and implement the strategy.
Leadership Distributor: Stewards widespread enrolment via cascading throughout all organization levels down to the individual.
Improvable: Sets measurements for determining progress and for improving on strategic thinking & implementation.
Introduction(Cont.)
Arturo J. Bencosme, PhD 5
There are two ways of being lost :
Not knowing where we are going…
And not knowing where we are…!
S E T T I N G T H E C O U R S E
?
?
Arturo J. Bencosme, PhD 6
WHERE WE ARE GOING:
Establishing the Organization’s Aspirationthrough
the Governing Ideas
Arturo J. Bencosme, PhD 7
WHERE WE ARE GOING (Cont.)
Arturo J. Bencosme, PhD 8
Governing Ideas are the fundamental statements of what matters to the organization specifically, the future it aspires to build. They are summarized in a visionary narrative.
are deep-rooted ethical beliefs with which the organization identifies itself.
describes the products or services offered as the specific way of manifesting the purpose.
to be achieved in accomplishing the organization’s mission.
is the larger impact sought and why society values the
organization.
PURPOSE
WHERE WE ARE GOING (Cont.)
Arturo J. Bencosme, PhD 9
T h e o r g a n i z a ti o n ’s k e y s t a k e h o l d e r s a r e i n d i v i d u a l s , g r o u p s a n d o r g a n i z a ti o n s ,
w i t h i n a n d w i t h o u t t h e o r g a n i z a ti o n , w h o s e s a ti s f a c ti o n d e t e r m i n e i t s s u c c e s s
o r t h a t t h e o r g a n i z a ti o n n e e d s t o c o n s i d e rt o a d v a n c e t o w a r d i t s s u c c e s s .
SETTING THE VISIONARY GOALS AROUND THE ORGANIZATION’S KEY STAKEHOLDERS’ ATTRIBUTES OF SATISFACTION
EXPANDS THE ENVISIONING PROCESS
WHERE WE ARE GOING (Cont.)
Arturo J. Bencosme, PhD 10
For each stakeholder identified:
What are its satisfaction attributes?
What is its current stand relative to the organization:-support, oposition, collaboration, interdependence, indiference?
What are its strengths and weaknesses, and what opportunities and threats does it offer to the organization?
What is its connection to other stakeholdersand how does that connection operate?
How much power does it have over the organization, and what is the source of such power?
How much interest does it have in the organization and why?
STAKEHOLDER CHARACTERIZATION IS A MATTER OF ORGANIZATIONAL INTELLIGENCE
WHERE WE ARE GOING (Cont.)
Arturo J. Bencosme, PhD 11
Influence Power over the organization: Capacity to affect the organization’s success significantly, either directly or indirectly: the media, providers, politicians, state government…
Degree of Interest in the organization: The magnitude of the attention (knowledge / awareness)
or perception (favorable / against) that it has on the organization.
TWO DIMENSIONS TO INCLUDE IN THE STAKEHOLDER ANALYSIS: INFLUENCE POWER AND DEGREE OF INTEREST
WHERE WE ARE GOING (Cont.)
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ASSESSING THE DIMENSION OF STAKEHOLDER POWER OVER THE ORGANIZATION
If the organization were to pursue its goals and strategies, could/would this stakeholder exert its influence over it?
– Analysis relates to particular goals / strategies– Implementation of some strategies may be within
the approved discretion of a certain stakeholder.– Some stakeholders may not want to exercise their power
WHERE WE ARE GOING (Cont.)
Arturo J. Bencosme, PhD 13
ASSESSING THE DIMENSION OF STAKEHOLDER INTEREST IN DAODAS
If the organization were to pursue its goals and strategies, could/would that ignite / fuel this stakeholder’s interest in it?
– Analysis relates to particular goals and strategies– Is the stakeholder’s interest against or for the organization? – How high is the organization in this stakeholder’s priorities?
WHERE WE ARE GOING (Cont.)
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SUMMARIZING STAKEHOLDER CHARACTERIZATION BASED ON POWER & INTERESTIn
fluen
ce P
ower
(Imag
e, C
onvi
ncin
g)
Degree of Interest(Enablers)
Low High
Low
High Posible Movers Key Players
Less Important Potential Supports
WHERE WE ARE GOING (Cont.)
Arturo J. Bencosme, PhD 15
WHAT TO DO AS A RESULT FROM THE STAKEHOLDER ANALYSISIn
fluen
ce P
ower
(Imag
e, C
onvi
ncin
g)
Degree of Interest(Enablers)
Low High
Low
High
Posible Movers: Tend to their
requirements, keep them satisfied.
