What are you paying attention to?
Have you noticed how you notice what you are paying attention to? Are you paying attention to the letter t in this article? I doubt you were, but you are now, and you can stop if you want. Likewise, when you get a new car that you thought was unique in colour and model, suddenly every other car you see seems to be the same.
The opposite is also true. You tend not to notice what you are not paying attention to, unless it catches your attention. You probably didn’t think about the punctuation in the last paragraph. You just read it and it passed you by. It didn’t try to attract your attention.
You have probably noticed how the same is true with performance measurement and management. Recently we were working with a City Council, which involved helping them improve their planning processes and pay more attention to the quality of their thinking about strategy. As a part of the work, we took a look at the existing strategic plans and cast them as a strategy map, with interesting results.
Two things quickly became apparent: Firstly there were plenty of measures and activities around what they did. There were also many measures of how the council would tell whether things had changed for their community. There were, of course, plenty of financial measures.
Something was missing, though. We found few statements, let alone measures, of how the council would change. How would they change? What would make the difference? This was a council that was trying to improve the way it worked. Yet evidence of what they were going to do differently was sparse. In fact we had a completely blank “Learning & Growth” perspective.
Now, no doubt, they had been thinking about how the organisation needed to develop and how this would change overall performance and make the strategy happen. Yet that thinking was not clearly nor explicitly captured. They were not paying attention to it. Guess what. It wasn’t happening much either. As the Chief Executive put it, “What is happening with our change programme? We seem to have forgotten it”
As you think about your organisation, you’ll start to notice what it might not be paying attention to. For this reason our starting point for the Balanced Scorecard underlying principles are:
1. It is about balance
The reason it was called the “Balanced Scorecard” is precisely because that is what it was trying to address. Its origins back around 1992 were to get organisations to focus on more than the financial measures and the processes. To redress the balance with measures of what the customers think and want. To add to this measures that reflected how the organisation was to learn, develop, change and grow.
That council is not alone. Research indicates many organisations that say they have implemented a “balanced” scorecard have measures that are predominantly financial and process. As a consequence they are measuring what they are doing, rather than measuring what is making them change. Which lead us to the second key principle.
2. It is about cause and effect
It wasn’t long in the development of the scorecard, that it was realised that the old four-box model was a mistake. You have probably seen it around:Financial, Customer, Learning & growth, Process
This model of the scorecard is all over the web from people who think of this as a scorecard. But just ask yourself, “How do you choose what to put in each box?” “How do these boxes relate to one another?”
You are all smart people so you know, like, our client, that that changing what they did should end up affecting both costs and their customers. So a better way of thinking about things would be.
Of course this is what, by 1994 had become the basis of the strategy map. Sometimes, it was called the performance driver model in its early years.
As you will have spotted, this makes a major difference to how you think about the measures. For one, you are asking the question, how do these measures change behaviour and cause the higher pieces to behave differently? For another you start to ask what are the right measures in each of these perspectives?
We’ll cover more of this in the next article
If you want to move your balanced scorecard on, bring it up to date and make it more effective. Whether that is to change behaviours, focus people of strategy, make management meetings more effective or just get a clearer view of performance in your organisation, in just a day, you’ll find more details here.