How do you cascade a balanced scorecard?  Here are some simple rules that I use when when cascading balanced scorecards, learnt when I worked with Norton & Kaplan.  Ones that I continue to apply with my clients.

1) Cascade objectives rather than measures.

While some measures cascade, many do not naturally translate across organisational boundaries or down through the organisation. However by cascading objectives you cascade the characteristics you want to measure and can allow each to use measures that are relevant and meaningful at that level. (Having objectives before measures was a basic improvement that moved balanced scorecards from measurement systems to a more strategic tool and should be your standard approach. – we adopted then in 1994)

Read more about how to cascade balanced scorecard measures.

2) Cascade themes of the strategy map.

In other words make sure you cascade the cause and effect model from your strategy map. Think of this as a vertical slice. So for the marketing department you want to cascade the financial impact (revenue and costs) the customer impact, the marketing processes and the learning and growth objectives that will improve the marketing process, influence the customer and deliver revenue whilst managing the costs.

If you cascade objectives in perspectives in isolation then you lose the performance driver model that the strategy map and the cause and effect model describe. The objectives and measures lose context and the whole balanced scorecard philosophy breaks down.

3) Choose your pivot point of cascade

This is more subtle. If your strategy map is primarily designed around processes then they become the point of cascade. So divide up the strategy map into themes for each process. The cascade is sliced into the processes identified in the strategy map.

If your strategy map is more subtle than that, and you have linked the organisation around customer objectives or customer groups, then cascade around them.  This means that each department will have to ask, how do we support this customer objective and it will force (encourage/facilitate) joined up thinking and working.  This is a valuable exercise – do not underestimate it.

If you follow these basic rules you won’t go too far wrong

Some examples of cascading balanced scorecards that will help.

• You can see examples of cascades on the strategy mapping pages of my website
• The Local government case study shows a cascade by customer objectives that achieved joined up working.
• The Dimensions fourth generation balanced scorecard case study is a cascade that is straight forward for regions in a company.
• The Diana, Princess of Wales, Memorial Fund case study is where the overall Fund strategy is cascaded into each of the fund’s “Initiatives” and where each initiative adopts the overall strategy. However as the initiatives are at different stages of implementation and maturity, each initiative has a different emphasis.
• The cascade through a technology group on the first page of the strategy mapping pages shows how the group’s overall strategy was adopted and refined slightly for each of 5 companies in different countries that made up the group. In this case, synergies were identified from the strengths and weaknesses of each company against the overall group strategy.

Some warnings when cascading balanced scorecards

a) Beware cascading measures especially where the are not consistent (read more on cascading meaningful measures in a balanced scorecard)

b) Do not aggregate measures into meaningless ratios and combined composite measures (e.g. we are at 76%) as these hid any meaning and cause and effect that drives performance

c) Ensure you communicate what you are trying to achieve (objectives before measures) as well as how you plan to measure it so people do not have to mind read what you thought of when you create a measure.

d) Don’t dictate, but look for understanding and ownership. If people understand what they are being asked they will find ways to achieve it.  Don’t simply communicate your strategy, but socialise your strategy.

Hope this helps

Phil