Summary 

In this article, author, management consultant and Balanced Scorecard expert Paul Niven sounds a strong note of caution against overloading Balanced Scorecards with Key Performance Indicators (KPIs) and Strategic Objectives.

Once early adopters of the Balanced Scorecard started seeing results, organizations were convinced that more objectives and measures would make performance management even more effective. This led to overcrowded Strategy Maps and Balanced Scorecard Maps that failed to offer a coherent picture of strategy and strategy execution.

Summary 

In this entertaining article, author, management consultant and Balanced Scorecard expert Paul Niven takes a closer look at movie making to borrow lessons for making management meetings better.

Ultimately, movies are all about stories and how they progress, scene by scene. While volumes have been written on creating winning scenes, expert screenwriters have found a way to keep it very simple…and very effective.

Summary 

In this article – the last of a four part series – author, management consultant and Balanced Scorecard expert Paul Niven discusses the need for a Learning and Growth Perspective in a Balanced Scorecard. The other three parts focus on the Financial, Customer and Internal Process perspectives.

The author begins by focusing on the need for a Learning and Growth Perspective. Organisations that seek to create a culture of performance management typically wish to create flawless processes, fulfill customer expectations, and create value for financial stakeholders. To achieve these goals, organisations need a strong foundation. People, the author argues, provide this foundation. The knowledge and talents of people are the intangibles that account for upward of 80 per cent of value creation in modern organisations. In the ultimate analysis, committed and capable people dictate the success or failure of an organisation.

Summary

In this article – the third of a four part series – author, management consultant and Balanced Scorecard expert Paul Niven discusses the need for an Internal Process Perspective in a Balanced Scorecard. The other three parts focus on the Financial, Customer and Learning and Growth perspectives.

The author begins by pointing out that, with the Internal Process perspective, the focus of performance management shifts from the “what” of value creation to the “how” of value creation. Specifically, the Internal Process perspective describes how an organisation will achieve outcomes envisioned in the Customer and Financial perspectives.

Summary

In this article – the second of a four part series – author, management consultant and Balanced Scorecard expert Paul Niven discusses the need for a Customer Perspective in a Balanced Scorecard. “The remaining two parts focus on the Internal Process, and Learning and Growth perspectives.”

The author begins by discussing the explosion in the options available for a consumer’s choice. A century and more ago, producers of goods and services enjoyed great power over customers who had extremely limited choices in the market. Today, the scenario has reversed, with customers exerting far greater power in the purchase transaction. Technologies like the Internet increase customer knowledge and insight and deliver greater bargaining power to customers. This makes it absolutely vital for companies to have a well-defined Customer Perspective.

Summary

In this article – the first of a four part series – author, management consultant and Balanced Scorecard expert Paul Niven discusses the need for a Financial Perspective in a Balanced Scorecard. The other three parts focus on the Customer, Internal Process and Learning and Growth perspectives.

Typically, the mission and vision statements of organisations do not refer to their financial aspirations. However, companies need to have a Financial Perspective so that they can answer shareholders who require a return on their investment.

Companies must ensure that a focus on customers also leads to improved financial results. Financial performance also enables investment in people, processes and technology so that customers can be served successfully.

So, how do companies know if they are performing well financially? The Financial perspective of the Balanced Scorecard gauges financial success from the perspective of a company’s shareholders and gives the company the tools to track success over time.

Summary

Bilprovningen is the Swedish Vehicle Inspection Company. With a mission to improve road safety and to contribute to a better environment, the company completes about 5.4 million inspections per year. Bilprovningen’s 2,100 employees work in 16 districts, 180 stations and two mobile units.

Summary

In the 1990s, BKK, a Norwegian producer of electrical power, became a vertically integrated provider and also diversified to capitalize on emerging market opportunities such as broadband services. As a result, BKK faced a challenge in aligning managerial principles and approaches across the group. In response, BKK successfully implemented a bottom-up, group-wide process improvement program, driven by the identification of Critical Success Factors (CSFs) and Key Performance Indicators (KPIs).

