BSC Designer – Balanced Scorecard Software

Sarah Worsham, CEO & Web Strategist from Sazbean Consulting

BSCDesigner.com team continues researching performance measurement theory by interviewing leading experts in this area. This time we had a pleasure of talking to Sarah Worsham, CEO & Web Strategist from Sazbean Consulting (http://sazbeanconsulting.com/). BSC Designer team and audience expresses gratitude for the below answers that contain very interesting points and insights.

1.     Having browsed your website we noticed that your consulting services refer to social media and evaluation of social media strategies. In other words, you help organizations better understand how they can use vast Internet opportunities to grow business and how effectively these tools are being used. Is that correct? Can you, please, briefly characterize your services, especially in terms of evaluating social media strategies?

Yes, but also for other digital strategies, such as search engine optimization, pay-per-click advertising, conversion optimization, content strategies, as well as social media strategies. We always start with an organization’s business goal (which should specific, attainable, measureable and time-delimited), and then look at their core competence and the benefits they offer to their specific customers (they may have different types of customers with different value propositions). From this business definition, we can define what the marketing messaging should be and look at strategies to help the organization reach their goal using digital marketing tools & tactics. Specifically for social media, it’s very important that whatever tactics are being used reach the right audience with the proper messaging, but also that it’s interactive in nature, instead of just being promotional (we use the 80-20 rule: 80% of content on social media should be informative and engaging, and only 20% or less should be self-promotional).

2.    For us, as Balanced Scorecard followers, your approach to measurement of social media strategies seems extremely interesting. It looks like you use the same approach, i.e. evaluation of KPIs (key performance indicators) which are pageviews, fans, retweets etc. Does success in effective evaluation of social media lie in the right choice of these measures only? What are the most widely used social media measures?

The measurement of any business endeavor are actually very similar: start with the objective that you’re trying to attain, define strategies & tactics, and then look at what key performance indicators will tell you how you’re doing.  The same is true in social media (and other digital marketing), but you also have secondary performance measures that can also be important. For example, if you’re business goal is to increase revenue by 10% in this quarter, you’ll put together digital marketing tactics to help you achieve that goal. If you’re using social media, KPIs will probably include clicks on links which lead to conversions (sales). But social media is also powerful for helping to manage brand perception (how people feel about your products, services and organization) because your reputation and what your customers think about you can heavily influence future sales (since people are more likely to listen to recommendations from within their own network over company marketing). So it’s also important to measure indicators like sentiment and influence, as well as how many times the organization is being mentioned.  The mostly widely used social media measures depend on the tactic in question — what’s available  on Facebook is not the same as what’s available on Twitter, for example.  But, in general, you look to see how much attention you’re getting (likes, shares, retweets), how much influence you have (Klout, likes, followers, reach), what the sentiment is for your brand (positive vs. negative mentions, reviews), and how that’s impacting your business objectives (traffic back to a landing page, conversions).

3.    What makes an effective KPI in social media evaluation? Key you perhaps give 5 attributes of effective measures?

An effective KPI is anything that helps you directly measure how your particular tactic is doing in helping you achieve your stated business goal — the same is true for social media evaluation.  A particular metric is a KPI if it has a direct relationship to your objective and whether it helps you evaluate the effectiveness of the particular tactic.

4.    It looks like you use different metrics for different social networking websites. So, what’s the different between measures used in evaluation of Facebook strategies and those of Twitter or YouTube? Is there perhaps a universal set of measures that can be used for all social networking sites?

There’s not an universal set of measures for anything — it really depends on what you’re trying to accomplish (and what your goal is). What measures work on Facebook versus Twitter depend on your tactics, as well as the metrics that are available (what the platform provides). There are general measurements that are often used for tactics like landing pages (or custom Facebook pages), where you’d want to measure the traffic to the page (from whatever sources — Twitter, Facebook, etc) and how much converts to a sale.

5.    What are the most important things to remember when tying business goals to what you can do at social networking websites?

It’s important to choose the right social networking websites — places where your intended audience is already interacting.  It is possible to build up an audience on a platform where they don’t already exist, but it’s much more difficult than leverage an existing audience.  It’s also important to give people a reason to interact with you (beyond your self-promotion) — it helps to think about the things they might like to know that are related to your products or services (For example, if you sell tents, your audience probably would like to know about camping, campgrounds, traveling, etc.).

6.    What are the most common mistakes people do when use the power of social media?

The most common mistake is using social media like more traditional marketing channels (TV, radio, print), which are broadcast and one-to-many (one broadcaster to many people in the audience) mediums.  Social media is a many-to-many medium where your audience can not only talk back to you, but they also talk to each other. Social media allows anyone to be a publisher or broadcaster and it’s very easy for any individual to make their opinions known to a large audience. Using social media for business should be about having conversations with your customers and potential customers (similar to what you do in person), and providing useful and helpful information (as opposed to advertising).

7.    Can your approach be used as a part of a bigger performance evaluation framework, for example in marketing plans of big companies?

Absolutely. This approach works for any type of marketing (and is actually based on basic marketing strategies, techniques and measurement). And any type of performance evaluation framework tries to use the right metrics to measure objectives, which is exactly what this approach does.

8.    Do you promote use of any performance evaluation software or is it possible to measure social media success using widespread tools, for example Excel?

There are paid social media monitoring & evaluation tools, for example: Radian6, Sysomos, Alterian, Lithium, etc.  These tools usually are prohibitively expensive unless you’re a larger company.  There are also some great free tools (and lower-priced): HootSuite, Google Alerts, Twitter Search, Social Mention, Twitalyzer (these are the ones I primarily use).  I also use a spreadsheet for trending and comparison analysis of KPIs.

