creating strategy-focused public sector...
TRANSCRIPT
October 10-12, 2006 Washington, D.C.
Government Summit 2006
Balanced Scorecard Collaborative/Palladium • 55 Old Bedford Road • Lincoln, MA 01773 • Tel: 781.259.3737 • Fax: 781.259.3389 • bscol.com
Creating Strategy-Focused Public Sector Enterprises
Dr. Robert S. KaplanBaker Foundation ProfessorHarvard Business School
203_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
The Balanced Scorecard Model of Value CreationPrivate Sector Organizations
"If we succeed, how will we look to our shareholders?”
Financial Perspective
"To achieve our vision, how must we look to our
customers?”
Customer Perspective
"To satisfy our customers and shareholders, at which processes must we excel?”
Internal Perspective
“How do we align our intangible assets to improve critical processes?”
Learning & Growth
“How do we have a social impact with our citizens/constituents?”
Mission (Customer) Perspective
“How do we attract resources and authorization
for our mission?”
Support Perspective
Public Sector Organizations
“To have a social impact and to attract resources and support, at which processes must we excel?”
Internal (Operational Capacity)
“How do we align our intangible assets to improve critical
processes?”
Learning & Growth
“How should we manage and allocate our resources for maximum social impact?”
Financial
303_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
1992 20001996 20041993 2005 2006
A MeasurementSystem
(The BalancedScorecard)
A Performance Management System
(Strategy-FocusedOrganizations)
A Core Competency(Strategy Execution)
The Balanced Scorecard has gone through three distinct cycles of evolution.
403_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
Balanced Scorecard Hall of Fame for Executing Strategy By Industry 2001 – 2006
503_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
Most organizations do not know how to execute strategy.
Between 1988 and 1998, only 13% of companies were able to deliver 5.5% annual real earnings growth and deliver returns that covered their cost of capital.
Only 15% of the 794 programs reviewed in Fiscal
2005 were rated effective.
- Fortune Magazine - Barron’s
- Chris Zook, Profit From the Core
Companies on average realize only 60% of the financial performance their strategies promise... more than one-third of executives surveyed placed the figure at less than 50%.
- Harvard Business Review
Less than 10% of strategies effectively formulated are
effectively executed.
603_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
According to a recently completed Monitor study, strategy execution is the single most important issue to the executive suite.
"Using a 1-5 scale, please rate the level of interest / concernyou have in the following business issues at present.”
2.953.07
3.263.353.463.513.53
3.703.703.723.733.98
3.78
1
2
3
4
5
Executing the strategy
Markettrends
Regulatory, compliance, and risk management
Growing the top line
Customer service
Forecasting & reporting effectiveness
Product / service fulfillment
HR
Product innovation / time to market
IT capabilities ITO / BPO Investor relations
SCM
All Positions n = 354
Source: Monitor Analysis. Survey of 354 executives; 49% of respondents are C-level and 56% are from companies with revenue greater than $1 billion
703_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
Do you have a formal strategy execution process in place?
Describe your organization’s current performance.
Yes No(54%) (46%)
…We have breakthrough results…we are performing better than our peer group
Sub-Total
12%58%70%
7%20%27%
…performing at the same level as our peer group.…performing at a lower level than our peer group…not performing at a sustainable level
Sub-Total
18%9%3%30%
30%27%16%73%
Winners
Losers
Source: BSCol Research (Survey of 143 performance management professionals, drawn from BSCol On-Line Community, March 2006)
Organizations with a formal strategy execution process in place are dramatically outperforming organizations without formal processes.
