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CONTENTS
About the Authors viii
About the API x
List of Figures and Tables xi
Acknowledgements xiii
Foreword xiv
1 Both Efficient and Effective: The New Public Sector 1
Performance Agenda
2 Balanced Scorecards: The Journey from Measurement to 14
Strategic Performance Management
3 Using Lean Thinking to Improve Strategic Performance 42
4 Designing Strategy Maps to Agree Strategic Priorities 63
5 Agreeing High Level Strategic Outcome Targets and 90
Key Performance Indicators
6 Selecting Strategic Initiatives 112
7 Aligning Financial Management with Strategic Goals 134
8 Keeping Your Eyes on the Ball: Reporting and Reviewing 157
Performance
9 Building a Culture Focused on Strategic Performance 182
Management
10 Conclusion and Key Strategic Performance Questions 212
Notes 230
Index 240
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1
BOTH EFFICIENT AND EFFECTIVE:
THE NEW PUBLIC SECTOR
PERFORMANCE AGENDA
We can no longer afford to sustain the old ways when we know
there are new and more efficient ways of getting the job done.
Barack Obama
INTRODUCTION
It is fair to say that the collapse of the financial markets in 2007/2008
was an epoch making event. As well as popularizing the then obscure
term “credit crunch,” commentators watched in disbelief as long-
established and venerable companies such as Lehman Brothers went
out of business and other household names such as Citibank in the
US and the Royal Bank of Scotland in the UK were saved from extinc-
tion only through massive financial interventions from their national
Governments.
Few industries and sectors were unscathed by the global economic
recession that was triggered by the collapse of the financial markets.
From construction to publishing, from property to computing, organ-
izations were forced to hurriedly batten down the hatches and wait
while the recessionary hurricane passed by. Although we have
avoided the deep “depression” that was widely predicted at the turn
of 2009, the recession can still be seen as a massive economic cata-
strophe and it is safe to claim that the road to full recovery will be
long and treacherous and many more well known organizations may
well die en route.
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THE AMERICAN RECOVERY AND REINVESTMENT ACT
Financing the recovery will place enormous demands on public purses
that, due to demographic and other influences, have already been stretched
in recent years. Perhaps the most powerful measure of the cost of recovery
can be gleaned by considering the price tag on The American Recovery and
Reinvestment Act (ARRA) of 2009. Largely based on proposals made by
President Barack Obama, the Act introduced measures intended to stim-
ulate the US economy that together will cost about US$787 billion. The
range of measures include federal tax cuts, expansion of unemployment
benefits and other social welfare provisions as well as domestic spending on
education, healthcare and infrastructure projects. And bear in mind that
ARRA spending is on top of significant amounts of money that have already
been pumped into the US economy by the Government (and that was
replicated in other nations such as the UK) to shore up the banking sector
as well as the cost of other recession-busting and depression-avoiding
interventions.
TRANSPARENCY AND ACCOUNTABILITY
When looked at strictly from a performance management perspective
ARRA is nothing short of groundbreaking. For many years, those of us
working to improve performance management within the Government
and public sectors (which, for ease of reading, together we will refer to
as the public sector) have been actively promoting the establishment of
mechanisms that substantially improve performance accountability
and transparency, which we have long argued must be at least on par
with that expected in the commercial sector.
Therefore it is heartwarming to note that an ARRA provision called
for “a website on the internet to be named Recovery.gov, to foster greater
accountability and transparency (authors’ italics) in the use of funds made
available in this Act.”1 Recovery.gov is operated by the Recovery Trans-
parency and Accountability Board, which was also created by the Act.
Unprecedented in the levels of performance transparency and
accountability (indeed the words “Track the Money” are emblazoned
across every webpage) the website tracks areas such as:
– Are the public benefits from the use of the Recovery funds being
reported clearly, accurately and in a timely manner?
– Are Recovery projects avoiding unnecessary delays and cost overruns?
– Do Recovery programs meet specified goals and targets?
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FEDERAL DIRECTOR OF PERFORMANCE
Although the ACCA can be viewed as a short-term response to a des-
perate situation (even though some of the funding is earmarked for
longer-term economic developments) the Act should be understood
within a broader performance improving agenda that beats at the heart
of the Obama administration. For example, in June 2009 the President
appointed Jeffrey D. Zients (an American CEO, management consultant
and entrepreneur) as the United States Chief Performance Officer. Zients
is also Deputy Director for Management of the Office of Management
and Budget in the federal government of the United States. According to
President Obama, Zients’ assignment is to help “streamline processes, cut
costs, and find best practices throughout the US government.”2
Zients replaced Nancy Killefer who withdrew from her nomination
to this position in February 2009 to avoid controversy about her
personal income taxes.
On announcing the new position of Chief Performance Officer,
Obama made a statement that accurately describes the need for reform
in public sector performance management across the globe, “We can
no longer afford to sustain the old ways when we know there are
new and more efficient ways of getting the job done,” he said, add-
ing that, “Even in good times, Washington can’t afford to continue
these bad practices. In bad times, it’s absolutely imperative that
Washington stop them and restores confidence that our Government
is on the side of taxpayers and everyday Americans.”
Although the two just-cited examples relate to the USA, throughout
the world we are witnessing a radical refocusing of how the public
sector is spending its money, with words such as transparency, account-
ability, efficiency and effectiveness peppering the uncountable perfor-
mance dialogs that are taking place from the UK to New Zealand, from
Canada to Singapore.
A PUBLIC SECTOR HISTORY OF PERFORMANCE
IMPROVEMENT
Although the discussions have become heightened, the quest to radi-
cally improve performance is hardly a new concept in the public sector.
