10 questions to Balanced Scorecard Expert Thomas MG, Business-IT Consultant
at CXO Dashboards
1. Please, summarize in few words what your expertise and background with Balanced Scorecard is.
I implemented Balanced Scorecard first in my previous organization, a mid size software development organization. I have developed comprehensive Dashboards for various functions, as part of the organization wide initiatives such as ISO 9000, CMMI, People CMM and Balanced Scorecard. During this journey, I gained deep insights as a practitioner of Balanced Scorecard before starting my consulting services. Now I offer end-to-end services that combine Balanced Scorecard methodology and dashboard solutions.
2. It is known that Balanced Scorecard is used by more than 50% of Fortune companies. Do you think this concept is for big companies only?
Large organizations find Balanced Scorecard a great tool for managing complexity. However, even small organizations have their vision/mission, a strategy, a need to measure performance, and a need to accomplish goals with certainty. Since Balanced Scorecard aims to bring alignment of employees with the organizational strategy and goals, it is very much applicable for small organizations too. Small companies may not need sophisticated automated dashboards, and they can go for simple applications, Excel based scorecards or on-demand scorecard applications.
3. While BSC concept is popular now, what other business performance measurement concepts can you recommend for companies to consider?
There are several performance measurement frameworks that an organization can choose from, some common ones are Performance Prism, Six Sigma, the GQM framework and elements of Malcolm Baldrige. However, none of these are mutually exclusive. I feel Balanced Scorecard is relatively simpler to understand and implement, and that BSC can be implemented effectively at multiple levels – the whole organization, a division or a department. In fact, I have successfully implemented BSC concepts in internal functions such as HR and IT, without an organization-wide implementation. This is helpful when there is reluctance to go for a full-fledged BSC implementation and the sponsor is a CXO other than a CEO. Quality improvement framework such as Six Sigma can complement BSC for driving initiatives that build specific organization capabilities.
4. Please, share your opinion about key ideas that should be kept in mind for successful implementation of BSC?
One of the most important factors is the commitment from the CEO for the BSC. Clarity on the business pains that BSC will address and clarity on the potential benefits are important. The results of BSC should be made visible in a few months time. Typical techniques that are applicable for any change management initiative, need to be applied. BSC should be implemented primarily to improve business performance and not to judge people. Integrate BSC processes with the rest of the organization processes. An IT enabled dashboard for each key role in the organization will dramatically improve the effectiveness of the BSC implementation.
5. The BSC is a business performance measurement concept, but should only top managers and CEO use it? Or should it be used company-wide? Should BSC be implemented in all departments or for instance, only in HR?
If there are budget constraints, keep BSC at the top management level, to start with. If there are critical performance issues in just one department, BSC could be implemented there first (even though it is only a subset of the BSC). Scorecards are powerful feedback mechanisms and implementing it across the organization results in break-through productivity. Concepts of BSC can be drilled down to an individual performer – the performance management and appraisal system can be seamlessly integrated with BSC.
6. While there are certain benefits of BSC, do you see there any limitations or possible problems? Some areas where BSC does not work properly or is inefficient.
BSC has been around for nearly two decades and it is pretty matured as a strategy execution framework. A few processes such as Strategic Risk Management is weak in BSC. It may not give detailed guideline on how to choose a measure or how to go about improving any specific business process. BSC is a top-down approach, yet there may be times when a bottom up approach is required an automated system is already in place. For a greater success of BSC implementation, concepts such as process improvement, process automation, and dashboard design could be applied along with the BSC concepts. It has been found that the success of BSC is higher when the strategies of an organization and the inter-linkages between various strategies are clearly understood, otherwise, BSC becomes a glorified version of MIS reporting.
7. The BSC concept is discussed widely. What do you think, if most companies understand the importance of BSC development? Are they willing to invest in BSC? Is it hard to get decisions makers to conclusion that it is necessary to use BSC?
Most CXOs I met agreed that they need a Business Dashboard based on BSC, for their effectiveness. However they have their view points on when they can afford to invest their time & money on a BSC initiative. When BSC is positioned as a solution to a very critical business problem, it is not difficult to get buy-in, provided the solution comes from a credible source. Of late I am seeing good interest in BSC from organizations that are coming out of the recession.
8. The practical implementation is always as important as theory itself. There are a lot of ways to implement BSC from simple Excel files to software, web-based services and full integration with company business system. What do you think is the best implementation strategy in terms of quality/price? What type of tools would you use to do implementation?
This depends on their current investment in IT. For a micro organization, it is sufficient to have an Excel based BSC. For a small or mid-size organization, Scorecard applications are more suitable; ideally it should be usable without IT support. The more integration the scorecard application is having with the rest of the IT systems and processes, the better. For large organizations, I believe they will have some ERP system in place and the Scorecard/Dashboard applications need to be integrated well with the ERP system. Web based on-demand applications are suitable for budget conscious organizations; however they usually have user based licenses; for BSC to be effective, the scorecards need to be shared with the relevant stakeholders.
9. There are companies that already use BSC, we read about them in business magazines, we read their case-studies and success stories. What advice would you give companies that just start considering the implementation of Balanced Scorecard concept?
While starting a BSC implementation, go for a scorecard at the strategy level first. This could be in Excel. Once you get clarity, you can extend its capabilities by building dashboards at strategy, operational and at tactic level. This will give you a quick ROI (Return-on-Investment). Get the blue-print ready before deciding on the scorecard application. While choosing a scorecard application, look for its ability to scale-up for the future requirements too.
10. Thank you very much for your answers. I think our readers would like to know more about your company and service you provide. If possible share also your detailed experience with Balanced Scorecard here.
CXO Dashboards offers services in implementing Balanced Scorecard and building role specific dashboards primarily for the Services Industry. We also provide advisory services on process improvement and IT initiatives typically that result out of the BSC.
We are located in Chennai, India.
For more information, please contact me at thomas.mg<at>cxodashboards.com