101 Balanced Scorecard tips to boost your strategy execution
101 Balanced Scorecard tips
This is a version from a collection of several Balanced Scorecard blog posts I wrote over the years. 101 Balanced Scorecard tips is a strategy execution guide that combines the best Balanced Scorecard (BSC) tips. I hope this guide will facilitate your Balanced Scorecard journey!
I won’t focus on the technical aspects of the Balanced Scorecard itself since many great books and articles have already been written on the subject. Instead, I will focus on the BSC implementation challenges every practitioner faces.
What does a Balanced Scorecard actually do?
The Balanced Scorecard is “one of most influential management ideas of the past 75 years” according to Harvard Business Review. It provides a framework for translating an abstract strategy into specific, concrete objectives, measures, indicators and actions. It combines a ‘balanced’ (cause/effect) view with a ‘scoring’ (measuring/tracking) view. It focuses on aligning the goals of business units, teams, and individual employees with the company’s overall business strategy.
one of most influential management ideas of the past 75 years
A great Balanced Scorecard breaks a business strategy down into specific and measurable chunks. It also keeps the long-term strategic goals visible on the radar. The ultimate goal of a Balanced Scorecard is to experience Strategy Execution as a continuous process.
Today, the BSC provides much more than multi-view measurement; in many organizations, it’s an essential management system and a cornerstone of successful Strategy Execution. According to research by Bain, the Balanced Scorecard is the sixth most used management instrument in today’s organizations, with around 50 percent of all 11,000 survey participants making use of it.
What are the Balanced Scorecard benefits you aim for?
I’m an early Scorecard adopter having used it since 1996. I’ve learnt the hard way what works and what doesn’t. One of the most important things on my experience list is that you need to decide how you use the BSC in your organization. Or put differently, a Scorecard can offer you and your company a variety of benefits depending on how it is introduced and used. The crucial question is therefore not if you use the Scorecard but how you use it.
For maximum return, you need to look below the surface, understand your options, and make a definite choice about ‘how our company should use the Scorecard for maximum benefit’. It’s like buying a smart phone and using it only for phone calls. You’ll miss out on all the other great benefits that such a phone can offer.
Benefit 1. The Balanced Scorecard cascades your strategy
The Balanced Scorecard helps you cascade strategy. That’s the most important benefit. Your strategy is your big elephant that you have to cut into pieces. The Balanced Scorecard helps you achieve this.
The cause and effect relationships of Scorecards on different levels force you to make your strategy thinking more visible and facilitates debate and challenging. You will find ‘cascade strategy’ in top right. That’s where the Balanced Scorecard fits in – a methodology to cut your strategy into pieces and cascade it across the organization. The Scorecard is a company’s strategy waterfall and can either be a torrent such as the powerful Niagara Falls on the Canada-America border or the almost invisible sources that feed Iceland’s hot springs.
Benefit 2. The Balanced Scorecard measures your strategy progress
If you ask 100 managers ‘What’s the use of a BSC?’, 98 will include the response ‘It’s for measurement’ within their answer. And there’s nothing wrong with that, as long as it’s not the only answer. And therein lies the fundamental problem with Scorecards in many organizations.
The Balanced Scorecard can measure, but that’s not the only or most important thing it does or should do. It’s like saying that a flat screen TV is great as a wall decoration or that a car keeps you dry when it’s raining – you just miss out on the most important benefits such as watching your favorite movies and programs in high quality or getting you from A-to-B the most convenient way possible.
There is no doubt that Scorecards improve your measuring, but by focusing on this benefit alone, you will only reap 25 percent of all four potential benefits. I see too many managers getting carried away with the measuring part and when that happens a Scorecard approach does the organization more harm than good. Companies that lose track of the goal and let the means take over are on the wrong track. The Scorecard becomes a nice word for describing a set of measures, rather than a building block of your Strategy Execution framework.
Benefit 3. The Balanced Scorecard communicates your strategy
Cascading strategy is all about the collective understanding of the overall company strategy. And while this strategy can be designed by just a few people, the Strategy Execution demands effort from a much bigger crowd to succeed.
Thanks to the visualization of the cause and effect relationships, the Scorecard helps to get the strategy into the Head, Heart and Hands of all your employees. A strategy needs to come alive at each of these three levels.
Benefit 4. The Balanced Scorecard boosts your strategic thinking skills
The fourth benefit is a Scorecard advantage that few advertise or promote. And that’s a shame, as I believe it’s one of the most important returns you can have.
I’m a big fan of integrating Balanced Scorecard building into the leadership track. This is especially useful in operational environments where 95 percent of the challenges that managers face are focused on finding short or medium-term solutions. There will come a time when your best managers in operational jobs move up. And they should be ready. Learning to work with the Balanced Scorecard in a leadership track is a great way to train and get those analytical and conceptual thinking muscles in shape. So the Balanced Scorecard offers the opportunity to build and stretch those strategic thinking skills, an opportunity rarely present in lower-level operational environments.
Please find the full text of this resource below. It covers a list of Balanced Scorecard Implementation tips.
Balanced Scorecard tips to boost your strategy execution
A collection of practical tips on how to implement Balanced Scorecards to facilitate your strategy execution journey. This paper also covers purpose benefits and practical implementation aspects.Download File