Getting a sense of perspective
Similarities between the balanced scorecard and how our eyes work
Yesterday I got something in my eye and it irritated the lens surface so much I was going around much of the day with one eye closed. Not only was it very painful and irritating, it made it difficult to see properly. As a result, with only one good eye, I only had my sense of distance if I moved my head around. I had lost my sense of perspective.
Our sense of perspective comes from having two eyes and merging the images together in our brains. When we look through only one eye it makes harder to tell the distance of objectives. In effect our vision moved from three dimensions to two.
Our views of our organisations can become afflicted with the same problem. If we look at a business as a set of financial data we are looking a just one dimension on the organisation. The accounts tell us nothing about the customers, personality, product quality, how they are made, the skills they have, the management talent they have developed.
It is the same if we look at the organisation just as the products it produces. I think of Sony, Apple, BMW and many consumer brands as the products I have seen (or the service I have received) rather than the bigger picture. This is just as important perspective, but it is not the whole picture as some companies manage to produce great products unprofitable and others perhaps unethically.
So an importance aspect of the “Balanced scorecard” is to provide the information in more than two dimensions. To get the information on the organisation that not only looks at the finances, but also looks at what the customers want. It looks at how the organisation produces those products or delivers those services with the processes that the organisation is using and it looks at the personality, capability and management of the organisation through the learning and growth perspective. You can even get a sense of the organisation’s underpinning values and ethics as well.
So value comes from having these multiple perspectives on the organisation.
But this is not the whole story. Our sense of perspective comes not just from having two eyes. It comes from the ability of the brain to process that information and put it together to make sense of it. The eyes provide the information. The brain interprets it and makes decisions about whether that car is parked or moving towards us very quickly.
It is the same with the balanced scorecard and the interpretation of all the information that could be collected on the scorecard and reported to management. The important pieces in the scorecard are the relationships between the information in the perspectives. It is about how what you believe the customers will pay for. It is about how well you processes serve your customer’s needs. It is about the cost of delivering the products and services. It is about how the organisations capabilities, knowledge skills and culture create effective and efficient processes. It is about how the values and ethics affect how you do business.
Just as the brain acts to integrate information from both eyes to create the whole picture it also works out where to pay most attention. What is moving, where are faces, what is a danger, how to coordinate our hands to type at the keyboard, gathering feedback from the outside world. So this interpretation is not just about creating the whole three dimensional picture but also what to focus on or what to concentrate our attention on.
Again our brains do this automatically. But do we as managers do this? If we only have part of the picture not only are we in danger on missing signs and not making connections. We are in danger of not concentrating on the right things.
So what acts as the analogy to the brain in the balanced scorecard. The answer is “The strategy map”. It is the strategy map that asks the questions, “How complete is this picture, what are the connections between these parts, how does one piece of information affect other pieces in other perspectives and also, where should we focus and concentrate our attention to make sure we are addressing the most important parts.
It is in the design of the strategy map and the story of the strategy that the strategy maps contain that you will have this information. It helps you filter the important information from the rest. Like the brick in the wall opposite the detail in the picture is still available to me if I want it, but at the moment I am quite happy to be reassured that the building is still there. I can drill down into that detail if I want to, but I don’t need to.
So the perspectives of the balanced scorecard act to give us perspective and ensure we have the whole picture. But this picture contains a massive amount of detail and so needs interpretation in the same way that our brains can interpret the information our eyes gather to focus on what is really important or may become important. Therefore, the strategy map provides the connections between the information in various perspectives on the organisation, so that a richer picture emerges. A picture that allows us to concentrate on what is most important, whilst keeping an eye out for those exceptions and issues that pop up occasionally.
So you have probably been asking yourself, as you read this, how much of a perspective you have on your whole business? How balanced is the information coming into your eyes (and ears and other senses for that matter)? And how well is your brain interpreting this information and working out what is most important to concentrate on?
I leave you with a final thought. We all see the same things. It is how we choose to interpret them that makes the difference.
When you feel that your organisation could gather and interpret information better, get in touch with us.
Strategy and performance specialist