Key Players:Special attention,
seek alliances & collaboration.
Less Important:Minimal efforts.
Potential Supports:Show consideration, keep them informed
WHERE WE ARE GOING (Cont.)
Arturo J. Bencosme, PhD 16
STAKEHOLDER INVOLVEMENT MOVESIn
fluen
ce P
ower
(Imag
e, C
onvi
ncin
g)
Degree of Interest(Enablers)
Low High
Low
High
Posible Movers: Involve and consult with them, strive to increase
their interest
Key Players:Focus on them, seek to involve them in
major decisions,i.e., the organization’s
vision.
Less Important:Keep them generally
informed, strive to increase their interest.
Potential Supports:Keep them informed,
involve them in low risk matters
WHERE WE ARE GOING (Cont.)
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GENERAL CONSIDERATIONSFOR STAKEHOLDER MANAGEMENT & INVOLVEMENT
• Orchestrate stakeholder management & involvement efforts following the results from the stakeholder analysis.
• Incorporate the most important stakeholders (key players, possible movers and potential supports) in the organization’s vision & strategy in an explicit manner.
• Maintain current a stakeholder data base, monitoring their evolving characterization.
• Aim at establishing win-win agreements with the key players.
• Develop, implement and keep current an institutional communications plan emphasizing the specifics for each stakeholder.
WHERE WE ARE GOING (Cont.)
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KEY STAKEHOLDER
1
KEY STAKEHOLDER
2
KEY STAKEHOLDER
3
KEY STAKEHOLDER
4
KEY STAKEHOLDER
5
KEY STAKEHOLDER
N…
DRAWING THE ORGANIZATION’S KEY STAKEHOLDER BIG PICTURE…
THE ORGANIZATION
SPECIFY POWER AND INTEREST INTERCONNECTIONS
WHERE WE ARE GOING (Cont.)
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KEY STAKEHOLDER
1
KEY STAKEHOLDER
2
KEY STAKEHOLDER
3
KEY STAKEHOLDER
4
KEY STAKEHOLDER
5
KEY STAKEHOLDER
N…
… AND UNDERSTANDING THE BALANCE TO STRIVE FOR AMONG THE KEY STAKEHOLDERS
THE ORGANIZATION
WHERE WE ARE GOING (Cont.)
Arturo J. Bencosme, PhD 20
BENEFICIARIES
FUNDERS / DONORS
STAFF
VOLUNTEERS
GOVERNMENTREGULATORS
SOCIAL MEDIA
MANY ORGANIZATIONS WOULD CONSIDER THE FOLLOWING STAKEHOLDERS:
THE ORGANIZATION
WHERE WE ARE GOING (Cont.)
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A shared vision of the organization’s successful future will bring about the alignment needed to accomplish its mission.
Visions take the form of a detailed, vivid narrative
-a portrait painted with words-
of what will look like and how will feel
having attained the overarching goals of the organization.
The Visionary Narrative Weaves Everything Together
WHERE WE ARE GOING (Cont.)
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There are two alternative routes to develop a visionary narrative:
• Start with the purpose, mission and values, establish the goals, and then write the narrative.
• Start with a narrative which incorporates the values, purpose and mission, and describes the aspired future and then, intuitively extract the goals from it.
What is important is to be able to inspire for achieving worthwhile goals totally congruent with the underlying essence of the organization: its values, purpose and mission.
Writing Visionary Narratives
WHERE WE ARE GOING (Cont.)
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As we stand on our future, we see ourselves energized and proud as an ever growing number of graduates from our trainings surround us. They show gratitude and support having transformed themselves into the true human beings they are, and are embodying their full potential. As staff, we enjoy a profound sense of purpose and connection among ourselves and to our volunteers, sharing a worthwhile endeavor in caring, truth, endurance, effectiveness and honesty. Our funders and donors are confident on the value of the service that is provided by us to those who participate in our trainings thanks to their generosity and continued support. Our financial sustainability is partly provided by them and from the proceeds from our ever growing training participants. And we strive to remain at the cutting edge of like skill trainings, while continuing to build a community of graduates who are our best ambassadors to society in pursuing our endeavor of contributing to a better world.
Example: Visionary Narrative in a Non Profit OrganizationDedicated to Provide Life Skills for Personal Growth
WHERE WE ARE GOING (Cont.)
