Monday, April 07, 2008

Strategic Planning - Why your balanced scorecard isn't yielding the results you expect 4

This is the last in a series of blog articles on why your balanced scorecard isn't getting the results you expect.

The fourth main reason why you may be disappointed in your balanced scorecard program is fundamental to the limitations of the scorecard itself.

-The change your business needs involves a more fundamental shift in strategy

Simply put, you can't measure your way out of some strategic issues. To use an analogy, let's say you are part of a team of jungle explorers, and you are measuring your efficiency. You might look at "miles traveled per day". Under many circumstances, this might get you where you want to go. But there is no measurement around this that addresses the more fundamental strategic questions - such as "Are we in the right jungle?" and "Should we be in a jungle in the first place?". No matter how well you perform on your measurements, being in the wrong jungle will prevent you from succeeding - and you won't even ask the right questions if you stay completely focused on any set of metrics.

So, to sum it up - a balanced scorecard is a very useful tool, one that is quite similar to the "Measures of Performance" we have been teaching since 1981. Even more importantly, measurement can drive strategically useful behavior, so a balanced scorecard program can yield excellent results. But - as with any other management process - you need to be aware that no one approach can solve all of your business problems, and there is no substitute for a robust, formal strategic planning process.


belle.me09 said...

You're right in saying that there are no perfect business models. But the uses of balanced scorecard also cannot be discounted. I just read this article recently explaining balanced scorecard:

Robert Bradford said...

I believe the balance scorecard approach CAN be discounted because most companies that use it devote far greater resources to the process than they should - and completely ignore other critical areas of strategy. Balanced scorecard simply is not a replacement for good strategic planning - it is merely a component of a good plan which warrants perhaps a day of time from most top management teams. I have yet to see a highly successful strategy built by spending the majority of strategy time on balanced scorecard. Please give details of any exceptions to this you have seen.

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