This is the third in a series of occasional articles on the Balanced Scorecard. Portions of this article are drawn from Niven’s book Balanced Scorecard Step by Step: Maximizing Performance and Maintaining Results.
What do the following activities, seemingly random at first glance, have in common?: mowing your lawn, researching insurance rates and reading the phone book. Sure, you could glance down and flip through the Yellow Pages for a list of insurance companies while simultaneously navigating your lawn mower through the obstacle course of kids’ toys populating your front yard. But that’s more of a recipe for how to wind up in the emergency room than a common link.
The thread that unites these disparate activities is the fact that, when asked, most people said they would rather engage in any of these than attend a management meeting at their company (USA Today Snapshots, by Julia Neyman and Julie Snider, USA Today, Nov. 15, 2004.) Ouch.
In my travels, nothing seems to engender as much eye rolling and frustration as the traditional management powwow that, nine times out of 10, produces more yawns and heartburn than breakthrough "aha" moments. Just why are we plagued with such poor meetings? These are sessions in which, by one study’s findings, more than 80 percent of the time is spent on items creating less than 20 percent of the organization’s value (Stop Wasting Valuable Time, by Michael C. Mankins, Harvard Business Review, September 2004). One critical reason is the fact that most management teams spend this valuable time traipsing through the operational weeds of the company rather than analyzing the strategic course they’ve set. But it certainly doesn’t have to be that way, and as the following paragraphs will demonstrate, organizations can turn management meetings to their advantage!
A new course
The Port of San Diego is a self-supporting public benefit corporation established in 1963 by an act of the California state Legislature. Overseeing the protection and development of the public tidelands surrounding the San Diego Bay is the core responsibility of this 600-employee organization that generated revenues of approximately $117 million in 2005.
Traditionally, the Port’s operations had been managed in a highly siloed fashion, with departments such as real estate, maritime, environmental services and harbor police— groups that shared little in common—rarely communicating or collaborating to drive results. CEO Bruce Hollingsworth recognized this deficiency shortly after taking the reins of the Port and spearheaded the creation of a new strategic plan in 2002, one that would draw the disparate units together in a cohesive whole.
Over time, the new plan paid dividends, and communication began to improve. But progress was slow, with annual reviews of performance contributing significantly to the glacial pace of change. Hollingsworth recognized that the Port needed a catalyst, a system of performance measurement that would drive strategic implementation and be monitored on a more frequent basis, allowing for the inevitable course corrections needed to execute a dynamic strategy.
The Port turned to the Balanced Scorecard to develop performance measures that would draw the organization together and create a platform for regular and systematic strategy reviews. Despite the fact that the organization engages in projects that sometimes take decades to complete, Hollingsworth determined that quarterly meetings should be held to review progress on Scorecard measures that were deemed to drive those longer-term results.
To meet or not to meet
As the time for the first meeting drew near, facilitators Brandy Christian and Amy Kosifas of Strategic Management Services were concerned; they had collected data for fewer than half the Port’s Scorecard measures. Should they hold the meeting or wait until all data had been corralled? They decided to conduct the meeting, feeling the momentum established by holding strategic reviews of what they did have would far outweigh some missing data. Their intuition paid off in a big way, with strategic conversations unlocking new insights into the Port’s operations. And ironically, during that inaugural meeting senior management held a significant conversation around a measure for which no data had yet been collected!
One of the many benefits that the Port has accrued through regular review meetings of Scorecard results is finding what truly matters to the organization’s success. When the team began its journey, it was accompanied by the weighty baggage of 77 measures, a huge number for any entity when the name of the game is focus. But through the strategic lens of the new meetings, Port management has narrowed that number to 37 by focusing on what the results are really saying and what is actually vital to running the business.
During the first year of the Balanced Scorecard implementation, the Port’s senior team completed brief surveys about the tool at the end of each review session. One of the highest-scoring items was knowledge people gained about Port operations outside of their own departments. As Kosifas puts it,
We have definitely seen improved results, which is the primary purpose for implementing a Balanced Scorecard. Putting a measure on the Scorecard gives that activity a spotlight throughout the organization, and we have watched the saying, “What gets measured gets done,” come to life.
Thanks to the Balanced Scorecard, I doubt you’ll find any members of the Port of San Diego’s senior management team browsing insurance rates during meetings any time soon!