Over the preceding two decades there have been repeated attempts to
remove waste, bureaucracies and the inward foci from public sector
agencies. For instance in 1993 the then US President Bill Clinton intro-
duced the Government Performance Results Act (GPRA), which set out
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to improve agency program performance and accountability, thus
improving the public’s confidence in Federal Agencies. Key program
goals included:
– Initiate program performance reforms with a series of pilot projects
in setting program goals, measuring program performance against
those goals, and reporting publicly on their progress.
– Improve Federal program effectiveness and public accountability
by promoting a new focus on results, service quality and customer
satisfaction.
As the result of this Act, the head of each Government agency has to
submit to the US congress a strategic plan detailing the strategic aims
and performance indicators. The key performance results are then
aggregated into an executive branch management scorecard, which
is published for everybody to see.
Note the use of terms such as measurement, goals, reporting and
accountability, which all feature strongly in the words that have been
coming out of ARRA and the importance of transparency.
Switching our attention to the UK, a catalog of programs and init-
iatives has been launched in recent years with the clear goal of improv-
ing public sector performance. For example the “best value” scheme
that requires local authorities to deliver service to clear standards by
the most economic, efficient and effective means available was first
launched in 1999 and has evolved since. Other UK-based Government
initiatives that have been in place for some time include the use of
national league tables for National Health Services trust and primary
and secondary schools. Although controversial (critics claim that local
factors are not taken into account and that the emphasis should be on
celebrating and sharing best practice rather than naming and shaming
poor performers) league tables have delivered some benefits in that
they have catapulted performance issues onto the agendas of health
trusts and school managers as well as raising public awareness of the
distance that separates the best from the worst performers.
THE EFFICIENCY PRIORITY
But although we have witnessed concerted attempts to improve public
sector performance through the last decade of the last century and the
first of this, as we enter the second decade of the 21st century there is
no doubt that there is a new performance imperative to contend with.
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BOTH EFFICIENT AND EFFECTIVE
The fact is, as a result of the recession that followed the credit crunch
public sector leaders have to do a lot more than ever before but with
much smaller public purses. In essence, public sector bodies have little
option but to focus squarely onto cost savings and efficiency gains.
Scottish example
As just one indication of the scale of the challenge that is facing
public sectors leaders throughout the world, Audit Scotland (which is
a case study in this book) released a report in November 2009 that
painted a worrying picture of Scotland’s future public sector finances.
The report noted that although it was commendable that Scottish
Ministers had committed to a 2% annual efficiency saving to 2011
(Audit Scotland itself has internally embraced this target) that this
would be insufficient to fill the shortfall that will see the Scottish
budget fall between 7% and 13% in real terms by 2013–2024. This
shortcoming, it commented, was caused primarily by falling govern-
ment revenues, rising unemployment, ever-increasing demands for
improved public services and an aging population.
To contend with this shortfall, the Scottish Auditor General Robert
Black noted that difficult decisions would be needed to find other
ways to reduce public spending. Black highlighted an “urgent need”
to improve the efficiency and productivity of public services in Scot-
land, alongside better information linking spending with actual service
delivery, costs and performance. Put in stark terms, the Audit Scotland
report warned that “severe spending constraint is on the way.”3
Of course Scotland is not the only nation facing spending con-
straints, the same holds true for public sector funding in just about
every other developed nation. Without significant efficiency gains,
public sector bodies will simply not be able to properly deliver their
services in the next decade.
A DELAY IN IMPACT
As a result, the need to become efficient has become perhaps the key
performance imperative for public sector bodies. What’s more as there
is a delay from the time commercial organizations emerge from reces-
sion and public funds recovering, the aftermath of the current recession
will continue to hurt the public sector long after the present downturn
ends.
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Basically, while most private businesses can just get on with the job
after money starts flowing more freely, governments have to deal with
the huge debt burdens, they still own major stakes in banks that need
to be restructured and they have to cope with the reduced tax income.
While budgets are often set for three or five years, the next budget
round will mean reduced budgets for most government organizations
– be it central government departments, agencies, education insti-
tutions, schools, NHS organizations, police forces, fire and emergency
services, justice organizations, local authorities, etc. All of those will be
forced to cut costs and become leaner and more efficient, which is a
trend that is likely to continue for many years until the massive debts
are repaid and public purses look more healthy again. The fact is over
the coming years public sector bodies are facing harsh economic real-
ities, the likes of which has not been seen since the end of World War 2.
IMPROVING EFFECTIVENESS
But note. Although there will be massive pressure on public sector bodies
to deliver quantifiable and significant cost savings in the coming years
there is a wider and more complex performance challenge facing public
sector leaders. They will have to achieve the potentially large-scale cost
reductions without negatively impacting citizen-facing performance.
Indeed as the public gets more demanding of performance, public sector
bodies might be expected to improve service outputs with the same
or fewer resources. While this might be achievable in some large and
inefficient departments, it’s a lot harder for some organizations that are
already lean. Basically efficiency savings are on a logarithmus scale and
will become exponentially more difficult.
So here’s the rub. Public sector bodies are being asked to become
both more effective as well as more efficient (not therefore becoming
efficient at the expense of being more effective). Often seen as inter-
changeable words, we can define efficiency as “doing things right,”
and effectiveness as “doing the right things.”
In essence, from an effectiveness perspective the general public of
developed nations are demanding that their public sector agencies per-
form to the same level of customer-centricity that they now expect from
their commercial sector suppliers. Indeed over the last 20 years or so
(perhaps measurable from the early 1980s when total quality manage-
ment principles were first introduced into Western organizations with
their focus on increased efficiencies through tight process management
as well as the inculcation of greater customer focus – see Chapter 3) as
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8. Proof
BOTH EFFICIENT AND EFFECTIVE
the performance of private sector companies improved, consumers
began to use the standards of the best companies as the benchmark
for all of their service providers – commercial or public. The perfor-
mance of the public sector was generally found wanting which led
to an interesting cycle: private citizens vented their frustrations regard-
ing public sector performance on elected officials. These officials
then passed this anger straight back to public sector managers, with
the non-negotiable order to demonstrate substantial service perfor-
mance improvement. Fast forward to today, this means that as public
sector bodies look to (and are forced to) cut costs they will not be
allowed to trade this with any measurable and sustained degradation
of service. However unfair it might seem to beleaguered public sector
leaders, the general public will not stand for poorer performance
from public sector bodies and therefore neither will their elected
officials.
