Reading reviews of John Kay’s latest book Obliquity, they bring out how the theme of the book is that route to success is often through the search for something else: Taking the oblique route. It is a paradox, he says, that to achieve objectives you are better not have to focus on something completely different. Is the objective of profit maximisation the best way to maximise profits? Is a focus on wealth the best way to create wealth?
The basic tenet of Obliquity is that the direct approach is not always the best way. Attempting to maximise shareholder value can be the best way to destroy it. The best way to create value is to concentrate on creating a great business and serving customers.
I have had this conversation with clients about the structure of the balanced scorecard’s perspectives. “Doesn’t having the financial perspective at the top, mean that we are focusing on money? Perhaps profits or shareholder value” “Isn’t it flawed”, they argue “to have money at the top when the key thing we need to concentrate on is customers…if we do that well our financials will look after themselves.”
And I say, “You are right”. Just because money is at the top, does not mean that that is your major objective. Its simple, lets just make the customer perspective larger and more prominent and focus people’s attention on it. Then, satisfying our customers will ensure that we get the financial outcomes that we are also looking for. For the financial outcomes are the consequence or serving your customers. Do that well and the money will come.
So do not worry that the financial perspective is at the top of the balanced scorecard and strategy map. Of course you have to keep an eye on the money, but it is getting close to your customers that matters and that is the perspective you should focus on. You can read more about John’s book and decision making here