measuring strategic performance

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Measuring Strategic Performance PMIWDC June 20, 2011 11:30-13:00 Jenine Serviolo, PMP, SDI® Facilitator SMART Management Consulting, LLC 1

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Are your measures strategic? Are you measuring the right things to make sure your organization is strategically successful? Top-down versus bottoms up tracking.

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Page 1: Measuring Strategic Performance

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Measuring Strategic Performance

PMIWDC June 20, 201111:30-13:00

Jenine Serviolo, PMP, SDI® FacilitatorSMART Management Consulting, LLC

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Introduction

President & CEO, SMART Management Consulting, LLC

PMI Involvement• PfM for the PM 2005• Standard for PfM 3rd Edition

Relevant Certifications & Industry Engagement• PMP• SDI® Facilitator• Master’s Certificate in PM,

GWU• Performance Measure

Blueprint with Stacey Barr• September 2011

o Balanced Scorecard Strategic Execution with Kaplan and Norton

o Relationship Awareness Conference

SMART Management Consulting, LLC

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Agenda

Strategy discussion Performance versus

progress Management

disciplines From the top Cause and effect

o Strategy mappingo Results mappingo Gantt chart

Defining measures Designing reports Report analysis

• Tracking and recommendations

Tips References

SMART Management Consulting, LLC

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Strategy

Strategy is about achieving change or maintaining excellence• Where are we now?• Where do we want to go?• How are we going to get there?

Strategy stretches the organization• Far enough for productive tension• Not so far to cause it to snap

Strategy comes from the top• It is the framework within which we

make operational decisions

SMART Management Consulting, LLC

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Performance vs Progress

Performance focuses on meeting objectives• Strategic• Top down view• Used by Executive Leadership and Portfolio

Managers to assess and manage strategy execution Progress focuses on hitting milestones

(schedule, cost, scope)• Tactical• Bottom up view• Used by Program and Project Managers to explain

performance variances to Portfolio Managers and Executive Leadership

SMART Management Consulting, LLC

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Focus by Management Discipline

Management Layer

Management Focus

Executive Leadership

Give us the overall direction to achieve the mission and vision

Organizational Performance

Portfolio Management

Ensures we do the best combination of work to meet the mission and achieve the vision

Portfolio Performance to meet objectives

Program Management

Ensures we do the work most efficiently to deliver benefits in a coordinated fashion

Program Performance to deliver benefits

Project Management

Ensures we do the work right - on schedule, within budget and scope

Project Progress to meet

milestones

The related management disciplines of Portfolio, Program and Project are also known as P3M3

SMART Management Consulting, LLC 6

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Portfolios

A portfolio is a collection of projects or programs and other work grouped together to facilitate effective management to meet strategic business objectives. (PMBOK® Guide – Fourth Edition)

The components of a portfolio are quantifiable; that is, they can be measured, ranked, and prioritized. A portfolio is a true measure of an organization’s intent, direction, and progress

Portfolio management (PfM) is the coordinated management of portfolio components to achieve specific organizational objectives. (PMI® Standard for Portfolio Management – Second Edition)

SMART Management Consulting, LLC

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Programs and Projects

A program is a group of related projects managed in a coordinated way to obtain benefits and control not available from managing them individually

Program management (PgM) is the centralized coordinated management of a program to achieve the program’s strategic objectives and benefits. It involves aligning multiple projects to achieve the program goals and allows for optimized or integrated cost, schedule, and effort (PMI® Standard for Program Management – Second Edition)

JS, (45) SMART Management Consulting, LLC 8

A project is temporary endeavor undertaken to create a unique product, service or result

Project Management (PM) is the application of knowledge, skills, tools and techniques to project activities to meet the project requirements (PMBOK® Guide – Fourth Edition)

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From the top

What do we need to achieve?• Goals Objectives

What do we need to Start, Stop or Change to achieve our objectives?

