If you have ever tried to cascade measures on a balanced scorecard you have a problem that is common to many starting down the balanced scorecard route.
By developing the scorecard you look for the right measures that will cascade as meaningful drivers of the behaviours and results of others. However, in making those steps the gap between strategy and action widens. What is the right measure? Will this be meaningful? Will it encourage the right results? Will it encourage the right behaviour? The uncertainty grows. The meaning starts to disappear. The worries build: will these measures be meaningful and create the right behaviours?
Let me explain where some of these problems lie…
Back when I started working for Norton & Kaplan in 1994, soon after their first book was published I would look at old projects and cases on the servers and talk to people about them. I realised three important things:
1) that the scorecard was the last piece you developed.
2) It was about engaging managers and how they were thinking. That is what needs to be communicated.
The first insight helps you realise that BEFORE to think about any measures you have to develop a strategy map for that team. You also need a view of the future and how the strategy will change the organisation. This is where 90% of so called “Balanced scorecards” go wrong. Only when this strategy map has captured the strategy, the business model and the thinking of the management team do you even think about starting the scorecard. If you miss out capturing the strategy you have mere operational measures.
The second insight is that it is about how managers think and talk about their strategy. Strategy maps help you tell the story of the strategy so people get it. (That is why my first book was “Communicating Strategy”). Mere scorecards don’t do this. Strategy maps and scorecards together do achieve this (If you develop them by engaging the hearts and minds of the team). This way they can tell the story of their strategy (backed up with the scorecard). When you track progress you use both. That way you can tell whether things are working operationally and the strategy is working as well.
Developing a balanced scorecard is not an intellectual exercise. It is a social process.
3) Finally, there is one piece that almost everyone misses. YOU DO NOT CREATE A BALANCED SCORECARD FOR AN ORGANISATION!
Yes really! What you do is create a strategy map and scorecard for each management team. The problem is that in Norton & Kaplan’s books, to simplify the story, they tend to show a strategy map for the executive team and describe it as the organisation’s strategy map. It is, but there are others beneath it. I know because I worked on a few of those cases and examples. It is this cascade of strategy maps (before you develop scorecards) the solves the problems you are facing. Miss this out and you will have one strategy map and 120 measures! Precisely the problem that the balanced scorecard approach was designed to solve.
So what can you do?
1) You could buy my book, “Strategy Mapping for learning organizations”.
- Dear David Norton said, It is a must read book for anyone doing a strategic balanced scorecard based performance management system. That was very kind given he has written 5 books on the subject with Bob Kaplan.
- There are whole chapters on cascading scorecards (or rather strategy maps) and it introduces the cascade map that solves your problem at source. How to buy Strategy Mapping for learning organizations
2) You could have me do consultancy for your clients. My contact details for Balanced Scorecard consultancy are at the top of the page and here on the main website