803_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
Strategy-Focused Organization Best Practices Framework
IV. MOTIVATE TO MAKE STRATEGY EVERYONE’S JOB
I. MOBILIZE CHANGE THROUGH EXECUTIVE LEADERSHIP
III. ALIGN THE ORGANIZATIONTO THE STRATEGY
V. GOVERN TO MAKE STRATEGY A CONTINUAL PROCESS
II. TRANSLATE STRATEGY TO OPERATIONAL TERMS
903_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
Strategy-Focused Organization Best Practices Framework
IV. MOTIVATE TO MAKE STRATEGY EVERYONE’S JOB
I. MOBILIZE CHANGE THROUGH EXECUTIVE LEADERSHIP
III. ALIGN THE ORGANIZATIONTO THE STRATEGY
V. GOVERN TO MAKE STRATEGY A CONTINUAL PROCESS
II. TRANSLATE STRATEGY TO OPERATIONAL TERMS
1.1 Leaders drive strategy execution1.2 Executives make case for change
1.3 Leaders reinforce strategic priorities1.4 Well articulated strategy exists
1.5 Office of Strategy Management established
1003_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
The Mobilization Phase: Getting Started
A variety of situations suggest the need for a new and better way to manage strategy
Strategic ShiftNew CEO or senior executiveNew strategy
UnderperformingValue gapPoor quality or customer serviceOperational execution
New RegulationsGPRA, CFO ActPresident’s Management Agenda
Triggers of Change
These situations present an opportunity to introduce the Balanced Scorecard / Strategy-Focused Organization framework as a “new way to manage”.
√√
√√
√√√
A successful Balanced Scorecard program starts with a recognition that it is
not a metrics project…
IT’S A CHANGE PROCESS
1103_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
Why do leaders use strategy maps to create value?
STRATEGY
MAP
EXECUTIVE CONSENSUS AND ACCOUNTABILITY
Building the strategy map eliminates ambiguity and clarifies responsibility.
CREATE ALIGNMENT
Each part of the organization and each individual link their objectives to the strategy map.
EDUCATE AND COMMUNICATE
Communicate and educate the workforce about the strategy.
PROMOTE TRANSPARENCY
Communicate and educate employees, constituents, support authorities, and the public.
9 StratMaps-eab-3.23.04DOCID# ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com
Stak
ehol
der
Inte
rnal
Pro
cess
Lear
ning
& G
row
thRe
sour
ces
Optimize Delivery of Non-Core
Competencies
Improve Business Practices
Leverage Technologies into Key Processes and
Equip Army
Improve Acquisition with
Industries
People
Secure ResourcesPeople, Dollars, Infrastructure, Installations, Institutions(I3) and Time
“Adapt Institutional Army”
Organize the Army
Train the Army
Man the ArmySustain the Army
Equip the Army
ProvideInfrastructure
Ready Force for Today and Tomorrow
“Adapt/Improve Total Army Capabilities”
Mis
sion
Secure Resources
Opportunity for Service
Competitive Standard of Living
Pride and Sense of Belonging
PersonalEnrichment
Leader Training and Leader Development
Communicate across the Army
Essential and Enduring Capabilities
Execute Prompt Response
Mobilize the Army
Conduct Forcible Entry
Shape Security Environment
Sustained Land
DominanceSupport Civil Authorities
Core Competencies
“Provide necessary forces and capabilities to the Combatant Commanders in support of the National Security and Defense Strategies.”Provide Relevant and Ready Land Power Capability to the Combatant Commanders and the Joint Team
Train and Equip Soldiers and Grow Leaders
16 JAN 04
“Develop Joint,Interdependent
Logistics Structure”
“Build theFuture Force”
“Optimize ReserveComponent Contributions”
“Sustain Right All Volunteer Force”
“Support Global Operations”
“Adjust GlobalFootprint”
Army Strategy Map
1203_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
Strategy-Focused Organization Best Practices Framework
IV. MOTIVATE TO MAKE STRATEGY EVERYONE’S JOB
I. MOBILIZE CHANGE THROUGH EXECUTIVE LEADERSHIP
III. ALIGN THE ORGANIZATIONTO THE STRATEGY
V. GOVERN TO MAKE STRATEGY A CONTINUAL PROCESS
II. TRANSLATE STRATEGY TO OPERATIONAL TERMS
2.1 Strategy translated in strategy map2.2 Strategy described in Balanced Scorecard
2.3 Targets identified for all measures 2.4 Strategic initiatives rationalized
2.5 Executives accountable for initiatives
1303_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
#1. The constituent/ support value propositions define the source of value.
