Balanced scorecard

It’s well documented that organizations struggle with change. In one of many studies on the topic, Michael Beer of Harvard Business School estimates failure rates as high as sixty percent. Of course you don’t need a Harvard professor to tell you what you’ve most likely experienced many times during your working life. So what, or who, is to blame for the high flameout rate of change?

One of the basic tenets of change management is that over time people and institutions tend to become ‘frozen’ in their ways of doing things. Frozen in the way they think about customers and markets, about which products and services to provide, and in how they treat each other (their culture), among many others. Of course it happens in our personal lives too – when was the last time you changed the toothpaste you use or took a different route to work?

If you had one of the top productivity blogs on the web do you think it would be wise to suddenly tell your readers they should “Toss productivity advice out the window?” Seems crazy, or at least counterintuitive, but that’s exactly what Zen Habits blogger Leo Babauta did in a recent post. For years he doled out advice on getting more done and being more efficient. But now, based on his own experiences, he’s recommending doing less in order to simplify life; pushing aside the urgent, and freeing up space and time for what’s truly important.

In the Performance Management and Balanced Scorecard worlds we often highlight the value of leading indicators of success. An effective system should contain a mix of lagging and leading measures if the organization wishes to get a true gauge of performance. The so-called ‘leading indicators’ are measures you feel hold predictive power and have the ability to drive or lead to the success of longer-term lagging indicators. For example, tracking the number of hours spent with prospects could be a leading indicator of future revenue, a classic lagging measure. Market share, an important, but ‘lagging’, indicator for many businesses is often driven by the leading indicator brand awareness.

I have had the pleasure to spend the past two days with Bob Kaplan and Dave Norton, inventors of the Balanced Scorecard and the Strategy Premium Execution Framework, as well as a number of leading practitioners to discuss some of the recent trends and developments in the field of performance management. Here is my initial take on some important developments you should be aware of:

At KPI Library we are often asked to help businesses to define their measures. Since we are not a consulting business we refer most of these requests to partners and specialized consultancies that do deliver these kind of services.