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WHERE WE ARE:
Performing the Strategic Analysis to AssessCurrent Reality and the Challenges Ahead
¿
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VISION
REALITY CHECK
HOW FAR ARE WE?
WHERE WE ARE (Cont.)
The strategic analysis starts by determining the GAP
between the aspired state of the organization -as specified in the vision-and its current state relative to that vision.
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WHERE WE ARE (Cont.)
1) A future oriented view with the visionary goals being the focus.
2) Multiple organizational perspectives for formulating comprehensive, organization-wide strategies.
FIN
ANCE
BENEFICIARIES
SOCIETY
PROCESSES LEARNING & GROWTH
PROGRAMS
The “SWOT” analysis assesses the organization’s potential for moving toward its vision: a scan for the organization’s
Strengths, Weaknesses, Opportunities and Threats.
Within the balanced scorecard approach, the SWOT analysis encompasses two dimensions:
Arturo J. Bencosme, PhD 27
The SWOT Analysis’s First Dimension:
Is driven by questions about current reality with respect to attaining the organization’s future vision amidst complexities posed by the environment of the organization’s sector.
STRENGTHS WEAKNESSES
OPPORTUNITIES THREATS
What are the internal advantages?
What can it do better than any other organization?
What unique resources can it draw upon?
What could the organization improve on, and what should it avoid?
What internal factors hamper the organization in materializing its vision?
What external obstacles could stand in the way to success?
Are there any funding / fiscal issues?
What unfavorable trends are emerging?
What are the significant opportunities within the organization’s environment for achieving success?
What favorable trends are surging?
WHERE WE ARE (Cont.)
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Uncertainty needs to be included in the SWOT analysis when looking into the external factors that is,
the uncertainty surrounding the threats and opportunities.
“In the future, instead of striving to be right at a high cost,
it will be more appropriate to be flexibleand plural at a lower cost.
If you cannot accurately predict the future then
you must flexibly be prepared to deal with various possible futures.”
~ Edward de Bono
An effective way to handle the uncertainty in threats and opportunities is via scenarios about the future:
“Should this scenario materialize, then what would be the right strategy to pursue?”
WHERE WE ARE (Cont.)
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FUTURE SCENARIO
“Z”
FUTURE SCENARIO
”X”
FUTURE SCENARIO
“W”
FUTURE SCENARIO
“Y”
CURRENTKNOWNS & UNKNOWNS ABOUT THE
FUTURE
“…Scenarios are stories about the way the world might turn out tomorrow, stories that can help us recognize and adapt to changing aspects of our present environment…”
“…To act with confidence, one must be willing to look ahead and consider uncertainties:
“What challenges could the world present to me? How might others react to my actions?”
Peter Schwartz, The Art of the Long View
WHAT ARE “SCENARIOS”?
WHERE WE ARE (Cont.)
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HOW STRATEGIC SCENARIOS ARE CONSTRUCTED
1. Focus on the key organizational choices: the visionary goals.
3. Identify and analyze the key environment driving forces, and identify uncertainties.
4. Establish scenario logics: the organizing paradigms or theories around which the scenarios will be structured.
5. Select and elaborate the 3-4 most significant scenarios by describing explicitly their plots.
6.Interpret the scenarios: strategic Implications in terms of threats and opportunities.
2. Specify key factors to know about the future to achieve the visionary goals.
Organization’s Overarching
Choices
Key factors about the future needed for strategy crafting
Scenario Logics
Strategy implications
Environmental factors &
trends
SCENARIOS
7. Qualify / Redefine the key factors about the future needed for strategy crafting.
WHERE WE ARE (Cont.)
Arturo J. Bencosme, PhD 31
BOTH THE ORGANIZATION’S WORKING AND CONTEXTUAL ENVIRONMENTS OUGHT TO BE CONSIDERED.
WORKING ENVIRONMENT DRIVING FORCES:
BeneficiariesVolunteersDonors/FundersCompetitorsPartnersRegulatorsCommunities
CONTEXTUAL ENVIRONMENT DRIVING FORCES:
EconomicPoliticalSocialCulturalGeographical
The most uncertain and therefore, the most relevant to scenario construction usually is the contextual environment.
WHERE WE ARE (Cont.)
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Scenario logics are the organizing principles around which the scenarios’ plots are structured: the “theories of the way the world might work" along each of the axes of uncertainty.
