Balanced Scorecard Designer

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

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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@cxodashboards.com

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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 hace 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 Happ of Fame awards from Drs Kaplan and Norton.

I can be reached at james.creelman@googlemail.com

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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 suggsted 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

admin Interviews 2GC, Gavin Lawrie, inverview

10 questions to Balanced Scorecard Expert Sandy Richardson, BSc, MEd;  President and Managing Consultant at Strategy Focused Business Solutions Inc.; www.sfo-consulting.com. Sandy Richardson is also running interesting business blog.

Could you please, summarize in few words what is your expertise and background with Balanced Scorecard?

I have seen both sides of balanced scorecard creation, implementation, and management – both as a hands-on practitioner and as a consultant.

As a BSC practitioner, I had the opportunity to participate on my employer’s balanced scorecard development team in early 1997 – this was when the balanced scorecard was still a new concept so, with no real models to follow,  we had a huge BSC learning curve! After our BSC was launched, I took over its management and expansion – I did this for 5 years. I am proud to say that over that time, I successfully facilitated the institutionalization of the BSC as a critical strategy management tool.

As a consultant, I have had the opportunity to help organizations in a wide variety of sectors create and implement their strategy-focused balanced scorecard while avoiding the typical BSC pitfalls.

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 is an important tool that can be used by organizations, business units, and teams of any size to manage for the successful achievement of business goals and objectives. 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. This can be achieved in organizations of all sizes.

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

While I believe that the balanced scorecard is the best approach to business performance measurement and management, I have seen quality criteria such as the Baldrige Criteria (USA), the Framework for Business Excellence (Canada), etc. used successfully to measure and manage business performance. These are good approaches because, like the BSC, they take a wholistic approach to organizational management and are focused on producing a clear strategic outcome (a quality organization).

Please, share your opinion about key ideas that should be kept in mind for successful implementation of BSC?
In my opinion, there are several critical factors that contribute to successful BSC implementation and utilization:

1. Visionary leadership and active senior management commitment and leadership;
2. Defining your organization’s BSC philosophy (what the BSC is, how it will be used, and who will use it) BEFORE beginning the BSC development process,
3. Ensuring broad cross-functional participation in the identification and detailing of BSC indicators:
4. Clearly linking BSC indicators with strategic objectives;
5. Using the BSC to measure and manage the health of the business strategy;
6. Changing BSC measures as required – keeping the BSC relevant at all times;
7. Not using the BSC to “punish” for underperformance;
8. Supporting your BSC utilization with accountability and governance frameworks; and
9. Communicating the BSC/BSC results widely and integrating the BSC into regular organizational management processes.

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?

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.

In addition, every member of the organization should have access to the BSC and BSC results. Having this access serves to engage the entire population with the business strategy, unleashing the untapped potential in the organization to identify creative opportunities to achieve strategic goals and objectives.

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 do not see any serious limitations to the BSC as a tool, however,  in my opinion, limitations appear through creative or inappropriate BSC use. While the BSC is a wonderfully flexible tool, it is my experience that it is important to stick to the traditional four perspectives and classic indicator development approaches as much as possible – these approaches have been proven in a wide variety of organizations in all business sectors.  Trouble can arise when organizations customize their balanced scorecard in an unbalanced way – for example, opting for a stakeholder-based scorecard (one that allots BSC perspectives by the various stakeholder groups). This was tried in the past – I haven’t seen this done for a while. The best advice is to start with the traditional BSC framework and customize with caution.

Problems can also arise when steps aren’t taken to integrate the BSC with existing business processes – the BSC must become the way you work in your organization. For example, leveraging existing measures for initial BSC indicators, leveraging natural organizational accountabilities for BSC accountabilities, and re-purposing existing meetings for BSC discussion sessions ensures that any extra work that could be associated with BSC implementation is minimized. Taking these steps helps reduce the inefficiencies organizations frequently experience when implementing the balanced scorecard.

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?

