Why do Balanced Scorecard projects fail? The bigger issue – tackling change

There are lots of stories about Balanced Scorecard projects failing. What is the real story behind these and why do they fail?  In this article we look behind the headlines.

There is a separate question:  Who puts these stories about?  When you look carefully, usually they are put about by someone who does not like the system, has their on solution or has not seen it succeed.

Of course some fail.  Probably many fail.  But why do they fail?

Why might balanced scorecard projects fail?

So what is really going on here? I believe it is about how the organisation tackles change projects as a whole, not just their balanced scorecard project.

You may read out there that “70% of balanced scorecard projects fail” but the original was “70% of “Performance measurement initiatives” fail – quite different.  (see explanation of this misunderstanding and the original McCann 1998 paper).  The original McCann paper refers to “management system implementations failing in manufacturing organisations.” Not to any specific type of management system. An important distinction.  One not to be confused.

In many cases the balanced scorecard approach is not clearly understood

I have seen it suggested that AN implementation problem is caused by,  in many cases, people who don’t understand the balanced scorecard approach properly.

I strongly agree.  It is true.  I have written about this a lot.

Poor skills are likely to lead to a poor implementation.  That is why I do my “vulcan mind meld” to embed deeply into my client’s staff the underlying thinking and principles of the approach.  It makes sure the project is sustainable and I don’t have to come out again and repeat stuff.  The project is more likely to succeed and we all get a better result.

It is also about the problem you are trying to solve

I also know, as you do, that if you don’t know what problem you are solving and what type of Balanced Scorecard system you need, you are likely to set off on the wrong path.  The project will fail.  That is why I run a diagnostic test with my clients BEFORE we start.  That is why I believe each generation of balanced scorecard solves a particular management problem.  That is why the client’s “Balanced scorecard system is often implemented alongside other behavioural and cultural changes, awe are helping with.

But these issues, though big, are not the bigger issue.

What is the bigger issue here?

Research by Palladium suggests (obliquely and by association) that companies rate themselves as high performers, implement successfully and implement balanced scorecards. (Causality or correlation, that is the question? I suspect correlation – NOT causality.  In other words, the balanced scorecard system does not create this end effect.  Rather organisations that are generally better are also using the balanced scorecard system.)

This is an important distinction.  Let me make it clear.  A well implemented and used strategic balanced scorecard system (generation 3 or 4) will help you implement your strategy better.  However, how well you implement that balanced scorecard system and whether you stick with it, is down to the way the organisation as a whole thinks.  An organisation that is good at managing change  and behaves and gets serious about changes and implementation and use of its management systems generally.

Let me suggest the real case is this:

1. It seems that many organisations fail to successfully implement (any type of) management systems generally, no matter what they are (budgeting, appraisals, quality initiatives, lean, or Balanced Scorecard or strategy). (As suggested by the 1998 McCann paper)
2. This may or may not be related to the type of initiative. To be proven. But assume it for the moment, that it is unrelated. It is thematic. It is a feature of the organisation’s capability.
3. In contrast, organisations that are good at implementing systems, will implement them well, irrespective of the type of system. (This is all that can be deduced from the James’s point. It is also my experience and why I am careful to choose who I work with).
4. Poor implementation is a factor, (In BSC failure as in any other management system failure) but I suspect the factors are common whether it is lean, BSC, strategy, rolling budget, appraisal, or whatever: Namely unclear objectives for the change, poor design, poor top management support, poor skills, not really knowing how the approach really works, just having a model of change, amongst others. Many pieces. You know the list.
5. So organisations that are good at change, are good at implementing any and all their management systems, no matter what they are. They tend to be better at (or think of themselves as better at) executing strategy and delivering results (Not a surprise there – also my experience). This is all that The Palladium survey says.

So in conclusion – It is also about how the organisation tackles change projects, as a whole

To suggest that any particular method, system, or tool is the problem is a leap too far.

It is more likely to be related to the organisation’s (read Executive team’s and Management’s) overall capability to manage change, than be related to any particular tool.

To suggest otherwise is a large leap of logic. A leap probably used to prove or disprove a particular bias or opinion. (and we have enough of them around).  Sure, failing to understand the balanced scorecard approach, what you are trying to achieve and what sort of balanced scorecard system you need, is a fundamental problem.

Failing to use an experienced consultant or training your own staff properly is also a problem.

But there is also the bigger issue: how does this organisation tackle change: Is it serious about changing behaviours and performance or not.  If not I don’t want to work with you, because I don’t want to waste my time nor you waste your money.  If you are serious about change, then we can talk.

Finally, my experience: Making change happen

This is the reason I have been out interviewing Chief Executives who successfully deliver real change in their organisation’s performance by changing the culture and deeply embedded learnt behaviours.

(Now here comes my plug – as everyone else is doing it) That is why I now focus Excitant’s “Fourth Generation strategic balanced scorecards” on organisations looking for behavioural change, make a clear point of explicitly saying how we are going to create behavioural change (modelled using the experiences and practices and thinking of those Chief Executives) and wrap it in a wider change programme. Ergo, it is more likely to succeed.

Otherwise you just get “yet another initiative” changing something we have to do (not how we think or behave) or adding in some measures someone wants.

It is your choice.  Call me if you are serious about making changes stick.  Otherwise just buy a book on measures :)