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Saving Strategy – How to Make “Doing Strategy” Meaningful in an Age of Disruption

Did you realize that the approach to strategy that most companies (and consultants) use today was formulated in the last century?

That’s right. Back in the days when people had to talk face to face and TV was the new kid on the block. A time when if someone called you while you were out at the store they left you a message and had to wait until you got to a land line to call them back. And an era where the typical computer was big enough to fill a room at your university.

Back in those days, life and business moved at a much slower and predictable pace - so a slow moving, mechanistic and linear approach to strategy was adopted. And it seemed to do the trick for a really long while.

How different does our world look today? People around the globe are connected to each other (socially and for business) 24/7, digital technology is a part of everyone’s lives, big data isn’t a new concept anymore and AI is lurking on our horizon, and no industry is immune to disruption. Things have changed so much in just a blink of an eye and there’s every indication that things will only accelerate.

So why would we think that the old way of doing strategy would still apply in this new world? It just doesn’t make sense but, surprisingly, the old-school approach to strategy is still taught in many universities and business schools today.

It’s kind of crazy but this is where we find ourselves at this moment in time.

Many business leaders have felt the sting of applying this dated approach to strategy to their company and business reality. They’ve invested time, effort, resources, and money on a long, drawn out planning process only to realize that the strategy that came out the other end was DOA. It took so damn long to craft the strategy that a critical change in the business environment required a strategy do-over right out of the gate.

The response? After an experience like this, most business leaders would rather “wing it” when it comes to strategy than waste time trekking down the tired strategy path again. Who could blame them? More importantly - where’s the alternative?

Some consultants and darling tech companies have adopted approaches to planning and business management that work on a shorter horizon. The thinking is that since things will change anyway, why even bother planning for, let alone think about, the long term? With these approaches, “strategy” equals a collection of vague and generic directions, and quarterly goals and to do lists that hopefully get your business to the next level.

Hey – if it works for <insert the name of the latest tech star here>, why not for us?

The problem is that these new approaches to “doing strategy” appear to have been created with the belief that the best (only?) way to solve the problems with old school strategy is to focus on speed, and the short-term, while sacrificing the fundamentals required for sustained business success.

And while these new approaches may produce short-terms gains, it often (and sadly) doesn’t take long before something blindsides these companies and their business leaders find themselves wondering what exactly happened and how they got here.

Unfortunately, in these situations, many folks conclude that there was no way to have seen the big change coming. However, the fact is that, with a better strategy process in place – one that’s designed for a time of disruption – they could have been positioned to surf, or even lead, the change themselves.

So – what needs to change when it comes to “doing strategy” in this age of disruption? How can we save strategy and re-make it so that it becomes a powerful tool for sustained business results and success in a time of significant, and often unexpected, change? Here’s how:

First of all, we need to get rid of the activities in the old strategy process that prevent businesses from being fast and adaptable. Things like customer/stakeholder engagement events, the annual planning retreat, and extended budgeting and operating plan synching cycles.

Essentially, we need to move away from treating strategy as an event to making “doing strategy” an ongoing process for our organizations.

Next, strategy needs to move beyond the old-school fixation on life and conditions within our organization to include much greater emphasis on (1) keeping our finger on the pulse of our external environment (including our customers) and then (2) incorporating this information quickly and intelligently into our strategy calculations.

However, most importantly, a new approach to strategy needs to focus on what was often hidden in the traditional strategy process: the key strategic choices and business model the company is betting on to deliver success.

In fact, to do a better job in an age of disruption, “doing strategy” needs be a no nonsense process that’s focused on capturing, implementing, testing, validating, and improving (or innovating) a company’s strategic choices and its business model.

That’s it.

Here’s a one pager that gives you a closer look at the essentials of this new approach to doing strategy.

Download Express Strategy in 1 page 

This new process (let’s call it Express Strategy) is lightning fast! The initial turn through it can be done in weeks rather than months and then your business can cycle through the steps quarterly, more frequently, or whenever the need for a change is detected. The key to success is that your organization moves through the sequence continually supported by a steady stream of data, knowledge, analysis, and insights that helps you and your team change exactly what needs to change when/if it needs to change.

The outcome is this a more dynamic approach to doing strategy that gives your business greater odds of sustainable success in a rapidly changing and disruptive business environment.

 

Are you interested in learning more and/or giving Express Strategy a try? I’ll spend time in my next blog posts going over each step in this new strategy process and giving you tips you can use to adopt the express approach to “doing strategy” in our organization.

 

Tips for Creating a Strategy Map for Your Non-Profit Organization

Creating a strategy map for your non-profit organization is as easy as asking and answering a series of important questions as a team. In this short video I go over the key questions you and your team need to ask and answer to create a powerful, agile, and actionable strategy for your organization.

Just click on this link to open and watch the video: Download The Non-Profit Strategy Map

 

Interested in getting your copy of the strategy map questions template? 

 

Time is Money and What It Means When It Comes to Strategy

An old saying states that “time is money” and it still applies today. Most people take this sage advice as a reminder to be efficient in their work – that is, the longer you take to do something, the greater the amount of money you spend/waste accomplishing it. However, in these days of rapid change, “time is money” takes on another meaning. In this case, the longer you take to make a change in your organization’s direction/business model when faced with a shift or disruption in the business or operating environment, the more it will probably “cost” you in the end. The penalty for being a risk adverse tortoise rather than an agile adaptive hare these days can range from lost opportunities to revenue loss and, in the worst cases, bankruptcy.

In addition to this, I’d also include another perspective on “time is money” - one that’s focused on value, investment, and return. So, for the sake of completeness, let’s also frame “time is money” as meaning that “time invested well (i.e. on the “right” things) delivers value”.

The implication of these different perspectives is that time is actually a shape shifter. In one case, devoting time to something can be an investment while in another situation it can be a costly waste. It also means that time spent doing something may have been an investment yesterday but now, in today’s context, it isn’t.

In my experience, business activities (and the time we spend on them) undergo a change in their value when business objectives change. And business objectives often change when the “rules” of the game change.  