#2. Processes create value for the constituent and support authority.
#3. Intangible assets must drive the processes critical for the strategy.
#4. Cause-and-effect relationships define the logic that converts intangible assets to tangible outcomes
#5. Resource management performance enables the agency to maximize the impact from its resources to succeed with its strategy.
Process Perspective
Learning & Growth Perspective
Constituent/ Support Perspectives
Price Quality Time Function Relation Brand
Product/Service Attributes
Operations Management
Processes
Constituent Management
Processes
Resource Management Perspective
Budget Management
Adequate Resources
Relationship Image
Regulatory and Social Processes
Human Capital
Information Capital
Organization Capital
“Support”Management
Processes
The Balanced Scorecard / strategy map framework is based on a simple model of value creation.
1403_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
But remember, strategy maps are just one element of the complete Balanced Scorecard required to create value.
What the strategy is trying to achieve
Train Units and Leaders
Balanced Scorecard
Objective
Percent trained
How performance against the objective is quantified
Measure
80%
The level of performance
or rate of improvement
needed
Target
Analysis of training needs
Processes and programs
required to reach the
target
Initiative
$XXX
Budget
Action Plan
Strategic Theme Readiness
Inte
rnal
Lear
ning
Res
ourc
esSt
akeh
olde
r
Train Units and
Leaders
Improve Leaders
Development
Secure Resources
Man critical positions
Provide trained Forces
Develop Training
Requirements
1503_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
Vision: Become the Premier Standard Bearer for Domestic Economic Development
Mission: To help our partners across the nation create wealth and minimize poverty by promoting a favorable business environment to attract private capital investment and jobs
Financial
Stakeholder-Become an effective, efficient, results-oriented agency
TaxpayersWhite House/OMBCongressDept of Commerce
Customer
Internal
Learning & Growth
Be Knowledgeable &Prompt Economic
Development Advisors
AdvanceAdministration’s
DomesticAgenda
Show VisibleResults
Maximize EDAImpact onDistressed
Communities
MaximizeAdministrativeEfficiency &
Effectiveness
MaximizePrivate Sector
Leverage
Maximize HigherSkill / HigherWage Jobs
Provide aTransparent &Responsive
Process
ProvideInformation &
TechnicalAssistance
Policy Leadership High Impact Investment Organizational ExcellenceUpdate &Expand
InvestmentPolicyProvide
PolicyOptions
EnhanceResearchCapability
Enhance DueDiligence
Expand Deal Flow(Invest with New
Partners)
EmphasizeFundingPriorities
ImproveCommunication
StrategyStandardizeProcesses
Align Resourceswith Strategic
Priorities
TechnologyEnable KeyBusiness
Processes
ImproveAnalytical
Skills
Attract TopTalent
DevelopTechnologyProficiency
EstablishEnterprise
Information SystemEstablish
PerformanceCulture
Make Investmentsthat are Engines of
Growth
Distressed CommunitiesInvestment PartnersPrivate Sector
Enhance PostApproval
Monitoring
Public Sector: US Economic Development Administration
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EXCELLENCE IN INTEGRATED POLICING
Safe homes, safe communities
OPERATIONSBRIDGE-BUILDING
Contribute valued public policy advice
Be community
leaders
Communicate our vision
I.5
I.4
I.2
Build strategic alliances
I.3
Ensure leadership for
the future
Pride & commitment to
service
HR policies & practices to
support strategy
Positive & healthy work environmentL.2 L.3 L.4
Provide enabling equipment & technologyL.1 L.5
Be the best managed organization in
government
Live core values that make us a trusted
partner
Excel at leading-edge policing
WORLD-CLASS POLICE SERVICE (CLIENTS, PARTNERS AND STAKEHOLDERS)
C.3
Assure accountability at
all levels
Exemplify modern
management principles &
practices
MANAGEMENT EXCELLENCE
Excel at resource management
Reduce the threat & impact
of Organized
Crime
Prevent & reduce youth involvement in crime as victims and offenders
Reduce the threat of terrorist
activity in Canada and
abroad
Effective Support of International
Operations/Initiatives
Safer and healthier Aboriginal communities
I.6
I.8
I.7
C.2C.1
PEOPLE, LEARNING & INNOVATION
Maximize Use of the Operations
ModelI.1
Royal Canadian Mounted Police
1703_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
Project Overview: Developing a Strategy for Rio Grande do Sul Province, Brazil
“Measures, Targets, Projects”July 11th Workshop
Future VisionMeeting “O Rio Grande que Queremos”
(March 8th and 9th)
The Strategy“Strategy Map of RS”
April 26th Workshop
11 Thematic Forums (examples)
“Governance Model – Strategic Agenda”August 9th Workshop
Rio Grande do Sul 2020Alignment of societal
