Getting the Balanced Scorecard to Add Up

About group

A live change managment project using balanced scorecard measures and also their cause and effect correlations

Project - Getting the Balanced Scorecard to Add Up.

Customer perspective + Operational Perspective + People Perspective = Financial Results

On my blog, Management Myth Busters, I talk about the problems with focussing on the financial measurements inside companies and how we need to measure the other three quadrants of the balanced scorecard. To test this out I have kicked off a project at work where I have hired an outside company www.seemoredata.com to build a measurement framework based on the formula above- Customer + Operations + People = Financials. I have asked them to take this a step further and build the linkages and correlations between the non-financial measurements and their resulting impact on the financial measures.

For example what is the correlation between our customer opportunity pipeline in our CRM system and the resulting revenue impact downstream? What is the impact of improving our operational processes on revenue and expense as well as customer satisfaction? By increasing the development of our people how has this changed customer satisfaction and our opportunity pipeline?

The reason to build the framework and linkages in this manor is to draw the attention of senior management away from the output, financial measures, and towards the inputs, customers, operations and people. In this way I am attempting to get them to understand “the efficiency myth� of carrying out cost saving programs and setting up value destroying measures. The idea is to change their focus to value creating customer measures and people and operational improvements.

Ultimately the aim is create local feedback loops on decision making up and down the organisation. As a middle manager, I have two layers below me and above me are two between myself and the CEO, this project is attempting to create cultural change from the middle. As per the article in HBR on coaching the alpha male, May 2004, if this project can bring tangible information in front of the key decision makers maybe we can get them to change their behaviour towards actions like building a learning organisation or process improvement, etc.

At the same time I have kicked off an operational process improvement project based on Toyota’s Lean Thinking. I am using the company www.completeleansolutions.com to help me with this one. The good news is that like many large companies, (we are over 20,000 people), we are drowning in the low hanging fruit of improvement opportunities. Our first operational improvement project is our order entry process. We are using the balanced scorecard measurement system above to measure our progress as well as the impacts on customer satisfaction and financial results.

Why have I formed this group for the project? We are open to any help people can give us. If you like what we are trying to do and have some ideas for us please feel free to share. Also looking for any suggested reading material, web sites or anything that can help.