Summary

In 2006, the Christchurch City Council was the only organization awarded Business Excellence New Zealand’s Performance Excellence Study Award (PESA). Sponsored by the New Zealand Government and businesses, the Award uses the internationally recognized Malcolm Baldrige National Quality Award Criteria.

Summary

One of the world’s leading creative organizations, Saatchi & Saatchi provides solutions to leading clients like Carlsberg, General Mills, Lexus, Procter & Gamble, Sony Ericsson and Visa International.

In 1997, Saatchi & Saatchi was close to bankruptcy. A new senior management team was appointed to engineer a turnaround. The senior team presented to stakeholders a new vision and a detailed strategic blueprint for recovery, with very ambitious targets for a 3-year timeframe. With survival at stake, the group had only one chance to make the plan work.

Summary

Scandinavian Bottlers was set up in the late 1990s as a regional bottler for a major soft drinks corporation. From the very start, the management decided to use the Balanced Scorecard as its core strategic management tool because they perceived it as a powerful mechanism to align the company’s vision, goals and strategic initiatives. In fact, the Strategy Map and Scorecard were created before the launch of the organization. Key inputs to the scorecard came from the Annual Business Plans formulated by functional heads.

Summary

The UK-based Remote Bank is an example of an organization that deployed the Balanced Scorecard as it central management tool right from the time it was a small startup.

Launched in the late 1990s with staff strength of just 50, Remote Bank offered telephone based banking services. In the run up to the company’s launch, the then CEO had decided on the use of the Balanced Scorecard as the core tool to steer the startup.

Summary

Headquartered in Norway, Statoil is an integrated oil and gas company operating in 32 countries with 25,000 employees. Through 2006, Statoil ran a series of pilot initiatives to become a budget-free enterprise, following in the path of a previous daughter company, Borealis, which was a pioneer of the Beyond Budgeting movement.

With a clear understanding of extremely dynamic nature of today’s business environment and the limitations of a static budget concept, Statoil realized the need for tools that could help it address the key actions of target setting, forecasting and resource allocation. By focusing internal discussions on the key question of ensuring the best possible performance, the senior team got people to look beyond budgeting. A scorecard user from 1997, Statoil was already convinced about the tool’s strategic management capabilities and had developed over 700 scorecards. This made the Balanced Scorecard the central tool for Statoil’s approach to performance planning and performance management, as it moved to become a budget-free enterprise.

Summary

The Subordinate Courts of Singapore handles over 400,000 cases annually, amounting to 95% of the country’s judicial caseload. In 1997, the then Senior District Judge (equivalent to a CEO) was introduced to the Balanced Scorecard concept at a Harvard Business School program. The concept seemed tailor-made for developing a predictive and proactive measurement and management system.

In 1998, the Court launched a pilot project to assess the Balanced Scorecard. A Steering Committee reviewed and monitored the scorecard every month. Six months later, the Balanced Scorecard was helping the Court to see what they were doing and how they were doing it. As a two-way system, it was changing the paradigm of communication, performance, monitoring, measurement, and improvement. The leadership was convinced and decided to cascade the scorecard organization-wide.

Summary

The Commercial Vehicles Business Unit of India-based Tata Motors manufactures the full range of commercial vehicles and is one of the world’s top 10 truck manufacturers.

Years of poor financial performance had thrown off-track the Unit’s objective of being among the world’s five most profitable commercial vehicle makers. The CVBU developed a strategy for effecting turnaround, creating sustainable growth and profitability. Earlier studies, using the Malcolm Baldrige model, had highlighted the unit’s weakness in strategy deployment. In response, senior managers chose the Balanced Scorecard as the preferred driver of change and strategy implementation tool.

Summary

The US Postal Service has over 700,000 employees and delivers 212 billion pieces of mail annually to over 144 million destinations. Surprisingly, the strategic performance of such a huge organization is managed through a corporate Balanced Scorecard with only five goals and 10 measures.