However, sometimes I think that those of us in the business community don’t think that these facts apply to the activities associated with strategy. We seem to keep on doing what we’ve always done without critically evaluating whether the time we spend on them is still a good investment of time and resources in the current context. And we don’t ask ourselves whether there are new things we should be doing to get the most out of our strategy creation and implementation efforts.

Since context is everything when assessing value, let’s begin by examining some fundamental changes that have occurred in the business environment, the requirements for strategy management and business success, and the objectives of strategy activities. 

	Stable Operating Environment (yesterday)	Era of Disruption (today)
Nature of the Business Environment	Predictable (economy, competition, demand, etc.), steady and slow moving, low risk	Unpredictable (the old rules don’t apply), highly competitive and risky, shifting at multiple levels internally and externally simultaneously
Successful strategy is….	Deliberate	Deliberate + Emergent
Imperatives for Success	Complete a defined set of tasks and initiatives that have been proven to deliver results in the past	Pro-active, flexible, and agile – testing new paths and changing based on real time information
Strategy Creation – Objective(s)	Mapping out a proven roadmap with to produce a desired outcome	Continuously innovating, improving, and testing the business model (to enable or defend against disruption)
Strategy Implementation/ Management – Objective(s)	Top down management and decision making. Deliberate strategy. Management and employees are focused on completing the tasks defined in the plan.	Everyone’s involved providing multiple sources of relevant data, information, insights, and feedback. Management and employees are focused on learning and adjusting course and/or the business model together. Distributed decision-making.

With this new context, and its implications, in mind, we now have a more objective frame for assessing whether the strategic processes and tools, and the time spent on them, still represent time well spent. For example, let’s take scenario planning – a tool that has been used as part of the standard strategic planning toolkit for some time. Back in the day when the business environment was stable and predictable, scenario planning was a solid investment of time, effort, and resources. However, in an environment that's full of unpredictability and lurking black swans, putting time into scenario planning just doesn’t deliver the value it once had. In this context, it’s easy to see that scenario planning is just one case where spending the time on it has gone from being a good investment to a questionable one.

Completing a critical examination also provides us with an opportunity to see when adopting, and investing time and effort in, new strategy processes and tools makes sense in the current context. Let’s consider mapping out your company’s business model. While tools such as the business model canvas and strategy maps (two examples of business model frameworks) have been around for a while, they haven’t been routinely incorporated into the strategy processes of existing enterprises (the business model canvas is routinely used by startups). It just didn’t seem to be time well spent in yesterday’s business environment, however, when strategy management and business success demands that companies put their business model at the center of everything they do, spending time working with, and on, your company’s business model suddenly becomes an extremely high value activity that simply has to be a key part of your strategy/strategy activities.

I’m sure that I could go on and I hope that you’ll add your thoughts and comments to this post. What do you think we should take out of and add to a contemporary approach to strategy?

The bottom line is that we all need to take a closer look at everything we do in relation to strategy creation, implementation, and management because time is a precious resource. We need to remove the waste and we need to make sure that the strategy activities we do spend our time on represent “time invested well” in a business environment characterized by rapid change and breathtaking disruption.

 

Are you and your team ready to create or capture and test out your company's business model? If so, consider joining us for a four week live online training series where you'll learn "must have" business model essentials AND you'll be guided step by step to create your company's business model using the strategy mapping method. Participation includes a technical review of your company's strategy map. If you are interested in participating and/or learning more please fill in the form below - next training series begins soon!

   

Strategy Cascading – What it is and How to Do It

You may have heard of this term before. In fact, you may even have seen some dialogue in BSC and strategy management forums debating whether we should shift from a “cascading” concept. So, as we usually must when it comes to strategy management concepts, let’s define what we mean by “strategy cascading”.

When I use the term, I use it to describe the process of creating organizational alignment with strategy. Basically, strategy cascading refers to ensuring that the strategy pervades the organization at all levels so that the organization, and its efforts, are fully and appropriately aligned with the strategy.

Now – you may be wondering what strategy any given part of an organization is meant to be aligned with. While the high level answer is the organization’s overall/corporate strategy, the reality is that what alignment looks like and how it works depends on where you/your team or department is located within your organization. Often it’s easier to focus your alignment activities on getting in sync with the strategic priorities and efforts of the organizational entity (department and/or manager) that sits above you on your organization’s org chart.

However, it’s worth noting that strategy cascading (and therefore organizational alignment with strategy) also refers to ensuring that resource and asset allocation, employee skills development activities, budgets, etc. appropriately support successful strategy execution. As a result, strategy cascading must involve all elements in the business or organization.

Essentially, strategy cascading is a necessary process for optimizing organizational alignment with strategy. And, as we know, strong organizational alignment with strategy is the nirvana state smart organizations work to achieve because the greater the degree of organizational alignment with strategy, the more efficient and reliable an organization can become in executing its strategy. The result of alignment is the faster achievement of desired strategic results – even when there’s a course correction in the strategy you started with.

I’ll admit that I actually don’t mind using the term strategy cascading but I completely understand why it bothers some people. The word cascading could imply a wholly one directional process when, in fact, strategy creation, when done correctly, is quite a bit more dynamic. Ideally, an organization sets the strategy for the overall organization/corporation through an interactive process that includes people and perspectives from all corners of the organization. The result is a well-informed strategy that everyone contributed to and can get behind.

However, it’s important to realize that strategy rarely gets executed at the corporate level alone. Strategy is usually put into action through the contributions of business units, departments, teams, regional offices, etc. For the groups in the org structure then, strategy cascading involves each area of the business (1) determining their part in/contribution to the realization of the company’s strategy, and (2) translating the corporate strategy, where required, into terms, objectives, and activities that reflect and enable the business area to make that contribution.

Depending on where a business area resides in the organization, the nature of their contribution to, and impact on, the realization of the corporate strategy can be different. That is, in some cases, the contribution can be very direct while in others, the contribution is more indirect in nature. Sometimes, the contribution is mixed (often the case for HR that has accountabilities for implementing corporate strategy AND supporting a business unit’s people objectives). As a general rule of thumb, the closer a business area is to the top in the org chart, the more direct the contribution. When the contribution to the overall corporate strategy is direct in nature, it makes sense for the supporting business unit to align with/determine their contribution to the corporate strategy. However, when a business unit sits several levels away from the top on the org structure, their contribution to the corporate strategy is often realized through their contribution to their parent business area. 

