A couple of years back, I began a Scorecard implementation with a government organization under the sponsorship of their senior executive. To my absolute delight, he was downright inspirational in our initial meetings and training sessions with employees. He frequently repeated such refrains as, “the Balanced Scorecard is the single greatest priority of this organization this year,” “my number one priority is the successful implementation of the Balanced Scorecard,,” “I’m committing all the resources necessary to develop the Balanced Scorecard.” Wonderful statements: inspirational, direct, and indicative of true sponsorship. But have you noticed what is missing? Not once did he address why the organization had determined the Balanced Scorecard was an appropriate tool at this moment. I suggested he insert the “why” message in all future correspondence but he hesitated for some reason.

Despite our best efforts, over time the implementation began to struggle and we rapidly began losing momentum. Eventually, I turned to that most reliable of corporate news sources—the grapevine—to find out what people were saying about the Balanced Scorecard. It turned out most employees were convinced that in the absence of a stated reason for the Balanced Scorecard, their boss was planning to use it as a tool for generating layoffs within the group. As a result, they were refusing to provide any support for the implementation. “Why lead ourselves to the chopping block?” was the defining sentiment among the rank and file. The executive sponsor was shocked by this news since he sincerely saw the Balanced Scorecard as a tool that could eventually lead to the attraction of new resources for the group. He attempted to re-engage, but the damage was done and we literally spent weeks thereafter communicating the true message of why the Balanced Scorecard was being implemented. It’s a sad but true fact of the business world—in the absence of a motive for change, employees will generate one, and chances are it won’t be the message you had in mind!¹

The Balanced Scorecard has proven to be remarkably effective since its inception over 17 years ago. It has been used by thousands of organizations to generate focus, alignment, and to execute their unique strategies. The question is, will it work for you? To answer that question you must first diagnose your organization and determine whether you have a specific issue the Scorecard can help you combat, one that is evident to everyone in the organization and the importance of which is universally acknowledged. Absent this “burning platform,” the Balanced Scorecard is likely to be seen as yet another panacea grasped at by management in the vain hopes of altering the organization’s veering course.

Exhibit 3.1 provides a number of possible reasons for launching a Balanced Scorecard program. While all these reasons are valid, you should not consider this a “pick and choose” exercise of selecting a rationale that sounds good to you. In order to realize real benefits from the Balanced Scorecard, you must determine your specific justification for launching this implementation. The Michigan Department of Transportation described their motivation for using the Balanced Scorecard: “The Balanced Scorecard was selected as a tool to identify the commonalities of strategy, expand our focus and understanding of customer needs, and align systems and structures to meet customer needs.”² All excellent reasons for launching a Scorecard effort. The City of North Bay, Ontario also felt the Scorecard would assist them in meeting the many challenges facing their organization. They described their principal objective in building a Scorecard this way: “There was an increased desire both politically and administratively for improved accountability.”³ This is an objective that will most likely motivate many public and nonprofit organizations.

Of course I can’t dictate why your specific agency or organization should develop a Balanced Scorecard; there could be any number of possible motivations. However, I can provide you with reasons that you definitely should not use to support an implementation. For example, if you find yourself answering the “why the Balanced Scorecard?” query with a response such as “we’re going for excellence,” or “we need a full-court press this year,” or my personal favorite, “we want to go from good to great!” hit the stop button immediately. These are slogans that are most likely devoid of any real meaning to the average worker. In fact, the typical executive may not be able to penetrate the shiny veneer of these platitudes. I’m all for going from “good to great.” In fact, Jim Collins’s book by the same name is among the best business books I’ve ever read. But unless you possess a deep knowledge of what it specifically entails and how the Scorecard will help you traverse the rocky path from good to great, you’re better off investing your Scorecard budget in mouse pads and coffee cups emblazoned with the phrase.

The problem with cliché-driven rationales such as those outlined earlier is their nebulous and fuzzy nature that makes them difficult to implement on a day-to-day basis. When well-meaning CEOs and executive directors trot out such phrases, even very senior managers tend to nod in polite agreement, punctuated by the occasional “YES,” or “AMEN!” But deep within they may feel confused, wondering whether they truly understand the essence of the vision presented so enthusiastically. Rather than asking for clarification and risk looking stupid in front of their peers, these managers will demur and proceed to pass on watered-down interpretations of these vague marching orders to their own teams, all of whom subsequently develop meanings at least three times removed from the original intent of the leader. The result of this mess is often misalignment, sloppy behavior, and lots of wasted time.⁴

