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How to Pitch the Decision-Maker: On Adopting the Balanced Scorecard in Your Organization

This is still the biggest question I get from people who have discovered the balanced scorecard and want to introduce this powerful tool in their organization. Sometimes they simply want to get their organization using measurement to obtain performance results feedback. However, sometimes their challenge is a bit bigger - they want their business leaders to take a second look at the way they actually use business performance results in their company.

Regardless for their reason for wanting to implement the balanced scorecard in their organization, these folks need to focus on pitching their decision-maker on the balanced scorecard by helping them see how the balanced scorecard can solve significant business problems and enable the achievement of critical top and bottom line business results.

 

However, before pitching the balanced scorecard to decision-makers, it’s critical that you yourself are clear on what the balanced scorecard is – and isn’t. Many people believe that the balanced scorecard is just a measurement tool, however, this couldn’t be further from the truth. While measurement is one of the roles of the balanced scorecard, it’s almost a disguise it wears to achieve its real purpose and deliver its real value to any organization that adopts it. What I mean is that the balanced scorecard is actually a strategy management system and philosophy that uses measurement as the catalyst for organizational dialogue, discovery and learning, targeted improvement, the forward acceleration of value proposition delivery, the development of loyal customers/stakeholders, and the achievement of desired business performance results and outcomes.

The balanced scorecard is a powerful communication tool that highlights to everyone what’s important in relation to your business strategy (after all, as they say, what gets measured gets done!). It also provides your organization with a valuable repository for information about its strategy, and enables knowledge and best practice creation and sharing. The balanced scorecard is focused on a company’s business strategy so it requires some sort of recognized strategy to serve as the foundation for the indicators included in it. Equally important is the fact that the balanced scorecard isn’t a diagnostic tool. Its purpose is to provide you with an early warning when something has changed in the strategy management system and stimulate further investigation and organizational dialogue about what’s going on and what, if anything, needs to happen next to maintain forward strategic progress.

The most often overlooked aspect of the balanced scorecard though is its philosophy element. The balanced scorecard offers organizations a new approach to strategy, business, and organizational management. In fact, for balanced scorecard adoption to be successful and have its greatest impact on organizational performance, customer/stakeholder results, and business outcomes, business leaders must be prepared to manage in a way that engages others in a dialogue about the business and how to move forward, and actively supports employees in participating in that discussion. The balanced scorecard should be a catalyst for business leaders, employees, and, in some organizations, stakeholders, to collaborate and co-create the business strategy. Finally, successful balanced scorecard use requires business leaders to engage in a more dynamic strategy management process that is focused on measuring and talking about what’s relevant, accepting the truth of the situation based on what performance results and dialogue are telling them, and then using that information to learn and improve their business strategy as needed.

 Is this what your decision-maker thinks the balanced scorecard is?

If not, your first step in pitching the balanced scorecard is to engage your decision-maker in a discussion about the real purpose of the balanced scorecard. And while your company’s initial purpose behind adopting the balanced scorecard may be to bring a little more measurement discipline into the mix, it’s important to open your decision-makers eyes up to where the balanced scorecard can really take your organization. Why? Because the real promise of the balanced scorecard can only be achieved if your organization goes the extra mile and implements (and uses) the balanced scorecard the way it was meant to be used.

I believe that much of the dissatisfaction many business leaders feel about the balanced scorecard happens because it ultimately underdelivers and underwhelms. That is, decision-makers get sold on the powerful benefits of an optimized balanced scorecard and then they are disappointed that these results don’t materialize. In my experience, this usually happens because the decision-maker’s definition of the balanced scorecard was "measurement tool or report". Here’s the thing - a simple measurement tool alone absolutely cannot deliver the transformational business results you are probably going to pitch to your decision-maker. As a result, it’s important that you make sure that you and your decision-maker are on the same page about what the balanced scorecard is, AND the management commitment required to achieve the promised results, before you have a discussion about the business problems the balanced scorecard typically solves and the results it can enable.  

Getting through this first step in the pitching process is absolutely critical and, based on my experience, unless your organization measures absolutely nothing today (and could therefore benefit from adopting the balanced scorecard for its measurement aspects alone), don’t proceed with your balanced scorecard pitch until your decision-maker sees its true potential and accepts that the balanced scorecard is a strategy management system (not just a measurement tool and report). Your decision-maker doesn’t need to fully understand what is going to be required of them to fully implement the balanced scorecard - it’s hard for them to fully appreciate what this commitment looks like until they are actually in it. The key is that they need to be open to the balanced scorecard being something bigger than they might have previously thought.  