Summary

The world over, demand for performance transparency, responsibility and accountability of organizations is increasing – issues that form the core of corporate governance. This article argues that legislative and regulative interventions are not adequate to improve the corporate governance standards. In fact, a major analysis reveals that lack of compliance with accounting/financial rules and regulations is only a minor cause of poor performance. The analysis finds that strategic failure, such as misjudging consumer demand or competition, is a greater cause – pointing to the fact that corporate governance and corporate performance management are closely linked.

Summary

This article examines the challenges of creating effective links between the Balanced Scorecard on the one hand and compensation and incentives on the other hand. Monetary incentives are, in principle, a powerful motivator for aligning employee efforts to Balanced Scorecard objectives. In fact, Robert Kaplan and David Norton, creators of the Balanced Scorecard, recommend the incentive-compensation link as a sub-component of the principle that calls for making strategy everyone’s everyday job. However, establishing a clear incentive-compensation link that actually works is one of the most challenging aspects of a Balanced Scorecard approach to enterprise performance management.

Summary

The Balanced Scorecard was introduced in 1992 and has since, given rise to a wealth of material that describes the concept’s preeminence for enterprise performance management (or corporate performance management, as it is also referred to). The material also covers themes like scorecard implementation and cascading the scorecard. However, very little has been written about the roles and responsibilities of the Balanced Scorecard Manager. This article seeks to fill the gap because expertise in strategy management is the most critical prerequisite for success in today’s dynamic business environment. Acknowledging this prerequisite, experts have proposed new concepts like the Office of Strategy Management.

Summary

In this article, Peter Ryan, Corporate Performance Manager for the Christchurch City Council of New Zealand and expert on performance management in the public sector, points out that the science of successful creation and use of the Balanced Scorecard methodology is widely understood in the case of the private sector and government agencies with narrow regulatory fields. However, points out Ryan, government agencies in charge of complex and diverse services have no body of best practices to draw on when they use the Balanced Scorecard. After dwelling on the challenges involved in developing such a body of knowledge, Ryan seeks to fill the gap and point out the differences between a successful and a failed scorecard implementation through an extensive comparative study of the scorecard implementation experiences of two cities – New  Albany (a hypothetical case of failure built around actual scorecard implementations) and Christchurch (a highly successful and much-acclaimed real case).

Summary

Businesses and organizations are fundamentally re-evaluating their approach to planning and performance management. As part of this process, many have chosen the Balanced Scorecard as an appropriate strategic management tool for delivering more sustained performance improvements.

This article examines another powerful emerging idea – Beyond Budgeting – and describes how it is proving to be a superior alternative to the conventional budgeting approach. Leading this paradigm shift is the Beyond Budgeting Round Table, which has brought much clarity to the debate about the value and validity of the budget. In doing so, argues the author, it has generated practical insights for those involved in Balanced Scorecard initiatives. In support of this argument, the author examines the key dimensions of the Beyond Budgeting movement and how organizations are freeing themselves from the limitations of the budget mechanism. Interestingly, many of these aspects find echo in the Balanced Scorecard philosophy. The author summarizes the six external factors of change identified by the Beyond Budgeting Round Table.

Summary

Over the years, a number of business excellence models have been developed to serve as performance management frameworks. Some examples are the Malcolm Baldrige Model, the European Foundation for Quality Management (EFQM) Excellence Model, the Australian Business Excellence Framework and the Singapore Quality Model.

This article seeks to examine the key question of which framework organizations should use and concludes that organizations should use a combined approach.

As part of the argument, the article first takes an-depth look at the Malcolm Baldrige Framework, the seven criteria that form part of the framework and organizations that have successfully used the Baldrige model. Then, the article looks at the EFQM Business Excellence Model and looks at successful practitioners.

Summary

A large number of companies successfully use some form of Balanced Scorecard to drive their performance management. One reason for this probably lies in the fact that the bottom line of a company is actually fairly easy to describe.

However, building and implementing a Balanced Scorecard Management System within a public sector organization presents a challenge that is different from what private sector organizations encounter. For instance, public sector organizations typically need to place ‘customer’ as the top strategic perspective as opposed to ‘financial’.

