Have you have ever wanted to adopt the balanced scorecard philosophy into your organization? You may like the concept but find that it is not quite enough and has its limitations. The problems with the balanced scorecard methods are not in the generic sense of balance (which is good) but in the way the original authors choose to introduce balance into the scorecard ideas. This article walks through a vehicle to develop, implement, and apply the balanced scorecard to its fullest extent so that it will be useful to leadership.
Enhanced Balanced Scorecard Reporting
Traditional balanced scorecard reporting involves alignment of the financials, customer, internal business processes, and learning/growth to an organization’s vision/strategy. This effort is then to result in created objectives, measures, targets and initiatives. However, traditional balanced scorecard methodology has several issues.
Traditional balanced scorecards often have alignment to strategic statements that are written more like vision statements which are hard to get one’s arm around and can change over time. Also, measures and targets using a traditional balanced scorecard approach give focus to meeting specific targets for a future date, which can lead to playing games with the number.
An enhanced balanced scorecard approach that addresses all the shortcomings of a traditional approach is Integrated Enterprise Excellence (IEE) which provides a natural scorecard balanced, where 30,000-foot-level performance report-outs provide a predictive statement. With the IEE system, if a high-level metric is not satisfactory this shortcoming pulls for a process improvement effort.
The disadvantages out weigh advantages when assessing balanced scorecard pros and cons! Having a balance in organizational scorecards is important but a natural balance, not forced balance, is much more beneficial. In addition, scorecards should give focus on the alignment of its performance scorecard measures to what is done when producing its product and services. …
The Balanced scorecard, was presented in a 1992 Harvard Business Review article by Kaplan and Norton. Many organizations has adopted this idea into their business practices with a wide range of success levels. In the Integrated Enterprise Excellence (IEE) system book, Forrest Breyfogle examines the benefits and true problems with the Balanced Scorecard as currently documented and provides ideas how to use the concept without any of the clear issues. This is an excerpt from his first book in the Integrated Enterprise Excellence four book series.
The balanced scorecard, was presented in a 1992 Harvard Business Review article by Kaplan and Norton. The balanced scorecard tracks the business in the areas of financial, customer, internal processes, and learning and growth. It is important to have scorecard balance because if you don’t have balance you could be giving one metric more focus than another, which can lead to problems. For example, when focus is given in a scorecard to only on-time delivery, product quality could suffer dramatically to meet ship dates. However it is important that care be given in how this balance in scorecards is achieved. A natural balance is much more powerful than forcing balance through the organizational chart using a scorecard structure of financial, customer, internal business process, and learning and growth, which may not be directly appropriate to all business areas. In addition, we need to keep in mind that a scorecard structure that is closely tied to the organization chart has an additional disadvantage in that it will need to be changed whenever significant reorganization occurs.Integrated Enterprise Excellence (IEE) is a sustainable business management governance system, which integrates business scorecards, strategies, and process improvement so that organizations move toward the three Rs of business (everyone is doing the Right things and doing them Right at the Right time). IEE is a system that goes beyond Lean Six Sigma and the Balanced Scorecard.
The E-DMAIC system within an integrated enterprise excellence (IEE) process provides a scorecard approach that more structurally integrates and orchestrates a company’s whole system. Read more to learnd about the approach and it’s five characteristics.
Over the years, scorecards have progressed through many changes, good and bad. Although scorecards often evolve into a meet-the-numbers game, regardless of the consequences to an enterprise as a whole, restructuring can produce dramatic improvements for any organization.