However, proximity to the corporate strategy is just one of many considerations when determining the way you actually “do” strategy cascading within your organization.

In my experience, there are essentially two mechanisms for strategy cascading available to an organization, however, both begin with the strategy map. One method for strategy cascading is through the strategy map (and associated Balanced Scorecard) while the other can be achieved predominately through the Balanced Scorecard alone.

Let’s take a look at each of these approaches.

 

Strategy Cascading via the Scorecard

Can your business unit essentially adopt the corporate (or top level) strategy map without making changes to the strategic objectives AND their definitions? When this is the case, it naturally follows that the Balanced Scorecard indicators associated with the corporate strategy will apply to the business unit as well (same strategic objectives = same indicators). In this scenario, the business unit wants to be able to see their performance results for these indicators in addition to the corporate results.

Often, in these cases, the corporate results for any given indicator are simply a roll up of the results achieved by each of the contributing business units. What you need to do is determine which business units can adopt the corporate strategic objectives “as is” and contribute to the results roll up (e.g. Revenue (overall company) = Revenue (BU1) + Revenue (BU2) + Revenue (BU3)) – these business units are members of a scorecard’s/ indicator’s “breakdown structure”.

In my experience, business units can usually adopt the corporate strategic objectives in “as is” form when they are mini-me’s (mirror images) of the corporation in their purpose and strategy to achieve it (Kaplan and Norton refer to this as a Franchise scenario). For example, when I was in the group insurance business we were organized into customer-based business units and each business unit simply executed the strategy (strategic objectives and strategic imperatives) depicted on the corporate strategy map with their target customer group. This meant that all of the indicators on the scorecard were relevant to the corporation AND each business unit – we just needed to be able to show each business unit their slice of performance on each BSC indicator (i.e. that business unit’s Balanced Scorecard).

Taking this approach to strategy cascading allows you to work with one strategy map and scorecard to cascade strategy and provide meaningful performance feedback to participating business units. Having the luxury of this approach to strategy cascading can make strategy management much easier to administer.

 

Strategy Cascading via the Strategy Map (and Balanced Scorecard)

Does your business unit contribute to some but not all strategic objectives on the corporate strategy map? For the ones that you do contribute to, would it make the strategy more relatable and relevant to change them a bit (i.e. strategic objective names AND/OR their definitions) to better capture the uniqueness of your contribution? And, would your strategy map be incomplete if it didn’t include some additional, functionally specific strategic objectives?

When this is the case, it makes sense to leverage the strategy map of the closest organizational group to the business unit in question (i.e. its “parent”) and then edit it as necessary to create a new but related strategy map. The beauty of this approach is that modifying the parent strategy map helps ensure appropriate alignment while also capturing important unique strategic objective essentials on the business unit’s individual strategy map.  

New, “custom” strategic objectives on a strategy map usually require indicators that are different from the ones used by the parent business area on the business unit Balanced Scorecard. While some indicators may be common between the two scorecards, strategy cascading via the strategy map usually produces a unique indicator set that applies just to the business unit in question.

I don’t need to tell you that taking this approach to strategy cascading has the potential to produce numerous strategy maps, scorecards, and indicators. Organizations taking this approach to strategy cascading should consider using a strategy management application to help make administration easier and more efficient.    

 

In my experience, having these two approaches to strategy cascading available provides organizations with the means to walk the line between maximizing organizational alignment while minimizing the risk of unnecessary strategy map and scorecard proliferation. And while working towards this goal allows organizations to optimize strategy management outcomes without undue administrative burden, it’s important to focus on what’s most important – ensuring that the strategy cascading approach used by your organization produces a set of strategic objectives/strategy map that is relevant and meaningful to each individual business unit and their contribution to strategy and business success.

 

If you follow the guidelines and questions I have offered here, you should be able to make good strategy cascading choices. However, remember that there are always unique situations and exceptions to the rule. And don’t be surprised to discover that a mixed/hybrid approach to strategy cascading might offer the right balance for your organization.

 

My advice? When in doubt, use the strategy cascading approach that makes the most sense at the time – you can always change your approach if necessary as your organization learns and matures on its strategy management journey!

 

How to Modify the Strategy Map for the Two-Sided Business Model

I am really fortunate to have the opportunity each year to teach strategy mapping and Balanced Scorecard concepts to student entrepreneurs at the Conrad Centre at the University of Waterloo. The best part of this gig is that I don’t just teach the material, I also have the opportunity to help these entrepreneurs apply the concepts to their budding businesses and start ups. I really love this part of my work because it gives me a front row seat on the most current innovations in business model design.

One thing I have noticed over the past four years is an explosion in the use of the two-sided business model in entrepreneurial technology companies. Just a reminder that the two-sided business model usually refers to a scenario where there is a non-paying user base and a paying “customer”. Basically, the company that’s employing the two-sided business model is seeking to generate revenue by monetizing a free user base in some way.

Now – there are lots of different ways to monetize a base of “freemium” users. One way is via advertising revenue. That is, you allow advertisers to promote their products and services directly to the free user base for a price (i.e. “pay for click”). You see this on Twitter, Facebook, and LinkedIn. Another way is to drive user traffic to a customer company that “sells” to the user base. In the cases I have seen, the technology firm receives a fee when members of the user base go to the customer’s business and spend money with them. I’m sure that you can think of lots of other examples of how companies monetize a free user base.

With the two-sided business model it’s critical to realize that you have two “customers” who are “paying” you in different ways! One customer (your free users) pays you in attention while your other customer pays you money. To make the two-sided business model profitable for your company it’s essential to keep both of these customers in your sights.  However, this can be difficult because each customer has different needs and expectations from you. What causes your free user to give you their attention can be easily lost as the paying customer seeks to monetize the user base – for example, adding advertising to a previously ad free private or social environment can make your paying customer happy while turning off your users.

The most important rule to remember if you are hoping to become profitable using the two-sided business model? Your company’s revenue potential depends on delivering value to BOTH the free user AND the paying customer.

 

One of the best tools I know for mapping the value creation stream in any given business model is the strategy map. However, traditionally, the strategy map has only one customer perspective/section and this can make mapping the two-sided business model a little confusing and challenging.

