Fourth Generation Balanced Scorecards:
An overview of the thinking and approach

This article describes some of the key features of the Fourth Generation Balanced Scorecard approach, while contrasting the approach with first, second and third generations of balanced scorecard thinking.

The Fourth Generation Balanced Scorecard addresses the demands of organisations today and how successful executives think about their performance. This includes:

1. Looking externally, anticipating change
2. Strategy as a continuous learning process
3. Agility: How can we respond to change, faster?
4. Empowering teams and individuals.
5. Behaviours: Measures are important, but not sufficient. The culture you create matters.
6. New models of business and service delivery.

The Fourth Generation Balanced Scorecard Approach: More...

Types of Governance and Performance Management

Before you implement a balanced scorecard, or any performance management system, in an organisation it is vital you understand the Governance context: the other ways in which performance is being managed.

Understanding the wider governance context will help you ensure you design your piece so it fits in with the rest of the organisation.

Get this wrong and your scorecard will not be accepted, or might even be high-jacked for other purposes.

There are lots of ways in which performance is managed. We use a selection of them as a diagnostic tool with clients. This articles looks at just one aspect of how performance is managed: the variety of levers of control that managers use.

Types of Performance Management: More...

How well is your Strategy going to be Implemented?

This article is a useful strategy diagnostic test that I run with my clients on their strategy or plans. Get this wrong and you inevitable have "Strategy by hope and magic".

There is a fundamental model within the strategy map and balanced scorecard. A model that runs across the perspectives and captures the essence of strategy in organisations:

"If we developed the skills, knowledge and capability capability of our organisation, we will deliver our processes better, so that our customers will get what they want, and we shall deliver our financial results."

This simple model goes to the heart of strategy: What capabilities do we need to learn and grow as an organisation to be competitive, deliver our services, and do so economically and sustainably?

This article provides a simple diagnostic test: More...

Strategy Maps and Strategy Mapping:

Strategy Mapping for Learning Organizations provides a detailed guide to designing, implementing and managing using strategy map based balanced scorecards.

On these pages we provide a short insight. We summarise what strategy maps are, explain how strategy maps improve the design and effectiveness of balanced scorecards, and provide some strategy map examples. We also explain how to avoid some common mistakes people make when designing strategy maps.

Make sure you check out the four warnings about designing Strategy Maps, particularly if you were planning to steal someone else's strategy.

An introduction to Strategy Maps and Strategy Mapping: More...

Public Sector Balanced Scorecard and Strategy Map:
Addressing Strategy, Policy and Service Delivery models

This paper describes the overall approach to designing public sector balanced scorecards and using strategy maps in the public sector, based upon 4th Generation Balanced Scorecard thinking.

In particular it explains how public sector bodies can model their strategy and their service delivery models in their strategy map, so that the resulting Balanced Scorecard better communicates their overall approach.

If you are managing strategy and performance during the Public Sector Financial Review, then this paper has useful guidance, advice and mistakes to avoid.

This paper was peer reviewed for the PMA Newsletter, (Performance Management Association) published September 2011.

The Public Sector Balanced Scorecard and Strategy Map: More...

Public sector transformation, cost reduction and service provision: Two contrasting case studies and lessons from two city councils

This extended Public Sector balanced scorecard case study contrasts the approach of two city councils we have worked with. Both wanted to address change. Both said they wanted to adopt a Strategic Balanced Scorecard approach.

One was successful, the other not. One clients addressed the underlying behaviours, the other did not.

There are lessons here for anyone addressing cost reduction, change and service provision in the public sector. Don't throw away the opportunity to lower public sector costs and still maintain or improve public sector services.

Contrasting transformation in the Public sector More...

Using a Balanced Scorecard and strategy map in charities and not-for profit organisations.

Do not use the standard balanced scorecard model in a charity or not for profit organisation. IT WILL NOT WORK!

If you considering a balanced scorecard to help you manage your strategy or performance, then please read this? I hope it will save you valuable time and money. It is not often realised that charities and not for profit organisations require a particular approach to the design of their strategy maps and balanced scorecards. This is not simply about the balanced scorecard perspectives: it is about the operating and service delivery models being fundamentally different to commercial organisations.

The Not for Profit Balanced Scorecard: Will it help a NFP organisation?More...

Designing an effective Environmental Balanced Scorecard

If you are simply looking for ways to measure carbon footprint, this article may not help you (yet). 

However, if you are an organisation that believes in a sustainable environmental approach;if you are concerned that 2010 CO2 emission reached a record high; if you are want to embed environmental and sustainable thinking into the way you think and act as a business; if you want to design an environmental balanced scorecard that communicates and supports such thinking and action, then read on....

