| If you haven't yet heard of the Balanced | | | | perspectives. Functionality. Brand Image. |
| Scorecard, it's a world-renowned model developed | | | | Relationship. |
| by Robert Kaplan and David Norton in the mid | | | | But these terms mean such different things to |
| 1990's to encourage corporations to realise that | | | | different organisations and people, so to measure |
| relying on just the financial metrics is relying on | | | | them meaningfully takes more thought than |
| too little, too late. They wrote the landmark book, | | | | brainstorming or copying from a book. It takes a |
| "The Balanced Scorecard: Translating Strategy | | | | thinking process that extends from an intimate |
| Into Action" to demonstrate how to measure | | | | understanding of the result that needs measuring, |
| corporate performance in a more balanced way, | | | | and this often requires climbing out of mental ruts |
| that aligns everyone in the corporation to its | | | | like "this isn't measurable" and "we don't have the |
| strategic direction. | | | | data". |
| But does it? | | | | The Balanced Scorecard doesn't show the |
| The Balanced Scorecard has well-known | | | | process of measure implementation. |
| implementation problems. | | | | Populating a balanced scorecard with measures |
| There has been much criticism of the Balanced | | | | assumes that the populating process is obvious |
| Scorecard by organisations that have attempted | | | | and straightforward. Select some measures, then |
| to implement it. They hoped to quickly manifest a | | | | give the IT department the brief to report them. |
| meaningful suite of performance measures that | | | | "Add customer retention to the scorecard, |
| has everyone focusing on what matters most in | | | | thanks!" is just too brief. |
| fulfilling the mission, vision and goals. But didn't. | | | | You can't ignore the many details that can (and |
| Implementers of the Balanced Scorecard find | | | | do) make the difference between measuring |
| they end up with too many measures in the | | | | what's easiest versus measuring what was meant |
| tangible parts of their scorecard, not enough | | | | to be measured. There are many subtleties to |
| measures in less tangible parts of their scorecard, | | | | measuring something like customer retention, |
| and altogether not measuring meaningful results. | | | | which need to be drawn out into a full definition, |
| Why does this happen? | | | | from which the measure can successfully be |
| The Balanced Scorecard doesn't put enough | | | | brought to life. |
| emphasis on results versus strategies. | | | | So is the Balanced Scorecard all bad? |
| The primary building blocks of the Balanced | | | | No, the Balanced Scorecard is not all bad - it will |
| Scorecard are 1) it's four perspectives of financial, | | | | go down in history as the serious beginning of |
| customer, internal business process, and learning | | | | non-financial performance measurement in the |
| and growth; 2) the strategies that populate and | | | | corporate world. And its heart is really the |
| link through each perspective; and 3) the | | | | roadmap for linking what happens from day to |
| measures that link to each strategy. | | | | day in a corporation to its strategic, longer term |
| Most people express their strategies as vague, | | | | direction, through deliberate conversation about |
| jargon rich actions, and struggle to tease out the | | | | strategy design. But it's not about performance |
| specific and tangible results implied by these | | | | measure design and implementation. |
| strategies. So they measure what is easy to | | | | It's just not specific enough to stand alone as a |
| measure: progress against planned activity, the | | | | performance measurement tool. |
| reaching of milestones and whatever else they | | | | To select truly meaningful measures for your |
| have data for. The measures focus on activities | | | | scorecard - beyond the traditional profit, customer |
| like "develop target markets" and "upgrade staff | | | | satisfaction and employee turnover - you need to |
| competencies", not outcomes. | | | | learn a way of thinking about measurement that |
| The Balanced Scorecard doesn't offer the steps | | | | Kaplan and Norton didn't address. To make your |
| to measure design. | | | | scorecard a success, couple the strategic design |
| Bordering on prescriptive, the Balanced Scorecard | | | | and translation power of the Balanced Scorecard, |
| literature offers ideas for measures to use, for | | | | with a deliberate performance measurement |
| specific strategies typical of each of the four | | | | process like PuMP. |