                   

So, to make things clearer and help keep our two types of customers in our sights, why not modify the customer perspective in this way?

 

Now we have a workspace where we can better capture the different ways we deliver value to our two groups of customers.

Let’s begin with our free user base. Remember that we need to give them something and/or an experience that’s continuously attention worthy. When we are successful we can achieve our ultimate objective: attracting and keeping our free users – this is important because it helps get your business model/company over to the paying customer’s side of the strategy map. Other objectives that should go into this strategy map perspective are those that answer the question: “What do we have to give to/do for the free user(s) to earn and keep their attention?” The answers will depend on your business and what your unique users see as being attention worthy!

 

Now, let’s turn our thoughts to your paying customer. The ultimate objective you want to deliver for this customer group is an opportunity to grow their revenues by accessing and monetizing the free user base. To enable your paying customer to achieve this objective there are really two things your company needs to do: (1) grow an attractive free user base; and (2) deliver whatever else is necessary to help your paying customer achieve their ultimate objective.

 

Here’s what these two customer perspectives look like together:

 

Essentially, enabling your paying customer to get what they want (the achievement of their revenue growth objectives) is the gateway for achieving your company’s revenue objectives.

Attracting and maintaining the RIGHT free user base is the gateway for your paying customer to achieve their revenue growth objectives.

And giving your free users something they value in exchange for their continued attention is the foundation on which a successful customer perspective (AND outstanding customer value) is built in the two-sided business model.

Here’s how the picture/strategy map is beginning to evolve:

 

To ensure that your two-sided business model delivers the intended value and results, be sure that your Internal Process strategic objectives include the things you must excel at to give BOTH your free users AND your paying customers what they need/want/expect. Taking this approach better positions your company to deliver value to both groups of customers.

 

Juggling the different interests of your two groups of customers and delivering the necessary value under the two-sided business model can be challenging. While the strategy map is a great tool for clarifying the value creation stream and making it transparent to everyone in your organization, my experience working with tech company entrepreneurs has shown me that the traditional strategy map format doesn’t make it easy to keep the often competing value creation streams clear – it gets very confusing about where and how to capture objectives for the two essential customer groups in the two-sided business model.

The strategy map modifications outlined here have helped the entrepreneurs I’ve worked with clarify the customer approaches required under their two-sided business model, giving them an easier way to capture the essential strategic objectives AND map the important relationships between them.

However, please remember that this is a generic template designed to offer you a starting point for thinking about the value you create for, and deliver to, both the free and paying customers of your company. You may need to modify the template further to work for your specific two-sided business model – something that you should feel perfectly fine in doing!

 

Have you tried to map your two-sided business model using this or another modified approach to the traditional strategy map format? What has worked for you and your company? Please share your experiences here so that we can all learn together!

 

How Strategic Objective Owners Enable Strategy Execution Success

An important step in the strategy map creation process is the assignment of owners for strategic objectives. While everyone in your organization/business unit/team has shared accountability for the achievement of all of the strategic objectives on your strategy map, we all know that this can be a recipe for dropped balls and things falling through the cracks. To mitigate this critical strategy execution risk organizations are wise to assign one person to each strategic objective on their strategy map and ask them to oversee the achievement of that specific strategic objective on behalf of the organization.

These people are called Strategic Objective Owners.

I find that many business leaders get worried about this role but experience working with countless organizations has shown me that Strategic Objective Owners make the difference between sub-par and stellar strategy execution results.

Let’s take a closer look at this important role.

In high performing organizations, Strategic Objective Owners have accountability for overseeing and managing the health of their assigned strategic objective as the organization executes the strategy and moves towards vision and mission achievement. When their assigned strategic objective is underperforming, a Strategic Objective Owner is responsible for pulling together the right people to investigate and identify root cause problems, and develop the targeted corrective action plan that will turn performance and results around. 

It’s important, however, to be clear that Strategic Objective Owners are never solely responsible for taking on, and improving, the health of their assigned strategic objective. Quite often they make their biggest contribution by simply manage the completion of the corrective action plan that’s been created. In some cases, a Strategic Objective Owner may be assigned an action step in the corrective action plan but this is usually a reflection of their operational role, not the fact that they are the Strategic Objective Owner.

When selecting Strategic Objective Owners, it’s important to pick the right people. As the strategic objective “quarterback”, Strategic Objective Owners must have strong collaboration, influencing, and negotiating skills – they are often pulling together people from across the organization and asking them to work together to solve a cross-functional organizational or systemic problem or challenge. As a result, to help Strategic Objective Owners be as successful as possible in their role, it is best to select individuals who are in a position to break down any functional silos that may exist and influence people across your organization to move the strategic objective forward together.

It is also important that Strategic Objective Owners have/develop keen insight into how your business operates to produce results including the important interconnections between functions and the cause and effect relationships that exist within your business. This knowledge enables Strategic Objective Owners to play their role more effectively and productively.  

Many business leaders tell me that they are concerned about assigning the role of Strategic Objective Owner for any given strategic objective to just one person. They worry that, in a busy work environment, it will be too much extra work for that one person to take on. While this is a fair concern, I always advise that matching the regular accountabilities of the prospective Strategic Objective Owner with the scope of the strategic objective as closely as possible will mitigate this concern. However, it’s important to realize that it’s unusual to find that one person whose everyday role fits perfectly with the scope of their proposed strategic objective. This happens because strategic objectives are, by their very nature, cross-functional/cross-organizational while role assignments within organizations tend to exist within functional hierarchies. Exceptions to this rule can, of course, exist in organizations that are matrixed and/or have adopted a shared services model. Either way, my advice is to select someone whose regular job lines up OPTIMALLY with the description of the proposed strategic objective. When the match isn’t perfect, it’s important for the Strategic Objective Owner to resist the temptation to play their role with their functional hat on. The most successful Strategic Objective Owners act from an “entire-organization” perspective.

When selecting a person to be a Strategic Objective Owner I often suggest picking someone who is in a senior position – this is because it’s easier for them to span the organization in their view of the business and in getting things done. That being said, don’t feel that every Strategic Objective Owner must be a senior business leader. Sometimes a Director or Manager is perfectly positioned to fill the role.