9.    What do you think of Balanced Scorecard concept as a way to measure social media strategies?

I think the Balanced Scorecard concept could be very benefical for identifying the right social media metrics to properly evaluate a social media strategy (and specific tactics). The concept is especially valuable to mid-to-large companies who are looking at implementing social media throughout their organization and processes.  There is also benefit to smaller businesses who may be especially interested in the measurement of their tactics. While Balanced Scorecard concept is very thorough, it can also be overwhelming to businesses who are just trying to wrap their heads around the basic measurements needed to measure the effectiveness of social media. So, I think the Balanced Scorecard concept has advantages and disadvantages (just like any tool) depending on how an organization works and thinks.

• Find more interviews with Balanced Scorecard experts in “Interviews” section

bsc_ideas Interviews

Stacey Barr - a well known expert helping business owners and top managers execute strategy and make the most of strategic frameworks, including Balanced Scorecard

Implementation of strategy is a process that has lots of approaches, practices and theories. We have recently contacted Stacey Barr, a well known expert in strategy implementation techniques and a creator of PuMP® system, to ask questions about Balanced Scorecard, implementation of strategy and key points of PuMP®.

Q: Thank you for finding time to participate in this interview! My first question is about your background – how you decided to become teacher and mentor for businesses? How do you see your mission?

Getting into performance measurement was an accident really. I always liked maths, and studied statistics at university, and started my career as a Research Statistician. But I got a little bored and took a job in a railway organization as their Measurement Consultant, working in the quality and process improvement team. My manager was the real inspiration for specializing in performance measurement, and he saw in me an ability to be technical (the maths and stats) and connect with people too. My mission has become to help people shift their appreciation of results and measures so much that it profoundly improves the authenticity and focus of their dialogue about achieving excellence in their lives and their organizations. I want to see performance measurement become as normal a part of business management as financial management is.

Most readers of our web-site are Balanced Scorecard professionals, so we are now getting to serious questions straight away. And for sure, PuMP® is of great interest!

Q: On your web-site you write that PuMP® is actually a methodology while Balanced Scorecard is a strategic framework. However, the list of causes for performance evaluation failures looks like the list of typical BSC mistakes. What is a major distinction between PuMP® and BSC, given that the latter also comes with a variety of training courses, lots of literature and case studies, including those by BSC Creators Norton and Kaplan?

A: When I first learned the Balanced Scorecard, back in the mid 1990s, and ever since then, I’ve found that people understand about the balance, they understand about the strategy design but despite the Balanced Scorecard, they continued to struggle to find meaningful performance measures, to implement those measures properly and to use them validly to drive decision making. Balanced Scorecard has evolved more toward the strategy execution arena but PuMP focuses very specifically on the selection or design of performance measures, defining them and implementing them and interpreting them. PuMP is more about the nitty-gritty aspects of measuring performance, and really is quite independent of the strategy tool used, whether it’s Balanced Scorecard or any other framework.

Q: In your description of PuMP®, you claim that performance measurement is more a social than tech process. What is this social component? Does successful performance evaluation for any company mean answering question “Who we are and what we want to achieve?”

A: The biggest aspect of the social component of performance measurement, and PuMP, is buy-in. That means the engagement and ownership that people throughout an organization or company feel for the measures they are using. Many of the people that come to me for help are struggling to get people to own their measures and use them to drive performance improvement. The lack of buy-in comes from the approaches people typically use to select measures, like brainstorming (I know that sounds counter-intuitive but it’s true), managers telling people what to measure, asking consultants to come up with the measures, and not seeing the measurement process through to its natural conclusion which is performance improvement. We need to acknowledge this social component of performance measurement before we’ll get the technical side of it down pat.

Q: PuMP® pretty much relies on establishment of effective feedback systems between company managerial levels and involvement of personnel into performance evaluation. Do you think it is really necessary to get the majority of personnel involved in this processes or involvement of top and mid level management is enough?

A: I like what author Dean Spitzer says: “Measurement is everybody’s job.” To me this means that if you turn up to work at an organization or company, you aren’t just responsible for the tasks you do but for the contribution your tasks make to the success of the organization or company. Measures help us define and monitor that contribution for individuals, for teams and for the organization as a whole. Measures help us focus on what really matters, give us the feedback to know how far or close we are to the results that matter, and give us clues about what to change to get closer to what matters. That’s relevant to everyone. While not everyone will be actively involved in selecting performance measures for the organization, they do need to be offered the opportunity to have a say, not just be “communicated to”. And they certainly need to understand what the messages are from the measures and the implications for improving performance by working “on” the business and not just “in” the business.

Q: Based on your experience, what is the better way of developing scorecards and measures (from top to bottom of vice versa)? According to PuMP®, it seems like the process start on top (stakeholders and business owners).

A: That’s certainly the ideal way to start, but only when you have the energy in the top leadership team to do it. My advice is always to start where there is the most energy to improve performance measurement. That might be at the top, it might be one particular manager and her department, it might be one team. It’s not practical to wait until you can do a top-down approach, even though that’s the faster way to a strong performance culture. But I’m a big believer in starting small and using the small successes to engage the interest of others, and let the buy-in grow naturally as people see the value of measuring what matters.

Q: Are measures and experiences of other organizations (including those operating in the same business environment) absolutely useless? Are there any ways of adapting such experience?