EFFICIENCY AND EFFECTIVENESS: AUDIT SCOTLAND
CASE EXAMPLE
In short, the expectation of public sector leaders is that they deliver
“more value for less money.” As a best practice example of this pro-
mise consider our case organization: Audit Scotland. Its vision is that:
“On behalf of the Auditor General and the Accounts Commission,
we will provide assurance to the people of Scotland that their money
is spent appropriately and we will help public sector organizations
in Scotland to improve and perform better.” This vision speaks
directly to the efficiency (value for money) and effectiveness (perfor-
mance improvement) strands of Audit Scotland’s responsibilities. Diane
McGiffen, Audit Scotland’s Director of Corporate Services notes that,
“The vision we have now captures the essence of the priorities that
our stakeholders and clients have identified for the next five years,”
therefore stressing the fact that their customers anticipate improve-
ments to both efficiency and effectiveness performance strands – not
one or the other.
As well as an external performance improvement focus, Audit
Scotland pays equal attention to improving the efficiency and
effectiveness of its own performance. To help achieve both its
external and internal goals and bring these together in one docu-
ment, Audit Scotland, as with all of the other case organizations
in this book, uses a Balanced Scorecard as it core management
framework.
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A BALANCED SCORECARD
Described in detail in Chapter 2, a Balanced Scorecard is essentially a
strategic management framework that comprises both financial and
non-financial performance perspectives. First popularized in the early
1990s by Harvard Business Professor Dr Robert Kaplan and manage-
ment consultant Dr David Norton, a “classic” Balanced Scorecard (that
is as defined by Kaplan and Norton) comprises learning and growth,
internal process and customer perspectives in addition to the financial
perspective. These perspectives are collocated within a Strategy Map
and an accompanying scorecard of indicators, targets and initiatives.
A number of variations to the Balanced Scorecard have evolved since
the Kaplan/Norton framework was first introduced. Indeed the term
Balanced Scorecard today most accurately relates to a broad range of
performance management systems or frameworks that comprise finan-
cial and non-financial performance dimensions.
VALUE CREATION MAP
Alongside the “classic” Balanced Scorecard, this book also outlines how
organizations have amended and changed the Balanced Scorecard
concept to make it work for their organization. Bob Kaplan and Dave
Norton make it very clear that organizations shouldn’t see the “classic”
scorecard template as a straight jacket and encourage organizations to
change the standard templates to better reflect their unique strategies.
One such evolution is the Value Creation Map that is used by Audit
Scotland and many of the other case studies that we profile. The Value
Creation Map is also described in detail within the next chapter. But as a
quick description, a Value Creation Map describes the strategic objectives,
initiatives and supporting key performance questions and key perfor-
mance indicators that an organization must master in order to deliver to
its vision or mission. Figure 1.1 provides a diagrammatic overview of a
Strategy Map of a “classic” Balanced Scorecard and a Value Creation Map
(which throughout this book we will also refer to as a Strategy Map). The
process of strategy mapping (the most important phase in any Balanced
Scorecard creation) is described fully in Chapter 4.
PERFORMANCE PRIORITIZATION IN THE PUBLIC SECTOR
Although the original Kaplan/Norton Balanced Scorecard was designed
for deployment within commercial organizations (and indeed emerged
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10. Proof
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Strategy Map Value Creation Map
Financial Perspective
Outcomes/Stakeholder Value
Proposition/Output Deliverables
Customer Perspective
Internal Processes Perspective Core Activity Core Activity
Information Capital Human Relational Structural
Resources Resources Resources
Human Capital Organizational
Capital Financial Physical
Resources Resources
Figure 1.1 Balanced Scorecard Strategy Map and a Value Creation Map
from a 1990 study involving 12 large listed organizations that were
looking at better ways to measure performance than could then be
achieved through reliance on financial metrics alone4) Balanced Score-
cards have perhaps become even more popular and enduring in public
sector organizations. A key reason for this popularity is that a Balanced
Scorecard enables public sector leaders to successfully contend with a
challenge that is normally far tougher for them than their private sector
counterparts – prioritizing where to spend money (which of course
has today taken on a significantly more important focus than has
previously been the case).
Simply put, whereas commercial organizations can boil every-
thing down to some form of shareholder value focus (be that as a
publicly traded or family owned enterprise) for public sector bodies
there’s a requirement to deliver equal value to a range of stakeholders:
funders, consumers and partners, as examples. This can confuse the
public sector leaders as to where they should prioritize attention
and resources. Peter Ryan, Manager, Planning and Performance at
our case study organization Christchurch City Council puts it well:
“The leaders of public sector bodies have a great deal of difficulty
in knowing what they’re there to produce in terms of outcomes and
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what they need to support that,” he says. “So their greatest short-
coming is that they lack a real sense of what their business is.”
Ryan continues that, “It’s not like a private company where you’re just
pitching it at a profit measure which is a nice, simple thing to have as a
prime directive. Public sector organizations have so many things that
they’re seeking to deliver that they end up not knowing what they’re
supposed to do.”
He asks: “How can they set realistic and useful performance objec-
tives and targets and prioritize performance when they’re not sure
what they’re supposed to do in the first place?”