The role of Strategic Objective Owner is also a great development opportunity for an up and coming future leader or a high potential employee. Giving either of these types of people the opportunity to think cross-organizationally and more strategically, and to lead strategy-focused interventions provides them with an on-the-job experiential learning opportunity that can benefit both the employee and your organization.

 

Specific accountabilities and clear responsibilities are key foundational elements for strategy execution success. While your strategy governance model will identify several important roles and accountabilities, a critical role is that of Strategic Objective Owner. By assigning one person to each strategic objective on your strategy map you’ll find that you have strategic objective champions in place who can keep an eye on the performance of individual strategic objectives, alert the organization when attention is required, and keep your organization focused on doing the right things necessary to move your strategy forward through strong strategic objective performance.

 

How to Build the Triple Aim into Your Healthcare Organization’s Strategy Map

Many healthcare leaders will be familiar with the concept of the Triple Aim. To summarize, the Triple Aim is a framework developed by the Institute for Healthcare Improvement (www.ihi.org) that outlines an approach to optimizing health system performance.

 

The foundation of the Triple Aim is the belief (supported by evidence) that effective, sustainable healthcare and healthcare systems must pursue three dimensions simultaneously. These three dimensions include:

● The patient experience of care (including quality and satisfaction),

● The health outcomes produced, and

● The productivity of the system and the costs of healthcare.

The value of the Triple Aim approach is that it reflects the current reality for healthcare systems around the world – the struggle to effectively balance the need for an affordable or profitable healthcare system with a quality patient experience and the achievement of optimal health outcomes.

 

By keeping the three critical elements of the Triple Aim in their sights at all times, healthcare organizations are better positioned to:

(1) Make the fact that the three elements, and the balance between them, are key to the organization’s strategy and business model transparent to all,

(2) Effectively manage the inevitable tradeoff decisions required in all healthcare organizations,

(3) Be alerted when an over-emphasis on one element of the Triple Aim is having a negative impact on another element, and

(4) Determine what optimal “balance” between each of the three elements of the Triple Aim looks like for the individual organization at any given point in time.

 

The great thing about the Triple Aim concept is that it can be applied to the healthcare system broadly or at the enterprise level. With this in mind, individual healthcare organizations can apply the Triple Aim framework to their strategy and business model.

One of the best tools available for capturing both an organization’s strategy and business model is the strategy map. Since it is both a strategy formulation AND strategy execution tool, organizations can use a strategy map to design, communicate, and manage the successful execution of an organizational strategy that will produce Triple Aim-based results and outcomes.

Let’s take a high level look at how you can build the Triple Aim into a strategy map for your mission-oriented/publically funded healthcare organization or hospital. Leveraging the strategy map format typically used in these types of organizations, here is an example of what this strategy map is likely to include.

 

Recall that the top/stakeholder perspective of the strategy map is designed to address the question: “To achieve our mission and vision, deliver our stakeholder promise, and provide/create value, what do we need to do for/deliver to our stakeholders?”

The convenient thing about the Triple Aim is that it’s the foundation of a quality healthcare system AND delivering Triple Aim outcomes satisfies the primary needs and expectations of key stakeholder groups (delivering stakeholder value as a result).  Patients, the community, citizens, and funders share an interest in providing individual patients (and their families) with a quality care experience and producing better individual and societal health outcomes - all in a way that gets the most out every funding dollar (allowing the system to delivery more for the same amount of money). As a result, three strategic objectives, each one focused on a specific element of the Triple Aim, can be sufficient for the stakeholder perspective of your strategy map. Of course, the actual strategic objectives on your healthcare organization’s strategy map will be customized to reflect your choices in applying the elements of the Triple Aim to create value for your stakeholders’ unique needs.

 

Once the objectives of the stakeholder perspective have been set, the remainder of your strategy map is defined to depict the value chain that supports the achievement of Triple Aim strategic objectives.

The strategic objectives in the internal process perspective answer the question: “To give our stakeholders what they want/expect and achieve our mission and vision, what processes must we focus on and excel at?”  Our sample strategy map outlines the critical components and processes, in both the clinical and operational dimensions, typically required to support the achievement of Triple Aim objectives. While the strategy map for your healthcare organization may include some or all of these objectives and/or more, the key is to identify the short list of processes required to deliver your desired stakeholder objectives and outcomes. Taking this step helps you (1) identify which clinical and business processes your organization must have in place to achieve Triple Aim results, and (2) allows to measure and manage the performance of the business processes that ensure the delivery of stakeholder outcomes and value.

 

The organizational capabilities perspective of your strategy map answer the question: “To produce the stakeholder results we desire and to excel at our critical processes, (1) what kind of culture do we need, what skills must we help our people develop, and how do we want to work together; (2) what is the nature of our service and care delivery partnerships and relationships and how must we work with others across the continuum of care, and (3) what types of data/information, tools and technologies must we have access to and how must we use them?” These strategic objectives form a critical foundation for the upper portions of your organization’s strategy map – their specifics will be customized based on the choices you have made in the previous perspectives.

 

While the financial/resource management perspective of the strategy map supports the achievement of all the other strategic objectives on your strategy map, it plays a very important role in enabling the achievement of the productivity/financial performance element of the Triple Aim. Strategic objectives in this perspective answer the question: “To create and deliver value to our stakeholders and achieve our mission and vision, how must we use our financial and non-financial resources and ensure that we do it in the most optimal way?” Strategic objectives focused on resource utilization support optimized clinical and operational process performance and enable the achievement of the Triple Aim’s productivity outcomes. A focus on strong financial management produces desired financial performance results AND builds the confidence and trust of funders – an important stakeholder outcome for publically funded healthcare organizations.

 

Building the Triple Aim into your healthcare organization’s strategy and business model via the strategy map is an important step you can take to ensure that your organization will achieve the desired results for most healthcare organizations - high quality healthcare outcomes for individuals and the system, cost-effectively and sustainably over the long-term.

Leverage the sample strategy map provided here to create a strategy and business model for your healthcare organization that is crafted to respond to the unique needs and expectations of your various stakeholder groups. By building your healthcare organization’s strategy and business model around Triple Aim concepts, it will be well positioned to create and deliver the value stakeholders need from your organization, other healthcare institutions and the broader health system itself. 

