PS: Our Balanced Scorecard Saved The U.S. Army $26 Million

PS: Our Balanced Scorecard Saved The U.S. Army $26 Million

I was working with an Army command at Ft. Sam Houston this week and had invited a special guest – Scott Hencshel – to address the group regarding the organizational challenges of implementing a balanced scorecard system within Army.  (Scott’s command is also stationed at Ft. Sam Houston –  Army Medical Department Center & School (AMEDDC&S), an Institute “Award for Excellence” winner.)

As Scott was wrapping up, someone asked a final question, “What was the biggest benefit that AMEDDC&S realized after implementing its strategic balanced scorecard?”  Scott talked about alignment, focus, and data-driven decision making.  Then as he was making his way to the door he turned back and said, “Oh yeah, we immediately saved the Army $26 million.”

Say what?!?!

AMEDDC&S is where the U.S. Army educates and trains all of its medical personnel – over 27,000 soldiers. One of the strategic measures on AMEDD’s balanced scorecard is “attrition rates.”  Before the scorecard was implemented, it was commonly believed that discipline issues were the primary reason for soldiers not completing their training programs – because resolution of these discipline issues were what consumed everyone’s time.  Once the scorecard was implemented, attrition was measured more thoroughly and two discoveries were made:

  1. Attrition was MUCH higher than originally thought.  The traditional calculation was flawed and attrition was actually over 34%.  That means 1/3 of those entering the medical training programs would “drop-out” thereby wasting the Army’s investment in their training.
  2. Academic performance, not discipline, was discovered to be the primary reason for attrition.

So as the scorecard team delved further, they looked for root causes of poor academic performance resulting in attrition incidents.  They discovered that a major cause was a lack of communication between the Brigade leadership and the AMEDDC&S faculty.  Students in the medical training program were being assigned Brigade duties that prevented them from having proper opportunities to study and prepare for classes and exams.   A prime example was students falling asleep during final exams due to having served Brigade guard duty the night before.

Once the communications issues were corrected, overall attrition rapidly dropped from 34% to below 20%…thereby saving the U.S. Army $26 million.

PS:  Did I mention that I have the best job in the world?!?  It is extremely rewarding to hear about results like this.

For more examples of break-through performance, we invite you to read “The Institute Way: Simply Strategic Planning & Management with the Balanced Scorecard.

Balanced Scorecard Gone Bad – What’s that Funky Smell?

Balanced Scorecard Gone Bad – What’s that Funky Smell?

I had a distressing phone conversation earlier this week.  A former client called to say they were at a decision-point. They were trying to decide if they wanted to keep using their balanced scorecard system or not.  He went on to say, “to be quite honest, the scorecard really isn’t driving the organization.  It feels more like ‘busy work’…it leaves a bad taste in our mouths.” 

“In fact,” he continued, “our project management discipline is clearly what is strategically guiding the organization while the balanced scorecard feels like an anchor weighing us down.   It used to be what propelled us forward and kept everyone in alignment.  Maybe if we cascade the scorecard, this will help?”   I was perplexed.  While I’ve diagnosed the root cause and prescribed the solutions for a lot of “broken” scorecard systems, this was the first time I’d heard of project management being “more strategic” than the strategic management system that drives it.

The next day, I joined the client executive team on a web conference.  We walked through an overview of an integrated scorecard system – reviewing the 14 components of a fully integrated system.  As we talked, some of the team members began remembering back to when they built the original scorecard and recalled how the underlying strategic elements were built – how they brought in board members and stakeholders to inform and set strategic direction.  But most importantly, they began to remember when it was built.

This client is a healthcare organization and they built their original scorecard during the last presidential election cycle – at a time when there was political uncertainty.  The environment was so uncertain that one of their strategic themes was “Readiness for Public Policy Changes” which meant that their resultant strategic scorecard was designed to prepare them for whichever way the political winds eventually blew.  And that scorecard was appropriate for the times.

But their environment has since changed…significantly!  In the past year or so, the Affordable Care Act now drives all action and projects at this organization.  This massive shift in their strategic environment happened to coincide with the implementation of a robust project management system in which the portfolio is aligned to the tenants of Triple Aim.   That’s when the room went silent.  As I strained to hear across the phone line, I began to hear murmurs as one after another team member came to the same diagnosis.  Their environment had changed and they had shifted strategic directions without updating their strategy / strategic balanced scorecard.  Their strategic scorecard was outdated….expired!  Their sense that their old scorecard was anchoring them in the past and was at odds with the new implied direction of the organization was absolutely correct.

They had stumbled into the classic “Set It and Forget It” mistake.  Their project management discipline (which is critical to strategy execution) appeared to be “more strategic” because it was more aligned with their true strategy than was the rest of their strategic management system.  Due to some key team member turnover, they had forgotten their entire system needs to go through a regular strategic evaluation cycle!  Scorecards do not have indefinites shelf lives….they are dynamic systems designed to allow an organization to shift directions, as needed.  The team is now in the process of updating their entire strategic management system to reflect their current reality. And as part of this update process, they will ensure that their current strategic direction is chosen, not implied.   Only then can they be sure that their current portfolio of projects is truly aligned for maximum strategic impact.

Does your scorecard have a funky smell?  For more examples of Scorecard Challenges and Solutions, we invite you to read “The Institute Way: Simply Strategic Planning & Management with the Balanced Scorecard.”

We also invite you to join the conversation at our Linked In group: www.theInstitutePress.com/group

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