While the balanced scorecard is well known as a concept, I believe that most organizations still misunderstand how it should be used and the true value of appropriate use. That is, they sub-optimize its power by using it as a measurement system ONLY. Taking this approach to BSC use effectively creates a metrics-focused organization – not much of a change for many organizations. In these situations, organizations become disillusioned with the BSC because it does not produce significant change or improvement in their business results. A few research studies have been done that have shown mixed benefits to BSC utilization – this has led some decision makers to question the value of an investment in BSC development.

The key to maximizing the value of an investment in the BSC is to use it to create a strategy-focused organization – one that uses balanced scorecard results to manage strategy execution, to facilitate strategic learning, and to effect culture change.  It is one of my goals to help people/decision makers understand the real way to use the BSC and the business value this approach produces.

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?

Many organizations opt to begin their BSC effort using Excel – they do this to save money by using a standard program already available to the organization. However, in my experience, Excel is an inadequate tool for BSC results presentment – it does not lend itself to integrating results data and commentary in a way that helps organizations use the BSC for strategy management.  If an organization is truly committed to BSC use then it is best to take the automated approach using a BSC friendly application.

While some organizations will choose to build their BSC application in house, this is not an effective use of resources/dollars. This is because there are now many different BSC applications available to organizations. Options range from SAAS (software as a service) solutions to web-based solutions that are run off of a dedicated server. This range of options allows organizations to have access to a BSC application at the price point that works for them.
The key to finding a BSC application that suits your organization is to first define “have to have” and “nice to have” specifications. This list or criteria can then be used to formally evaluate BSC application options. Regardless of your criteria, the best advice is to choose an application that is scalable and flexible – this means that the application will grow with you as your organization’s BSC use matures.

Bottom line is that you want a BSC application that integrates results data with commentary and facilitates line of sight with strategic objectives. Next generation BSC applications will include functionality that includes two way communication and collaboration on the strategic issues and learnings that come out of BSC use (think social networking tools/capabilities) – this will only serve to enhance the power and value of the balanced scorecard for strategy management to organizations.

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?

Organizations should begin by educating themselves/their leaders fully about the BSC. This includes understanding the true way of using the BSC, the process and resources required to develop, implement and manage the BSC, and the impact BSC use will have on the organization itself. Only once organizational leaders understand the value of the BSC on organizational performance and feel that they can commit to active BSC leadership and the ongoing BSC use in the face of resistance to change (including influential stakeholders),  should organizations begin their BSC journey.

Once BSC development begins, it is important to just focus on getting it done – don’t wait until your indicator set is perfect. The key is to just get a representative/strategy-focused indicator set together quickly and then start using the BSC. Ideally, the timeframe from the first BSC indicator development workshop to BSC implementation should be a matter of weeks (e.g. 12 weeks), not months.

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.

At Strategy Focused Business Solutions Our MISSION is to transform organizations and people by enabling an integrated and dynamic focus on strategy execution and mission achievement.  Leveraging our unique blend of knowledge of best practice methodologies and hands on expertise, we partner with you to create the customized solutions required to develop your strategy and implement the strategy-focused business performance management system your organization needs.

Our innovative approaches enable the effective execution of your organization’s unique strategic objectives, sets the stage for the creation of a strategy-focused organization, and positions your organization to achieve the performance results you expect and your stakeholders demand.

Our services include:

• Strategy-Focused Organizational Performance Management Facilitation, Consultation, and Assessments (including strategic planning facilitation, strategy map development, balanced scorecard development, strategy communication plan development, and strategy cascading facilitation)
• Strategy-Focused Organization Development and Management Training and Education Programs
• Hands On Organizational Performance Management Services (including strategy cascading, balanced scorecard management and results reporting, and Office of Strategy Management services)
• Change Readiness Assessments
• Sector-Specific Solutions

Strategy Focused Business Solutions Inc. is located in Waterloo, Ontario, Canada and provides services to organizations around the world.

For more information, please contact Sandy Richardson, President and Managing Consultant at sandyrichardson_bsc@yahoo.ca or (416) 722-1367.

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