interests for a common vision
Translate the future vision into strategic objectives
Creation of a results monitoring system and definition of proposals
to reach the objectives
Proposal validation by the thematic forums
Guarantee the continuity of the Strategic Agenda until 2020
(from project to process)
Infra-structure Education
Market Develop-
ment
Environ-ment
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Activities done
— State diagnosis;
— Shared future vision;
— Main challenges to overcome
Participants— More than 850 people representing
major stakeholders
The Future Vision“O Rio Grande que Queremos” Meeting
(March 8th and 9th)
Future Vision Search – March 8th and 9th
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Future Vision Search – Pictures
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Society in general –Ample survey
Management Forum –Interviews
• Societal involvement:5,000 people200 municipalities(40% of the total);Segments not representedon March 8th and 9th
• 70 interviews with leaders of various segments of society:
Systemic vision of the State via the Strategy Map
Results are consolidated and validated on April 26th
Strategy Map Workshop
The Strategy“Strategic Map of RS“
Workshop of April 26th
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Survey - Pictures
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HealthEducation
Com
petit
ive
Diff
eren
tials
Gro
wth
Axi
sSo
ciet
yD
evel
opm
ent
Foun
datio
ns
Public adminis-tration
Market development
Innovation and
technology
Regional development
Infrastructure
Institutional and regulatory
environmentEnvironmentCitizenship and
social responsibility
Financial resources availability
The best state to live and work
Economic Growth Quality of LifeSocial and Regional Equality
Benchmark in innovation and
technology
Benchmark in human capital
The best state to do business
2303_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
So
ciet
y
Benchmark in innovation and technology
Benchmark in human capital
Economic Growth Quality of LifeSocial and Regional Equality
The best state to do business
Com
petit
ive
Diff
eren
tials
The best state to live and work
Gro
wth
Axi
sD
evel
opm
ent F
ound
atio
ns
Public Administration
Environment
Market Development Innovation and Technology
Regional Development
Health
Citizenship and Social Responsibility
Infrastructure
Integrate companies, research institutes, universities and the Government in leading edge
technology efforts
Promote technology centers that are aligned with a state plan
Establish and execute investment policies and stimulus for innovation
and technology
Modernize and enhance the efficiency of the public administration, including a size
adjustment
Augment the State’s investment capacity through fiscal equilibrium
Guarantee transparency in public administration via a societal monitoring
system
Balance environmental preservation with
development, through clear and stable rules and greater
efficiency of regulating bodies
Promote society's
environmental commitment
through environmental
education
Attract and strengthen companies in strategic sectors, diversifying the regions´
production matrix
Capacitate for entrepreneurship, management and quality, and innovation
and technology
Stimulate exports with a focus on value added activities
Incent and guarantee means of societal
participation in public administration
Guarantee a regional and
integrated strategic plan with social
participation, assuring the
continuity of public policies
Promote family planning and infant mortality reduction
initiatives
Promote health through
preventive actions
Amplify the effectiveness of the health network with
service quality improvement
Implement an integrated transportation logistics network with a focus on greater
efficiency
Establish public-private partnerships and concessions with guaranteed
contractual assurances
Institutional and Regulatory Environment
Education
Financial Resources Availability
Expand the network of full-day schools Define and implement
an educational model focused on qualityInvest in teacher
qualification
Capacitate for the market and citizenship, with the help of
universities and colleges, schools, NGOs, and government and
amplifying professional teaching
Guarantee public safety and trust in institutions Guarantee the stability
and execution of rules
Facilitate credit access
with better orientation
Incent the formation of public and
private savings
Combat informality, piracy and tax evasion
Reduce the State’s tax burden
Promote social responsibility
Guarantee the efficient use and availability of energy at
competitive prices
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Economic Growth
Quality of Life
Social and RegionalEquality
2020 Targets for Rio Grande do Sul
% GDP c.a.g.r.