A well-articulated, widely understood, and ceaselessly communicated rationale for the Balanced Scorecard will prove to be a huge asset in your efforts. The simple act of developing your objectives will force the establishment of consensus among all team members. Building that consensus will greatly assist your communication and education efforts as everyone will truly be on the same page. Objectives are also critical at those inevitable moments when your project loses some momentum. The focal point of your guiding objectives can serve as a rallying cry to re-energize and refocus your team’s efforts, reminding everyone of exactly why you chose to develop a Scorecard. Author and consultant to nonprofits Bill Ryan sums it up nicely: “Organizations must really understand their motivation in doing this (Balanced Scorecard) work. Because with these systems there will come daunting stretches, there will come times when people are wondering, why are we doing this? What will get organizations over those humps is understanding the relevance of these tools to the social vision they have. More attention to the rationale is really useful and important.”⁶

More than a measures effort, the Balanced Scorecard represents a change initiative. A change in how you measure, in the way you manage, and in the way you demonstrate accountability and show results. To facilitate this dramatic transformation, you absolutely must have the support of your senior executive.

Senior managers and executives set the tone for any organization. If these leaders provide only shallow and casual support for the Balanced Scorecard, this demonstration will be rapidly translated by all employees as a sign the implementation probably isn’t worth their time and effort. Employees “watch what the boss watches”⁷ and know what initiatives are likely to merit their attention. We’ve all seen the train wrecks of abandoned initiatives and have witnessed the impact theses debacles have on employees coping to keep their heads above the waters of change that really does matter. In their provocatively titled book Confronting Reality, authors Charan and Bossidy provide this very compelling description of the syndrome:

The only thing potentially worse than a lack of support from the executive is “lip service.” This “behavioral integrity” has been proven in the for-profit world to have a significant impact on profits. In one study of 6,500 hotel workers, researchers discovered that a 12% improvement in a hotel’s score on leadership integrity (following through on promises and demonstrating values they preached) resulted in increased profits of $250,000 per year.⁹ That’s a strong statistic but I don’t think any of us need empirical evidence to be convinced of the doom that awaits any program launched with a splash of fanfare, only to be abandoned by a senior executive and leadership team swimming with the prevailing current for the next “new greatest thing.”

Scorecard architects Kaplan and Norton believe senior management commitment to the Balanced Scorecard is necessary for a number of reasons:¹⁰

I’m sure you’ve witnessed the power and importance of executive sponsorship for change initiatives during your career. I’m equally convinced that many of you know the maddening frustration that results from seeing a potentially beneficial change vanish almost instantly because your leaders could not be convinced of its importance, relevance, or worth. Assuming you don’t want the Balanced Scorecard to suffer this ignominious fate, let’s examine a number of techniques you can use to convince even the most skeptical senior executive of the Balanced Scorecard’s worth: Always remember that we’re dealing with human beings, and human behavior can be shaped, as this story of Andrew Carnegie, the Scottish-born industrialist and philanthropist humorously illustrates. Carnegie’s sister-in-law was worried sick over her two boys. They were so busy at Yale with their own affairs that they neglected to write home and paid no attention whatsoever to their mother’s frantic letters. Carnegie offered to wager $100 that if he wrote them a letter he would get an answer from the boys by return mail, without even asking for it. Someone called his bet so he wrote his nephews a chatty letter, mentioning casually in a postscript that he was sending each one a five-dollar bill (this was in the very early 1900s remember). He neglected, however, to enclose the money. Back came replies by return mail thanking “Dear Uncle Andrew” for the kind note and ...—you can finish the sentence yourself.¹⁹

You don’t require pure executive power to make a tremendous difference in your organization. Take the case of Frances Hesselbein, who led the Girl Scouts of America through a period of rapid and significant transition from 1976 to 1990. She was once asked by a columnist what it felt like to be at the top of such a large organization. Rather than parading a stock answer, the type commonly employed by most luminaries when faced with a microphone, Hesselbein began rearranging items on a lunch table in front of her. She formed a set of concentric circles consisting of plates, cups, and saucers, connected by various pieces of cutlery. The finishing touch of this innovative organizational chart was the placement of a glass directly in the middle. Pointing to the center of this constellation she quietly declared, “I’m here.” The message being, I may be the CEO but I’m really not on top of anything.

The Girl Scouts of America during Hesselbein’s tenure relied on a volunteer workforce of 650,000 to carry out the work of hundreds of local Girl Scout councils all operating under a complex governance structure. In such an environment, she couldn’t simply reign imperiously (not that she ever would), waving a magic wand of change and expecting the masses to obsequiously comply. Instead, she moved people to understand and confront the facts facing girls in America, such as teen pregnancy and alcohol use. She created materials on the issues, spoke about them ceaselessly, and simply gave the independent councils the opportunity to make changes of their own volition. Most did.²⁰ Hesselbein, who lacked pure executive power, excelled in the art of yielding legislative power and her results speak for themselves.