    

What Stakeholder Outcome(s) is Your Organization Ultimately Accountable for Delivering?

More often than not, when I ask the leaders of public sector healthcare and social service organizations this question, they can’t give me a straight answer. Sometimes, I get a blank stare or (frequently) they object to my question.

What do I mean, what stakeholder outcomes are we accountable for delivering? Outcomes are difficult to track back to one source (they often say) - we can’t possibly be held accountable for producing outcomes.

However, it IS possible and, in my opinion, exactly what we should expect from all public (and non-profit) sector organizations. Being able to clearly state (and put your organization’s reputation on the line for) what results you will deliver or enable, and the real difference your organization will make in the world, is the necessary first step on the path to being able to demonstrate your organization’s true value.

If being able to demonstrate value isn’t an imperative for your organization right now, I predict that will become critically important in the very near future.

More and more frequently, funders (i.e. governments, taxpayers, donors, etc.) are demanding assurance that the money they have entrusted to the organizations they are investing in is (1) being used wisely (i.e. it is being used for what it was meant to be used for), and (2) that it is actually making a difference/having an impact (i.e. their financial support is translating into tangible results and outcomes). As funders become more discerning, the organizations that have publically declared and committed themselves to delivering clearly defined stakeholder outcomes, AND can demonstrate that they are successfully producing those results and outcomes, will find that they enjoy sustainable funding support.

 

Making a clear statement about the ultimate outcome(s) your organization is willing to take accountability for doesn’t have to be a daunting proposition - it’s really just a logical extension of your organization’s mission statement and stakeholder promise or value proposition. Let’s take a closer look.

Remember that your mission statement is simply your purpose – a statement of why your organization is here, the impact you wish to have on whom, and/or the difference you want to make for society/the world. Your stakeholder value proposition is the unique set of benefits that are valued by your primary stakeholder and that you are promising to deliver.

Both of these statements usually hint at the value your organization delivers, however, they may or may not spell out the results or outcomes you plan to deliver and be held accountable for. So, leveraging both your mission and stakeholder value proposition statements, it’s important that you take the next step and clearly state what these results and/or ultimate outcome(s) will be.

When I am working with an organization to create their strategy map, the pinnacle strategic objective, at the very top of the strategy map, is usually where we place this ultimate outcome objective/statement. For public and non-profit sector organizations it’s usually at the top of the stakeholder/stakeholder outcomes perspective on their strategy map.

 

To determine your ultimate stakeholder outcome objective, you and your team need to ask and answer a few important questions:

1 What ultimate outcome are our stakeholders (all stakeholders – not just your primary stakeholder or your funder) united behind/do they all wish to see produced?

2 What is our contribution to the achievement of this ultimate outcome?

3 What could we reasonably be held accountable for delivering or producing, given our sphere of influence, that aligns with, directly supports, or actually is this ultimate outcome?

4 If we committed to delivering this outcome, would it have a critically important impact on society/the world, our service recipients, our other stakeholders, and/or the systems we work in?

Key inputs into the discussions prompted by these questions include your insights about your stakeholders’ needs and expectations, your analysis of the external environment and systems you are operating in, and, as mentioned previously, your mission statement and stakeholder value proposition.

 

At the end of a thoughtful and engaging set of discussions, you should be able to come up with a clearly stated outcome/set of outcomes that you are prepared to be accountable for delivering or enabling, that you are confident you can influence (i.e. it’s reasonable), and that you know is meaningful to the people you serve and your stakeholders.

 

While having a clearly stated ultimate outcome is a key step in demonstrating your organization’s value in a way that satisfies your funders and other stakeholders, this isn’t the only reason why you should take the time and effort to define it.

Once you know what ultimate outcome(s) your organization is driving to produce, you can:

● Orient the rest of your business strategy, strategic objectives, and dependencies (i.e. your strategy map) around supporting this outcome,

● Design your business model, organization, and operations around this strategy so that you actually produce the necessary results and desired stakeholder outcome(s),

● Translate your strategy map into a Balanced Scorecard and measure, monitor, and improve your organization’s performance in producing your ultimate outcome(s), and

● Engage, motivate, and align your employees behind your desired outcome(s).

 

The bottom line is that getting clear about your ultimate stakeholder outcome drives organizational alignment with, and focus on, achieving this key strategic objective.

So, whether your organization’s top stakeholder objective is Advancing Healthcare for Your Community, Shaping the Innovations and Great Companies of the Future, Continuously Improving Population Health, or Enabling Citizen Self-Sufficiency and Social Inclusion, boldly and clearly stating which ultimate stakeholder outcome(s) your organization is accountable for delivering or enabling is the first step to actually making the real, high value difference I know you are striving to make - in the world, on society, and for the people you work with and serve. 

 

Business Model Canvas Fusion is Your Best Approach for Business Success

A few years ago, Alexander Osterwalder and Yves Pigneur published their ground-breaking book Business Model Generation. Since its publication, their book has gone on to be one of the “must read” business books for start ups, entrepreneurs, and business leaders alike.

Billed as “a handbook for visionaries, game changers, and challengers”, Business Model Generation was created to enable business model creation and, more importantly, innovation – a way to re-imagine business models to create value in an ever evolving business environment while also getting an edge on old guard businesses using old school business models.

One of the most interesting things about the approach that Osterwalder and Pigneur’s book and model takes is that it allows you to depict your thinking and business model in a visual format (called the business model canvas). Though not new (the strategy map was introduced many years earlier as a visual strategy and business communication and management tool), the visual format provided by the business model canvas is really appealing in today’s quick information, sound-bite world. In addition, this approach makes it easy for business leaders and their teams to sketch out and test business models as they explore strategic alternatives and innovations.

If this is the first you are hearing about this book, I would strongly encourage you to check it out – it’s loaded with lots of great information, tips, and practical examples business leaders and their teams can use.

 

Let’s take a moment to look a little closer at the approach to business model creation and innovation outlined in the book.

 

Business Model Generation defines a business model as “describing the rationale of how an organization creates, delivers, and captures value”. I would agree with this definition but I would actually go a little further and frame it like this: “describing the rationale behind, and the way in which, an organization creates and delivers value to a specific customer (or stakeholder), AND demonstrating how it translates value creation and delivery into business benefits”.

