Why balanced scorecards fail

I believe it is about how the organisation tackles change projects as a whole, not just their balanced scorecard project. Is your project about to go over a cliff edge? An important distinction. One not to be confused. Poor skills are likely to lead to a poor implementation. The project is more likely to succeed and we all get a better result. The project will fail. That is why I believe each generation of balanced scorecard solves a particular management problem.

Research by Palladium suggests obliquely and by association that companies rate themselves as high performers, implement successfully and implement balanced scorecards.

Causality or correlation, that is the question? I suspect correlation — NOT causality. In other words, the balanced scorecard system does not create this end effect.

Rather organisations that are generally better are also using the balanced scorecard system. This is an important distinction. Let me make it clear. A well implemented and used strategic balanced scorecard system generation 3 or 4 will help you implement your strategy better. The value of Balance Scorecard systems relies on the premise that once performance problems are identified, there is an efficient and effective method for diagnosing and addressing root causes.

Solutions can then be developed and performance gaps can be closed. If the organization does not have standard methodologies and toolkits for addressing process problems, the amount of effort required to derive a problem solving approach for each new performance gap could eventually damage the performance improvement program as it will be seen as taking too many resources away from daily operations.

When this happens, there can be no adaptation and performance will continue to deteriorate. Using time-tested process improvement methodologies, perhaps in combination with problem solving methodologies e. Six Sigma can greatly alleviate this problem. One major criticism of the Balanced Scorecard is that it encourages an internal focus. This is not as much an indictment of the principle as it is the way companies put the principle into practice.

This will then guide them to gaps in their enterprise level metrics. Then, all other levels of metrics are tested for alignment with the enterprise level metrics, thereby ensuring that even internal metrics link to external performance drivers. You can drive measurable results in your organization by adopting this more holistic approach to developing a balanced metrics system. The key is to start—today. View courses related to the material you are reading on this page.

Ahmet Akal. Andrew Campbell. Mathias Kirchmer. Joanne Carswell. Tom Dwyer. Faun deHenry. Ian Gotts. Edward Hunt. Andrew Guitarte. David Hamme. Simona Lovin. Andrew Spanyi. Gagan Saxena. The tough questions about causality between objectives in perspectives get avoided. Either by practitioners who are afraind to ask them or managers who do not wish to answer them. When this happens the resulting scorecard degenerates into a set of whatever you have operational measures — and they fail.

I have seen organisations who get it wrong, apply it simply and fail to get the benefits they should really get. But I blame poor quality of thinking and conversation based upon a mis-understanding of the principles. Your email address will not be published. This site uses Akismet to reduce spam. Learn how your comment data is processed.