The balanced scorecard – first conceived in 1992 by Robert Kaplan and David Norton in a paper written for the Harvard Business Review – introduced the concept of measuring organizational performance by focusing on financial and human issues, on a much broader scope than businesses had done in the past.
Kaplan and Norton’s bestseller, The Balanced Scorecard: Translating Strategy into Action (1996) propelled the idea into the forefront of business theory, and many large companies adopted this management tool as their primary means for determining how well they were doing in the marketplace.
This approach to business management has been hugely popular for the past couple of decades, but there are significant drawbacks to its methodology and it is most definitely not for all organizations. Here’s why:
- Cost in time and money – Setting up a balanced scorecard system can be expensive, particularly when measured in the time needed to train employees in the system. Additional costs – for a facilitator, software license and the labor to maintain it, as well as testing and installation –quickly add up.
- Reports the past, not the present – The balanced scorecard focuses on past financial measures, which worked well enough for businesses before the age of the Internet. Today, a focus on lagging indicators won’t help to map out a strategy for the future.
- Requires company-wide buy-in – For the best results, a company’s entire workforce should be trained to understand the proper use of the balanced scorecard system. Frequently, this generates resistance to buy-in from both employees and managers alike, especially when they consider the loss of time and effort for their most pressing job responsibilities.
- Only as good as information provided – The success of the balanced scorecard system depends on the information provided to evaluate progress. Data that’s incomplete, inaccurate and/or irrelevant will produce unreliable results.
- They don’t work!-Again, they are a tool designed to align business activities to vision and strategy. When only 10% of well formulated strategies are successfully implemented per Harvard are they worth all the effort?
CNC Strategy Cloud Solutions’ precise strategy alignment software offers a different approach. The focus is on gathering real-time information in three crucial areas – finances, people and processes – and measuring deployment of these strategic assets for the sole purpose of transforming strategy into execution.
Using online business diagnostics (questionnaires and scorecards distributed throughout the organization) as well as on-demand consultant services, CNC Strategy Cloud Solutions offers “snapshots” that highlight what your business is doing well and where you have risk.
This vital information can be accessed anywhere, so that CEOs and business owners can immediately measure and manage how well the organization is aligned in the three critical areas – the first necessary step towards successful strategy execution.