Ryan, along with other practitioners and thought leaders that we
interviewed for this book states that a Balanced Scorecard is an ideal
tool for those public sector leaders that want to properly understand
what they should be doing and where to prioritize their spending. And
usefully, given that public sector organizations are not subjected to the
commercial sensitivities that exist in the private sector, they have been
much more willing over the years to share the content of their Balanced
Scorecards with other organizations. As a consequence, a substantial
body of best practices and learning has emerged and been made freely
available, which has been much less evident in the commercial sector.
The best of these practices and learnings are reported in this book.
LEAN METHODOLOGIES
Throughout this book we also provide best practices in learnings as to
how public sector organizations have used “Lean” methodologies to drive
significant efficiency gains. Essentially Lean is a collection of methodo-
logies and approaches (of which Six Sigma is perhaps the most popular)
that are used to systematically identify and drive waste out of organ-
izational activities and processes. Long-established and proven within the
commercial sector, leaders within the public sector are waking up to the
cost-saving potential of Lean within their own setting. As we explain
throughout this book, Lean methodologies work extremely well when
deployed as part of a Balanced Scorecard implementation. When Lean is
used as part of a scorecard effort, organizations can ensure that they iden-
tify the most impactful organization-wide efficiency opportunities while
making sure that the effectiveness performance dimension is not com-
promised. It also ensures that efficiency programs are tied to the organ-
ization’s longer-term strategic agenda. Although the role of Lean within a
scorecard implementation is described in many parts of the book, we
describe Lean in detail within Chapter 3 and explain its key role in the
identification of strategic initiatives in Chapter 6.
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12. Proof
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CONCLUSION
This chapter has explained that as a result of the economic downturn
public sector organizations are under intense pressure to become much
more efficient in their usage of scarce financial and other resources.
But we also explained that they will be under huge pressure to remain
effective; that is continuing to deliver (and improve upon) the required
standards of service to an ever-demanding and increasingly unforgiving
citizen-base: that is delivering “more value for less money.”
The remainder of this book explains how public sector leaders can
properly deliver these efficiency/effectiveness requirements. This begins
with building a Balanced Scorecard, which as we describe in the next
chapter is much more than simply choosing a bunch of financial and
non-financial performance metrics (as we also explain, too many public
sector bodies have become “obsessed” with measurement in recent times,
largely as a consequence of externally mandated target-setting). Rather it
is about public sector bodies using Balanced Scorecard principles and
methodologies to place a robust strategic performance management
framework, which includes a measurement component. In essence, this
is about identifying what matters, measuring this and then managing it so
to improve the effectiveness, efficiency and overall performance of an
organization. Such an approach beats at the heart of the new public
sector performance agenda.
SIDEBAR
Global study of performance management in the public sector
Recently the Advanced Performance Institute (API) conducted the
research project, Strategic Performance Management in Government and
Public Sector Organizations – a Global Survey, which, with more than
1100 responses is the largest and most comprehensive global study of
Government and public sector Performance Management to date.5
These findings, alongside an extensive review of academic and
practitioner literature on performance measurement and perfor-
mance management, and from a consultation with a panel of leading
academics and practitioners in this field – enabled the identified best
practices and from this tested ten principles of good performance
management for government and public sector organizations.
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We questioned public sector respondents about their Perfor-
mance Management practices in this light, tested the impact
of these principles on organizational success using the latest
statistical tools, determined how widespread these approaches
are, and how effective they are when used. We found that organ-
izations which have these principles in place are able to:
1. Create clarity and agreement about the strategic aims.
2. Collect meaningful and relevant performance indicators.
3. Use these indicators to extract relevant insights.
4. Create a positive culture of learning from performance
information.
5. Gain cross-organizational buy-in.
6. Align other organizational activities with the strategic aims
outlined in the Performance Management system.
7. Keep the strategic objectives and performance indicators fresh
and up-to-date.
8. Report and communicate performance information well.
9. Use the appropriate IT infrastructure to support their Perfor-
mance Management activities.
10. Give people enough time and resources to manage performance
strategically.
(1) Achieve Strategic Clarity
(2) Collect Meaningful Performance Indicators
Learning
(3) Apply Performance Management Analytics
(4) Create a Positive Learning Culture
Strength of impact
(5) Gain Cross-Organizational Buy-in Better
Decision
(6) Ensure Organizational Alignment Making
(7) Keep the System Fresh
(8) Report and Communicate Performance Well Improved
Organizational
(9) Implement Appropriate Software Performance
(10) Dedicate Resources and Time
Figure 1.2 10 Principles of Good Performance Management
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14. Proof
BOTH EFFICIENT AND EFFECTIVE
The principles with the strongest individual impact on perfor-
mance improvement were confirmed to be: (1) creating clarity
about the strategy with agreement on intended outcomes, out-
puts and necessary enablers, and (4) creating a positive culture of
learning and improvement (see Figure 1.2).
Both (1) and (4) are prerequisites for succeeding with a Balanced
Scorecard. That said, where all ten principles were found to be in
place, the improvement was particularly substantial, confirming that
the combined effect is far greater than the sum of the parts. It is
notable that most of the case studies within this book would score
highly for the deployment of all ten principles. Throughout this
book we report the key findings from this study.
