The Balanced Scorecard: Translating Strategy Into Action

Organizations execute four 'mission critical' activities, for a scorecard to succeed. Each is more difficult than might appear and must be performed by a different part of the organization.

1. Articulating the strategy: Top management must articulate and disseminate the strategy. More than measuring success, a performance system communicates a strategy. Without a strategy, the performance measures become an 'anything goes' exercise. 'Anything goes in theory' means that 'everything stays in practice'.

2. Designing the measures: A core task team must design the measures to avoid uneconomic behavior. Poorly thought out measures create counter productive activity.

3. Operationalizing the measures: Once measures are defined, programmers operationalize and automate them.

Even revenue can be complicated in practice: When is it recorded, and what does it include. The task team may well find themselves getting what they asked for, and not what they wanted.

4. Getting the buy-in: Change management skills are needed to align the changes and create buy in. Dilbert cynically states that there are two steps to a great performance measurement system. 1) Gather information and 2) ignore it. For performance measurement to work, the system must be accepted, understood, and aligned to the reward.

The book, 'The Balanced Scorecard' by Kaplan and Norton has become compulsory reading for middle management. It is very good, with the one weakness that it makes performance measurement look deceptively simple.


Overcome Poor Communications and Bureaucracy for New Actions   April 12, 2000
Donald Mitchell (Boston)
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The Balanced Scorecard looks at the important issues of alignment, coordination, and effective implementation. Most business thinkers like to start with the big picture, and end there. As a result, most ideas for going in a new direction are quickly diluted by misunderstanding, falling back on old habits, and lethargy. Since Peter Drucker first popularized the idea of business strategy, there have been vastly more strategies conceived than there have been strategies successfully implemented as a result. Much attention has been paid to devising better strategies in the last four decades, and little to implementing strategies. The big pay-off is in the implementation, and The Balanced Scorecard is one of handful of books that provide important and valuable guidance to explain what needs to be done to successfully execute strategy. You must have more measures, and different measures than the accounting system provides. You also need to link measures and compensation to the key tasks that each person must perform. This book is simply the Rosetta Stone of communicating and managing strategy. The Balanced Scorecard is the beginning of the practical period of maturity in the field of business strategy. Read this book today to enjoy much more prosperity! I also recommend that you read The Fifth Discipline, The Fifth Discipline Handbook, and The Dance of Change to understand more about the context in which you are trying to make positive change. These four books are excellent companions for each other.