1. Identify general, broad, driving forces, applicable to all scenarios i.e.., Government Orientation, Economic Strength, Immigration Reform Progress.
2. Identify trends and combine them to get a series of scenarios
3. Select those which are most significant, naming then meaningfully.
Social Welfare Oriented
Government
Strong Economy
Weak Economy
Free Market Oriented
GovernmentIm
migration Reform
Stalls
“Locomotive Style”
“Navigating in Difficult Waters”
“High Expectations of
the 3rd Kind”
“Mission Almost
Impossible”
Immigration Reform
AdvancesEXAMPLE
WHERE WE ARE (Cont.)
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SWOT Analysis’ Second Dimension:
Supports the balanced scorecard-based strategy crafting process by adopting 4 perspectives on the organization namely,
Organization Beneficiaries, the Community and Society at Large.
Donor and Financial Accountability & Sustainability.
Agility & Efficacy in each of the organization’s key processes.
Organizational Dynamics: Learning & Growth (information, human & organizational capital).
FIN
ANCE
BENEFICIARIES
SOCIETY
PROCESSESLEARNING & GROWTH
WHERE WE ARE (Cont.)
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Within the balanced scorecard approach, a complete SWOT analysis encompasses the strengths, weaknesses, opportunities and threats as seen from the 4 perspectives and takes the form of a “bookshelf” that organizes all aspects of the analysis.
WHERE WE ARE (Cont.)
Arturo J. Bencosme, PhD 35
The next step in the strategic analysis is the “So What?” stage:
…what are the challenges that the organization faces?
The challenges are of two kinds:
1) Challenges to transform the adversities (weaknesses & threats) into possibilities.
2) Challenges to make the most of the advantages: strengths & opportunities.
Match Strengths
to the Opportunities
Transform
Adversities into
Possibilities
WHERE WE ARE (Cont.)
¿
Arturo J. Bencosme, PhD 36
The logic that articulates the means to overcome the challengesthat were determined in the SWOT analysis
is at the core of strategic thinking.
CRAFTING THE STRATEGY
Arturo J. Bencosme, PhD 37
How to go past the challenges in order to attain the visionary objectives under a variety of scenarios about the future?
The answer is:
through crafting and implementing an effective, robust strategy.
S T R A T E G Y
VISION
YOU ARE
HERE
CRAFTING THE STRATEGY (Cont.)
Arturo J. Bencosme, PhD 38
CRAFTING THE STRATEGY (Cont.)
WHAT IS STRATEGY ?
Within the balanced scorecard method, STRATEGY consists of
a set of mutually supporting Strategic Themes
(a.k.a. ¨Strategic Thrusts”)
The strategic themes are the assumptions (hypothesis) about how to drive the organization toward its visionary goalsunder the most significant scenarios about the future.
Usually there will be one strategic theme for each visionary objective expressing what the leadership believes the organization should adopt as a rationale to materialize each such objective.
Arturo J. Bencosme, PhD 39
In order to attain these VISONARY GOALS:
The leaders believe that these STRATEGIC THEMESshould be adopted:
Beneficiaries achieve substantial personal
transformation.
Cultivate the intent and the skills to transform lives among the organization’s staff and volunteers.
Financial Stability & Sustainability.
Impel process improvementwith emphasis on cost efficiency and financial
accountability.
The following are examples of visionary objectives and their corresponding strategic themes in a non profit organization dedicated to provide life skills for personal growth.
CRAFTING THE STRATEGY (Cont.)
Arturo J. Bencosme, PhD 40
OPERATIONALIZING STRATEGY
The next task consists of identifying the key areas of action which will operationalize the set of strategic themes that is, the strategy.
Organization Beneficiaries, community & Society at Large; Financial Efficiency, Accountability & Transparency; Agility & Efficacy in each of the Organization’s Processes; and Organizational Learning & Growth.
The key areas of action comprise the four balanced scorecard perspectives:
CRAFTING THE STRATEGY (Cont.)
Arturo J. Bencosme, PhD 41
CRAFTING THE STRATEGY (Cont.)
FINANCIALHow should we be perceived by our donors and other stakeholders financially wise?
• Transparent & accountable?• Cost efficient?
BENEFICIARIES & COMMUNITYHow should we be perceived by our beneficiaries and society at large?
• What services & products?• What population segments?• What impacts?
INTERNAL PROCESSESHow should our work flow?
• With agility?• With reliability?• Error-free?
