« Follow These Steps to Realize the Value of Your M & A via Strategy Maps and the Balanced Scorecard | Main | Why Organizational Alignment Should Matter to You (and how to get it) »

07/19/2011

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

Sandy Richardson

Excel is not a free option - yes, most organizations already have the licenses on most desktops but the time that it takes to design the BSC framework in it, build calulation functions (and manage them on an ongoing basis), inport and export data, create BSC reports, etc. takes time and resources, costing additional money. All BSC applications will do this (BSC principles are designed into them - you don't need to create it) and yes it costs too. However, SAAS products are very affordable (some at $60/month/license) and offer web-publishing of the BSC to allow company-wide access/viewing of the BSC at a relatively low cost.

But let's leave the cost argument out of it for a minute. The idea of prototyping your BSC is a bit misleading in my opinion because a company's BSC will always be evolving - it changes and grows over time as it should. It is never finished so, if an organization is committed to the BSC, I don't agree that there is a protyping phase that is suited to Excel.

Excel can't give the BSC its full due - it does not do a good job, in my opinion, at integrating strategic objectives and indicators, multiple data views, and results commentary together (which is the way the BSC is supposed to work at its most powerful effect). Adding linked documents and other links that can inform the BSC can get hard to manage in Excel from what I have seen. I'm not convinced that Excel is conducive to making the BSC the strategy management information hub it should be. As a result, beginning with Excel can give business users an underwhelming introduction to the BSC and can increase the risk of poor adoption of the BSC as a business management tool.

When an organization is truly committed to the BSC, I strongly believe, based on my experience as a past BSC practitioner, that a scaleable and affordable BSC application is the best way to begin.

Private

Excel may be a free option for small to medium-scale projects and for prototyping.

Remember that most of the BSC and Dashboard softwares ask for expensive licenses. And most of them charge by user.

My advice would be to begin with Excel to be sure to determine your exact needs in BsC and in dashboarding. Then once your needs are deeply identified, go with the more expensive solution.

Most of the BSC and dashboarding projects evolve so quickly during the project... prototyping is not a luxury!

Sandy Richardson

Hi Matt: I like your short list of requirements for indicators - the only addition I would make is reliable - be sure that the indicator will reliably pick up changes in performance. Sometimes organizations pick indicators that aren't sensitive enough to register a change.

While I agree that outcome indicators are powerful, they can be very hard to measure and often there is quite a lag between the action and the outcome. I like to see some input indicators on a balanaced scorecard because they can be predictive in nature and offer the option for intervention before an outcome is produced. However, sometimes people are worried about the strength of connection between an input and an outcome - in those cases, I suggest two indicators (the input and the outcome) so that the relationship can be observed/tested. I find that most organizations use outputs for their measures (again, measures of past performance).

In the end, it is good to try to include a balance of predictive (input and in-process) measures AND measures of past performance (outputs and outcomes) on a good balanced scorecard.

Matt H. Evans

I often ask small business owners to simply measure 5 to 7 vital few indicators regarding the health of their business. Unfortunately, I would estimate that 70% of all small private companies in the United States do not measure anything.

A lot of folks also advocate SMART as a way of developing good measurements. I prefer to boil this down to 3 simple rules: 1) Relevant: Measurements should relate directly to a performance objective. The best way to do this is to express objectives that imply both the measurement and the target; 2) Measurable: You have to be able to collect and measure the objective; 3) Actionable: You have to collect the data in a timely manner so you can take action and influence performance.

A third point I would make is that you should distinguish measurements between Inputs, Outputs and Outcomes. Outcomes carry more weight than Outputs and Outputs carry more weight than Inputs. Logic Models provide a great framework for learning how this works.

Finally, I do like the Balanced Scorecard approach since it forces you to look at the non-financial parts of the business which is the driver behind financial results.

The comments to this entry are closed.