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15. Proof
INDEX
Note: Page numbers followed by “f” and “t” denote figures and tables,
respectively.
accountability, 2 Alignment: Using the Balanced
of initiative selection, 119, 121–6 Scorecard to Create Corporate
Advanced Performance Institute (API) Synergies, 31
Audit Scotland and, 37–8 American Recovery and Reinvestment
Creating and Implementing a Act of 2009 (ARRA), 2
Balanced Scorecard: The Case of Apple Computer, 23
the Ministry of Works, Bahrain, Armstrong, Charles, 185–6
75 Audit Scotland
four performance meetings, 177 Advanced Performance Institute
New Directions for Government: and, 37–8
Five Principles for sustainable cascading the strategy map, 81
Recovery, 80 effectiveness, 7
Reporting and Communicating efficiency, 7
Performance Information efficiency priority, 5
Appropriately, 161, 168 financial management with
Strategic Performance Management strategic goals, 135–6
in Government and Public Sector key performance questions, 94–5
Organizations – a Global lower level map circulation, 74
Survey, 11–13, 12f, 15, 18, 64, metrics for learning and
92, 103–4, 112, 152, 161, improvement, 195
191, 213 performance report, 172
“Use the appropriate IT senior management interviews, 70,
infrastructure to support 71
performance management stakeholder-facing improvement,
activities,” 161 39
Using Performance Management to strategy map of, 36–9, 37f, 66–7
Transform a Failing Australian Business Excellence
Organization, 134 Model, 24
alignment, 31–2 automation, benefits of, 160–7
checkpoints, 32 API findings, 161–2, 162f
with performance management, packaged versus custom built
113f solutions, 162–6
240

16. Proof
INDEX
Christchurch City Council case metrics for learning and
example, 163–6, 164f, 165f improvement, 194–5
Ministry of Works, Bahrain case overcoming challenges of
example, 163 scorecard implementation,
purchase of a packaged solution, 190
advising, 166 resource allocation for initiative
scorecard solution, guidelines for, selection, 118–19, 120f
166–7 scoping, 73
strategic objectives/enablers,
Baillie, John, 70 number of, 78
Balanced Scorecard, 8, 14, 22–31 Strategic Performance
aligning Lean to strategic goals Improvement Meetings, 176
through, 46–8 value creation map of, 39–41, 40f,
classic, 22, 23 72–3, 72f
financial perspective, 135–7 VCM creation, 73
4 box model, 25f Bell, Sheldon, 139
implementation best practice report, creating, 168–72
failure in, 188–9 show the key performance
overcoming challenges of, question, 170
189–90 show the strategy map, 170
is not software conversation, 158–9 use headlines, 171
performance enabler, 160 use meaningful graphs and
software conversation, 158 charts, 170–1
solution integrating with software, use performance narratives, 172
159–60 see also best practice report
strategy-focused organization, Beyond Budgeting Roundtable
principles of, 29–31, 30f (BBRT), 138, 140
strategy maps, 25–9, 26f, 29f Big Dig project, 119
translating strategy into action, Black, Robert, 5
23–5 Black Belts, 57–8
vendor failings, 159 break down barriers, 46, 61
Balanced Scorecard: Translating Brisbane City Council, 26, 28
Strategy into Action, The, 23 strategic and operational
Balanced Six Sigma, 55–6, 58 measures, 103
see also Six Sigma strategy map of, 103
Barberg, Bill, 76, 87, 108–9, 127, Brown & Root, 25
159, 166, 167 budget, 137–48
Belfast City Council, 145, 172 abandoning, 138
cascading the strategy map, 81–3, Belfast City Council case
82f example, 145
data collection, 73 budget-free, 139–40
element definitions and narrative Christchurch City Council
creation, 73 case example, 143
finance perspective, relegating, 78 cost of, 140–1
241

17. Proof
INDEX
budget – continued strategy map of
Ministry of Works, Bahrain case “Balanced Scorecard,” the term,
example, 142 avoiding, 70
public sector finance professionals, cascading the strategy map,
upskilling, 143–5 83–5, 84f, 85f
Purolator case example, 138–9, Cigna Property & Casualty, 23,
141–2 25
Scottish Enterprise case example, Citibank, 1
145–8 City of Brisbane strategy map, 26–7,
with strategy, aligning, 137–8 26f
transformation advice, 141–3 see also strategy map
budget-free approach, 139–40 City of Charlotte strategy map, 27–9,
budget transformation advice, 141–3 29f
Budiarso, Adi, 210 see also strategy map
Bush, Patricia, 79, 209 Civil Service College, Singapore
business intelligence, 215 incentive compensation, 201
Clinton, Bill
CAPEX (capital expenditure), 151 Government Performance Results
see also Strategic Expenditure Act and, 3–4
cascading the strategy map, 80–7 color coding reporting, 108–10
cause-and-effect maps, 64–5 communicating performance
cease dependence on mass information, 168
inspection, 60 community outcomes, 19–22, 20f,
Champions, 56–7 21f, 143
charts, 170–1 constancy of purpose, 45, 60
Chief Strategy Officer, 204 consumption, targets for
Christchurch City Council, New internal/external, 107–8
Zealand, 9, 24, 140 cost cutting, by doing nothing,
“better financial reporting” 116–17
program, 143 Creelman, James, 139, 142, 159
custom built solutions of, 163–6, Driving Corporate Culture for
164f, 165f Business Success, 184
Finance Function: Achieving Superior cultural challenge, 183
Performance in a Global culture, 182–211
Economy, 144 API research findings, 191–4
financial management with defined, 184
strategic goals, 135, 143, employees implement strategy,
144f 186
incentive compensation, 199 incentives and rewards, 198
Lean methodologies, use of, 48 incentive compensation, 198–203
Long-term Council Community influence of, 184
Plan, 143 metrics for learning and
outputs-focused perspective, improvement, 194–5