ORGANIZATIONAL DYNAMICSHow can we excel at learning collectively to become an intelligent, progressive and cohesive organization with a strong climate of oneness?
THE FOUR PERSPECTIVES DEPICT FOUR DISTINC BUT INTERRELATED STANCES ON THE ORGANIZATION
Arturo J. Bencosme, PhD 42
THE KEY AREAS OF ACTION ARE DISPLAYED THROUGH ”STRATEGY MAPS”:
FINANCIAL
CUSTOMER
INTERNAL PROCESSES
ORGANIZATIONAL DYNAMICS
While For-Profit organizations are finance-driven,
FINANCIALBENEFICIARIES & COMMUNITY
INTERNAL PROCESSES
ORGANIZATIONAL DYNAMICS
Nonprofit / Nongovernmental organizations and government agenciesare mission-driven and financially accountable.
The “strategy maps” depict the causal relationships among the areas of action that implement the strategic themes.
Naturally, the strategy maps of nonprofit / nongovernmental organizations and government agencies are different from those of for-profit organizations.
CRAFTING THE STRATEGY (Cont.)
Arturo J. Bencosme, PhD 43
Enhanced Quality of the Trainings
Offered
Volunteer, Participant & Graduate Relationship
Management
Participants Complete Trainings Successfully
Organizational Learning Focused on Adult
Learning
Staff & Volunteers Align with the Values, Purpose
Mission & Vision
Beneficiaries & Community
Financial (N.A.)
Internal Processes
Organizational Dynamics
STRATEGY MAP EXAMPLE 1ORGANIZATION DEDICATED TO PROVIDE LIFE SKILLS FOR PERSONAL GROWTH
To have the beneficiaries achieve a substantial personal transformation, (Visionary Objective)cultivate among the staff and volunteers commitment and skills to transform lives. (Strategic Theme).
This strategic theme will be implemented through the following key areas of action: Build alignment with the organization’s guiding ideas. Collectively learn adult learning aimed at personal growth. Improve the quality of the trainings being offered. Advance volunteer & graduate involvement processes. Support the participants in successfully completing their trainings.
CRAFTING THE STRATEGY (Cont.)
Arturo J. Bencosme, PhD 44
Improve the Efficiency in Marketing and in Delivering Trainings
Donor & Graduate Relationship Management
Continuity in Training Offering
Staff & Volunteers Align with the Values, Purpose Mission & Vision
Beneficiaries & Community
Financial
Internal Processes
Organizational Dynamics
Donor Continuity, Financial Equilibrium,
Financial Accountability
Enhanced Cost Accounting
STRATEGY MAP EXAMPLE 2
ORGANIZATION DEDICATED TO PROVIDE LIFE SKILLS FOR PERSONAL GROWTH
In order to achieve financial stability & sustainability, (Visionary Objective)Articulate process improvement with emphasis on cost efficiency and financial accountability. (Strategic Theme).
This strategic theme will be implemented through the following key areas of action: Build alignment with the organization’s governing ideas. Improve the cost efficiency in the trainings being offered and in marketing efforts. Advance donor & graduate involvement processes. Improve cost accounting and fund allocation. Strengthen relations with donors & graduates. Ensure continuity in training offering.
CRAFTING THE STRATEGY (Cont.)
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SUPERIMPOSING THE CAUSAL RELATIONSHIPS FOR THE THEMESGENERATES AN OVERARCHING STRATEGY MAP
CRAFTING THE STRATEGY (Cont.)
Arturo J. Bencosme, PhD 46
SUCH A COMPACT VISUAL REPRESENTATION OF THE ORGANIZATION’S STRATEGIC THINKINGCAN BE USEFUL AND POWERFUL:
The organization’s leaders can make it availableto all the staff members and volunteers as
a “pocket strategy guide” to remind everyone of what the organizations aspires to be
and the path that has been chosen - its strategy.
CRAFTING THE STRATEGY (Cont.)
Arturo J. Bencosme, PhD 47
INDICATORS & MEASURES FOR STRATEGY EXECUTION
Arturo J. Bencosme, PhD 48
Strategic management requires measuring progress toward the vision
and quantitatively supporting strategic decision making
“What you can measure you can manage.”
INDICATORS & MEASURES FOR STRATEGY EXECUTION (Cont.)
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Measurements and targets will empower the organization to monitor its progress toward its vision and to gauge feedback for improvementin the strategy being implemented.
INDICATORS & MEASURES FOR STRATEGY EXECUTION (Cont.)
