Is your balanced scorecard a reflection of your organisation? A manager once said to me, “Our Balanced Scorecard is an unfocussed mess.”. So I asked him, “Is your balanced scorecard, in some way, a reflection of your organisation?”.
Cheeky I know. However he looked embarrassed. I think I had hit on a fundamental truth. This article explores how to reflect what you really want in your balanced scorecard.
“Our balanced scorecard is an unfocused mess”
This conversation was many years ago, when I was chairing a large Balanced Scorecard conference in London. There were over 120 organisations represented and there seemed to be 120 different ways of doing the Balanced Scorecard being promoted. Over dinner I was sitting amongst a group of people when the person on my right said, “This Balanced Scorecard thing is a heap of junk”. Intrigued I asked him why he thought that.
He explained that he worked for a large, public sector organisation. “Our Balanced Scorecard is an unfocussed mess. It has over fifty measures on it. It is impossible to work out what is important from it. There is no logic to it. It just creates confusion.”
So I asked him, “Why do you have so many measures on it?”
He replied, “We were supposed to.”
Now I must admit I was puzzled at this point. I could not imagine where this “rule” of his had come from. As a guideline we used 4-6 objectives or measures in each perspective. That generally led to around 20-24 measures.
Your balanced scorecard is a mirror that reflects the organisation
What puzzled me was that, unlike other approaches like, say, EFQM, there are no guidelines as to which objectives and measures you should have on a strategy map and scorecard. Whereas EFQM will ask about your capability in a number of dimensions of good practice.
There is no such standard set of objectives and measures for the Balanced Scorecard (though many people have constructed them). There is an expectation that you can focus as a team on 20-25 or so.
Its good to think of the approach as a blank tableau: It’s like a mirror to the organisation. The people who are designing the scorecard will be representing the thinking of the organisation, won’t they. In other words, what you get is what you put there. What you put there is a reflection of the organisation’s thinking.
In this case, I simply asked, “So if the scorecard is a reflection of the quality of the thinking and clarity of the strategy of your organisation, what does your scorecard tell you?”
A balanced scorecard is different to a collection of available measures
Just because you can measure it, does not mean it should go in your balanced scorecard.
A common example of this is where the scorecard is used to capture all the measures in particular perspectives. No selection is applied. In many ways it is simply a diagnosing tool, that says, “This is what we have available”. Like me you probably come across management reports with 100, 120, 150 or even 200 measures in them. They are simply collecting and presenting the information that is available to them (If its there we shall have it). I know that many organisations do this. I also know that they benefit from the far simpler and clearer focus that high performing organisations use.
What they are creating are reports for management. These are not really strategic balanced scorecards, as intended by Kaplan and Norton. They are operational scorecards.
You must ask, “Why do I want this objective on our balanced scorecard”?
In the design process, people have somehow lost sight of the question “Why do I want this objective or measure on the scorecard?”. They have drifted into, this is what we have available. It’s a “manage what we can measure“, mentality.
3. If you don’t know where you want to go, you are unlikely to get there.
By now you will have realised that this applies both to the design of scorecard projects and to the organisation itself. If there is no clear strategy, or as would be suggested from the earlier discussion, it has become so unfocused and muddled that no-one can work out what they should be concentrating on, then guess what you will get: An unfocussed strategy map and scorecard.
If on the other hand you are clear about what you are trying to achieve. If you are clear what you are doing and what you are choosing not to do, and how you will get there, then you are likely to be more focussed. This will be reflected in the strategy map and the scorecard.
A useful test of any balanced scorecard
So a useful test of any scorecard or strategy map is, “Can I deduce the strategy from this?” If not, then you should ask, “What purpose is this serving and what effect it is having on the organisation?” That can be quite scary, can’t it?
You will appreciate that this is why we spend time with clients working on two aspects. What are they trying to achieve as an organisation? What are they trying to do with their performance management and decision making processes? You might want to think about how well your organisation does these.
Use diagnostic tools to find out what the underlying problems are
That is why we have developed diagnostic tools and techniques that help us understand where an organisation is trying to get to and how it wants to manage performance. We also have standard workshops we can customise to suit your particular circumstances and needs. When you want more information on these take a look at https://www.excitant.co.uk/Seminars_workshops.htm
By paying attention to just these two basic pieces, you will start to improve the value of your balanced scorecard in your business. Of course, you realise, there are other key principles that will make a difference. In other articles we will look at how strategy, people, focus and ownership affect things.
Of course if you are impatient, we can do on-site seminars and workshops to help your organisation make sure your investment in performance management and its strategy make a real difference.
You can access all the other Strategy & Balanced scorecard case studies here. You will appreciate our experience comes from many years of strategy, performance management and scorecard implementations. As we have seen the approach evolve, some techniques have fallen by the wayside as inefficient, whilst others have been refined and developed so that you can benefit from the experiences of others: To stand on the shoulders of successful implementations.