Challenge 1: Getting control – operational balanced Scorecards
Many Executives start in a search for control and the basic discipline of management reporting. What we call, “Getting a grip on the organisation”. The approach they use is often to collect a wider view of measures across the organisation, reported in a way that provides greater visibility of what is happening. They introduce these as relatively simple balanced scorecards. We call this “the first generation problem”.
These ‘operational scorecards’, as Balanced Scorecard co-author, Prof. Robert Kaplan calls them, focus on collecting measures in a variety of perspectives and reporting these to management. When using a balanced scorecard to get control you can improve the range of information available, increases the sense of control and the scorecard often satisfies some basic governance needs. However, they rarely drive performance, strategy or change. Over used, they can lead to an excessive focus on measures and targets and can even cause dysfunctional behaviour.
This sort of scorecard, (Balanced scorecard is too grand a word) is useful and a necessary step in governance and control. However, most organisations find them far from sufficient to manage their organisation, well. They look for something more.
For that have a look at our papers on 4th Generation Balanced Scorecards.