A: Learning from others is definitely never a waste of time. What I don’t like is copying. It’s great to gather ideas, discuss approaches, and see how to avoid mistakes by looking to the performance measurement experiences of other organizations, whether they are in your sector or industry or not. But it doesn’t work if you just copy the set of KPIs or performance measures that are most popular in your sector or industry. You are basically ignoring strategy completely. An organisation’s strategy is unique, and therefore needs a unique set of performance measures. Some of those measures will be popular ones, some won’t be, some will be altogether new. There isn’t a single true set of measures that an organization can “bolt on”. They have to be chosen so they match the strategy.

Q: Is PuMP® about teaching company personnel to live with performance evaluation in daily routine or is your system a classical example of consultant services (where role of company personnel in implementation process becomes less important)?

A: Measuring what matters is a competency that every organization needs to have. Success for me is when a client doesn’t need me anymore. My way of bringing PuMP to people is thusly more about teaching them how to use it as a tool, not to ever do it for them. That’s why my core focus is on teaching PuMP to as many people as I can, through the live Performance Measure Blueprint Workshop and it’s online version. Even when our PuMP Consultants work with clients in a classic consulting role, they are still facilitating the learning, guiding our clients to do the implementation, and helping them embed the PuMP techniques into normal business management.

Whether or not PuMP is the model you use, I absolutely believe that performance measurement needs to be integrated into how organizations are managed, just like financial management is.

Q: If you are asked about 5 characteristics of an effective KPI which ones you would mention?

A: Here’s my top 5 list (top of mind, actually, but that sometimes is the most reliable way to get the top priorities):

1. An effective KPI is one that is aligned to strategy, or put more simply, it has to be useful evidence that monitors a goal or objective or result that really matters for the organization or company.
2. An effective KPI is one that is as simple as possible so it has the best chance of being understood and implemented.
3. An effective KPI is one that has an owner, someone who will be the champion, the one who monitors it, interprets its signals, and initiates any action if required.
4. An effective KPI is one that is actually implemented, or brought to life, so it can be used. No point having KPIs in the business plan that never get used.
5. An effective KPI is one that is one that provides regular and ongoing evidence, and isn’t just used at the end of the planning cycle. It should provide frequent enough feedback so that action can be taken if performance isn’t tracking toward the target.

Q: Would it be correct to say that PuMP® breathes life into performance evaluation systems, or literary PuMP®s in air into the car tires so that the latter can drive.

A: I’ve not really thought much about an analogy for PuMP. The name came about because a client nicknamed my acronym of Performance Measurement Process as PuMP. My first client was a fire department and they loved it because that’s what they call the red trucks that put the fires out: pumps. But I have always said that I “bring performance measurement to life” and it’s not too far off your comment of PuMP breathing life into performance measurement! Don’t you think that’s a very dynamic and engaging way of thinking about a topic that’s usually considered so staid and boring? Perhaps it will help shift people’s perceptions so they can see that measuring performance can be fun and engaging.

P.S. Many thanks from BSCDesigner.com and web site readers to Stacey Barr. You can find more info on PuMP at http://www.staceybarr.com/

• Find more interviews with Balanced Scorecard experts in “Interviews” section

bsc_ideas Interviews

10 questions to Balanced Scorecard Expert Dinesh Kakkad, Executive Director of Excellence unLimited

1.    Please, summarize in few words what is your expertise and background with Balanced Scorecard.

I have been associated with Balanced Scorecard since 2000 and was and am actively involved to roll it out from SBU level to functions and individual KRAs and goals.

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?

No, even small companies can as well utilize it for systematic planning and growth.

3.    While BSC concept is popular now, what other business performance measurement concepts can you recommend for companies to consider?

Benchmarking and utilization of National Quality Award models like MBNQA, EFQM and Deming Prize are advantageous.

4.    Please, share your opinion about key ideas that should be kept in mind for successful implementation of BSC?

• Cross-checking “Cause and effect” linkages for initiatives across all four perspectives,
• SMART measures rolled down to functional and individual level,
• Few measures and goals to each individual to keep focus,
• An appropriate feedback and monitoring mechanism, which would review the whole process, take mid-corrections where necessary and guide whole organization towards achieving the goals and targets set, appreciate functional and individual achievement and efforts,
• Bring out periodic status reports for all concerned to know where they are and what remains to be done.

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?

BSC is a companywide approach to be implemented by all departments.
HR has a vital role in it, as Learning and Growth perspective in bottom-up starting point, influences Internal Business Processes, which in turn influences Customer perspective and finally Financial perspective.

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.

Ill defined or too much ambitious strategy as well too many functional and personal goals causes implementation problems.

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?

Malady is, most companies use short and long term planning, but only a few companies fully understand importance of strategic planning and BSC. Once they embrace it, there is no looking back to old approach.

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?

Simple Excel files are good enough. Since BSC percolates down to functional and individual KRAs, they are lot easier to deal, plot and track. For Chairman and CEO level, its aggregation may be arrived at by due software.

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?

I would request companies to elevate from mere planning to strategic planning level and take help of professionals to guide them, for a few initial years, to implement BSC and see the level of improvement and achievement. This will make them ardent followers.

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.

Excellence unLimited helps organizations to embrace all proven management tools and techniques, including BSC, for their performance improvement, growth and sustainability.
For companies that are new to strategic planning, we help them to take systematic route to identify their SWOT, assess external environment, formulate their Vision, Mission and Values, identify Strategic objectives, formulate strategic plan and roll it out through BSC and hand-hold them for a few cycles till their internal team gains expertise and confidence.