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Visionary Indicators: depict the organization’s current reality in terms of the degree to which the organization is attaining its visionary objectives.
Strategic Key Performance Indicators: depict the extent to which the key areas
of action which implement the strategy are being undertaken.
TWO SETS OF INDICATORS
INDICATORS & MEASURES FOR STRATEGY EXECUTION (Cont.)
Arturo J. Bencosme, PhD 51
The Visionary Objective Indicators: Express the degree to which the organization is actually making progress in materializing its visionary objectives.
Provide an objective way to verify the validity of the assumptions made when developing the strategy. Were the strategic themes or thrusts the right ones?
Help all levels of the organization strive for alignment with the vision.
INDICATORS & MEASURES FOR STRATEGY EXECUTION (Cont.)
Arturo J. Bencosme, PhD 52
The Key Strategic Indicators:
Reflect the degree to which the key areas of action are being undertaken which in turn, signal that the strategy is actually being implemented.
There might be more than one key strategic indicator for each area of action.
The system of key strategic indicators for the areas of action in the four perspectives will bring to life the balanced scorcard for the organization.
They will help all levels of the organization focus on what matters strategically.
INDICATORS & MEASURES FOR STRATEGY EXECUTION (Cont.)
Arturo J. Bencosme, PhD 53
The visionary objective indicators and the key strategic indicators together with the causal relationships among them
can be portrayed in a dashboard: a Strategic Decision Support System.
INDICATORS & MEASURES FOR STRATEGY EXECUTION (Cont.)
Arturo J. Bencosme, PhD 54
Strategy (the set of strategic thrusts or themes) is just a hypothesis about how to move effectively toward the organization vision.
As in science, hypothesis are stated, put to the test and either confirmed or changed.
Attainment of the
Visionary Objectives
(Visionary Objective Indicators)
Degree of Strategy Implementation(Key Strategic Indicators)
Low High
Low
High
!Moving Ahead in Spite of
Little or no StrategyImplementation - Strategy and/ or
Implementation Need to Change
Moving Ahead as Expected
~ Strategy is Validated ~
?Uncertainty Reigns /Organization Adrift
XStrategy Needs to Change
INDICATORS & MEASURES FOR STRATEGY EXECUTION (Cont.)
Arturo J. Bencosme, PhD 55
“Logic will get you from A to B. Imagination will take you everywhere”
“Not everything that counts can be counted, And not everything that can be counted counts”
“The only real valuable thing is intuition”
“Imagination is more important than knowledge”
The usefulness of measurements for strategic decision making determines the value of the information provided by those measurements.
For all this potential value however, quantitative and logical information should be seen only as a means to support intuition and imagination.
INDICATORS & MEASURES FOR STRATEGY EXECUTION (Cont.)
Arturo J. Bencosme, PhD 56
CASCADING THE BALANCED SCORECARD TO INVOLVE THE ENTIRE ORGANIZATION
Arturo J. Bencosme, PhD 57
ALIGNING THE ORGANIZATION WITH STRATEGY
The strategic alignment process consists of cascading it by utilizing the highest-level scorecard as a template
for constructing the scorecards for the other levels top to bottom throughout the entire organization and as a result,
every unit’s goals will be directed to implementing the organization’s strategy.
Cascading the balanced scorecard provides a means of fulfillingthe will to meaning & contribution
on the part of everyone within the organization.
CASCADING THE BALANCED SCORECARD TO INVOLVE THE ENTIRE ORGANIZATION (Cont.)
Arturo J. Bencosme, PhD 58
For successful cascading, everyone in the organization must embody
the organization’s guiding ideas (mission, values, visionary narrative), share the visionary objectives and their corresponding strategic themes,
and understand the objectives and measures in the highest-level scorecard.
From that point downward through the organization, the underlying drive will be one of cooperation.
CASCADING THE BALANCED SCORECARD TO INVOLVE THE ENTIRE ORGANIZATION (Cont.)
THE BEGINNING OF THE CASCADE
STRIVING TO SUPPORTT H E N E X T L E V E L U P
Each organizational level needs to find the answers to the question:
“How can we cooperate at our level to help the organization achieve its goals?”
Arturo J. Bencosme, PhD 59
THE CASCADING PROCESS IS DRIVEN BY A SENSE OF COOPERATION
Successive cascading to a particular organizational level begins by looking at the next upward level scorecard, and identifying the objectives and measures within it with which this level can cooperate.
