Perspectives on the Balanced Scorecard©
by Arthur M. Schneiderman
I have several working hypothesis on the balanced scorecard:
• Analog Devices scorecard implementation (1987-1992)
is still a best practice. It contained all of the popular elements
identified by today's balanced scorecard promoters including:
• top-management ownership of the processes for creation and management of the balanced scorecard,
• a complete set (the vital few) of rigorously defined metrics that characterize progress toward its strategic objectives,
• a clear and compelling story linking these metrics to Analog's Corporate Objective and business strategy,
• a rigorous process for setting aggressive long-term, intermediate and short-term goals (the half-life method) consistent with organizational capacity and resource requirements,
• deployment of scorecard goals to individual action agents and their knowledge based personal ownership and commitment to achievement of these goals,
• a state-of-the-art improvement process for achieving the highest possible rates or improvement on scorecard metrics,
• a formal process for its ongoing refinement.
See the detailed history of Analog's development, deployment and refinement of the First Balanced Scorecard and test my conclusions.
• The much sought-after linkage between performance
measurement and strategy is poor in practice, partly as a result of the
forced classification into the categories of financial, customer,
internal processes, and learning and growth.
• There is no formal process employed for creating the linkage between performance measurement and strategy. Current practice is ad hoc and the resulting linkages are not compelling. Tell me what an organization is measuring, and I should be able to deduce its strategy.
I'm in the process of collecting data to test these hypothesis. Watch for more on the last two in my Art of Process Management section