1,09
3,30 2,21
Rio Grandecurrent situation
Target2020(1)
Challenge
0,198
0,330
0,528
Rio Grandecurrent situation
Meta desejada2020(2)
Challenge
0,8140,901 0,087
Rio Grandecurrent situation
Target2020(3)
Challenge
GINI indicator
(1) Taxa de crescimento anual do PIB real per capita do Chile (média 1994-2004)
(2) Parâmetro do índice de GINI entre Alemanha e Irlanda (2004)
Index of Human Development – IDH (United Nations)
(3) Parâmetro do IDH da Coréia do Sul (2004)
2503_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
Benchmark in innovationand technology
Benchmark in human capital
The best state to do business
Average adult population school rate (years)
Rio Grandecurrent situation
Target2020(1)
Challenge Rio Grandecurrent situation
Target2020(2)
Challenge
% of adult population with high education
(1) Parâmetro da média de escolaridade da populaçãoadulta dos EUA e Coréia do Sul (2000)
(2) Parâmetro da média de população adulta comcurso superior de EUA e Coréia do Sul (2000)
6,80
11,00 4,20
(3) Parâmetro: Irlanda (2004)
21,65%30,85%
9,20%
Índice Geral
Força de Trabalho
Conhecimento e Inovação
Infra-estrutura
SP 1 1 1 2RJ 2 2 2 1RS 3 3 3 4PR 4 4 4 3SC 5 5 6 5
Desafio3%
34% 31%
Rio Grandecurrent situation
Target2020(3)
Challenge
2020 Targets for Rio Grado do Sul
Hi Tech exports (%)Ranking of state competitiveness
2603_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
Strategy-Focused Organization Best Practices Framework
IV. MOTIVATE TO MAKE STRATEGY EVERYONE’S JOB
I. MOBILIZE CHANGE THROUGH EXECUTIVE LEADERSHIP
III. ALIGN THE ORGANIZATIONTO THE STRATEGY
3.1 Corporate contribution to strategy defined
3.2 Enterprise scorecard guides business units
3.3 Enterprise scorecard guides support units
3.4 Scorecards align suppliers and/or customers
3.5 Scorecard reports to board and/or shareholders
V. GOVERN TO MAKE STRATEGY A CONTINUAL PROCESS
II. TRANSLATE STRATEGY TO OPERATIONAL TERMS
2703_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
Alignment in Action
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Cascading the BSC supports alignment and makes the scorecard part of the organization’s day-to-day operations.
EDA HQ
Regions
Departments
Employees
• Cascading the BSC through the organization ensures strategic focus downward and activity alignment upward.
• Additionally, cascading sets up a dialog within the organization that allows best practices to be shared, support functions to focus on high value activities, synergies to be exploited, and, most importantly, strategic learning to take place.
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EDA Will Cascade Quickly into the Regions
Cascading Considerations:What is the cascading ‘philosophy’?
— Cascading will apply a ‘shared’ approach—one that seeks to align regional maps as closely with headquarters as possible to ensure consistency of the strategy.
Who will drive and own the cascading process?— The cascading process will be driven by the headquarters core team (Danette and Sandy). They—with
the participation of regional representatives—will rollout the strategy thru EDA.