The scorecard at any level will align with the next upward level’s scorecard by cooperating through the same, or a sub-set or even different, yet congruent objectives, or through objectives in the same or in other perspectives.
CASCADING THE BALANCED SCORECARD TO INVOLVE THE ENTIRE ORGANIZATION (Cont.)
In the end, all the objectives at highest level must be supported by the cascade of scorecards throughout the organization.
Arturo J. Bencosme, PhD 60
CASCADING THE BALANCED SCORECARD TO INVOLVE THE ENTIRE ORGANIZATION (Cont.)
SEVERAL BALANCED SCORECARD CASCADING PATTERNS ARE AVAILABLE
Identical to the Next Upper LevelThe objective is the same as in the next upper level.
Contributory to the Next Upper LevelAn objective in the cascaded scorecard that is differentfrom those in the next upper level still contributes to an objective in the next upper level.
Unique to the LevelAn objective in the cascaded scorecard that is exclusive to the level.
Shared between Several Cascaded LevelsAn objective in the cascaded scorecard that is jointly owned by more than one scorecard.
Next Upper Level
Cascaded Level
Arturo J. Bencosme, PhD 61
Units such as human resources, accounting, finance, information technology and so forthprovide specialized services to the other units.
Balanced scorecard for shared service units ensurethat the services they provide support the units they serve in achieving their strategic objectives.
The shared service units will determinewith which strategic objectives in the units they servethey can most directly cooperate and based on that, develop their own strategic objectives.
The highest-level scorecard in the organization may also contain objectives with which the shared service units can directly cooperate.
CASCADING THE BALANCED SCORECARD TO INVOLVE THE ENTIRE ORGANIZATION (Cont.)
CONSTRUCTING THE SHARED SERVICE UNIT BALANCED SCORECARDS
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CASCADING THE BALANCED SCORECARD TO INVOLVE THE ENTIRE ORGANIZATION (Cont.)
TOP ORGANIZATION LEVEL
OPERATIONAL UNIT 1
SHARED SERVICE UNITS
OPERATIONAL UNIT 2
ALL THE ORGANIZATION’S LEVELS AND UNITS ARE ENCOMPASSED IN THE CASCADING OF THE STRATEGIC OBJECTIVE GOALS
Each unit is thus directed to cooperate in implementing the organization’s strategy by deploying their corresponding unit level goals and objectives to support those of the unit to which they report (operational units) or to which they serve (shared service units).
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MAKING THE BALANCED SCORECARD PERSONAL Cascading the Balanced Scorecard to the personal level can enhance significantly the employee, manager or executive performance appraisal process.
Personal Balanced Scorecards:
• Build awareness of, and commitment to the organization’s strategy and encourage comprehension of cascaded scorecards since that understanding is a pre-requisite to developing their own.
• Clarify personal – organizational strategy connections as it depicts the impacts from individual’s decisions and actions on the organization’s overall results.
• Motivate the individual for goal-setting processes by underscoring the importance of each one to the organization’s success.
CASCADING THE BALANCED SCORECARD TO INVOLVE THE ENTIRE ORGANIZATION (Cont.)
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Key elements of incentive compensation and capacity buildingshould connect to the balanced scorecard strategic alignment process:− In the personal scorecard construction process, the individual is the protagonist
albeit mentoring and coaching might be in order.
− If the compensation is performance-related, the individual establishes the appropriate weights for each measure and each perspective.
− Last but not least, a personal, individualized development plan is constructed in connection with the goals established on individual scorecard.
SIGNIFICANCE OF CONSTRUCTING PERSONAL BALANCED SCORECARDS
CASCADING THE BALANCED SCORECARD TO INVOLVE THE ENTIRE ORGANIZATION (Cont.)
The creation of personal scorecards completes the cascading from executives and managers to the line workers.
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Monitoring the cascade supports feedback and learning:
Verifying that the measures are complete and timely, the targets are stretching yet realistic, and all units are working cooperatively.
Verifying that alignment is consistent
throughout the organization: The strategic planning team reviews
all the cascaded scorecards and work with their counterpart teams in each unit to ensure consistency and completeness.
Organization-wide learning and improvement is done through staff forums and town halls, and specially, through communities of practice.
Individuals are encouraged to invite their peers to help improve their scorecards.
CASCADING THE BALANCED SCORECARD TO INVOLVE THE ENTIRE ORGANIZATION (Cont.)