Tweaking the definition of a business model in this way may look subtle but it actually makes a BIG difference to the approach you might want to take to business models (hold that thought for a moment!).

 

Very quickly, Business Model Generation adopts nine building blocks that are designed to cover four key business areas: customers, the offer, infrastructure, and financial viability. The nine building blocks, determined through a collaborative process roughly in this order, are:

1. Customer Segments (CS): The one customer or several customer segments the organization serves.

2. Value Propositions (VP): The customer problems the organization seeks to solve and the customer needs it strives to satisfy with its products and services in an effort to provide value to the customer segment(s).

3. Channels (CH): The communication, distribution, and sales channels that will be used to deliver the value propositions to customers

4. Customer Relationships (CR): The relationships you want to establish and maintain with each customer/customer segment.

5. Revenue Streams (RS): The revenue streams that will result from delivering the value propositions successfully to customers

6. Key Resources (KR): The assets required to offer and deliver everything that has been defined in 1-5 above

7. Key Activities (KA): The critical activities key resources must perform to deliver everything that has been defined in 1-5 above

8. Key Partnerships (KP): When some key activities are outsourced and/or some resources are acquired from outside the organization, partners and partnerships are required

9. Cost Structure (C$): The pricing structure the business model elements result in.

 

These nine building blocks are depicted on the business model canvas. You can click on this link to see a picture of the business model canvas, to watch a 2 1/2 minute video overview on it, and/or to download a blank business model canvas poster.

 

There is no doubt that the business model canvas is a great tool for the creation of a company’s business model but it’s important for business leaders to realize that the business model canvas on its own won’t get you where you want to go. That is, creating a business model canvas alone won’t translate into business success. Why? Because is doesn’t fully transform your business model into terms that effectively guide the people on the ground who need to put it into action every day. It also doesn't show how the elements of the model must work together to produce results.  

Remember my expanded definition of a business model? (“describing the rationale behind, and the way in which, an organization creates and delivers value to a specific customer (or stakeholder), AND demonstrating how it translates value creation and delivery into business benefits”) The business model canvas does a great job of helping you develop and document the rationale for how your organization creates, delivers, and captures value and it even sheds some light on the way in which this can happen but it just doesn’t do the complete job and it isn’t, in my mind, designed to demonstrate how the rationale and elements of the business model translate value creation and delivery into the desired business benefits and results.

 

This means that we have a gap between the business model idea, which is depicted on paper in the business model canvas, and the execution of that business model (including the realization of the expected benefits). Luckily, we have a proven tool that can bridge that gap effectively: the strategy map.

 

What a strategy map does is translate your business model and its key elements, organized under the nine building blocks, into actionable terms. In addition, it allows you to depict the cause and effect relationships that you believe exist between the elements of your business model and then test whether they work as you expect. In essence, the strategy map serves two business-critical purposes: (1) it translates the key elements of your business model into terms that enable the consistent execution of the model across your organization; and (2) the consistent execution of your business model allows you to test whether it actually works in the real world (which provides you with valuable feedback for business model improvement if required). When your business model proves to be “right”, you achieve your desired customer and business results!

 

Let’s take a look at how the elements from the business model canvas can be translated to the strategy map.

At the Top of your Strategy Map (SM): Your mission and vision go at the top of your SM. Mission and vision are not elements included on the business model canvas but they are important goals that provide essential cues that support the execution of your business model and strategy. They can easily be added to your SM based on the conversations that occurred during business model generation. You should also include a statement of your Customer Value Proposition (VP), or the big, differentiating promise you are delivering to your customer based on your understanding of your target Customer’s/Customer Segment’s needs (CS), at the top of your SM.

The Financial Perspective: Here you outline your planned Revenue Streams (RS) and, the ways you intend to leverage them to achieve your objectives for profitable business growth. Additional objectives included here relate to the Cost Structure (C$) building block and they outline how you plan to use company assets in the most optimal way to support profitability.

The Customer Perspective: This perspective expands on your Value Proposition (VP) by outlining what your customer value proposition looks like in action and the experience and benefits you must deliver to your customer. Objectives relating to Customer Relationships (CR) included here outline how you want to act with and relate to your customer as part of your value proposition.

The Internal Process Perspective: Business model canvas elements addressed here include Key Activities (KA) (objectives relating to the specific critical activities required to support your customer value proposition and how they must work to achieve that goal), Channels (CH) (objectives identifying the key channels that support delivery of your customer value proposition and how they must work to achieve success), and Cost Structure (C$) (objectives that outline how your key activities and channels must perform to support the cost structure required to achieve business profitability).

The Suppliers and Partners Perspective: In addition to objectives relating to supplier and partner-relevant Key Activity and Channel performance, this perspective includes Key Partners (KP) objectives that outline how you need to work with your suppliers and partners to execute your Key Activities via identified Channels both according to your desired Cost Structure and in a way that delivers your Value Proposition.

The Organizational Capabilities Perspective: Business model canvas elements built into this perspective include Key Resources (KR) (the physical, intellectual, cultural, and human (and the skills and capabilities they need) resources, and the financial and non-financial resource management attributes do you need to have in place AND how you will obtain and/or develop them), and Cost Structure (C$) (how you will invest in your key resources AND how you will use them in ways that support the delivery of your customer value proposition while also achieving a cost structure required for business profitability).

At the Bottom of Your Strategy Map (SM): Your company’s core values are the beliefs and principles that govern your organization’s behavior and support the execution of your business model. Core values are not included in the business model generation approach but they are critical for the consistent decision making and the successful execution of your business model and customer and business strategy. You probably have a set of core values identified for your company – be sure to include them on your SM.

 

Here is a picture showing how the nine building blocks from the business model canvas can be translated to a strategy map.

 

 

You’ll notice that I haven’t included cause and effect arrows on this strategy map. After translating the elements of your business model canvas into relevant strategic objectives on your strategy map (as I have outlined above) and adding in the cause and effect arrows, I’m sure that you can see that this SM would play a pivotal role in translating your business model into action at all levels of your organization and enabling the consistent execution of your business model and strategy.