Who will participate? How will it work?— Each region will provide two representatives: the Director and a supporting staff member. They will work
with the headquarters representatives over the design period to complete their BSCs. They will participate in three meetings: a strategy mapping workshop, a measures workshop and a deployment workshop.
What is the time-frame for overall completion? In a multi-tier cascade, what is the time frame by level?
— The pace is rapid. Cascading will start in August and is expected to be completed by the start of the next fiscal year (October)
3003_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
Financial
Stakeholder-Become an effective, efficient, results-oriented agency
TaxpayersCongressEDA Headquarters
Customer
Internal
Learning & Growth
Knowledgeable & Prompt Econ. Dev.
Advisors & Practitioners
Advance DOC/EDA
PolicyShow Visible
Results
Maximize EDA Impact on Distressed
Communities
Maximize Administrative
Efficiency & Effectiveness
Maximize Private Sector
Leverage
Maximize Higher Skill / Higher Wage Jobs
Provide a Transparent &
Responsive Process
Provide Information &
Technical Assistance
High Impact Investments Portfolio Management Organizational Excellence
Implement Investment
PolicyGuidelines
Emphasize Funding Priorities
Enhance Due Diligence
Practice Creative and Resourceful Management
Enhance Records
Management
Align Resources w/Strategic Priorities
Attract Top Talent
Develop Technology Proficiency
Establish Performance
Culture
Make Investments that are Engines
of Growth
Distressed CommunitiesInvestment PartnersPrivate SectorEconomic Development
Community
Enhance Post Approval
Monitoring
EDA BSC REGIONAL STRATEGY MAP: SECOND QUARTER FY 2004 COMPREHENSIVE
ImproveProfessional Development
Enhance Communication
Expand Deal Flow
Maximize EDA Impact on Distressed
Communities
Maximize Higher Skill / Higher Wage Jobs
Provide a Transparent &
Responsive Process
Provide Information &
Technical Assistance
Practice Creative and Resourceful Management
Develop Technology Proficiency
Establish Performance
Culture
ImproveProfessional Development
Maximize EDA Impact on Distressed
Communities
Maximize Higher Skill / Higher Wage Jobs
Provide a Transparent &
Responsive Process
Provide Information &
Technical Assistance
Practice Creative and Resourceful Management
Develop Technology Proficiency
Establish Performance
Culture
ImproveProfessional Development
3103_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
Organized Crime
Terrorism
Aboriginal
International
Youth
RCMP: 5 Strategic Priorities Maps
3203_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
RCMP Strategic FrameworkSafe homes, safe communitiesCLIENTS, PARTNERS AND STAKEHOLDERS
OPERATIONS MANAGEMENT EXCELLENCEBRIDGE BUILDING
PEOPLE, LEARNING, & INNOVATION
Invest in/ optimize research for policy
development
I-2CCAPS
Promote use of Restorative processes
I-5
CCAPSImproved service
delivery within Aboriginal Policing
Safer and healthier Aboriginal communities
Provide a culturally
sensitive police service
I-6 CCAPSDemonstrate value for
serviceI-7
CCAPS
Ensure data quality/integrityI-3
OPSBuild new
and strengthen
existing partnershipsI-8
CCAPS
Strategically allocate resources
I-12
OMB
Sound and rigorous stewardshipof RCMP Resources
I-11
CM&C
Build operational capacity and competency
Optimize enabling science &
technology
Recruit, develop and retain the right
people
Communicate effectively
Improve planning and Performance
Management
L-1
I-10
L-3L-2
I-1
HRHR CIO/NPS/
Tech. Ops
SD
Influence public policy
I-9
SD
SD
EXCELLENCE IN INTEGRATED POLICING
I-4
CCAPS
C-1
Aboriginal Strategy Map
CCAPS
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Clients, Partners and Stakeholders
Innovation and Excellence in PolicingExcellence in Operations Bridge Building Management Excellence
Be innovative in our useof technology
L2
Educate employees aboutthe implications of
FAS / FAE
L3
Ensure members receiverelevant and timely,operational training
L1
Foster and Recruit employees, with emphasis on
aboriginal recruitmentL4
Maximize officer safety,employee wellness and
development
L5
Be intelligence led I 10
Develop and facilitate implementation of
Restorative JusticeI 3
People, Learning, Growth and Technology
Market NWT Division internally and externallyI 1
Excel in the modern comptrollership
I 8
Instill commitment, support and understanding for the need for
accountability at all levelsI 9
Provide accurate, timelycommunication and reporting to our clients, partners, and stakeholders
I 7
Establish Diamond Protection Service as an
