The third thing I don't like about it is this:
CHALLENGE 3: The Balanced Scorecard is not a performance measurement methodology.
How dare I utter such a blasphemous suggestion!
But I truly beleive it. The Balanced Scorecard is, in my book, far more a strategy design methodology than a performance measurement methodology. And here's why: A performance measurement methodology has to go much further than just suggesting how to determine a balanced and cause-effect linked strategy.
A performance measurement methodology has to help you design and implement and use performance measures, too:
- It has to help you find meaningful measures, particularly when the strategies seem at first to be immeasurable. There are many Balanced Scorecards that are filled with lame, vague measures when they don't have to be.
- It has to help you nut out the details of your measures, so they can be implemented as intended. Too many of our performance measures are poor substitutes for what we originally intended them to be, because not enough thought went into the appropriate calculation and data requirements.
- It has to help you analyse and report your measures so they clearly and engagingly tell the story of actual performance.
- It has to help you engage people to measure performance willingly and honestly, and as easily as possible so the measures have the best chance of truthfully telling the story of performance.
- It has to help you validly interpret the quantitative information that the performance measures are providing, so decisions are based on patterns and trends instead of knee-jerk reactions to individual points of data.
But before you think I'm on a one-woman mission to bag the bejesus out of the Balanced Scorecard, let me say this: I don't advocate you don't use it, I just want you to be aware of its limitations despite its popularity, and make sure you take from its strengths and compensate for its weaknesses.
TAKING ACTION:
Do you have a step-by-step performance measurement process to populate your Balanced Scorecard with meaningful measures, and then implement and use those measures to execute and achieve the strategy implied by your Balanced Scorecard?
Do you have a step-by-step performance measurement process to populate your Balanced Scorecard with meaningful measures, and then implement and use those measures to execute and achieve the strategy implied by your Balanced Scorecard?
3 comments:
Hi Stacey,
I do agree. Most Balanced Scorecards (BSC) I see aren't Balanced Scorecards at all. BSC is a strategy management framework, and still requires a method of developing strategy, measures and targets. Getting BSC to work is hard work, requiring deep knowledge and understanding of what BSC does and does not provide, building other methods around it to ensure the strategic management process is successful.
regards
Kevin
Hi Stacy,
I couln't agree more.
When my colleagues and I drew out the BSC strategy map, we realised it is just a piece of paper with words written inside bubbles. We even had one on "meritocracy".
I would like to think of the BSC, as a starting point that gives clarity of allignment to the collective efforts of people. It gives meaning as people will know what is expected and how to dovetail their work performance. It's structure of lag and lead indicators gives direction to planning what measures and standards are required to meet the strategic goals. With the map, people can now shape the "territory" of the company to achieve, both in short term and long term goals. Without such a big picture or wholistic map, we end up being governed by ignorance, confusion, inconsistency, misallignment and disorientation.
The real challenge in making strategy work is in implementing the map into tactical actions where performance measures come handy in facilitating progress.
Regards
Yuva
Great comments, Kevin and Yuva! You're both so right: we need to put decent rigour into the strategy development and execution, as much as the measurement. Then it all comes together.
I should say though, that there are some brilliant implementations of the Balanced Scorecard, and we'll be hearing from one of the experts, Paul R. Niven, in our February 2010 Expert Interview in the Measures & More program. Stay tuned for details in upcoming issues of the Measure Up ezine.
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