...because this article will save you time and help you avoid some fundamental design mistakes.

Designing an Effective Environmental Balanced Scorecard: More...

The Culture of Performance 1:
Measures, targets and dysfunctional behaviour

If you have ever experienced problems with measures and targets creating problems, dysfunctional behaviour or failing to incentivise people in the way you expected, then this analysis may help you.

If you are in an organisation that has too many measures and targets, or relies on measures and targets to communicate your strategy and intention, then read on. This will help you diagnose the problem and point to some solutions.

Watch the video and you can look at the detail of the slides used in it, below.

The Mind Read model - and other forms of dysfunctional behaviour: More...

The Culture of Performance 2:
What do we mean by "A culture of performance"?

Most balanced scorecard approaches focus on measures, KPI and targets. But this can lead to dysfunctional behaviour (see The culture of performance 1). All symptoms of an excessive focus on measures.

In contrast our Fourth Generation Balanced Scorecard approach focus on behaviours. It is not that measures are not important, they are. But the messages, culture, permission managers give to their staff is much more important. That is why we say, "Behaviours trump measures"

This area is also the focus of our current research project: Read more about our research

The Culture of Performance: More...

The Culture of Performance 3:
Judgement and Evidence in Fourth Generation Balanced Scorecards

In this video from a talk I gave at a conference, you can learn why our balanced scorecards use subjective and qualitative measures alongside objective, qualitative measures. We believe they are a missing piece of the jigsaw.

Better judgement and better evidence is what we need in the current economic climate. Yet performance management approaches tend to rely only on quantitative measures, rather than judgement. Ironically we employ people for their experience and encourage then to use their judgement, based on evidence, yet many performance management approaches ignore this important aspect.

Our experience is that when we help clients to use Judgement and Evidence together, it encourages conversation. These conversations are where judgement is developed and learning occurs. You get more motivated and engaged staff and better decisions and improved results.

Judgement and evidence in Balanced Scorecards. More...

The Culture of Performance: More...

Fourteen KPIs to Monitor during Uncertain Times:
External Predictive Indicators and Key Performance Indicators

A useful guide to avoid problems during the economic uncertainty and to prepare for recovery.

Part of the Fourth Generation Balanced Scorecard approach, this paper introduces fourteen Indicators for the economic climate. These fourteen indicators are used by smart organisations to avoid problems during the economic crisis and to prepare for recovery.

This paper introduces: Nine Key Performance Indicators (KPIs) to avoid problems in your organisation Five External Predicting Indicators (EPIs) to help you anticipate change and recovery in the economic conditions.

Avoiding problems and predicting recovery, 14 KPIs More...

How your Balanced Scorecard should help you
during downturns, uncertainty and recessions

Eight ways your balanced scorecard should be helping you during a downturn or recession.

The current environment is an excellent test of your balanced scorecard. Does your balanced scorecard still serve you well, as the economy changes, with credit tightening, interest rate and exchange rate changes, with concerns over governance (just ask a banker), as you need to find ways to change costs, or as you seek ways to maintain existing revenues or find new ones? 

There are ways of doing well in this environment? For instance, given all the doom and gloom in the car industry I have a friend in the trade who has never been busier. Why? He is exporting UK cars to people who are finding the pound so cheap that it is worth buying cars here. In every cloud, as they say. Of course it’s a change of strategy but you do have to spot opportunities and grasp them and your balanced scorecard should be helping you.

How your Balanced Scorecard should help you during a recession: More...

Talking Strategy: Know your environment

A fundamental aspect of being strategic is understanding your environment.

This article, written for "Whitehall Business Magazine", looks at the various aspects of the external environment that executive teams need to monitor and how they can monitor them.

It includes a simple exercise you can do immediately to improve the breadth and awareness of your strategic thinking. Do it now before you get caught out.

Talking Strategy: Know your environment. More...

Balanced Scorecard basics:
10 Keys for successful implementation (11 actually)

A short article providing the 10 most important keys to a successful implementation. Forget any of these are you are doomed to a tactical, operational, or ineffective implementaion.

Of course number 11 is the most critical

10 Keys to successful balanced scorecard implementations More...

Balanced Scorecard basics:
Never start with measures!

You have probably heard the phrase:

"What gets measured gets managed".

You might even had come across the phrase

"Don't simply manage what you can measure, Measure what you want to manage"

Many balanced scorecard designers take this as an instruction to think hard about the measures they choose. Actually, it is more fundamental that that. You should NEVER start with measures. You should never communicate a measure alone. So, where do you start?

