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Much has been written about the importance of aligning our human, technical, and financial investments with known business challenges and needs. Examples of organizations that have done so are in short supply, however, leading one to wonder why Is the concept of alignment the latest management fad, just another technical buzzword, or an emerging best practice? This article will assess the real value of strategic alignment by examining Sarasota County's GovMax application, an example of building a platform across strategic areas, based on business need.
THE STRATEGIC BUSINESS NEED
In 2001, Sarasota County's newly assembled leadership team faced many questions. Was the county was getting the value it should from its investments of taxpayer dollars? Were the county's limited funds being allocated to the products and services valued most by the community? How did county officials know when a project was actually delivering the promised results? How would it be possible to stimulate innovation and focus on productivity in an organization that was largely accustomed to doing only more and more of the same? And what would it take to implement new, more efficient and effective business models, putting a stake in the heart of the "take last year and add X percent" model of public-sector financial management? The way to answer these questions was to benchmark the best--businesses, non-profits, professions, or other governments--and learn from their successes, challenges, and failures.
The foundation for change turned out to be a pretty obvious concept: "What gets measured gets managed." The best examples of this principle came from the county's analysis of management practices, along with their resulting business and organizational dynamics. An examination of the practices of successful chief financial officers (CFOs) seemed to reveal that the secret of CFO success is an unending focus on performance measures, and the effects of varying strategies and tactics on a particular measure.
The finance function exists to manage the financial health of an organization, and it goes right to performance measures to do so: fund balances, budget to actual reports, return on investment, bond rates, days of operating reserve, debt ratios, etc. It is hard to imagine measuring the financial function with squishy measures. The financial profession seems to be the proof that what gets measured gets managed. The next question, then, is why solid measures are not applied as easily across all public services and professions.
For Sarasota County, one answer was the culture of its public organizations. The mindset that "we are different from the business world" can be so pervasive that people make it so, regardless of whether this needs to be the case. The county initially had to spend months and even years positioning a new vernacular within the ranks to define performance-based management, a process often prolonged by those who believed they could wait out this latest management fad.
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The county's next step was a meaningful and clear organization-wide strategy that would show where resources should be focused, what success would look like, and how progress could be measured. County executives were charged with developing strategies to optimize the performance of their functions. As a result, Sarasota learned that asking eight business areas to produce their own strategies, with no overarching vision to guide them, had two significant downsides. The county acted like eight separate organizations, rather than one--at a huge cost to efficiency, Also, it turned out that competitive spirit was alive and well in the public sector, as strategy presentations quickly turned into an executive competition over whose combination of PowerPoint and Excel was most impressive. After a year spent trying to define a collective strategy, the county had expended significant organizational energy and produced largely nicely wrapped statements of direction that were not explicit, linked, or measurable.
It was time to regroup. Administration pulled together a small group to analyze what happened and to consider the root cause of each experience. They came up with five main issues:
1. Multiple unlinked strategic plans were caused by a lack of enterprise strategy to frame underlying improvement strategies.
2. Results from investments and projects were unquantifiable because the county didn't focus sufficiently on measurements of outcome. Quantity measures dominated, regardless of whether they were relevant to the county's progress toward a desired outcome.
3. There was no real connection to actual operations because no system had been implemented for tracking results. Narrow involvement in strategy development led to even narrower ownership and sense of accountability,
4. County officials emphasized presentation over content, treating strategy more as marketing for dollars than operations--it was more sizzle than steak.
5. There had not been enough focus on the products and services of government because of cultural hurdles--the "we are different" divide.
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Keeping these points in mind, county officials redefined their strategy They decided to:
1. Create an enterprise strategy to guide all underlying product and service strategies.
2. Clearly define the outcomes to be achieved in each product and service area.
3. Establish performance targets and capture actual results, involving management and staff at all levels.
4. Focus on content rather than imagery
5. Ensure that product and service strategies are linked to actions and investments.
THE ALIGNMENT OF INVESTMENTS
At this stage, county officials thought again about the performance focus of the finance function, leading to a critical breakthrough: The importance and tangibility of money as a measure could be used to drive leadership results. The budget could provide a powerful incentive for change.
The county's board and administrative team set the foundation for the performance management program by creating six strategic focus areas and identifying the community goals associated with each. Exhibit 1 shows how the county's strategic focus areas, in the outermost circle, are supported by eight service operations that relate to our purpose, improving the environmental, social, and economic sustainability of the community's quality of life.
Exhibit 2 shows how the county has developed broad strategic goal statements for each of the enterprise-level strategic focus areas, along with the performance outcome measures associated with them. The county used a number of index measures at the strategic level because indexes accommodate the diverse constituencies and interests of a community by eliminating debate over the relative importance of a particular measure. They also avoid the possible effect of prioritizing a specific program just because it was selected as the measure for a broader strategic focus area. The health index, for example, comprises many individual measures of community health and allows county officials to look at the overall impact of many individual community health measures, eliminating any Solomon-like debate over whether infant mortality rate is a more important measure than obesity rate.
THE SEEDS OF GOVMAX
Linking the county's efforts back to a performance-based budget led to another breakthrough in the way officials thought about the new program. Now that the county's business needs were well-defined, it could develop performance management software that would directly link investments in products and services with measurable results. County officials would then be able to measure the effect of varying levels of investment as the resources were allocated and track actual results over the course of the year. Technology could be used to improve the county's progress toward performance-based budgeting.
This idea led to the creation of GovMax, Sarasota County's online performance-based budgeting system, which guides and lends consistency to the entire planning and budgeting process. Sarasota's implementation of GovMax, which is used throughout the organization, is built around a five-level system model (see Exhibit 3).The highest level is strategic planning, which captures board and administrative strategies, goals, objectives, and measures for the overall organization. The business planning level provides the structure for each core service area to document the goals, objectives, targets, and performance measures being proposed for the next several years. These goals and objectives are linked to specific progress on the goals and objectives at the strategic level. The board and administration can review, on demand, how the work of each core service area supports the overall strategy of the county, and how well each area is doing in achieving each specific objective. At the next level, each core service area breaks into business processes, which often support the management and provision of a specific product or service within a broader service area. Sarasota County uses this level to provide for goals, objectives, targets, and measures for team managers. The work at this level also supports the objectives of the core service level. Sarasota County is committed to continuous process improvement, which often leads to breaking business processes into sub-processes, or activities that can be modeled, measured, and optimized. Cost accounting and resource allocation can be done at this level as well. The fifth and final level of the configuration links the goals, objectives, and performance measures of a specific employee to those at the process activity level, completing a cascade of linked objectives that allows employees to see exactly how their work for the coming year supports the board and administrative objectives for the overall organization.
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