REVIEWING AND EVALUATING CASCADED BALANCED SCORECARDS
CASCADING THE BALANCED
SCORECARD
STRATEGY
EVALUATING THE BALANCED
SCORECARDCASCADE
PERFORMANCE MEASUREMENT
PurposeValues Mission Vision
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CHECKING LINKAGES, TARGETS AND COMPLETENESS:
• Linkages to related scorecards. Each scorecard should contain objectives that contribute to the corresponding scorecard in the next upper level.
• Appropriate targets. Only targets that are stretching, specific, realistic and achievable should be established.
• Coverage of all key strategic objectives. All of highest-level strategic objectives should be cooperated with throughout the organization.
CASCADING THE BALANCED SCORECARD TO INVOLVE THE ENTIRE ORGANIZATION (Cont.)
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IMPLEMENTING THE STRATEGY:
MAKING STRATEGY HAPPENTHROUGH STRATEGIC INITIATIVES
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Executing the strategy usually involves leading and managing organizational change: enrolling all organization´s individualsin a collective construction effort.
In particular, the focus is on:
1) Implementing the initiatives that the strategy prescribes: bringing to life the key strategic areas of action.
2) Cascading the balanced scorecard throughout the organization: ensuring that everyone in the organization is responsible for implementing the strategy.
IMPLEMENTING THE STRATEGY: MAKING IT HAPPEN (Cont.)
STRATEGY EXECUTION ≅ CHANGE MANAGEMENT
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ORGANIZATIONAL DYNAMICS PERSPECTIVEInitiatives of particular interest to enhance motivation & alignment: Governing idea collective embodiment; dialogue & systems thinking development programs.
INTERNAL PROCESS PERSPECTIVEInitiatives to improve process effectiveness, efficiency, agility and reliability: process redesign, stakeholder relationship management expansion.
FINANCIAL PERSPECTIVEInitiatives aimed at financial performance and sustainability: improving cost accounting & transparency, developing donation continuity.
BENEFICIARY AND COMMUNITY PERSPECTIVEInitiatives to enhance the organization’s mission: personal development seminar innovation & offering, advocacy & support.
Example: Translating the strategic areas of action into initiativesin an organization dedicated to provide life skills for personal growth.
IMPLEMENTING THE STRATEGY: MAKING IT HAPPEN(Cont.)
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WHERE THE TREAD TOUCHES THE GROUND
A chart can be built that displays the visionary objectives, their strategic themes, the strategic enablers for each strategic theme and the initiatives that enliven the enablers. Each of them with the corresponding measurements and targets.
Visionary Objectives
Visionary Objective Indicators:
Current Measures
Visionary Objective Indicators:
Goals
Strategic Themes
Strategic Areas of Action:
Strategic Objectives
Key Strategic Indicator: Current
Measures
Key Strategic Indicator:
GoalsInitiatives
- - - -
-
-
-
-
-
-
-
-
-
IMPLEMENTING THE STRATEGY: MAKING IT HAPPEN (Cont.)
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IMPLEMENTING THE STRATEGY: MAKING IT HAPPEN (Cont.)
Those initiatives might include continuous activities (i.e., programs such as continuous quality improvement)
and projects (such as key process redesigns).
KEY
AREA
of
ACTI
ON
X
PROJECT X P1
CONTINUOUS ACTIVITY X A 1
CONTINUOUS ACTIVITY X A 2
CONTINUOUS ACTIVITY X A 3
THE KEY AREAS OF ACTION ENCOMPASS INITIATIVES NEEDED TO ATTAIN THEIR CORRESPONDING STRATEGIC OBJECTIVES.
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Purpose & Mission
Values
Visionary Objectives
Vision
Strategic Themes & Strategy Maps
Balanced Scorecard
Cascading
Initiatives
Results
The results obtained from the initiativesstand at the final stageof the balanced scorecard-basedstrategic planning approach which in turn,is a never ending process…
IMPLEMENTING THE STRATEGY: MAKING IT HAPPEN (Cont.)
RESULTS ARE FEED BACK TO PROGRESS STRATEGIC ORGANIZATIONAL LEARNING
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Planning is a team learning effort and a continuous, never ending process.
Every time, the process might cycle through all the stages.
It is at its best when it is specifically aimedat expanding the capacity for clarifying what the organization aspires to be
and the means to materialize such an aspiration.
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In preparing for battle, I have always foundthat plans are uselessbut planning is indispensable.
General Dwight D. Eisenhower
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