Every opportunity to reinforce the importance of the exercise must be utilized. One of my favorite examples of this stems from a common lament I hear during Balanced Scorecard workshops: the woe is me “what time is this session going to end? I have real work to do” complaint often lobbed from a disengaged participant slumping wearily in their chair. I was once in a Strategy Mapping workshop with a large organization when a vice president tossed just such a verbal grenade into the late afternoon air. I was poised to answer his query in my most restrained manner when I was rescued by the CEO himself. It was as if he were literally riding in on a white horse ready to save the day when he said to the unsuspecting culprit: “What could possibly be more important than what we are doing right here and now? We’re shaping the tool that we’ll use to execute our strategy over the next three years, and frankly if you don’t understand the importance of this exercise then maybe you don’t belong at this table.” The silence that followed was, as they say, deafening. In the intervening moments before he went on to further articulate his feelings, everyone sitting around that table had to dig deep and critically evaluate their commitment knowing full well the views of their boss. Not surprisingly as the implementation unfolded it was among the most successful I’ve ever had the privilege to engage in. I pin that success not to my consulting acumen but to that single incident that clearly demonstrated the passion this executive felt for the Balanced Scorecard.

As a consultant and writer, I have the unique opportunity to learn from organizations around the world. Over the past several years I’ve consulted with scores of organizations, have spoken at and attended conferences around the world, and have read stacks of case studies on organizational change. The theme of executive sponsorship is the one unifying element running through every encounter I’ve had. One statistic in particular dramatically demonstrates the importance of sponsorship. In “Driving Corporate Culture for Business Success,” the researchers found that a massive 98.7% of respondents stated senior executives’ role modeling of new behaviors and changes is key to enabling change.²³ As the iconoclastic physicist Albert Einstein, a man who produced as many memorable and poignant quotes during his life as he did mathematical equations, once said: “Setting an example is not the main means of influencing others; it is the only means.”²⁴

In the First Edition of this book, I quoted a study that suggested that a majority of Balanced Scorecard implementations utilized teams consisting of ten or more people.²⁵ Ahh, the beauty of a second edition—while I didn’t endorse that number back then, I didn’t reject it either. Let me be very clear in this edition, based on my experience having facilitated thousands of workshops. Ten people on a team is way too many if you expect to have meaningful discussions that result in decisions being made. Come to think of it, if you hope to have meetings in general, ten people is far too large a crowd. Think about it. Start with one person, that’s one calendar to manage. Add a second and the task of finding a mutually convenient time to meet has doubled in complexity. A third person makes it three times as difficult, but when you get to about the fifth person, the challenge expands exponentially. By the time you add the tenth person, it might actually be simpler to convene the leaders of the G-7 nations. I worked with a large nonprofit client a few years back that insisted on having a hefty team to develop their Balanced Scorecard. I knew that simply scheduling meetings would be a challenge with this not-so-intimate group of 12, but when I learned almost half the group was on the East Coast and half were stationed on the West Coast, I knew we were headed for trouble. Sure enough, the development of the Map and measures took almost twice as long as we had originally estimated because of the difficulties of balancing calendars. And the final product didn’t benefit from the sizable grey matter that occupied the meeting room either. In fact, coming to consensus was almost impossible for this mammoth group and ultimately nobody was truly satisfied with what was developed.

The U.S. Navy SEALs, who know a thing or two about complex missions, suggest that six is the ideal number of participants on any high intensity team.²⁶ I can’t say with certainty that six is the exact right number for your Scorecard team, however, I like the five to seven notion very much. This size, while still presenting logistical challenges, is a relatively small number that allows for cognitive space to emerge where meaningful discussions occur. A group of this size can find its own identity and members can take the necessary time in their discussions to truly understand the point of views of their colleagues without feeling the necessity to get something out before losing the floor to a host of other people craving the momentary spotlight.

If you’re not comfortable designating a certain number, use this approach. Base the team size on the precept of representing all the areas of your organization that you expect to be using the Scorecard. If, for example, you’re creating a high-level Balanced Scorecard, you should strive for representation from each of your departments or groups. Should you have more than five or six departments, you may require a larger Balanced Scorecard team than I normally advise. If your Scorecard effort is beginning at the department level, then key representatives within the unit should have a presence on the team. Remember our earlier admonition—no one person has all the knowledge of strategy, stakeholder needs, and competencies to build an effective Scorecard. The knowledge you need to build an effective Balanced Scorecard resides in the minds of your colleagues spanning the entire organization.