• Find more interviews with Balanced Scorecard experts in “Interviews” section

Expert_KPI Interviews

10 questions to Balanced Scorecard Expert Jeroen De Flander – author Strategy Execution Heroes and director at The Performance Factory

1.    Please, summarize in few words what is your expertise and background with Balanced Scorecard.

I’m the co-founder of the performance factory – a company specialized in strategy execution and the author of Strategy Execution Heroes. And I have been working with the Balanced Scorecard right from the start in the ‘90 and implemented the technique in over 50 companies. I used to be the responsible manager worldwide of the Balanced Scorecard product line for Arthur D. Little – a leading strategy consulting firm.

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?

The Balanced Scorecard can – and should – be used by both small and large organizations. The concept however should be adapted to the needs of the organization. You don’t need a canon to kill a fly.

3.    While BSC concept is popular now, what other business performance measurement concepts can you recommend for companies to consider?

We promote the 8, a strategy execution framework that also includes the Balanced Scorecard. You can read more about the 8 on our website.

4.    Please, share your opinion about key ideas that should be kept in mind for successful implementation of BSC?

Many companies have gone through the process of introducing a scorecard. It’s a good idea to do some research to get a feeling for your organization’s particular situation. This will help you avoid some of the classic pitfalls.
Here’s my list of 8 typical mistakes you should avoid:

1. Senior management is not convinced and shows little commitment
2. The scorecard is developed by ‘the happy few’
3. The internal/external project members have limited or only theoretical knowledge
4. The scorecard is only used by top management
5. The scorecard stays too long in the development stage before it’s launched and used
6. There are not enough links to the strategy and planning processes
7. The content of the Balanced Scorecard is unrealistic
8. The scorecard is only used for remuneration purposes

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?

I would like to react on the question itself. A scorecard is a measurement instrument but it is much more than that. It’s also a process that helps managers and entrepreneurs translate an overall strategy into smaller chunks. All too often, this is forgotten.

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.

I never use the Balanced Scorecard on an individual performance level.
Also, if there is too much focus on the measuring part and not enough on the strategy part, the scorecard becomes too administrative.

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?

As you mentioned before, most organizations are using the scorecard principles in some way or another. The question today becomes much more: “What’s the best way to use the Balanced Scorecard in our organization.”

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?

The most important tip I can give is to have a clear vision on automation. I believe it’s a smart idea to automate the whole or part of your performance management process… but with care.

In many cases, the ambition to automate the process is the positive driver at the start of a Strategy Execution upgrade programme but the bottleneck the year after.

Let me give you an example.

Imagine that you want to automate part of the BSC process. You start by selecting a software package. You launch an expensive IT project to customise the solution. Nine months later, you receive many suggestions (and complaints) from managers regarding the user-friendliness of the software. After a closer look, you decide they are right and agree the underlying process needs to change. But that would demand, yet again, some quite extensive IT system changes. You find it inappropriate to launch a new IT project as the previous one was more expensive than anticipated. So you decide to wait.

I would suggest you either choose a standard software solution and change your process or postpone automation until you are 100 percent happy with the underlying process.

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?

The Balanced Scorecard is a great instrument that helps you execute your strategy. But without a solid vision on the overall execution process and philosophy in your organization, you might just add more work.
So start with the overall execution approach and then see how a scorecard can add value within the total picture.

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.

The Performance Factory helps managers, future managers and organizations increase performance through best-in-class Strategy Execution.

We offer 4 services to our clients.

The Strategy Execution Barometer – Get a clear view on your Strategy Execution strengths and weaknesses. You can buy our benchmark report (1100+ companies) on Amazon.com and compare yourself with the market and your competitors. Or you can set-up a tailor-made survey to obtain the Strategy Execution insights you need.

Execution support – Receive practical expert coaching on your desired Strategy Execution topic (including the BSC). Get a second opinion on your initiative portfolio, strategy communication, or other Strategy Execution challenges. Add a seasoned professional to your execution team.

Training & Coaching – Review the effectiveness and efficiency of your existing Strategy Execution training and coaching programme. Get some guidance on the engineering of a new programme. Evaluate the quality and cost of your training partners. Deliver high-quality, high-volume skills booster programmes across the globe.

Speeches & Master classes − To date, we have delivered a wide variety of speeches, programmes and classes in 16 countries around the world − ranging from a 45-minute keynote speech, to a 1-day BSC programme, to specialised multi-day seminars and master classes on a variety of Strategy Execution topics.

Also Download two free chapters of
Jeroen’s book – Strategy Execution Heroes at http://jeroen-de-flander.com

Find more interviews with BSC experts in our “Interviews” section

Expert_KPI Interviews

10 questions to Balanced Scorecard Expert Thomas MG, Business-IT Consultant
at CXO Dashboards

1.    Please, summarize in few words what is your expertise and background with Balanced Scorecard.

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 since already an automated system is 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 source of credibility. 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 have usually 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 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 quick ROI (Return-on-Investment). Get the blue-print ready before deciding 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

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Expert_KPI Interviews

10 questions to Balanced Scorecard Expert James Creelman, independent Balanced Scorecard consultant and author

1.    Please, summarize in few words what is your expertise and background with Balanced Scorecard.

I have been involved with the Balanced Scorecard since 1993. I am an author of many Balanced Scorecard books and advise clients throughout the world – several of which have achieved Hall of Fame status. Dr David Norton has called me “the foremost chronicler and historian of the Balanced Scorecard movement.”

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?

Absolutely not. The Balanced Scorecard is used successfully from companies of any size and in any industries or sectors. If you have a strategy you can successfully deploy the Balanced Scorecard.

3.    While BSC concept is popular now, what other business performance measurement concepts can you recommend for companies to consider?

There are several emerging versions of the Balanced Scorecard that are worth looking at: most notably in my opinion the Value Creation Map pioneered by the Advanced Performance Institute in the UK. The scorecard also works well alongside frameworks such as Malcolm Baldrige or EFQM.