international centre of excellence
I 2
Expand and Strategically use Traffic
ServicesI 4
Clarify our role,and actively participate in
FAS preventionI 6
Reduce violence & victimization throughprevention, education and enforcement
I 5
outstanding contributionsto the safety, health and well being of
the peopleC 2
quality proactive police servicesfor the needs of the NWT
C 1 C 4
valued strategic partner in protecting Canada’s security and sovereignty in the
north
Provide a culturally sensitive police
serviceI-6
Safe homes, safe communities
Safer and healthier Aboriginal
communities
Northwest Territory Division Strategy Map
C 3
3403_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
Survey of Canadians’ View of RCM Police Services
Canadians' satisfaction level from 2003 to 2005 (% agree):
40
50
60
70
80
90
The RCMP issensitive
to/adapts todifferent cultures
& groups
The RCMP issensitive to/ has a
valued roleregarding
Aboriginal issues
The RCMPprovidesadequate
information aboutits work
RCMP staff gavetimely service
RCMP staff wentthe extra mile
RCMP staff gaveall the information
I needed
2003 2004 2005
Results - RCMP
3503_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
May 2006
3603_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
Strategy-Focused Organization Best Practices Framework
IV. MOTIVATE TO MAKE STRATEGY EVERYONE’S JOB
I. MOBILIZE CHANGE THROUGH EXECUTIVE LEADERSHIP
III. ALIGN THE ORGANIZATIONTO THE STRATEGY
V. GOVERN TO MAKE STRATEGY A CONTINUAL PROCESS
II. TRANSLATE STRATEGY TO OPERATIONAL TERMS
A. RESOURCE MANAGEMENT5.1 Budget is driven by strategy
5.2 Planning for HR/IT linked to strategy5.3 Portfolio of strategic initiatives aligned to themes
B. KEY PROCESS MANAGEMENT
5.4 Process improvement aligned to strategy5.5 Best practice sharing in place
C. LEARNING & CONTROL
5.6 Strategic performance information guides decision making
5.7 Strategy reviewed on regular basis
3703_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
City of Indianapolis: Activity-Based Costing of Public Services
Mayor Stephen Goldsmith guest column, The Indianapolis Business Journal, August 1992.
Government should be measured the same way every other enterprise is measured: By its results.
We shouldn’t talk in terms of programs funded or salaries paid, but rather in terms of neighborhoods protected and workers trained. If people aren’t getting a dollar’s worth of service for every dollar they pay in taxes, then government isn’t helping them out—it’s ripping them off.
3803_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
Indianapolis: Processes Performed by Transportation Department
Maintenance Section (9)Snow controlCurb repairGuardrail repairCrack sealingStrip patchingSpecial maintenanceMowing & brush cuttingAlley repairDrainage repair
Asset Management Division (10)Bridge repairBridge replacementIntersection improvementsRoad wideningStreet reconstructionStreet repairSignal interconnectsSignal upgradesResurfacingCurbs and sidewalks
Traffic Management (11)Pavement markingsSign installationSign repairSignal installationSignal maintenanceStreet cleaningSidewalk repairBerm repairPothole patchingStreet pavingSidewalk paving
Parking Management Division (5)Administration and planningParking lot and garage operationsParking meter enforcementCollectionsAdjudications
3903_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
Calculating departmental and process costs
Cost elements include:Direct employees: salaries, wages, payroll taxes, fringe benefits
Supervision: salaries, wages, payroll taxes, fringe benefits
Departmental indirect labor
Traceable equipment and technology (computers, telecommunications, physical capital)
Occupancy (space charges including depreciation, housekeeping, utilities, taxes, insurance)
Indirect and support departments ⎯ HR, IT, finance ⎯ based on actual quantity of resources used from these departments
4003_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
Unit Cost = Cost of capacity suppliedPractical capacity of resources supplied
Departmental cost = $72,000 per month (salaries, payroll taxes, supervision, assigned equipment, such as trucks, assigned support costs)
20 employees do the front-line work (filling potholes, repaving roads, …). Each employee works 20 days per month (after weekends, holidays, and
vacations), 7.5 hours per day, and 60 minutes per hour, or 9,000 minutes per month
The practical capacity of an employee: after breaks and training, produces outputs for 6 hours day (80% of theoretical capacity) or 7,200 minutes per employee.
