The balanced scorecard is an approach to strategic management developed in the early 1990’s by Drs. Robert Kaplan and David Norton. It allows organizations to examine strategies and see how they are performing.

QUESTION: A lot of companies try to do a scorecard on their own but

how many are actually successful?

Answer: The statistics will be gathered and a scorecard will be put together with every intention of publishing it regularly and because it meets the need for the budgetary information. That’s it. Nobody pressures them to give any more information and it can often just die a slow death.

QUESTION: At what point does it go off the rails?

Answer: People sometimes lose interest in it because it’s not telling them anything. For example, if you’re using a traffic light scale, and everything’s always coming up green. If it’s always coming up green why should I read this thing? Another is often when companies put it together, the metrics they’ll use are operational metrics they already collect. What they really need to do is say ‘What are the leading indicators? What are the things under process and learning and growth that we really need to capture to make sure we’re moving the organization in the right direction?’

It is only as successful as the effort a company puts into it and a lot of it stems from the fact you need sponsorship from the executive. If you have sponsorship from the executive — somebody who is going to hound the owner on a monthly basis to see the report, it has a lot better chance of going through.

QUESTION: Do you assist clients with scorecard measurement?

Answer: We’ve gone in at the beginning of and helped them create it, we’ve also gone in half way through when they seem to be floundering. Ideally, we go in at the beginning to help them identify the correct metrics upfront because often we end up taking them back to the beginning, and we may end up throwing out some of the measures because it’s really not applicable.

QUESTION: Who should be involved?

Answer: In terms of an IT project, it could be a scorecard for an individual project or a series of projects, so then it might be the business sponsors. Within IT itself it could be the CIO or one of the IT executives.

If it’s cascaded all the way through the organization — starting with a corporate scorecard going all the way down through divisional. Within IT, you probably get a series of operational scorecards that feed into this and ultimately the owner is the CEO.

QUESTION: Do you find clients have any real idea of what they’re trying to do?

Answer: In many cases someone has just told them to do this and they don’t really have the background. They’re just going through and saying well, ‘I have to throw together this report on measures.’ What we often see is people just take the reports that are already created and say ‘Well, I’ll take this measure’ because that seems to be important and I’ll take this measure and you see a series of lagging measures and it’s really another layer of reporting on top of everything else that’s done. One of the things we suggest to clients is if you’re going to create a scorecard then there should be some kind of return on investment — you should be able to either reallocate people who are collecting some of those metrics to other jobs or you should be able to get rid of some of the reports. But it shouldn’t just be another layer on top of everything else because then it becomes a make work project.

QUESTION: Is setting out realistic measures part of a successful outcome?

Answer: It’s about setting out realistic measures, but a good portion of that stems from the fact you start out with mission/vision values or objectives or strategy as opposed to starting from the bottom up with measures that you already clock. So the measures really have to tie in to the organization — the organizational goals and where you want to go, and if it’s not doing that if it’s just telling you ‘Well it cost me so much to do this this month,’ that’s fine but what are you going to do about that?

Ideally, and this is one of the things I constantly hound my customers about, is there has to be some kind of cause and effect between the measures, so if you change something then how is that going to affect the other measures that are in your scorecard? And if you’ve got a measure or measures that are not affected by some of those then you have to question whether they should be on there.

QUESTION: Are companies getting better at this?

ANSWER: I think they are because they’ve put something in place and by going through an iterative process they have learned from some of their mistakes. What I’ve seen in some organizations is they’ll go through two or three iterations of a scorecard before they get the one they really want to use. That takes a lot of time and a lot of effort. It’s one thing if you’re adjusting every year to changing directions or merger of companies. It’s something very different if after a year you realize you don’t have the right measures in place and have to go back and revisit it. We often help a company identify the measures the first time through as opposed to having to go through the pain of it on their own.

We recommend on a yearly basis going back and revisiting the scorecard, and if the corporate direction has changed or the value of IT within the organization has changed then you have to change some of the metrics. So it’s not a static document, it’s got to be a living document. I don’t think it ever really ends, it’s something organizations can continue to manage by and you might not need it as much as you mature the organization. But I would argue you have to branch out and take a look at things in a different light. If you start doing that then there’s always something you want to measure. E-commerce for instance, 10 years ago we hadn’t even heard of it. But today we want to make sure that if you’re going to play in that space you’re doing things right, that you’re learning not only from your mistakes but mistakes other people have made, and that you’re contributing value to the business and not just eating up valuable budget.

QUESTION: When can using a balanced scorecard be the most useful?

ANSWER: One of the most successful areas would be application development projects. Often there is no governance around a development project. For years development has got away with it and it’s starting to catch up with them.

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