The New Accountability: Part 2
By: Brian Ward
|Brian Ward is a principal in Affinity Consulting. He helps leaders, teams and individuals acquire new knowledge and wisdom through their consulting and educational work. He can be reached at t firstname.lastname@example.org.
Read The New Accountability: Part 1
Developing and implementing strategy is a messy affair. In an attempt to
put some workable structure and process around strategy development and
deployment, back in 1993 Kaplan and Norton introduced the concept of the
Balanced Scorecard. Since then, organizations of all types have adopted,
or more appropriately adapted this concept to help them get a grip on strategy,
accountability and organizational alignment.
More than a report card, the Balanced Scorecard is a collaborative approach,
aimed at helping an organization achieve success at strategy development,
implementation and evaluation.
The Balanced Scorecard is based on a number of governing beliefs, including:
- ‘Management for results’, which is forward looking, will outperform ‘management
by results’, which has been likened to driving your car by looking in the
rear view mirror.
- Financial outcomes alone will not tell you whether your organization is
or will continue to be successful. There are other perspectives to consider,
including customer outcomes (satisfaction, market share, etc.), process
excellence and learning & growth.
- An organization is a system, and understanding mission critical cause-and-effect
relationships, especially between the four perspectives on a scorecard,
is key to crafting and re-crafting successful strategies.
- Strategy development and implementation requires the active involvement
of all stakeholder groups to be successful.
Challenges in adapting the Balanced Scorecard
At first glance, the logic in a Balanced Scorecard seems self-evident.
In fact, it really is a process model (or for those of you who manage programs,
a logic model) that looks at an entire enterprise, and attempts to illustrate
a strategic or forward looking managerial hypothesis.
The difficulties that organizations experience include:
- Swimming in a sea of data, with no site of the shore. Organizations have great difficulty in pulling information together into
a Balanced Scorecard format that will demonstrate the strength or weakness
of many of the cause-and-effect relationships proposed in such a managerial
hypothesis. Very often, a significant realignment or overhaul of management
information systems, and the thinking that goes with them, is required.
- Leaving it to the ‘measurement experts’. While it is essential for any measurement system to have integrity, leaving
it to ‘experts’ takes it out of the hands of those who can effect the changes
that are necessary for any strategy to succeed. The scorecard system needs
to be owned and understood by those responsible for strategy implementation.
More than just a measurement system, it is a management system that tells
the story of your strategy.
- Too many measures. Kaplan and Norton suggest that successful scorecard implementations tend
to have around 20-21 measures, with the majority concentrating on the Internal
Process perspective…not surprising, since that’s where the action is. But
even this many measures can be overwhelming. It really is a case of ‘less
- Over reliance on software solutions. There are over thirty commercial balanced scorecard software packages
on the market. While software can help ease the number crunching and communications
tasks, it is no substitute for the hard work of convincing people that
strategy development and implementation is necessarily messy. Don’t be
fooled by the fancy graphics and gee-whiz capabilities of such technology
- Culture shock. Shifting to a Balanced Scorecard approach very often requires a dramatic
shift in attitude and behaviors. For example, experimentation and hypothesis
testing will help you refine your scorecard and strategy, but if your organization
has a history of command-and-control or management by results style of
leadership, then get ready for one big culture shock.
Overcoming the challenges
The senior leadership team need to buy-in fully to the concept of a balanced
scorecard. To do that, they need to approach the exercise with their eyes
fully open. It’s no walk in the park. If you are such a team, here are
some basic tips to help you over the hurdles:
The balanced scorecard is an effective, dynamic process for making strategy
everyone’s everyday job. It requires hard work, lively debate, innovative
thinking and a willingness to challenge and discard old ways of thinking
about performance management.
- Don’t expect perfection from day one. Hypothesis testing requires that you face reality. If your initial strategic
thinking is flawed, face it squarely and revise it so that your strategy,
and your credibility, are enhanced.
- Build your management information systems around the cause-and-effect paradigm of the scorecard.
- Throw out your tired old performance management systems that attempt to focus attention on the individual performer. We live in
an interconnected world, where none of us are so detached that our personal
contribution to organizational success can be reliably isolated and measured.
Performance appraisal systems that focus on individual performance are
notoriously ineffective at improving overall organizational performance.
- Learn from others. See the list of sites at the end of this article for more information.
- Use the correct balanced scorecard framework for your type of business. Not-for-profit models are different than for-profit in the cause-and-effect
relationships they seek to explore…don’t get them confused.
- Understand that strategy is not a spectator sport. Engage your entire organization in developing tactics to support the
strategy and feed into the scorecard system.
Above all, it requires focused and courageous leadership. Are you up to
Read The New Accountability: Part 1