Tip 1: Adapt your size.
The Balanced Scorecard should be adapted to the size of the user group. You don’t need a cannon to kill a fly. Smaller units don’t have – or need – the resources to handle a complex Scorecard. If you use Scorecards for large and small units, you need two different approaches – a basic and a more detailed way of working. If you don’t, you will overshoot for the smaller units and create frustration. So adopt according to size – a bare version for the smaller units, a standard version for mid-sized teams and a full-size version for big units.

Tip 2: The Balanced Scorecard is not the end station… so don’t stop!
Strategy Execution is a continuous process. The Scorecard is one technique for cascading strategy to the next level. But cascading strategy to the next level down is just the first step in the cascading process. If you stop there, your strategy will never end up in all the hands, hearts and heads of your employees. Make sure you continue to translate the Scorecard output to a solid project and programme portfolio and that you succeed in getting the necessary actions and activities into the individual objectives of all team members.

Tip 3: Start with the right content.
A well-designed Balanced Scorecard reflects your company’s strategy − so make sure your strategy is clear at the start. If it isn’t, take the necessary time to clarify. The quality of the strategy cascade can only be as good as the quality of the strategy it starts from. Challenge your strategy for inconsistencies and loopholes.

Tip 4: Don’t let your budget process dictate your company’s future.
What is the most important process in an organisation? Based on the amount of attention it receives, I would say the budgeting process. In many organisations, budget is king. Many see the budgeting process as the trigger (because they are forced to do so) of a limited reflection process to identify (read justify) how much more money they will need the following year. They get into a battle with those at the top and after some struggle and cutbacks, return to business as usual. Many companies would make a big leap forwards if the strategy cascade process received the same attention as the budgeting process. Ideally, the cascading process should lead and the budget process follow. A solid strategy cascading process with the BSC is a great counterbalance for an out of control budget approach – a situation prevalent in many organisations.

Tip 5: ‘We have a strategy map’ is not the same as ‘We have a strategy’.
When I see a strategy map, my favourite question is “Where’s the strategy?”. Just because you have a strategy map, doesn’t mean that you have a strategy. A strategy map often looks fancy but mostly it’s a lot of ‘map’ and very little ‘strategy’. I like a written strategy document in Word format with all the hypotheses clearly explained. I like a document where there is no hiding behind an arrow and people saying ‘But that’s what that arrows means’ when you point out something that isn’t clear.
I’m not against strategy maps at all. In fact, they can be quite useful to communicate strategy and create involvement. But I’ve seen too many sexy PowerPoint presentations that look strategic from a distance, but are far from strategic if you take a closer look and start questioning the content. So I advocate prudence. Each strategy map should include a written two or three-page Word document that captures customer and industry insights and the choices that you have made based on this information (the Who), plus a clear overview of the way you deliver unique value to your customer (the What) using your value chain.

Tip 6: Avoid measuring mania.
Be careful with the slogan ‘What gets measured gets done.’ Many companies lose valuable time playing around with performance measures in their organisation, debating the bells and whistles of their flashing traffic lights, measuring things because someone repeated the famous quote ‘What gets measured gets done’.
I’m not against measuring, but it needs to become part of the overall execution framework and aimed at the strategy. It cannot be a stand-alone process. Think about this, ‘What’s the value of measuring speed if you are driving in the wrong direction?’. Here are a few measuring tips to get it right.

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If you are looking for new reading material, you might want to check out Gary’s site.

DOWNSTREAM BALANCED SCORECARD MOVEMENT

The Downstream Balanced Scorecard movement was initiated by the software industry that eyed automation opportunities. The software vendors smelt money and started promoting KPI automation at every opportunity. Their storyline focused on the scoring element and positioned the Scorecard as a tracking tool – a dashboard for every manager to track his/her own performance with, if possible, an automated data upload. The Balanced Scorecard was positioned as the instrument to measure and visualise this measurement. Positioned as an instrument without any link with strategy, the Downstream Balanced Scorecard movement saw the light of day.

Both schools – Upstream and Downstream – had their share of followers, but the Downstream movement had a stronger voice fueled by underlying financial interest. So, unfortunately, in many organisations, for around a decade, Scorecard projects were mainly about building fancy, automated dashboards.

Thankfully, a lot has changed and several Balanced Scorecard automation companies have adopted a different approach and embraced the Upstream potential of a BSC. They now know that a Scorecard approach that’s not embedded in their client’s strategy cascading process will not survive.

If you don’t believe me, just look at the thousands of KPI’s on the walls in poor performing organisations.”