4.    Please, share your opinion about key ideas that should be kept in mind for successful implementation of BSC?

The most important component of a Balanced Scorecard is the Strategy Map, followed by the strategic initiatives. They are then followed by KPIs/targets. Keep the Strategy Map simple; understand the difference between objectives and initiatives and recognize that cultural barriers will likely pose the greatest barrier to scorecard success.

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?

Firstly, the Balanced Scorecard is not a business performance measurement concept. It is a strategic performance management framework of which measurement is but one component. A scorecard can be used at most organizational levels from the corporate level down to departmental level. The important question is “what value had the scorecard at this level – how will it improve performance.” There are many examples of good function-level (HR, finance, etc) scorecards.

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.

Don’t expect too much of the scorecard – it will not answer all of your problems. And remember it is a strategy management framework not a system for managing operations – you need an operational dashboard for the latter, which is different to a Balanced Scorecard.

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?

Decision-makers will use the Balanced Scorecard if they can see the value. If not, why should they? What we need to do better is get the message across about the value. Remember, CEOs etc get bombarded with lots of ideas. The scorecard has to stand out from the crowd to be of interest. We have enough case studies etc now to make the argument.

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?

Start with office tools, etc. After a year or so, migrate to a scorecard automation tool.
Automation enables a company to get the best out of the scorecard – progress tracking and reporting, best practice sharing, etc.

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?

Keep it simple. Understand the importance of strategy maps and that the maps should comprise objectives and not initiatives. Also people will only buy-in to the idea if they can see how it will make their job easier – if it’s just one more thing to do then they will resist: and rightly do. Also remember that the scorecard is not a measurement system – this is the biggest mistake that companies make and stop them securing the real benefits of the approach – which is around step-change, breakthrough performance improvement.

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.

Have written 20 management books/reports, eight of which are on the Balanced Scorecard. I have three new scorecard books due for publication this year. I run workshops and conduct consulting assignments for companies throughout the word: two companies that I have advised have received Balanced Scorecard Hall of Fame awards from Dr Kaplan and Norton.

I can be reached at james.creelman<at>googlemail.com

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Expert_KPI Interviews

Balanced Scorecard experts, people who do Balanced Scorecard design and implementation shares their opinion about Balanced Scorecard.

CEOs of large companies and small companies are unified by their common need to execute strategy. It has been reported that nine out of ten companies fail to execute their strategy. Much of this problem has been due to the fact that companies typically do a poor job communicating and translating the strategy to managers and frontline employees…

For performance measurement, companies can always turn to dashboards. However, what must be understood about dashboards is that they report tactical (not strategic) business information. In other words, dashboards measure the performance of business processes and typically do not have a clear link to the organizational strategy…

Read more insights about Balanced Scorecard in interview with Henry Killackey, Jr., Managing Partner and Educational Services Manager at Global Institute for Management.

All companies large and small need to have scorecards that lead to the 3 Rs of business; i.e., everyone doing the Right things, and doing them Right, at the Right time…

…it is important to have a natural balance rather than a forced balance; e.g., don’t want to sacrifice quality for improved on-time delivery…

Find more ideas about Balanced Scorecard in interview with Forrest W. Breyfogle III, Smarter Solutions, Inc.

What is clear from our experience is that Balanced Scorecard serves a slightly different purpose in a small firm compared to a large one – and this affects how you go about designing the Balanced Scorecard and subsequently how you use it…

Many Balanced Scorecard implementations fail to deliver the value their sponsors hoped for.  The most common reason appears to be a simple one – that the managers within the organisation simply don’t use the Balanced Scorecard.  If it isn’t used, it is hard to see how a Balanced Scorecard is going to do any good…

Detailed analysis of balanced scorecard concept as is exists today in interview with Gavin Lawrie, Managing Director at 2GC Active Management.

The most important factor for BSC success is the executive leader’s support of the balanced scorecard as a critical tool for strategy management and as a way of life…

The balanced scorecard is for everyone in the organization. This means that the balanced scorecard should be cascaded to all departments/business units and teams – both operating and support units. This is the only way to ensure successful strategy execution…

Sandy Richardson, BSc, MEd;  President and Managing Consultant at Strategy Focused Business Solutions Inc. shares ideas about Balanced Scorecard in interview with us.

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10 questions to Balanced Scorecard Expert Henry Killackey, Jr., Managing Partner and Educational Services Manager at Global Institute for Management

1.    Please, summarize in few words what is your expertise and background with Balanced Scorecard.

I have instructed large and small companies on how to construct strategy maps and Balanced Scorecards. I have created e-learning courses covering the fundamentals of strategic planning and establishing performance measures. I have authored several articles describing the role of the Balanced Scorecard in improving business process management and risk management. Also, I served as a conference producer for the Palladium Group / Balanced Scorecard Collaborative.

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?

Absolutely not. CEOs of large companies and small companies are unified by their common need to execute strategy. It has been reported that nine out of ten companies fail to execute their strategy. Much of this problem has been due to the fact that companies typically do a poor job communicating and translating the strategy to managers and frontline employees. The Balanced Scorecard is a tool that facilitates strategic execution through serving the organization as a management system, a means of communicating business results and a process of change.

3.    While BSC concept is popular now, what other business performance measurement concepts can you recommend for companies to consider?