Alignment• Cascade down• Link up

SMART Management Consulting, LLC

The Strategy Pyramid from Nonprofit Strategy Revolution: Real-Time Strategic Planning in a Rapid-Response World by David La Piana

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Cause and Effect

Cause and Effect relationships • Direct correlation between completing a work effort

and gaining a benefit or meeting an objective Cause

• Initiatives (Annual, Business, Corporate Plans)• Portfolios, Programs, Projects, Operational Activities

Effect• Goals, Objectives, Benefits

SMART Management Consulting, LLC

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Results Mapping

Stacey Barr • Performance Measure

Blueprint• Define the results that

spell success and depict them showing cause and effect relationships

SMART Management Consulting, LLC

Success

Corporate Capability

Process

Activity

Results Mapping StaceyBarr.com

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Results Mapping

Focuses on the results of each area

Lines indicate key relationships• Companion• Cause and effect• Lead-Lag• Conflict

SMART Management Consulting, LLC

Results Mapping StaceyBarr.com

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Strategy Mapping

Balanced Scorecard (BSC) is an industry best practice approach to manage strategic performance and is used for strategic planning

First detailed in a series of articles and books by Drs. Kaplan and Norton

Balances the Financial perspective with• Customer• Internal processes• Learning and growth

Requires us to develop objectives, metrics, collect data and analyze the organization relative to each of these perspectives

SMART Management Consulting, LLC C

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Objective

Objective

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Objective

Mission/Vision

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A strategy map assigns strategic objectives to each BSC perspective and defines relationships between efforts

• Reflects complete set of key objectives to achieve the vision

• Defines cause and effect relationships between objectives

• Action plans, performance measures and other detailed plans are developed and executed to support the strategy map

The balanced scorecard framework is recognized by the General Accountability Office (GAO) and used by the Department of Defense and other government agencies

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Objective

Objective

Objective

Objective

Objective

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Objective

Mission/Vision

Placement of Customer &

Financial perspectives

reflect working with Government

Organizations

Strategy Mapping

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Objective Gantt Chart

SMART Management Consulting, LLC

Excerpt from PMI’s Project Management Journal, December 2010: Measuring Portfolio Strategic Performance Using Key Performance Indicators by Hynuk Sanchez and Benoît Robert

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Objective

Statement of what must be achieved and what’s critical to its success

The level of performance or rate of improvement needed

How success in achieving the strategy will be determined

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Objective

Objective

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Objective

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Objective

Measure TargetKey programs, projects, activities required to achieve objectives

Initiative

Mission/Vision

Defining Performance Measures

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Defining Performance Measures

Focus on objectives using the measure and target

ExampleObjective: Develop and deploy timely IT solutions (from IT department)

Measure: By 30 SEP 2011 complete 50% of projects within 20% of their first approved date and cost baseline

SMART Management Consulting, LLC

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Defining Performance Measures

Measurement worksheet• Assigns ownership and responsibility• Defines data at lowest levels

o Key termso Calculationso Assumptions

• Sets data collection and reporting dates• Key communication tool

o Output becomes part of Strategic Communications Plan

SMART Management Consulting, LLC

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Performance Measure Worksheet

SMART Management Consulting, LLC

Measure Status Is this measure fully operational, in use but needs updating or is it new? If it is fully operational or in use, please note the name by which the measure is currently identified today.

Definition of Key Terms

What terms need clarification to remove ambiguity from the measure or target?

Counts, Calculations or Formulas

How will the measure or target will be calculated? Be as specific as possible.

Indicator Criteria Define ranges for Red, Orange, Yellow and Green.

Baseline Status Is the measure baseline fully established, in progress, not yet started or is a baseline not applicable to this measure? Please add any relevant detail. If in progress, or not yet started, what needs to be done to establish the baseline?

Assumptions What assumptions are being made about the measure, the data, processes, etc.?