Depending on the size of your organization, there is a chance that at least some team members will not have previously met. This was the case with a client team I worked with recently. At first, I saw this as a disadvantage, fearing it would take extra time for the team to “gel.” While there was definitely a period of growing pains for the team, in the end, the lack of personal relationships strengthened the level of debate around the Scorecard. There were no preconceived notions among the members, and everyone felt comfortable defending their positions. This team formed its own identity and found a place of mutual respect and collaboration that resulted in tremendous end products.

Perhaps most important, the sponsor must prove to be a tireless advocate and enthusiastic ambassador of the Balanced Scorecard. As we previously discussed, people watch what the boss watches and will be carefully evaluating both the words and actions of your executive sponsor. To accomplish this and still have time for a day job, the sponsor must possess ample credibility within the organization. In an article for the Harvard Management Update, Nick Wreden writes that “credibility derives from organizational achievements, trust, and the visible support of other top executives. Every time he’s been asked to perform, he has always delivered.”²⁹ The executive sponsor is not expected to provide full-time support to the Scorecard effort. However, attendance at Scorecard meetings and an “open door policy” for the Scorecard team should be considered mandatory.

The role is a challenging one and demands a skilled communicator and facilitator. While the champion is fully expected to contribute to Scorecard development, he or she also has the challenging tasks of team building and conflict resolution. As with the executive sponsor, the champion should enjoy widespread credibility throughout the organization. However, the source of credibility does not necessarily need to emanate from a long history within the organization. Some very skilled champions are recruited from outside the ranks of current employees based on their Scorecard knowledge and expertise. This confers credibility of another sort: expert credibility, which is often in short supply at the outset of a Scorecard implementation. I recently completed work with a client that recruited a person from outside their industry to run the Balanced Scorecard program. This individual’s track record of Scorecard success and deep reservoir of tools and techniques has helped the organization reap swift benefits from their implementation.

The Balanced Scorecard champion should transition into the leadership of your Office of Strategy Management, which will be examined in Chapter 13. While the role is permanent, you can expect some variations in the key tasks over time. At various times the champion will act as missionary, consultant, point person to fighting resistance, and chief of staff or general manger.³¹

During the implementation phase of the initiative, expect your team members to devote approximately 25% of their time to this effort. Any potential team member who can offer only 5 to 10% of their time must be viewed with caution. While they may carry valuable knowledge of their particular area, this must be weighed against the very negative lack of participation in the effort.

Some teams inaugurate the process by making the formation of a “team charter” their first order of business. The charter may include key milestones, group values, and important resources. I’m all for a team charter, but with this caveat: Don’t let this ostensibly helpful step turn into a debilitating headache. One nonprofit I worked with spent about two weeks deliberating feverishly over the team’s name! That is not a valuable use of anyone’s time. Exhibit 3.3 summarizes the roles and responsibilities of your Balanced Scorecard team.

The size of your organization will, to a great degree, dictate where your first Scorecard is developed. Those of you working in larger organizations will be faced with the most choices. You could decide to develop a high-level organizational Scorecard, or choose a “pilot” location for your first development efforts. Departments within the organization, or even support groups such as Finance or Human Resources, could launch the Balanced Scorecard.

For many organizations, starting at the top and building a high-level Balanced Scorecard that represents the entire enterprise is often the best choice for a number of reasons. First, the Strategy Map and measures can be widely communicated to all employees, ensuring everyone is aware of the critical drivers of success for your organization. Second, this Map and set of measures will provide focus for all groups and promote collaboration among departments in an effort to implement the strategy and work towards the mission. Finally, starting at the top greatly assists your cascading efforts. “Cascading” the Balanced Scorecard represents the process of driving the Scorecard to lower levels of the organization, giving all employees the opportunity to demonstrate how their day-to-day actions contribute to long-term goals. The high-level Strategy Map and Balanced Scorecard will then serve as the logical starting point for cascaded Balanced Scorecards.

Starting at the top is clearly not for everyone, and in some cases a pilot Scorecard effort is the best course of action. The most common reason for choosing a pilot approach is a lack of enthusiasm for the Balanced Scorecard at the highest echelons of the organization. Senior leadership may not be convinced of the efficacy of the tool or may lack passion on the idea of performance measurement, or they may feel they have too much on their plates already to invest in another program. Despite reluctance at the top, it’s not uncommon for a departmental leader to recognize the model’s merits and understand how the initiative could pay instant rewards in the form of increased focus, alignment, and accountability.