For performance measurement, companies can always turn to dashboards. However, what must be understood about dashboards is that they report tactical (not strategic) business information. In other words, dashboards measure the performance of business processes and typically do not have a clear link to the organizational strategy. The Balanced Scorecard, in contrast, is tied directly to strategy. The strategy is articulated through a strategy map which shows the direct linkages between strategic objectives within the four perspectives (financial, customer, internal process, learning/growth) of the Balanced Scorecard. Performance measures, targets, and initiatives emerge out of each of the strategic objectives of the strategy map.

4.    Please, share your opinion about key ideas that should be kept in mind for successful implementation of BSC?

First, upper management has to fully support and sponsor the BSC. If their support for this system is lukewarm, then its implementation will fail. Second, management needs to take the time to articulate and translate the organizational strategy. Patience is required with building and establishing consensus around the strategy map. There is often a temptation to shop around for a reporting tool right away but the problem with rushing to the process of building measures is that hastily built measures do not have a firm strategic foundation to stand on. A properly constructed strategy map is a solid foundation on which to build meaningful performance measures and initiatives that effectively assess the organization’s progress in executing its strategy.

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?

For the BSC to be effective in facilitating the execution of strategy, it needs to be cascaded throughout the organization. Cascading requires the participation of managers at all levels of the organization to translate the strategy and articulate the relevance of strategic objectives to each department, team and individual. Cascading can and should result in the alignment (or connectivity) of the corporate, departmental, and individual levels of the organization. It is important to remember that strategy is communicated from top to bottom (executives to frontline employees) and that execution begins with the individual.

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.

Over the last three years, the topic of initiative management has gained importance. The BSC has been brought into many organizations where other management systems such as lean, Six Sigma and TQM are used. When multiple management systems come together, there can be a problem with information overload amongst employees. This clash of management systems, in many instances, can result in a growing list of initiatives for driving business performance. Each of these management systems can drive action, but they do not always integrate to ensure organizational alignment. Integration can cause confusion at times because operations and process managers who work with Six Sigma have to get used to monitoring the Balanced Scorecard. Senior managers who use the Balanced Scorecard for assessing strategy execution have to understand Six Sigma as a means of achieving strategic objectives. While the BSC does lead the organization to generate strategy-focused initiatives, it does not provide a consistent method for prioritizing initiatives. Executives and managers have to take responsibility in organizing and prioritizing initiatives which is something the BSC cannot do on its own.

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?

The process of buy-in takes time. Without buy-in, there can be no successful implementation or usage of the BSC. From an organization’s executives and managers, there has to be a realization that there is a need to execute strategy.

Leaders have to ask themselves why they are truly considering the BSC. Has the organization lost its competitiveness through following an outdated strategy? Has strategy become too complicated for the organization to understand? Or does the organization simply need to better understand the performance of its business processes to diagnose problems? If an organization truly understands its strategic needs, then buy-in for the BSC has a higher likelihood. But if the organization is looking to fix its business processes and is not sure of its strategic needs, then buy-in for the BSC does not have a favorable likelihood. There is no purpose in selling the BSC to a company that really needs a dashboard for gauging process performance. An organization truly has to understand its own needs.

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?

The type of tool that is used should be determined by the size and budget of the company that is having its BSC implemented. A small company, for instance, with 100 employees and a very limited budget can use Excel or it can purchase one of the many affordable web-based services that have emerged in the last two to three years. Many of the web-based services have monthly “pay-as-you-go” subscription plans that spare the client from the obligation of a contract. What I’ve noticed about some of the web-based services is that they have a high level of user friendliness (data can be easy to find and objectives can be easily built) which is ideal for a small company that may have limited experience with business performance management solutions. A Fortune 500 company, on the other hand, has more options at its disposal. This type of company is going to be concerned with such issues as cascading scorecards and having access to real-time performance information to name a few. The name brand software solutions are going to offer more choices in terms of scorecard adaptability, integration, and performance reporting.

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?

My advice to companies that are just starting out with a BSC implementation is to not just perceive the BSC as a reporting tool. Your BSC will do more for the organization than just show business results. It is a management system that gets managers and stakeholders focused on action through initiatives. It is a process of collaboration that requires feedback from managers, business units, and individual employees for the formulation of strategic actions and initiatives. The BSC is also a facilitator of change. A company cannot move toward achieving objectives unless it is willing to adapt and evolve. If you can think of the BSC as something more than a reporting tool, you will realize that the BSC is worth the effort required with implementation.

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.

The Global Institute for Management (GIM) is the leading provider of educational services that enable organizations to overcome the challenges that prevent the achievement of optimal performance. Our core competencies include strategy management, risk management and organizational leadership. We provide educational products that come in a variety of formats which include e-learning, live workshops and in-house training.

Here are a few samples of our thought leadership:

The Balanced Approach to Managing Risk (featured in Information Management)

Seeing Red: Integrating Balanced Scorecard and Six Sigma (featured in iSixSigma)

Bringing the Balanced Scorecard Back to Life (featured in iSixSigma)

We are able to help you build your BSC. Visit us at www.gimanagement.com

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10 questions to Balanced Scorecard Expert Forrest W. Breyfogle III, Smarter Solutions, Inc.

1.    Please, summarize in few words what is your expertise and background with Balanced Scorecard.

I have worked with many companies that have used the Balanced Scorecard.

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?

All companies large and small need to have scorecards that lead to the 3 Rs of business; i.e., everyone doing the Right things, and doing them Right, at the Right time.

A Wall Street Journal article “Strategic Plans Lose Favor: Slump Showed Bosses Value of Flexibility, Quick Decisions” is available through the link. This article illustrates what I think is a flaw with traditional applications of the balanced scorecard. With traditional implementations metrics are to be aligned with strategies, which according to the article, now need to be more dynamic than in the past to address changing environmental conditions.   This dynamic environment would cause havoc with traditional implementations of the balanced scorecard.