Next week, I will be sharing the stage with Bob Kaplan and David Norton from Harvard at the 2012 Balanced Scorecard Forum in Dubai.

One of the topics I will talk about is why so many organisations are fooled by the quote “What get’s measured get’s done.” And although there is some truth it, it’s nearly not as important as some people like you to believe, especially those selling KPI dashboards. If you don’t believe me, just look at the thousands of KPI’s on the walls in poor performing organisations

To better understand this point, let’s take a short journey back in time. The first article in the Harvard Business Review in 1992 about the Scorecard was called Balanced Scorecard – Measures That Drive Performance. As you can see from the title, the concept of the Scorecard was initially designed to help companies measure performance differently − by focusing on more than financial indicators alone. (Research in the early ‘90s showed that 90 percent of all indicators were financial).

But what most people don’t know is that soon after the publication of this first article in 1992, the basic ideas rapidly evolved and two movements were initiated. I call these the ‘Upstream’ and the ‘Downstream’ Balanced Scorecard movements.

Let’s look at the Upstream Balanced Scorecard movement first. When the early adopters started using the Scorecard for measuring, they quickly learnt that it had other more important benefits. They realised that the Scorecard also provides an interesting framework to cascade strategy. Four years after the publication of their first article, Kaplan and Norton included some of these findings in their book The Balanced Scorecard: Translating Strategy into Action (1996) and continued to explore the cascading idea further in their later books, particularly The Strategy-focused Organisation – How Balanced Scorecard Companies Thrive in the New Business Environment (2000) and Strategy Maps: Converting Intangible Assets into Tangible Outcomes (2004). Others followed this same path and positioned the BSC as an ideal approach for cascading an overall strategy. It was positioned as the next logical thing for a company to do once it had finished a strategy revamp or update. The Upstream Balanced Scorecard movement was born.

The Downstream Balanced Scorecard movement was initiated by the software industry that eyed automation opportunities. I will cover this in my next post.

Operational people are like firefighters – they are always ready to react at a moment’s notice. But reacting to something that has already happened demands a different skill-set than debating things that have not happened. If you are not used to doing this, it can be quite a challenge.

SCENARIO THINKING

One of the first things I learned at Arthur D. Little was scenario thinking – learning to think about the future by looking at the same problem with a different set of fixed parameters each time. The first thing you have to learn is how to translate your assumptions into parameters that you can control in a scenario exercise (it sounds harder than it is. The key question is ‘Let’s assume that…’). It’s a very useful skill to dive deeper into different assumptions, using a common language.

LEARN TO CAPTURE ASSUMPTIONS

A second important skill – and an often-overlooked one – is listening. As you are talking about something that has not yet happened, you have to feed the basis of your discussion on the assumptions of others. That means that you have to be able to capture them and understand them. Listening skills are highly undervalued. Interventions such as ‘So you’re saying that…’ or ‘Do I understand correctly that…’ are crucial to get a solid strategy debate off the ground.

Remember: the quality of a strategy debate is greatly determined by the listening skills of the participants. When you are not able to feed off other’s ideas, the discussion becomes a ‘convincing’ contest and flatters nothing but the ego.

For those interested, here’s a link to the brochure.

We say that the new company strategy is the best we had in years but, deep down, we don’t really understand it.

We say a good leader needs to act transparent, but that last little project hick-up is best covered up. It might cost us our next promotion. And, it’s very likely that nobody will notice anyway.

We say people development is crucial, but we don’t need it ourselves and the people in our team are too busy running the business.

We say that simplicity is crucial, but have just implemented two new software tools.

We say communication is key, but allways postpone it until the next phase is ready.

We say strategy execution is important, but we don’t teach our people how to do it.

We say we love innovation and dwell about the success of Apple, but we have not produced a single new idea in the last 12 months and shot at least 20 from our peers.

The problem isn’t in what we say. It’s what we do.

Thanks for sharing, Hannelou.

The advertisment is related to the largest Balanced Scorecard event in the world. It takes place in Dubai this year, April 22 – 26.

If you want more info, here’s a link to the brochure

If you happen to be there, come say hello!

Many companies lose valuable time playing around with performance measures in their organisation, debating the bells and whistles of their flashing traffic lights, measuring things because someone repeated the famous quote ‘What gets measured gets done’.

I’m not against measuring, but it needs to become part of the overall execution framework and aimed at the strategy. It cannot be a stand-alone process. Think about this, ‘What’s the value of measuring speed if you are driving in the wrong direction?’.

Here a few measuring tips to get it right.