This article looks at the most common balanced scorecard problems that we see clients face. It suggests typical underlying causes of these individual balanced scorecard problem and provides links to more detailed articles that will help you.
The presenting problems, and some underlying causes
In this article I cover the most common complaints I hear from clients about their existing balanced scorecards: The problem as presented, and the underlying problems that are likely causing them. Understanding the underlying problem and cause helps you know how to find the solution.
- We are measuring the wrong things: it is too detailed: I cannot see the wood for the trees
- We are not sure what type of balanced scorecard to adopt
- We have pockets of performance. In others we have dysfunctional behaviour.
- Our balanced scorecard has not made a difference.
- The scorecards are not being used – there is little or no buy-in.
- Our balanced scorecards are not telling us what is going wrong, or going to go wrong?
- Our scorecards do not inform decisions
- Our scorecard is not strategic enough
1) We seem to be measuring the wrong things. It is too detailed. We can’t see the wood for the trees.
It is likely you have a simplistic scorecard or have adopted a
2) We are not sure what type of balanced scorecard to adopt.
This is a hidden balanced scorecard problem, because many do not realise that different types of balanced scorecard serve different management needs. So the problem is created because “We want a balanced scorecard” gets interpreted as a particular type of scorecard, without any analysis of the underlying problems and needs. As a result, the most common response is to create a simple first generation operational scorecard. The consequential effect is that other symptoms of balanced scorecard problems occur such as lack of ownership or the project not making a difference.
Have a read of:
3) We have dysfunctional behaviour. We get pockets of performance…
It is easy to assume a culture of performance based on “What gets measured gets managed”.
However the culture and discipline of performance is far more subtle than this.
Have a read of “The culture and discipline of performance”
4) Our balanced scorecard project has not made much difference
There are various myths about balanced scorecard project failure: most and just that, misquoted statistics and myths. However, the most common cause of the problem is that balanced scorecard project was treated as a technical solution to provide measures. Little thought was given to the social aspects or how the information would improve a team’s decision making.
A more extreme view would say “The project was designed to create change, but there was no management of that change” So, guess what – nothing changed. Or in a worse case, the wrong things changed and made things worse.
There are also some clear ways to ensure yours succeeds. This includes being clear what problems you are trying to solve and treating it as a project that requires change to be managed. Have a read of
5) The scorecards are not being used. There is no or little buy-in or ownership
This often comes back to how the scorecards were designed and implemented, or how any measures or targets were chosen. Have a look at topics under “Ownership and buy-in to your balanced scorecard”
6) Our scorecards are not telling us where things are going wrong: this could be several things:
You have the wrong style, type or generation of balanced scorecard.
You do not have a clear cause and effect story across the perspectives to explain what drives your strategy and performance
7) Our scorecards do not inform decisions.
A key test we use for any balanced scorecard, to see if it is useful is, “Does this inform decisions?” What has become apparent to us over 25 years of doing this, is that the heart is a decision making process, for which scorecards and KPis are just a part. If you have scorecards that are collected and reported on, but never used for any decision making, then they have probably missed the point. Except them to die a slow death. Better still, start again.
The whole point of these tools is to make good decisions, and execute them well. Learning quickly from them as you do. Take a look at our six step decision model to understand this better.
8) Not strategic enough
It is likely you have adopted an operational scorecard rather than a strategic balanced scorecard.
The Norton & Kaplan Balanced Scorecard approach was designed, not as an operational scorecard, but as a whole strategic management system.
Different types of “Scorecard”, different generations, address different management problems. It is vital to understand what problems you are trying to solve and therefore what type of balanced scorecard you should adopt.