ExampleObjective: Develop and deploy timely IT solutions (from IT department)

Measure: By 30 SEP 2011 complete 50% of projects within 20% of their first approved date and cost baseline

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Measure Worksheet

SMART Management Consulting, LLC

Data Sources From where will the Owner get the data – may be an electronic data store, data call, survey results, etc.

Data Collection Procedure

What processes, procedures and tools will the Owner use to gather the data from the source(s) and get the collected data to the Reporting Branch?

Data Collection Frequency

How often will the data collection procedure be followed?

Report Frequency How often will the Report Branch brief the C level executive?Report Format What format (run chart, list, pie chart, etc.,) will be used?Report Forum In what forum with the performance reports be briefed? Report Location Where will the Perform Reports be stored?First Data Due Date On what date will the first data be provided to the Reports Branch?First Data Collection Period

What period will the data of the first report cover?

First Reporting Date On what date will the Performance Report first be briefed?Change Management When will this measure be reviewed again to ensure it is sustainable

and remains valid for the goal?

ExampleObjective: Develop and deploy timely IT solutions (from IT department)

Measure: By 30 SEP 2011 complete 50% of projects within 20% of their first approved date and cost baseline

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Performance Reports

Focus on Objectives• Are we meeting the objective target? • Allow program and project managers to

focus on initiatives. Use their progress data, along with other information to explain performance variations

Chart and graph development• Keep it simple• Minimum “data bite” requirements

o Target and points over timeo Context or trend data

SMART Management Consulting, LLC

Respond don’t react to data.

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Performance as Aggregate

SMART Management Consulting, LLC

Bottoms up focus

Example from PMI® Standard for Portfolio Management – Second Edition

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Performance by Objectives

SMART Management Consulting, LLC

Includes objective, measure, target and performance summary

Top down focus

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Explaining Performance

SMART Management Consulting, LLC

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Explaining Performance

SMART Management Consulting, LLC

Use progress charts and reports to explain performance variations – only as needed

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Performance Reporting Tips

Start reporting objective performance right away – don’t wait for supporting initiatives or projects to start• Practice data collection• Keep performance visible• Acts as catalyst to start strategic initiatives• May see changes in performance without starting initiatives

Use top down performance reporting to stay strategically focused• Use bottom up reporting to help explain variances in strategic

performance Hold formal performance review meetings Ensure each level of management is clear on their

performance reporting role and responsibility

SMART Management Consulting, LLC

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Performance Reporting Tips

Use performance reporting as part of your communications plan

Provide training on chart development and reading

Keep charts simple Document and communicate what

defines your red, orange, yellow, green performance indicators • Be consistent

Once enough data is collected add control charts to graphs

SMART Management Consulting, LLC

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References

Strategic Planning • Balanced Scorecard

o Kaplan and Nortono Palladium Groupo Balanced Scorecard Institute

• Bascom “Dit” Talleyo Instructor and Coordinator, Intelligence Analysis Program, JHU o President at Corporate and Government Consulting

Strategic Planning Leadership

Performance Measurement• StaceyBarr.com

o Performance Measurement Specialisto Performance Measurement Blueprinto Key Performance Indictor Library

SMART Management Consulting, LLC

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References

Leadership & P3M3• Personal Strengths Publishing

o Strength Deployment Inventory® (SDI)o Strategic Intelligence

• Project Management Institute (PMI)• Project Smart

Chart and Graph Development• Steve Souza, Liquilight.com

Discover Your Data

• Stephen Few

SMART Management Consulting, LLC

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Questions?

[email protected]

SMART Management Consulting, LLC offers training, workshops and consulting in all aspects of

SMART Management Consulting, LLC

Emotional Intelligence

Conflict Management

Performance ManagementTeam building

Delegating and Coaching

Balanced Scorecard

Strength Deployment Inventory ®

Portfolio Prioritization and

Ranking

• Leadership• Strategic Planning• Sustainability as Strategy• Portfolio, Program and Project

Management (P3M3)

Strategy Execution