19–22, 20f, 21f objective on strategy map, 186–9
242

18. Proof
INDEX
scorecard failure in plan operations, 34–5
implementation, 188–9 test and adapt, 35
survey results, 187–8, 188t translate the strategy, 33–4
as organization, 185–6, 185f executive leadership, 45, 56
overcoming challenges of scorecard see also leadership
implementation, 189–90 Executive Strategy Management
performance-driven, 185, 202 (ESM) Balanced Scorecard
values and, 196–8 software solution, 163
winning, 184–5
customer and stakeholder, Federal Bureau of Investigation (FBI),
distinction between, 79–80 United States, 79
Office of Strategy Management,
data manipulation, 191–2 209
delay in impact, 5 Federal Director, of performance, 3
delivery of strategy map, 80 finance perspective, relegating, 78–80
Deming, W. Edwards, 44, 45 financial management with strategic
principles of good management, goals, aligning, 134–56
60–2 Audit Scotland, 135–6
diagnostic control, 193 budget, 137–48
drive out fear, 45, 61 aligning management with
Drucker, Peter F., 112 leadership actions, 156
Belfast City Council case
Edwards, Charles, 134 example, 145
effectiveness, 144 Christchurch City Council case
communication, 169f example, 143, 144f
improving, 6–7 cost of, 140–1
efficiency, 6, 7, 144 leadership actions, 155
cause and effect, 136–7 Ministry of Works, Bahrain case
priority, 4–5 example, 142
EFQM Business Excellence model, public sector finance professionals,
24, 24f upskilling, 143–5
eliminate arbitrary numerical Scottish Enterprise case
targets, 61 example, 145–8, 149f
eliminate exhortations, 61 transformation advice, 141–3
employees Christchurch City Council case
behavior, guiding, 193–4 example, 135
implement strategy, 186 efficiency cause and effect, 136–7
encourage education, 62 performance management
end lowest tender contracts, 60 systems, aligning, 152–4
execution premium management failure to integrate risk
system, 32–5, 33f management with
align the organization, 34 performance, 153–4, 154f
develop the strategy, 33 rolling forecast, 148, 150–1
monitor and learn, 35 Friedman, Mark, 103
243

19. Proof
INDEX
Gibbon, Edward, 157 target-setting
good management, principles of, color coding reporting,
60–2 108–10
Google for external and internal
Key Performance Questions, 93–4 consumption, 107–8
government guidance, 110–11
outputs-focused perspective, 18 HMRC IMS (HM Revenues and
Government Performance Results Customs Information Services
Act (GPRA), 3–4 Management)
graphs, 170–1 Lean methodologies, use of, 48
Green Belts, 58 Office of Strategy Management,
210–11
Hackett Group overcoming challenges of
budget-free approach, 139–40 scorecard implementation,
“Linked, Light and Late,” 141–2 189–90
Performance Metrics and Practices performance management
of World-Class Finance systems, aligning, 153
Organizations, 142 performance meetings, 176–7
Planning for Economic Sustainability: Horizon, 164–6, 164f, 165f
Linking Strategy to Action, 141 human energy waste, 50
headlines, 171 see also waste
heat maps, 87–9, 88f, 129
Hereford Hospitals NHS Trust, 131–3, improve every process, 45, 60
133t incentive compensation, 198–203
Hertfordshire Fire and Rescue incentives, 198
Service UK information waste, 49
initiative selection process, 124–5 see also waste
Hewlett Packard, 23 initiative selection, 112–33
high level strategic outcome targets, accountability of, 119, 121–6
agreeing, 90–111 cross-cutting, 126–7
focus on increased measurement, importance of, 114
91 International Baccalaureate case
meaningful and relevant indicators, example, 115
collecting, 92 Lean thinking and, 127–33
Key Performance Questions, 93–9 Ministry of Works, Bahrain case
Audit Scotland, 94–5 example, 115–16
defined, 93 prioritization of, 117–18
Google, 93–4 resource allocation for, 118–19,
International Baccalaureate, 98–9 120f
Scottish Intellectual Assets role of, 113–14
Centre, 95–8, 96f, 97t templates, 116–17
strategy map, creating, 91–2 institute leadership, 45, 61
10–step guide to creating KPQs, see also leadership
99–102 institute training on the job, 61
244

20. Proof
INDEX
interesting times, curse of living in, key performance questions (KPQs),
212–13 36, 38, 64, 93–9, 135–6, 170,
International Baccalaureate (IB), 217–28
strategy map of, 65–6, 66f, Audit Scotland, 94–5
68–9, 98–9 defined, 93
“balanced scorecard,” the term, Google, 93–4
avoiding, 70 International Baccalaureate, 98–9
finance perspective, relegating, 78 Scottish Intellectual Assets
initiative selection, 115 Centre, 95–8, 96f, 97t
key performance indicators, 98–9 10–step guide to creating, 99–102
key performance questions, 98–9 Killefer, Nancy, 3
senior management interviews, 71 Kmiecic, Eva, 72
strategic objectives/enablers,
number of, 78 leadership
actions, 155
Al-Jowder, Fahmi Bin Ali, 77, 115, aligning management with, 156
174, 210 executive, 45, 56
Juran, Josef, 44 institute, 45, 61
Lean Enterprise Institute, 43
kaizen, 44 initiative selection process,
Kaplan, Robert, 8, 22, 45, 64, 75, 90, 127–33
138, 163, 183, 204 Lean thinking and initiative selection,
performance meetings and, 127–33
172–81 Lean thinking and strategic
StartEx and, 151–2 performance, 42–62
key performance indicators (KPIs), defined, 43
36, 38, 136, 91, 94–5 kaizen, 44
actionable, 107 poke-yoke, 44
collecting, 92 Six Sigma
common definitions, 106 capability of, 53
danger of repackaging, 106 challenges of, 58–9
design template, 102–3, 102f DMAIC principles of, 54–5
externally imposed, 92 in-house competencies,
extracting insights from metrics, building, 56–8
103–4 levels of performance, 54,
International Baccalaureate, 98–9 54f
ownership, 106–7 popularity, 55–6