Unit Cost = $72,000 = $0.50 per minute7,200 * 20 = 144,000 minutes
R. S. Kaplan and S. Anderson, “Time-Driven Activity-Based Costing,” Harvard Business Review (November 2004)
Time-Driven Activity-Based Costing! First, calculate the cost per unit time of supplying capacity in processes or departments.
4103_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
Estimate the time required by each type of work performed:
Fill pothole 150 minutesPave 100 meters of road 500 minutesInstall traffic sign 90 minutes
Second, calculate the time used to accomplish each unit of work by the department’s resources.
4203_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
Calculation of department’s actual costs for work performed
Fill pothole 150*$0.50 $75/potholePave 100 meters of road 500*$0.50 $250/100 meters
repavedInstall traffic sign 90*$0.50 $45/sign installed
Third, calculate the department’s cost to accomplish work: Multiply capacity cost rates by standard (or actual) times.
4303_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
Actions Taken by Indianapolis with Activity-Based Costs of City’s Processes
1. Establish Competition for Provision of City Services— City employees bid for future work against private sector contractors— Compare city department’s costs against private sector bids
2. Encourage Process Improvements— City employees attempt to reduce cost per minute of supplying their services (eliminate
excess supervisors, fewer trucks, reduce truck maintenance costs – the $85 oil change)
— City employees reduce the time required to perform work (better scheduling of work tasks, reduced idle time between jobs, continuous improvement of work processes)
— In six weeks, city employees reduced the cost of filling potholes by 35%
4403_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
Indianapolis: Impact of Costing and Competing City Services
Union wins pothole filling contract (more experienced than private contractors)
After three years: 66 Competitive Projects— Private Sector: 37 wins (capital and technology intensive: wastewater
treatment plant, airport operations, I/T services)— City Workers: 29 wins (labor intensive: street repair, trash pickup)
Productivity Enhancements— Trash Crew: From 680 homes/day to 1,200 — Street Repair: Private $1,500/mile => City workers: $1,000/mile => Private:
$950/mile => City workers: $850/mile
Penalty for cost over-runs: Excess rolled into next bid
Reward for work under bid: Bonus checks to city employees
Three consecutive years of reductions in motor vehicle fleet and inventory 40% reduction in non-public safety employees: 2,425 => 1,484
4503_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
$200
$250
$300
$350
$400
$450
$500
$550
82 84 86 88 90 92 94 96
Calendar Year
Mill
ions
of T
hen-
Yea
r Dol
lars
$529 M
$439 M
$283 M
1983-92 Trendline
Source: City of Indianapolis
Impact of Using ABC for Competition in the City of Indianapolis
4603_061011_GovtSummit_SFO_KaplanR. ©2006 Robert S. Kaplan and Balanced Scorecard Collaborative, a Palladium company • bscol.com
Mayor Stephen Goldsmith on the impact of using activity-based costing and competition for city services.
“There’s a sense or reality now. City employees have redesigned their tools and their teams to think in different ways, and they win. People who aren’t competitive are moved out or their departments are eliminated. The ones that are left are convinced that they are good at what they do. They have a sense of pride that they are better than the private sector. That makes a big difference in their whole attitude towards work, the quality of the work they do, and, frankly, how the rest of the citizens think today about their city workers.”