You have been tasked to develop a balanced scorecard for a billion dollar business. The due date is yesterday. The first results are expected three month from now. Here is what you need to remember:
- Balanced scorecard development is an exercise in corporate politics. The request came from a high-ranking executive or straight from the Board, so you think you have all the required support to move things fast. Wrong assumption! The executive requested a scorecard because he was told so by the Board. The Board wants a scorecard because a competitor has one. The problem is: neither the executive nor the Board plans to use the scorecard in decision making process.
- Expect scorecard development process to be torpedoed by all stakeholders (other than the Board). Nobody likes to be periodically evaluated. You will hear all kinds of statements, ranging from “this is not what we do” to “you got it all wrong”.
- Even if you manage to identify the initial metrics, you will hit the wall when data collection begins. A significant chunk of high-level metrics that were agreed upon with executives are likely to be discarded by line management. The reason: these metrics have little to do with how the business actually operates. You will have to identify new metrics and incorporate them into data collection framework. The later is not an easy task in a billion-dollar company, where the number of data owners can easily reach 100+.
- Building reports using data visualization software can easily take a couple of months. Software selection & approval by IT will take another three-four month (under best case scenario).
- While you battle the above-mentioned issues, the Board/executive loses interest in the project. Several months later you are ejected from the company. A new consulting company is brought to finish the project. It will leave the client a fresh set of PowerPoint slides.
Is scorecard development doomed from the start? Not necessarily, if you find a way to avoid all the pitfalls. Here are some practical recommendations:
- Accept the fact that metrics will change multiple times.
- Once executives provide metrics, ask to be introduced to data owners. Set meetings with data owners immediately.
- Use tool(s) that enable simultaneous front and back-end build. The tool(s) must be flexible enough to accommodate changes proposed by line management “on the fly”.
- Help executives understand the scoring process. The major resistance arise when executives are unable to understand how they are evaluated. Enable corporate leaders to visualize how their respective business get in the “green”, and you will secure executive approvals early.
- Build data collection framework while you are still in early stages of the project; alternatively, use a corporate data collection tool.