qualitative, 105–6 to strategic goals through
quantitative, 105–6 balanced scorecard,
reviewing metrics, 104–5, 105f aligning, 46–8
Scottish Intellectual Assets Toyota Production System, 44
Centre, 97t, 98 break down barriers, 46
strategic and operational constancy of purpose, 45
measures, 103 drive out fear, 45
245

21. Proof
INDEX
Lean thinking and strategic color coding reporting, 109–10
performance – continued cultural objectives on strategy
improve every process, 45 map, 187
institute leadership, 45 ESM Balanced Scorecard software
Total Quality Management, 44–6 solution and, 163
usage in public sector, 42–3, financial management with
48–59 strategic goals, 142
value stream mapping, 43–4 initiative selection process, 115–16,
Lehman Brothers, 1 121–4
Linkage Models, 26 Lean methodologies, use of, 48
Long-Term Council Community Plan lower level map circulation, 74–5
(LTCCP), 21–2, 143 objectives and initiatives, difference
lower level map circulation, 74–8 between, 122–4
Office of Strategy Management,
Malcolm Baldrige Framework and 210
Award, 24, 48 ownership of metrics, 107
managing poor performance, 203 StartEx, 152
see also performance strategy map of, 67, 68f, 107,
Marr, Bernard, 35, 91, 158 109–10
Selecting Balanced Scorecard strategy review meeting, 174–5
Software Solutions, 166 Mobil Oil, 25
Massachusetts Institute of
Technology, 36 National Health Services, 4
Master Black Belts, 57 New Directions for Government:
McCusker, Michelle, 74, 204 Five Principles for sustainable
McGiffen, Diane, 7, 37, 66–7, 74, Recovery, 80
81, 94 new philosophy, the, 60
McNeil, Kay, 190, 204, 210–11 non-incentive rewards, 201–3
meetings, 172–81 see also rewards
four performance, 177 Nordea Bank, 139
operational review, 173t North East Lincolnshire Council
review, the term, avoiding, 177 financial crisis of, 134–5
strategy review, 173t, 194 Northumbria Healthcare heat map,
strategy testing and adapting, 87–9, 88f
173t see also heat maps
metrics see key performance North West Collaborative
indicators Commercial Agency (NWCCA)
Michelangelo, 90 “balanced scorecard,” the term,
Ministry of Finance, Indonesia avoiding, 70
Office of Strategy Management, heat maps, 89
209–10 lower level map circulation, 74–5
Ministry of Works, Bahrain (MoW) strategic objectives/enablers,
cascading the strategy map, 85–6, number of, 78
86f, 87f strategy map of, 69, 69f
246

22. Proof
INDEX
values charter, 196–8, 197t information requirements, 173t
vision/mission statement, and strategy review meeting,
distilling, 69–70 advising against combining,
Norton, David, 8, 22, 31, 32, 45, 64, 175
65, 90, 138, 183, 204 see also meetings
Palladium and, 79, 91, 163 OPEX (opening expenditure), 151
performance meetings and, see also Strategic Expenditure
172–81 organization, culture as, 185–6, 185f
StartEx and, 151–2 outcome-based perspective, 15–17,
16f, 17f
Obama, Barack, 1, 216 outputs-focused perspective, 15–22,
American Recovery and 16f, 17f
Reinvestment Act of 2009 reasons for, 17
and, 2 ownership, 106–7
Jeffrey D. Zients and, 3
Office of Government Commerce packaged solutions
(United Kingdom), 49 advising the purchase of, 166
Office of Strategy Management packaged versus custom built
(OSM), 30, 203–11 solutions, 162–6
role and responsibilities Christchurch City Council case
architect, 205 example, 163–6, 164f, 165f
integrator, 207–9 Ministry of Works, Bahrain case
process owner, 205–7 example, 163
team, 209 Palladium Group, 79, 91
operational dashboards and Balanced Scorecard Hall of Fame,
strategic scorecards, distinction 91, 109, 163
between, 167 ESM Balanced Scorecard software
operational measures of solution, 163
performance, 103 pay-for-performance, 198
see also key performance indicators see also performance
operational performance Payne, Ed, 150
improvement meetings, 180 performance
attendees, 178t enabler, 160
frequency, 178t improvement, public sector history
information requirements, 178t of, 3–4
purpose, 178t indicators see key performance
time horizon, 178t indicators
see also meetings information
operational review meetings communicating, 168
attendees, 173t reporting, 168
caution against aligning, 175–6 league, 18
focus, 173t managing poor, 203
frequency, 173t meetings see meetings
goal, 173t narratives, 172
247

23. Proof
INDEX
performance – continued public sector performance agenda,
pay-for-performance, 198 1–13
prioritization, in public sector, accountability, 2
8–10 American Recovery and
reporting and reviewing, 157–81 Reinvestment Act of 2009, 2
performance-driven culture, 185, balanced scorecard, 8
202 delay in impact, 5
see also culture effectiveness, improving, 6–7
Performance Excellence Study efficiency priority, 4–5
Award (PESA), 24 Federal Director of performance, 3
performance management, performance prioritization, in
defined, xiv public sector, 8–10
performance management systems, public sector history, of
aligning, 152–4 performance improvement,
HMRC IMS case example, 153 3–4
failure to integrate risk transparency, 2
management with value creation map, 8
performance, 153–4, 154f public-private partnership (PPP), 75,
permit pride of workmanship, 62 77
personal performance improvement Purolator, 141–2
meetings, 180–1 The Finance Function: Achieving
attendees, 178t Superior Performance in a
frequency, 178t Global Economy, 138–9
information requirements, 178t
purpose, 178t qualitative indicators of
time horizon, 178t performance, 105–6
see also meetings see also key performance
poke-yoke, 44 indicators
prioritization, of initiative selection, quantitative indicators of
117–18 performance, 105–6
process waste, 49 see also key performance
human energy waste, 50 indicators
