Lean Thinking and Balanced Scorecards: 1) The Policy Deployment Matrix

A client in the public sector are undertaking a large lean initiative to reduce costs and improve services.  When I started talking to them about fourth generation balanced scorecards, they asked how it related to their “Strategy deployment matrix”.  I must admit I had not heard of these Strategy Deployment Matrix before, though the title seemed self-explanatory.  So, I did some research.

It turns out that their “Strategy deployment matrix” is what lean practitioners sometimes call a “Policy deployment  matrix”.  This in turn comes from work at Unipart, where much Uk lean thinking originates (who in turn got it from Toyota).  I managed to find an article by three consultants who worked at Unipart (Thomason, Ashley, Jackson) and their paper was quite interesting.  They describe this Policy Deployment Matrix as part of “Hoshin Kanri, or Getting your ducks in a row” which is the title of the paper  by the Unipart Lean consultants.    The article only has three references and one of these was to Kaplan and Norton’s Balanced scorecard work.

Now a policy deployment matrix is actually a square each side of which contains one of these elements arranged in a circle or spiral – one set on each side:

1. Objectives,
2. Measures and targets
3. Actions
4. Responsibilities

Now you might recognise these four as the central elements of the scorecard part of a balanced scorecard approach, and that is precisely what they are.

The (apparently) clever thing with the “Policy deployment matrix” is how they have tied them together.  Essentially each corner of the matrix contains a mapping between the pairs of topics, for instance the mapping of measures and targets to objectives, the mapping of measures to actions and initiatives.  The mapping of actions and objectives to responsibilities.  What they are doing is aligning the measures, projects and responsibilities with the  objectives (Just as the balanced scorecard does).  I came across one site claiming that Hoshin Kanri and the  Strategy/Policy deployment matrix can be used to managed anything – well of course it can – it is simple a scorecard from the balanced scorecard approach (Doh!).

At first sight this seems quite clever and I can imagine how many would find this useful.  But there is a catch, or rather a couple of catches:

1. There is no structure to the objectives,  as they ignore the balanced scorecard perspectives. So objectives are not in any particular perspective and there is no cause and effect relationship between them, as you would expect with a proper balanced scorecard.  As a result, the objectives and measures and loosely related.  When you draw the matrix in the corner where objectives and measures meet you can have a measure relating to several different objectives and vice versa.  Whilst it makes sense that several measures are related to an objective, why would you have a measure that spanned several objectives?   With a balanced scorecard this matrix would be a relatively simple diagonal.
2. Secondly the same problem applies with initiatives.  When you align initiatives with objectives in the balanced scorecard you align initiatives against an objective.  What are necessary and sufficient to deliver improvements in this objective?   With this approach a project might have multiple relations with several objectives or measures, but the  extent of that influence is not clear.  Again with a properly aligned balanced scorecard this matrix would be a relatively straight forward diagonal.

So the Policy deployment matrix is simply a scorecard, without the structure in the objectives and the  consequential problems that this causes in the other parts of the scorecard.  If you have objectives that are not in clear perspectives then the measures and projects become similarly vague in their scope.  It all goes wobbly as a result.

Personally I would be much more precise about my choice of objectives, ensure they applied in each perspective of the balanced scorecard, aligned them with a cause and effect relationship and then made much more precise alignments of the  measures, initiatives and actions.

Each to their own I suppose, but do be careful if you are using this approach.  Its neatness masks the  fact that it is compensating for more rigorous thinking when the objectives are first chosen. A rigour that first creating a strategy map would introduce.

You can find the article Hoshin Kanri or getting your ducks in a row following this link.  You can find out more about strategy maps and structuring a balanced scorecard properly on this page of our website.