 

It turns out that the business model canvas and the strategy map are the “ying and yang” of successful strategy formulation, execution, and management. They need each other and you need both of them if you want to realize your vision for business growth and success. The business model canvas allows you to develop innovations in business strategy and ensures that the required building blocks have been successfully identified. From there, the strategy map translates your business model canvas into something that can be put into action in your company and with your customers. In addition, formatting your business model in a strategy map opens the door for focused organizational alignment and quick assessment, gap identification, and the creation of plans for gap closing initiatives, processes, resources, and capabilities. Finally, translating your business model into a strategy map enables the creation of a relevant balanced scorecard indicator set that will help test the performance of your business model and provide you with the valuable feedback and information you need to continually innovate your business model as needed.                               

 

Are you looking at business model innovation as your key to creating greater customer and business value? Don’t stop with just the business model canvas. Why not translate the nine building blocks of your business model into a strategy map? I think that you’ll discover that leveraging both tools is a powerful strategy that will give your company the necessary agility and game changing business success you are looking for! 

 

Use your Strategy Map as a Decision-Making Tool

We all know that the strategy map is an indispensible tool for helping organization’s bridge the gap between strategy formulation and execution. In fact, it does this in multiple ways.

In the case of the “traditional” strategy/strategic plan, a strategy map is a key tool for translating high level strategic directions into the critical supporting strategic objectives. Basically a good strategy map does the essential job of fleshing out what an organization really needs to do to enact its high level strategic goals and ultimately achieve the results and outcomes it is striving to achieve. By translating strategy into action in this way, a strategy map becomes the key to aligning day to day organizational and employee activities with strategy.

Strategy maps also play an important role in helping you ensure that your business strategy reflects the business model required to deliver your primary customer or stakeholder value proposition (VP). Whether your primary VP is operational excellence, product or service leadership, or customer/stakeholder intimacy, having it spelled out in black and white at the top of your strategy map makes it is easier to ensure that the elements of your strategy (and strategy map) reflect the business model that “fits” with your selected VP. Do your core values, technology strategy, and process objectives (for example) align optimally with your primary value proposition or are they actively working against it? By laying it all out on one page, your strategy map gives you the unique opportunity to answer this question quickly and make the required adjustments, if necessary, before you make costly strategy execution mistakes.

Most importantly, a strategy map is a valuable strategy communication tool. In my experience, no other vehicle communicates your strategy to all of your internal and external stakeholder groups as clearly, concisely, and consistently as a strategy map. When used as part of a passionate recounting of your strategy story, your strategy map is a powerful document that continuously reminds employees and stakeholders of your strategy and helps them share your strategy story in their own words with others. In addition, your strategy map can spark deeper conversations about your strategy. Simply walking an external business partner (for example) through your strategy map enables a two way dialogue that can build greater understanding about your business strategy. And once your strategy is more commonly understood (via your strategy map), your strategy map can become a catalyst for learning and innovative thinking that helps accelerate the strategy execution curve and/or take your strategy to new levels.

 

All these benefits make the strategy map a powerful business management tool, however, in my mind, the strategy map makes its biggest contribution through its role in enabling business decisions that keep your organization focused on, and working in alignment with, the essentials of your strategy. Strategy maps do this in two ways.         

 

First, a strategy map outlines organizational thinking about how everything, and everyone, works together in a series of cause-and-effect relationships to deliver your customer/stakeholder value proposition and achieve business performance results. Depicted by the arrows on your strategy map, this is called the “theory” of your business and it has important implications for efficient and cost-effective company operations. Here’s why.

Whether you admit it or not, everyone in your company has their own idea about what business objectives, priorities, and activities drive organizational performance and deliver customer/stakeholder and business results. Most of the time, unless an effort has been made to encourage otherwise, employees don’t talk about how the business produces results – they just go about their day, applying their assumptions about what’s important and what creates value. Employees’ assumptions in this regard are often based on their position in the company and their functional perspective – both impact their “line of sight” on the business strategy. The truth is that most employees don’t see or understand the big-picture business strategy and this affects their theory of how the business works. With that theory in mind, employees will make numerous business decisions during their work day, including how and where they spend their time, resources, and company money. If those decisions align with the business strategy it’s purely by chance. In most companies, the lack of a unifying theory of how the business works to produce value and results is a key driver of wasted time, energy, resources, and money. 

Successful high-growth companies have a clear theory of how the business works to produce results, and that theory is shared across the organization, right down to the front line. And once a theory of the business has been agreed to, successful companies test and tweak it more rapidly than their competitors until they get it right. Then they leverage this validated knowledge of the cause-and-effect relationships in their business to make targeted investments and interventions that are guaranteed to produce results.   

So, a strategy map, with its cause-and-effect arrows, displays the shared understanding of the drivers of business success for all to see. This translates into better, more aligned, business decisions; more efficient operations; the delivery of a more predictable customer experience; and, ultimately, more consistent business results.

 

Secondly, the strategic objectives on your strategy map can be used as key decision-making criteria themselves. When your organization is presented with new ideas and business opportunities, how do you determine whether to say yes or not? And how do you prioritize those opportunities once you have said yes? Most organizations have a variety of criteria they use to make yes-no and important prioritization decisions that include an assessment of risk and return on investment – what about an assessment of strategic value? When faced with opportunities like these, most of my clients will use decision-making criteria that include an assessment of which, if any, strategic objectives on their strategy map an opportunity directly relates to. While most will make this assessment of strategic value in different ways (some just count how many strategic objectives an opportunity or idea aligns with while others will use a more sophisticated approach that assigns weightings based on the relative priority of strategic objectives), every one of them leverages their strategy map to help them ensure that every big business decision they make aligns with their business strategy.

 

Are you currently using your strategy map as an important tool to translate your strategy into action and communicate your strategy to stakeholders inside and outside of your organization?

If you are then you are taking significant steps to bridge the strategy formulation – strategy execution gap. However, now it’s time for you and your team to take it to the next level and leverage your strategy map to build the concept of strategic value into you business decision-making processes. If you do, you will be that much closer to harnessing the power of strategy maps to help your organization actually execute and achieve your business strategy and realize targeted business performance results and outcomes.