Why so many Balanced Scorecard efforts fail
Clue 1: It’s all about leading transformational change
Balanced Scorecard (BSC) failure rates are likely in the same 70-80% range as other change programs. By failure, I mean they make little or no positive or sustainable impact on performance or culture. When scorecard initiatives fail, they are either killed off or limp on as meaningless and frankly annoying measurement systems.
So, why such high failure rates? In this series, I will offer my insights into this, based on over 20 years of working in this space.
Clue 2: It’s all about leading transformational change
To understand clue 1, we need to search through the annals of scorecard case studies and analyze the critical success factors of those that reported stunning successes: early adopters such as Cigna Property & Casualty and Saatchi & Saatchi spring to mind, among others. Extraordinary transformation programs and typically just over a 2-3 years’ timeframe.
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A CEO that knew what the scorecard could do for them
What these organizations had in common was that they had a fully committed CEO (Kevin Roberts at Saatchi & Saatchi) that understood that the Balanced Scorecard is first and foremost a CEO tool for driving transformation and systemic change – that will completely overhaul how the business works and thinks. Roberts realized that to turnaround a business that was on the brink of bankruptcy, he needed to drive common processes across a heavily decentralized organization that had been built through acquisitions and create a one “culture” mindset. A Strategy Map of just 12 objectives and 25 measures was mandated on all 45 nation-based business units. There was NO cascade and most of the emphasis was on rolling out global initiatives and not simply collecting and reporting measures. Roberts knew how a scorecard system could help him deliver his goals. Simple.
the Balanced Scorecard is first and foremost a CEO tool for driving transformation and systemic change
As Drs Kaplan and Norton realized in their research for the book The Strategy-Focused Organization, an absolute pre-requisite for succeeding with a Balanced Scorecard is a leadership team that is committed to driving change and led by the CEO. Without this in place, a scorecard simply won’t work, or will deliver minimal benefits. Indeed, I wouldn’t do it. It’s a waste of everyone’s time.
In any scorecard project, I am always interested in why the CEO wants this and what they think will be different as a result. I look for a transformational vision and not the nonsense of “turning strategy into action.”
I have never seen a truly successful scorecard initiative where this transformational vision is absent.
And so we keep failing
As an anecdote, I was recently asked to review a “failing” scorecard. A team of consultants were working long hours and showing signs of stress as they tried to fix “the scorecard problem.” After interviewing several managers from the client organization, it became blatantly obvious almost immediately that the problem was nothing to do with designing or implementing a scorecard – it was all about leadership and culture: a scorecard packed full of KPIs (and they had hundreds!) was not going to fix anything (especially in a culture where measures were used to punish poor performance). I advised the consultancy to walk away – but it was a multi-million, multi-year project so that wasn’t going to happen. Back to stress and pointless work and rebuilding the scorecard!!! Ah well, it brings revenues.
Moreover, I do not believe that a Balanced Scorecard system is a useful framework for managing “business as usual.” Sadly, this is how it is generally sold and implemented, supported by ridiculous and performance enervating cascade systems. The folly of the classic cascade will be discussed in Clue 2.
As always feedback is welcomed.