3.    While BSC concept is popular now, what other business performance measurement concepts can you recommend for companies to consider?

The following article describes an enhanced business performance management system that helps organizations toward achievement of the 3 Rs of business: “C-Suite: The Need to Re-think our Business System’s Strategic Planning, Scorecard Creation, and Process Improvement Efforts”

4.    Please, share your opinion about key ideas that should be kept in mind for successful implementation of BSC?

Think that it is important to have a natural balance rather than a forced balance; e.g., don’t want to sacrifice quality for improved on-time delivery.   Organizations benefit from a system where scorecards are long-lasting and have a predictive format, as described in the article “Creation of Effective Organizational Predictive Metrics that Lead to the 3 Rs of Business”

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?

Scorecards should be created throughout the organization where they make physical sense, recognizing that it is important not to force a scorecard metric where not appropriate.

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.

Shortcomings are described in: “The Balanced Scorecard: Issues and Resolution”

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?

It is important for executive management to have effective performance metrics. An enhanced balanced scorecard system that structurally integrates with process improvement efforts so that the business as a whole benefits is described in “Corporate Performance Management: The Integrated Enterprise Excellence System“

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?

Need to have a system for real-time predictive metric reporting that get organizations out of the firefighting mode and improvement metric needs pull for the creation of improvement projects that benefit the business as a whole; e.g., avoiding silo projects that might reporting a savings of 100 million dollars but nobody can find the money.

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?

Performance scorecards need to be part of a business system that addresses the problems of the day as described in “The Elephant in the Room: Corporate Performance Management Issues and its Reinvention, Going Beyond Lean Six Sigma and the Balanced Scorecard”

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.

Smarter Solutions, Inc. helps organizations create a balanced, predictive scorecard system that integrates with analytically/innovatively determined strategies that creates/executes improvement projects so that the business as a whole benefits.

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10 questions to Balanced Scorecard Expert Gavin Lawrie, Managing Director at 2GC Active Management.

1.    Please, summarize in few words what is your expertise and background with Balanced Scorecard.

My first exposure to Balanced Scorecard was in 1995, when I joined Renaissance Solutions, a  specialist consultancy in Boston USA that had been set up by David Norton (of Kaplan & Norton fame): my first project for the International Telephony Business of AT&T in the USA, but my focus was in developing Renaissance’s business outside the USA – helping establish an office for the firm in London, UK.  From the UK I had a tremendous opportunity to lead Balanced Scorecard projects in Europe, the Middle East and Asia, and learn about the challenges of applying the techniques Renaissance had developed in the USA in other markets: our insights from this international work led to the team becoming thought-leaders in several areas – including the development of what would become known as the 2nd Generation Balanced Scorecard, and the ‘cascading’ of Balanced Scorecards within large organisations.

In 1998 David Norton left Renaissance to form another firm in the USA, and the firm began to break up.  I set up 2GC in the UK in 1999, and it has since grown to become a leading global expert on performance management – working for clients in 40 countries across 5 continents, and completing roughly 200 Balanced Scorecard designs for a broad spectrum of clients drawn from private, public and NGO sectors.  During this time 2GC has also sought to remain at the cutting edge of thinking on strategic performance management, and is now recognised as a thought leader by both academics and practitioners.

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?

Not at all.  2GC is a small firm, and we have had and used a Balanced Scorecard since our inception 10 years ago, and during that time we have worked for a variety of small firms.  What is clear from our experience is that Balanced Scorecard serves a slightly different purpose in a small firm compared to a large one – and this affects how you go about designing the Balanced Scorecard and subsequently how you use it.  If you want to find out more about Balanced Scorecard in small firms, 2GC has written a couple of case studies, a short presentation and a research paper on the topic – all can be downloaded for free from the 2GC web site’s resources section (http://www.2gc.co.uk/resources).

While BSC concept is popular now, what other business performance measurement concepts can you recommend for companies to consider?

Do you mean performance measurement or performance management?  Balanced Scorecard is a performance management tool that helps an organisation choose which performance measures it should focus on, and to justify this choice to others, but in itself it doesn’t actually help you measure things.  There is a rich literature on how to measure things – wherein discussions tend to be focused by ‘type of measure’: for example the literature on financial measures is distinct and different to the literature concerning measuring brand strength, which in turn is distinct from the literature on measuring workforce competence.  Recommending a single source here is tricky – but a good start is to look at the literature on measuring and managing intellectual capital which covers much of the territory at a high level.
Regarding performance management, most of the material available focuses on Balanced Scorecard – a lot of which simply restates the content of the original Kaplan & Norton articles in one way or another.  I guess there is a market for it, but in the main the quality is pretty low.  One exception to this rule is a book called Performance Drivers by Nils-Goran Olve, JanRoy & Magnus Wetter, published in English translation in 1999.  It is a bit dated now, but remains the best single book on performance management around I think.  There are some interesting books and articles about performance management thinking coming from the NGO and public sector, which has had to perhaps be more innovative over the years (as the original Balanced Scorecard concept was never really set up for non-profit organisations).  I particularly like recent work on the “Results Based Management” framework by the UN since 2000, and work from Canada on “Outcome Mapping” approach.

2GC has published a suggested reading list on performance management – find it on the 2GC web site.

