The power of networked Balanced Scorecards
We are witnessing an emerging and powerful application of the Balanced Scorecard system within networked organizations. These networks bring together distinct organizations and groups of people to deliver collective outcomes while also achieving the goals of each individual member.
The conventional structure of such collaborations can exaggerate the same issues that organizations face individually. Networked organizations struggle to assign accountabilities, to maintain transparency, and to measure progress. Further, the looseness of the affiliation between network members creates a culture in which it is easy to assign blame elsewhere.
The Balanced Scorecard system addresses these obstacles by aligning the disparate network members around a common strategy to which they all contribute and by creating a platform through which each partner can understand their progress toward a common goal.
Networked organizations applying the Balanced Scorecard system vary widely depending upon their collective goals. They might consist of public sector organizations, private sector organizations, or a combination of both. They might be short term in nature (delivering a specific innovation project, for example) or longer term (dealing with deeply ingrained socio-economic challenges).
Case illustration: Thriving Weld
Thriving Weld is a collaborative effort by the North Colorado Health Alliance (NCHA), to facilitate data sharing and collaboration in Weld County, Colorado, a community of 275,000 people in the western United States. This network of over 60 partners capitalized on the Balanced Scorecard to share specific information about their plans and progress and collectively improve the community’s well-being. Thriving Weld has built scorecards across seven focus areas, such as Healthy Eating, Access to Care and Education.
At the outset, the scorecard system appealed to the Weld County Department of Public Health and Environment because it recognized that no single organization could successfully address all the priority health issues and social determinants of health in their community. Previously, each organization developed its strategy, measurements, reporting, and communication structures independent of one another. As a result, Weld County’s many efforts to improve the health and well-being of their community faced problems of fragmentation, wasteful redundancy, and inefficiency.
NCHA partnered with the US-based consultancy Insightformation, founded by Bill Barberg (a pioneer in collaborative scorecards) to create a community-based collaborative scorecard approach that would suit their networked environment and shift thinking from organization-centred strategies to community collaboration. Thriving Weld tailored the classic Kaplan-Norton Balanced Scorecard model to their needs, using a three-perspective structure for their strategy maps and scorecards instead of the usual four.
- Outcomes are what the multi-agency partnership wishes to achieve collectively. For example, the ultimate outcome in the Healthy Eating focus area is ‘Increased People Living at a Healthy Body Weight’.
- Strategies (such as ‘Increase Healthy Food Options in Restaurants and Retailers’) deliver the outcomes, essentially combining the conventional Customer and Process perspectives.
- Assets and Capacity Development captures the prerequisites for achieving the strategies, just as learning and growth supports internal process in conventional scorecards. Here we find objectives such as ‘Gather and Share Data to Improve Prioritization and Monitoring’.
Robust shared measurement system
The focus area Strategy Maps provide the structure for a shared measurement system. Each outcome objective has one or two measures to monitor the community’s progress.
Because changes at a community level take years to achieve, outcome measures move very slowly. Instead, progress in the short term is evident in the Strategies perspective, which supports the Outcome perspective. The Balanced Scorecard methodology emphasizes the importance of leading indicators, which in this case is accomplished with driver measures and associated targets that monitor the progress of objectives in the Strategies perspective.
Before launching Thriving Weld, individual organizations would select their own measures for their programs, frustrating collaborative efforts even when organizations were working toward common goals. Today the process is inverted: organizations make program and funding decisions according to their expected impact on the driver measures, which are shared across the network – providing a powerful incentive for teamwork.
Transparency and visibility were seen as central to buy-in. The strategy maps and scorecards are available for the public to view on Thriving Weld’s website via this link.
Extracted and abridged from Strategy Management in the Digital Age: How Dynamic Balanced Scorecards Transform Decision Making, Speed and Effectiveness, David Wiraeus and James Creelman (Foreword by Dr David Norton), Palgrave MacMillan, August 2018.