The Third of Three Things I Don’t Like About The Balanced Scorecard (It’s not a measurement methodology)January 8, 2010 by Stacey Barr
In the first part of this three part series, I posed the first challenge that I face with the Balanced Scorecard: it is hard to cascade meaningfully. And in part two was the second challenge: the Balanced Scorecard perspectives are too limiting.
The third thing I don’t like about it is this:
CHALLENGE 3: The Balanced Scorecard is not a performance measurement methodology.
How dare I utter such a blasphemous suggestion!
But I truly believe it. The Balanced Scorecard is, in my book, far more a strategy design methodology than a performance measurement methodology. And here’s why: A performance measurement methodology has to go much further than just suggesting how to determine a balanced and cause-effect linked strategy.
A performance measurement methodology has to help you design and implement and use performance measures, too:
- It has to help you find meaningful measures, particularly when the strategies seem at first to be immeasurable. There are many Balanced Scorecards that are filled with lame, vague measures when they don’t have to be.
- It has to help you nut out the details of your measures, so they can be implemented as intended. Too many of our performance measures are poor substitutes for what we originally intended them to be, because not enough thought went into the appropriate calculation and data requirements.
- It has to help you analyse and report your measures so they clearly and engagingly tell the story of actual performance.
- It has to help you engage people to measure performance willingly and honestly, and as easily as possible so the measures have the best chance of truthfully telling the story of performance.
- It has to help you validly interpret the quantitative information that the performance measures are providing, so decisions are based on patterns and trends instead of knee-jerk reactions to individual points of data.
The Balanced Scorecard does nothing to help you with these challenges. It isn’t a performance measurement methodology – it’s a strategy design methodology.
But before you think I’m on a one-woman mission to bag the bejesus out of the Balanced Scorecard, let me say this: I don’t advocate you don’t use it, I just want you to be aware of its limitations despite its popularity, and make sure you take from its strengths and compensate for its weaknesses.
Do you have a step-by-step performance measurement process to populate your Balanced Scorecard with meaningful measures, and then implement and use those measures to execute and achieve the strategy implied by your Balanced Scorecard?
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