information waste, 49
tangible outcomes, 51–3, 52f recovery, 213–16
work waste, 50 more integration and alignment,
see also waste 215–16
public sector more intelligent indictors, 215
history, of performance more partnership and synergies,
improvement, 3–4 214–15
Lean usage in, 42–3, 48–59 more serious appointments, 216
performance prioritization in, more strategic clarity, 214
8–10 Recovery.gov, 2
public sector finance professionals, Recovery Transparency and
upskilling, 143–5 Accountability Board, 2
248

24. Proof
INDEX
repackaging of measures, 106 strategy map of
reporting and reviewing key performance indicators, 97t,
performance, 157–81 98
see also best practice report, key performance questions,
creating 95–8, 96f, 97t
resource allocation, for initiative Scottish public sector
selection, 118–19 Lean usage in, 50–1
review, the term, avoiding, 177 see also public sector, Lean usage in
Review of Public Administration senior management interviews, 70–1
(RPA), 40 senior management workshops, 71–3
rewards, 198 senior management involvement,
non-incentive, 201–3 Importance of, 71–2
Risher, Howard, 182, 185 strategic assumptions,
rolling forecast, 148, 150–1 challenging, 72
Royal Bank of Scotland, 1 Shingo, Shigeo, 42
Royal Canadian Mounted Police Singapore Business Excellence
(RCMP), 72 Model, 24
rule of thumb, 151 Six Sigma, 50–9
Ryan, Peter, 9–10, 26, 90, 91, 103, aligning Balanced Scorecard
136–7, 143, 144–5, 160, 163–5, with, 130f
188, 199, 304 Balanced, 55–6, 58
Ryder, Richard, 153, 177, 189, 204 capability of, 53
challenges of, 58–9
Saint-Onge, Hubert, 185 DMAIC principles of, 54–5
Schein, Edgar in-house competencies, building
culture, definition of, 184 Black Belts, 57–8
Schmidt, Eric, 93–4 Champions, 56–7
Schumacher, Lisa, 28, 29 executive leadership, 56
scorecard solution, guidelines for, Green Belts, 58
166–7 Master Black Belts, 57
Scottish Enterprise levels of performance, 54, 54f
“a framework for managing the popularity, 55–6
business,” 147 voice of employees/associates/
corporate management team stakeholders, 129
strategy map, 148, 149f voice of the business, 129
financial management with voice of the customer, 129–30
strategic goals, 145–8 voice of the process, 129, 130
initiative selection process, 125–6 Smith, Andrea, 65, 66, 69–72, 115
Reinventing Planning and Budgeting Smith, Kent, 200
for the Adaptive Enterprise, 146 soccer goalkeeper analogy, 53
rolling forecast, 148, 150 software, solution integrating with,
Scottish Intellectual Assets Centre 159–60
cultural objectives on strategy software conversation, 158
map, 187 balanced scorecard and, 158–9
249

25. Proof
INDEX
Sreedharan, Elattuvalapil, 119 creating, 67–8, 91–2
stakeholder cultural objectives on, 186–9
defining, 79–80 scorecard failure in
distinguished from customer, implementation, 188–9
79–80 survey results, 187–8, 188t
stakeholder-facing improvement, 39 delivery of, 80
State of Washington, USA, finance perspective, relegating,
Department of Revenue 78–80
initiative selection process, 124 heat maps, 87–9, 88f
StatoilHydro, 139 importance of, 64–5
Stein, Ben, 63 lower level map circulation,
strategic aims, clarity of, 15 74–8
strategic communication, 65–7 senior management interviews,
Strategic Expenditure (StratEx), 126, 70–1
138, 151–2 senior management workshops,
capital (CAPEX), 152 71–3
opening (OPEX), 151 strategic objectives/enablers,
Strategic measures of performance, number of, 78
103 3–D, 87
see also key performance vision/mission statement,
indicators distilling, 69–70
strategic performance improvement see also individual entries
meetings (SPIMS), 176, 179–80, strategy review meetings, 174–5,
194 177–9
attendees, 178t attendees, 173t, 178t
frequency, 178t caution against aligning, 175–6
information requirements, 178t focus, 173t
purpose, 178t frequency, 173t, 178t
time horizon, 178t goal, 173t
see also meetings information requirements, 173t
strategic scorecards and operational and operational review meeting,
dashboards, distinction advising against combining,
between, 167 175
Strategy Aligned Management purpose, 178t
(SAM), 76 time horizon, 178t
strategy-focused organization, 138 see also meetings
principles of, 29–31, 30f strategy testing and adapting
strategy maps, 8, 9f, 25–9, 63–90 meetings
“balanced scorecard,” the term, attendees, 173t
avoiding, 70 focus, 173t
benefits of, 63–4 frequency, 173t
cascading, 80–7 goal, 173t
cause-and-effect maps, use information requirements, 173t
of, 65 see also meetings
250

26. Proof
INDEX
target-setting value creation map, 8, 9f, 22, 35–41
color coding reporting, 108–10 Belfast City Council, 72–3, 72f
for external and internal North West Collaborative
consumption, 107–8 Commercial Agency, 69, 69f
guidance, 110–11 value narrative, 39–41
Taylor, Julian, 125, 146, 148 value stream mapping, 43–4
Theme Teams, 127 vendor failings, 159
3–D strategy maps, 87
see also strategy maps Warwick Business School, UK
Tomkins, 139 Evaluation of the Lean Approach to
top management commitment and Business Management and its
action, 62 use in the Public Sector, 50
Total Quality Management (TQM), waste, 48–50
24, 44–6 human energy, 50
break down barriers, 46 information, 49
constancy of purpose, 45 process, 49
drive out fear, 45 work, 50
improve every process, 45 Wells Fargo Online Banking, 116
institute leadership, 45 Wileman, Andrew, 203
Toyota Production System, 44, 48 winning culture, 184–5
transparency, 2 see also culture
work waste, 50
US Postal Service see also waste
incentive compensation, 199–200,
200f Al Zayani, Raja, 76–8, 109–10, 123,
National Performance Assessment 142, 160, 163, 174, 175
Program, 200 Zients, Jeffrey D., 3
251