10 questions to Balanced Scorecard Expert Jeroen De Flander – author Strategy Execution Heroes and director at The Performance Factory and director at The Performance Factory and Chairman of The Institute for Strategy Execution.
Please, summarize in few words what your expertise and background with Balanced Scorecard is.
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 for the Balanced Scorecard product line for Arthur D. Little – a leading strategy consulting firm.
Balanced Scorecard Application
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.
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.
8 Typical Balanced Scorecard Mistakes to Avoid
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:
- Senior management is not convinced and shows little commitment
- The scorecard is developed by ‘the happy few’
- The internal/external project members have limited or only theoretical knowledge
- The scorecard is only used by top management
- The scorecard stays too long in the development stage before it’s launched and used
- There are not enough links to the strategy and planning processes
- The content of the Balanced Scorecard is unrealistic
- The scorecard is only used for remuneration purposes
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 to 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.
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.
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.”
Balanced Scorecard Automation
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.
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.
More about the Performance Factory
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/books/