Well over 50% of large businesses in the world use the Balanced Scorecard as a business performance management technique. A large percentage (number unknown) of small to medium sized businesses put it to use as well. The companies which make use of the Balanced Scorecard successfully are usually ‘strategically focused’. That is, they prefer it to translate business strategy into business objectives which have linked performance measures and initiatives. These are monitored on a regular basis. Furthermore, these objectives, measures and initiatives are cascaded down and throughout the organisation and made highly relevant to divisions, departments and people.
This, of course, is easier said than done. It is one thing to understand the Balanced Scorecard in principle, it is entirely another to understand it in practice. In their book ‘The Institute Way’ Howard Rohm et all acknowledge that “The Balanced Scorecard isn’t complicated, but it is not easy either” and why should it be easy? Business performance management for any company small or large is usually based around areas that are unique to their business. They will be sailing in unchartered waters. Plainly there will be some areas that are common to every business, but these are not the areas that will cause the business to develop. The expansion areas, or strategic areas, will be the unique selling points (USPs), the new products and services, the new ways of working with and managing customers. All of this new material has to be managed in a structured way in much the same way the day to day operation of the company is managed in a structured way.
It’s here that the Balanced Scorecard comes into its own. It is a strategic management tool that provides the framework to manage the growth of a business or organisation. It can, and should, be linked into operational management, but it is not the same thing.
Not understanding this distinction can lead to a failed implementation. Among the prime reasons frequently cited for failure is ‘lack of buy-in’ from both management and practitioners. Why is there a lack of buy-in? On close assessment it seems to come from the lack of understanding of how the Balanced Scorecard methodology actually works. As stated above, the subject isn’t complicated, but it is not easy either. To understand the methodology, training is required. In all other areas of business where a new approach or practice is introduced training plans are put in place. For example, in project management, if the Prince2™ approach is adopted, then foundation courses through to advanced practitioner courses and certifications are accessible for both management and practitioners. Any company using Prince2™ wouldn’t normally think twice about sending their employees on courses to become qualified.
In business performance management there exists often a different way of thinking. It tends to run along the lines of “our organization is different and so our management techniques are different, we train for this while on-the-job” or worse still “management practice isn’t difficult, we have a good collection of books available”. The Balanced Scorecard methodology can’t be learnt in a day. It can be learnt from a book, but only by individuals who are proficient at learning things from a book (there are hardly any people like this). As with any topic which is “not that easy” formal education is always the best answer. To achieve the most from any Balanced Scorecard implementation add training to the initial investment. With knowledgeable managers and practitioners the chances of success will be multiplied ten-fold.
Intrafocus runs Balanced Scorecard Professional programs in London, England each year, the course is underwritten by the Balanced Scorecard Institute and certification supplied by the George Washington University.