Should you choose to pilot the Balanced Scorecard at a department or team level, a critical consideration is ensuring your work is consistent with the overall strategic direction of the organization. Kaplan and Norton recommend sending representatives from the pilot location to the organization’s headquarters in order to solicit feedback from the top level executives on how your unit “fits in” with the organization-level strategy. What priorities must you consider and what organization-level themes should be incorporated?³³ Making this pilgrimage not only fosters alignment with “corporate” priorities, but also promotes the Balanced Scorecard to the executive team, which may enhance the likelihood of adoption at a higher-level.

A strategy is also critical since at its core the Balanced Scorecard is a tool designed to assist you in translating strategy into action. Without a strategic stake in the ground, you’re very likely to end up with an ad-hoc collection of financial and nonfinancial objectives and measures that do not link together to tell the story of your strategy.

Managers and supervisors make this happen with their understanding, acceptance, support of, and usage of the Balanced Scorecard. Not all members of these groups will demonstrate such a willingness to participate, however. While open criticism of new senior management initiatives is fairly rare, these managers and supervisors will often remain silent or demonstrate only mild enthusiasm, which workers quickly interpret as a questionable show of support for the program.³⁴ When choosing your organizational unit for the Balanced Scorecard, make an honest evaluation of the management team and supervisors you’ll be relying on for participation and support.

In Exhibit 3.7, I have created a sample worksheet you can use to determine the right organizational unit for your initial Balanced Scorecard effort. In this example, the Finance department is being considered for a Scorecard implementation. Let’s walk through the example.

Plotted along the left-hand side of the table are the seven criteria I discussed above. In the next column, I have assigned a score out of ten for this unit against each of the criteria. The third column represents weights for each of the seven dimensions based on my judgment and experience. You may feel more comfortable assigning equal weights to the seven items, but clearly some areas, such as mission and strategy and executive support are imperative to success and should be weighted accordingly. The fourth column contains the score for the unit within each criteria. Under “mission and strategy,” they were assigned a score of ten, which when multiplied by the weight for that category yields three total points. In the final column, I’ve provided a rationale for the scores assigned based on an assessment of the unit in the context of that specific criteria. It’s important to document your decision-making process in order to validate it with others responsible for choosing the Balanced Scorecard organizational unit. Finally, a total score is calculated and an overall assessment provided.

This assessment tool provides participants with the opportunity to discuss potential strengths and weaknesses of the unit, mitigate significant risks, and offer opinions on the viability of this group for a Balanced Scorecard implementation.³⁵

A caveat at the outset: You won’t find an exact Scorecard budget in this section or at any point in this book. I’ve already touted the Balanced Scorecard’s wide applicability as a strong attribute of the system. Given the fact that virtually any organization can enjoy the benefits offered by the Scorecard, and there are thousands of organization types and sizes out there, it’s difficult to pin down exact resource requirements. Every organization will have differing levels of comfort expending both human and financial resources, and each will have diverse limitations. Therefore, the purpose of this section is to provide a guide to the general classifications of resources required.

No Balanced Scorecard system can be built in isolation. The best Strategy Maps and Scorecards represent the collective inspiration and knowledge from a team of organizational experts. This means, as we discussed earlier, you’ll need a group of people devoted to your Scorecard initiative. The Scorecard also comes with a financial price tag. The good news is you don’t have to break the bank in order to develop a highly successful and sustainable Balanced Scorecard program. Here are a number of items you may wish to consider when building a budget for your Balanced Scorecard:

The word “plan” could conjure up as many different meanings as the word “strategy.” I remember one client several years ago. I had barely completed the introductory hand shakes when into my hands was thrust a Scorecard plan as thick as a phone book. Other organizations have chosen to keep it simple, focusing on the big chunks necessary to produce an effective work product. Ultimately, the plan you develop will be dictated by your culture, history of planning, and amount of expertise you possess in the subject. One thing is certain, however, regardless of the plan you adopt you will be spending lots of time in meetings while developing your Balanced Scorecard. For some suggestions on maximizing this time see the box entitled “Meetings, Meetings, Meetings.”³⁶

The time it will take you to complete these steps depends on a number of factors, including: the sense of urgency to create a Balanced Scorecard, the amount of resources dedicated to the implementation, the knowledge of key staff, and of course, executive support. Strategy Maps are literally built in a day at some organizations, while others will labor over the task for weeks. The Scorecard is not something to be “picked away at” as time permits. As with any change-related project, sustaining momentum is critical. Exhibit 3.8 presents a proposed development plan lasting 20 weeks. With focused effort and support, the vast majority of organizations should be able to comfortably craft a Scorecard within this timeframe.