4.    Please, share your opinion about key ideas that should be kept in mind for successful implementation of BSC?

Many Balanced Scorecard implementations fail to deliver the value their sponsors hoped for.  The most common reason appears to be a simple one – that the managers within the organisation simply don’t use the Balanced Scorecard.  If it isn’t used, it is hard to see how a Balanced Scorecard is going to do any good – and so from the outset 2GC’s aim in any Balanced Scorecard project has been focused on getting the device designed to be used.  This focus has implications for how you design the device, and also for how you support its introduction into an organisation.  There are many aspects to consider, but a couple worth highlighting are: keeping it simple, and ensuring it is ‘relevant’ to those who will eventually have to use it.  Adding more measures to a Balanced Scorecard  usually doesn’t make it better – aim for about 20.  Ensure ‘relevance’ by involving those who will use the Balanced Scorecard directly in its design – even if this results in a less ‘sophisticated’ design than experts might come up with.

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?

Actually it is a business performance management concept – but I know what you mean.  Designing a good Balanced Scorecard is quite resource intensive exercise, an investment justified by hoped for improvements in the quality of decision making and focus of a management team.  Clearly it is easier to justify the cost of Balanced Scorecard design for a senior team (where a small improvement in performance can yield substantial value), and as a result most Balanced Scorecard work we do is for top teams.  But in sufficiently large organisations, similar value from better decision making can justify developing Balanced Scorecard for lower level management teams.  2GC has had the good fortune to be involved in the running projects to develop ‘cascades’ of Balanced Scorecard in a variety of private and public sector organisations – and we have documented these experiences and the learnings arising in case studies and research papers that can be downloaded from the 2GC web site.

The idea that Balanced Scorecard is somehow different in form or should be restricted to use in functional departments (usually HR, or IT) arisises from a fairly basic misunderstanding of what Balanced Scorecard  is – and seems to be the result of attempts to sell differentiated management books rather than any useful understanding of the topic.  Balanced Scorecard can be applied usefully (though perhaps not always economically) to any management team’s activities regardless of functional specialisation.

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.

Of course.  Although the original suggestion by Kaplan & Norton was that Balanced Scorecard would help senior management teams ensure their strategic plans were properly implemented, since 1992 the framework has been extended to cover a wider range of uses.  2GC recognises four main ones – strategic management, operational management, monitoring and evaluation, and payment of incentives and rewards.  All uses work OK, but each use demands a quite different approach to the selection of measures used within the Balanced Scorecard, and are supported by quite different patterns of use by the managers concerned.  A major cause of problems is where a design processes best suited to one kind of application is used to build a Balanced Scorecard used for some other purpose – usually the results of such compromises fail.  For an illustration, read the “Arran” case study that illustrates this problem occurring in a Financial Services firm – download it for free from http://www.2gc.co.uk/resources-casestudies.

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 managers are familiar with the term Balanced Scorecard, and probably a majority of organisations in OECD economies have had some experience of Balanced Scorecard by now.  But whether this means the managers understand the potential value of a well designed Balanced Scorecard is not at all clear.  Unfortunately ‘completing’ a Balanced Scorecard is much easier than building a good one, and for many people their only experience of Balanced Scorecard has been a dodgy device produced by unscrupulous consultants or accountants looking to make a quick buck: a disappointing kind of short-termism from the consultancy profession that does no one any good.  However the basic need that Balanced Scorecard addresses is persistent – however it is done, managers need some mechanism to identify and track key financial and non-financial measures.  2GC is proof that organisations are willing to invest to develop Balanced Scorecard (we get almost all our revenues from such work).  Most of our work comes by referral from past clients – which suggests that when you do Balanced Scorecard well, it truly adds value.

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?

In our view, a well designed Balanced Scorecard comprises a selection of about 20 financial and non financial measures, reported quarterly.  The idea that you might need specialist software to support this activity for a single Balanced Scorecard is laughable.  Our view is that specialist software is not required (and is sometimes a distraction) for reporting a single Balanced Scorecard – the software is typically expensive compared to the alternatives (e.g. Excel) and usual not much more functional.   However if you have to report many Balanced Scorecards in a period (more than five is our current thinking), automated reporting solutions become more attractive.  It really depends on your organisation though, and there are no reliable hard-fast rules you can follow.  What is clear however, is that none of the (about 100) available software solutions will help you design a Balanced Scorecard – they are simply automata that make reporting a Balanced Scorecard design easier (regardless of what the vendor might say).

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?

Balanced Scorecard only does good if it gets used.  Simply having a Balanced Scorecard that everyone ignores won’t make anything better (any more than having a strategic plan that sits on the shelf will lead to strategic success).  So from the outset think about how your organisation is going to use the resulting Balanced Scorecard(s).  How are management meetings going to change?  How with the Balanced Scorecard integrate with your budgeting and planning systems?  How will you train the managers in your organisation to get best value from the device?  If you are building more than one Balanced Scorecard, how will you ensure that they all ‘align’ with each other to deliver the organisation’s overall objectives?  All these issues are peripheral to the activity of designing a Balanced Scorecard – but require careful thought and investment.  Approach the design of a Balanced Scorecard as a disconnected exercise, and you’ll struggle to get it to ‘work’ within your organisation.

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.

2GC Active Management is now one of the worlds most experienced specialist performance management consultancies, having spent over a decade at the leading edge of the field.  A small firm based in Europe, but with representative offices the Middle East and Asia, 2GC comprises a collection of dedicated performance management experts offering Balanced Scorecard design and audit services, and Balanced Scorecard training to private, public and NGO sector clients on a global basis.  A particular area of expertise is the design of sets of Balanced Scorecard within large / complex organisations – 2GC has worked on some of the most complex multi-level strategic Balanced Scorecard design projects ever documented.  For more information on 2GC and its experience, see the 2GC web site – http://www.2GC.co.uk/a2gc

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