Summary

Management writer and educator James Creelman is, in the words of David Norton, co-creator of the Balanced Scorecard, ‘the foremost chronicler and historian of the Balanced Scorecard movement.’ Author/co-author of 16 important management reports and books, James Creelman answers a question about the extent of popularity of the Balanced Scorecard in parts of the world other than North America and Europe. In his detailed response, James Creelman points to the growing popularity of the Balanced Scorecard concept in Latin America and Asia and cites examples from Brazil, Hong Kong, India, Korea, Mexico and Singapore that have attracted worldwide attention for their success. Finally, he even predicts that Asia might overtake other continents in its use of the Balanced Scorecard.

Summary

The introduction of a Balanced Scorecard program is a major enterprise performance management initiative or change program, involving considerable time and money for the full design and rollout. Hence, it is important to develop a clear idea of the business benefits.

This calls for building a compelling business case. When business faces a question of survival, as one example in the article shows, this is probably made easier. Such cases are an exception and most scorecard initiatives are proposed in organizations that face a ‘business as usual’ situation. In such scenarios, the proponents need to develop a clear plan for championing the Balanced Scorecard program.

Summary

Management writer and educator James Creelman is, in the words of David Norton, co-creator of the Balanced Scorecard, ‘the foremost chronicler and historian of the Balanced Scorecard movement.’ Author/co-author of 16 important management reports and books, James Creelman here answers a question seeking his view of the new Office of Strategy Management (OSM). In response, James Creelman traces the origin of the Office of Strategy Management concept, believes that it has actually taken a rather long time to emerge and how it is now creating a space for strategic management as a core organizational function, much in the same manner as HR or finance. He then goes on to describe the seven responsibilities of the Office of Strategy Management.

Summary

The article begins with what is the ultimate objective of a strategic performance management initiative like the Balanced Scorecard – ‘to make strategy everyone’s job.’ To do so, organizations need to align individual performance with the strategic objectives. In this endeavor,
personal Scorecards assume significance as a central tool.    

In an ideal scorecard cascade, personal scorecards serve as the final step in the process, starting from corporate, divisional, business unit, functional, and team to individual levels. The underlying belief is that cascading the scorecard to the deepest level of the organization fully aligns the individual’s objectives to the organization’s objectives.

Personal scorecards also introduce a high degree of transparency into organizational performance and also serve as the only appraisal system within the organization.

Summary

It is an acknowledged fact that the active support and involvement of the senior management team is the most important success factor in an enterprise performance management or Balanced Scorecard initiative. So influential is this success factor that the creators of the Balanced Scorecard initiative have made ‘mobilizing change through executive leadership’ one of the five principles for building a strategy-focused organization.

Summary

Management writer and educator James Creelman is, in the words of David Norton, co-creator of the Balanced Scorecard, ‘the foremost chronicler and historian of the Balanced Scorecard movement.’ Author/co-author of 16 important management reports and books, James Creelman answers a question about how to get the right balance of strategic objectives in a Strategy Map, so that it does not become unmanageably complex or far too simple with no meaning.

Summary

This article discusses the engagement of external consultants for change programs or performance management initiatives like the Balanced Scorecard and offers guidelines on what organizations should do and what they should not do.

The Balanced Scorecard has grown hugely in popularity and so has the community of consultants offering expertise in the design, development and implementation of Balanced Scorecard solutions. Organizations need to be aware that there is a marked differential the quality or value of services offered by scorecard consultants. The picture is cluttered with examples of consultants who have made a difference to the success and those who have failed to deliver.

Summary

In this article, author, management consultant and Balanced Scorecard expert Paul Niven argues that the discipline of Cost Management must evolve to face the realities of the new economy and meet the rapidly changing information needs of today’s decision makers. Cost Management, like finance, is finding out that the new mandate calls for providing the information companies need to produce the value their customers demand.

A focus on the importance of performance measurement is an integral component of the evolution Cost Management is undergoing. In this context, the Balanced Scorecard has emerged as a proven and effective performance measurement tool as organizations seek to succeed at strategy implementation and translate intangible assets into real value for stakeholders.