Thursday, March 06, 2008

Strategic Planning - Why your balanced scorecard doesn't work, part 2

You have too many metrics in your scorecard.

This is most likely true, if you are doing balanced scorecard in your company. Why do I say this? There are four reasons you have probably put too many metrics into your balanced scorecard.

1. Someone thinks bigger document = better document

This is a holdover from when we had to write five page papers in high school. We are all now old enough to know that quantity does NOT equal quality, it just makes work and wastes paper.

2. You can't decide which numbers to throw out

You know you should have only two or three financial measurements, but there are so many good ones from which to choose. Is the solution to keep them all? Only if you want to make people's eyes swim and make sure only the accounting types really read your scorcard numbers.

3. You want to be inclusive and have a metric for everyone

After all, if Bill in the mailroom doesn't have a metric, how will we include him in our process? This is a hard one, because inclusion does create value - but let's have a tactical number for Bill...and avoid pretending that our company should have a mailroom strategy. Either that, or admit that your balanced scorecard process is tactical rather than strategic - which is probably will become if you have this issue.

4. You don't want to exclude certain measures because someone says you "have to" watch them

I see "have to" junk all the time in strategic planning. Whenever someone says you "have to" do something in business, I hope you'll do what I do and immediately explore what will happen if you do the exact opposite. The future belongs to the unconventional company, and you are seriously conventional if you do everything people say you "have to" do...

And what are the reasons for having fewer measures? There are only three:

1. It's less work
2. It's more effective
3. More people will read it.

For some bizarre reason, none of these is as psychologically powerful as the reasons to have a big, bloated scorecard. So when someone asks me to look at their scorecard, I always brace myself for a mind-numbing avalanche of numbers only a CPA could love. I'm rarely disappointed.

1 comment:

quynh_tt said...

First of all. Thanks very much for your useful post.

I just came across your blog and wanted to drop you a note telling you how impressed I was with the information you have posted here.

Please let me introduce you some info related to this post and I hope that it is useful for community.

Source: Balanced scorecard

Thanks again