Balanced scorecard

When it comes to answering the all-important strategic question of “What is our value proposition?” I’ve always believed any private, public sector or nonprofit organization should choose one of three possibilities: operational excellence (resulting in low costs), product leadership (best product, often achieved through constant innovation), or customer intimacy (best service/best relationship). This rationale, one shared by many experts, is that focusing on more than one at the same time will lead to contradictory investment choices, misaligned processes, and ultimately produce a fog of confusion over your employees and customers who don’t know what the company stands for.

I define Enterprise Performance Management (EPM) much broader than its narrowly perceived view as a CFO initiative with a bunch of dashboards. Under EPM’s broad umbrella are these component methodologies: (1) profitability analysis; (2) forecasting, planning, and budgeting; (3) customer intelligence; (4) process improvement; and (5) strategy execution. The last one, strategy execution, relies on strategy maps, strategic scorecards (with KPIs), and operational dashboards (with PIs).

In a wide-ranging discussion I recently held with the senior strategy officer of a midsized organization the conversation eventually made its way to their Board of Directors. I asked how involved the Board had been in their Balanced Scorecard. “Not at all” this person replied. That response didn’t come as a great surprise to me as most organizations choose, rightly, to create strategy and their Balanced Scorecard themselves, seeking Board insight and approval afterwards. But what came next did surprise me, a great deal. I asked: “Did your Board receive any training on the Balanced Scorecard so they could use it effectively to gauge your strategy execution?” With no hesitation this executive responded, “No.

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.