Measure what you want to manage, but NEVER start with Measures. More...

Balanced Scorecard basics:
First principles and important early history

I worked for Norton & Kaplan between 1996 and 2000. Talking to Bob Kaplan in the dinner queue, I cheekily asked "Have we given too much away by writing the books?" His reply, "Don't worry about what we put in the book. That was 18 month old consulting when we wrote it"

This is one reason I get annoyed when I see this simplistic four quadrant model being touted as a "Balanced Scorecard", when even the most simple reading of the first 30 pages of the first book would make it clear that this is not what was intended.

Page nine makes it clear that you use objectives before measures. By page 30 there is the a clear cause and effect model across the perspectives. These two articles provide some history and important first principles.

Important first principles of Balanced Scorecard design More....
Why the four quadrant model should not be used More...

Why do so many "balanced scorecards" fail?

Welcome to the Balanced Scorecard dilemma…..

Research says that 80% of organisations say they have some form of “balanced scorecard” yet research also says that 70% of scorecards are failing heir organisations because they do not provide concise, predictable, actionable, information.

But at the same time...

World class performing organisations are over THREE times more likely to use a MATURE balanced scorecard approach to analyse performance.

What is going on? We know...

Balanced Scorecard dilemma More...

Balanced Scorecard basics:
The Sesame Street Connection

To understand the Balanced Scorecard you have to understand where the originators were coming from.

In this article and video you will learn how their thinking influenced the underlying principles of the Balanced Scorecard as a tool of Strategy and Organisational change.

Discover how it was not just Dr David Norton and Prof Bob Kaplan that developed the approach, but that there was an important other influence from an unlikely source: Sesame Street.

Balanced Scorecard principles - The Sesame Street Connection. More...

Strategy as a Learning Process:
Introducing the Strategic learning Model

Fundamental to our approach is the idea that strategy development, implementation and management is a continuous process of learning.

Our Strategic learning Model allows us to take any strategy process and model it. By changing the starting point and/or the pace at which you go around it, you can become more or less agile, responsive and increase or decrease your speed of learning from your strategy.

This short article provides an introduction to the approach, which is explained more in "Strategy mapping for Learning organizations."

The Strategic learning Model. More...

How to get buy in to Balanced Scorecards and Performance Management

I had the most amazing compliment from a Balanced Scorecard client recently.  When we first met, this Director was as sceptical as any person I have met, of poor measurement approaches.  However, having just extended the pilot balanced scorecard programme to a full roll-out, he said:

“I have never come across an approach where there is so much acceptance.  If fact I cannot think of a single person who is against the approach. You have overcome all resistance.” Steve Inch Director, Dimensions

It is not the first time we have had such a compliment. This articles provides a checklist of thirteen things to consider when trying to create buy-in to your new balanced scorecard or performance management implementation.

Getting Buy-in to your Balanced Scorecard More...

The Case for Balanced Scorecards based Performance Management:
What difference can it make to an organisation?

Almost every organisation has introduced some form of non-financial measures and targets into its performance management approach. Calling them "Scorecards" after the Balanced Scorecard introduced by Norton & Kaplan, non-financial performance measures are used in many organisations.

Is there any evidence that such an approach improves performance? If so, what are the characteristics that contribute to that performance? Are all "Scorecards" equal, or are some better than others?

This briefing paper summarises research that shows that companies that have balanced and structured performance management systems tend to have significantly higher performance (around 25% better) that their peers. Further, that this performance comes from having agreed strategic goals, setting out a clear path to achieve the goals and an improved quality of communication. It also provides a checklist to assess how balanced and structured your performance management system is.

Note: this is one of our older white papers in an older format.

Getting Buy-in to your Balanced Scorecard More...

A short video analysing of the pressures we see organisations facing, today

A short analysis of the pressures we see organisations facing:

• From the External Environment: Demands for improved Governance and increased Environmental & Social responsibility. Uncertainty, worsened by the speed of change. Competition, but also increasingly for collaboration and cooperation.


• On Strategy and the management of strategy: Given the need to respond, adapt, and refine strategy, annual review is no longer an option. There is still a need to build a persistent and sustainable capability that underpins the organisation's strategy. Both internal and external risks need managing and you need to monitor the external environment for change.


• The Operational implications: Improving the quality of decision making and action, at every level in the organisation. Having performance management that treats people like Human beings. Socialising the strategy, not merely communicating it.

The pressures on organisations, today. More...