What if you can’t get your decision-maker to get on board with the big picture definition of the balanced scorecard?

I personally would say “do not pass go” because, if you do, there’s a high probability that it’s going to end badly with the disappointment I outlined earlier. Some people would suggest starting by implementing the balanced scorecard as a measurement system and then trying to bring decision-makers along in their thinking over time with balanced scorecard use. The problem with this approach is that if you initially pitched the optimum balanced scorecard benefits, they will not materialize without implementing the balanced scorecard as a strategy management system and philosophy. When the promised results don’t materialize, your decision-maker will be less inclined to get on board with investing more time and effort into the balanced scorecard - and there is actually a high degree of risk that they will walk away from it seeing the balanced scorecard as another failed business management tool that didn’t deliver.  

 

Now, in an effort to help your decision-maker understand the difference in the results achieved with the different balanced scorecard definitions, you will probably want to talk them through the benefits of the balanced scorecard, the typical business problems it helps solve, and the key business impacts realized with proper use. Here are just a few examples of the elements you might want to highlight in this discussion:      

Balanced Scorecard Benefit #1: It keeps your organization always focused on, and investing in, the things that really move your business strategy forward

Balanced Scorecard Benefit #2: It gives you information that helps validate, and adjust if necessary, your theory about how your business works to deliver business results (allowing you to make targeted investments that will produce the desired results) 

Balanced Scorecard Benefit #3: It enables your organization to be more agile and responsive/competitive in your market place (by allowing you to identify changes early and giving you the information you need to improve or adjust your operations and/or business strategy as required and quickly)  

 

Sample Business Problems Addressed:

Wasted $$ on inappropriate capital expenditures and other purchases and investments (benefits #1 + #2)

Misallocation of resources (i.e. time, people, $$) (all benefits)

Slow decision-making = lost business opportunities (benefits #1 + #2)

Poor customer/stakeholder actions and decisions = lost customers/poor stakeholder satisfaction and support (all benefits)

Old actions/doing the same things the same old way isn’t producing the same results anymore = under-performance on key performance indicators in all areas (i.e. people, process performance, customer/stakeholder outcomes, financial results) (benefit #3)

Root cause problems are not clearly identified (benefit #3)

 

 

Sample Business Impacts/C-Suite Metrics Impacted with Balanced Scorecard Use:

ROA, ROE, Earnings, Budget Performance, Net Profit, Sales Revenues, Funds Raised, Operating Costs, Organizational Efficiency/Productivity, Stakeholder Satisfaction

 

However, be sure to use these examples to illustrate the impact of using a balanced scorecard with the expanded (true) definition. In some instances, I have contrasted these results with what can be achieved by only using the balanced scorecard as a results reporting tool. This approach can be very powerful in making a decision-maker become more open to exploring an alternate definition of the balanced scorecard.

 

The balanced scorecard has been existence as a management tool for some time now. This means that (1) many people are aware of it and (2) they have developed their own perspective on what it is. Interestingly, you’ll find that there is a high degree of variability in the perspectives of business leaders regarding the definition of the balanced scorecard. Unfortunately, some of those definitions are limiting, seeing the balanced scorecard as just a measurement tool and this limited view hampers the ability of the balanced scorecard to deliver to its potential. As a result, when you are pitching the balanced scorecard to a decision-maker, your first goal must be to discover how they define the balanced scorecard and, if necessary, invest the effort required to optimize their definition of the balanced scorecard before trying to sell them on the benefits of balanced scorecard adoption.

Taking this step is critical for ensuring that when you successfully persuade your decision-maker and organization to adopt the balanced scorecard, it lives up to its potential and exceeds their performance expectations.    

 

How to Pitch the Decision-Maker: On Adopting the Strategy Map in Your Organization

“How do I convince the CEO to……”

I hear this question a lot from business leaders and managers who have just attended a conference or webinar or after they have read a ground-breaking business management book. They’ve discovered a new approach to organizational management and/or business results achievement that would be just right for taking the way their company operates and does business to the next level - but they aren’t sure how to make the case for change.

Over the next few blog posts, I’m going to give you my best tips and strategies for convincing decision-makers to take a serious second look at some really powerful business management approaches, tools, and ideas.

Let’s start with the challenge of building the case for strategy map adoption.

 

Here’s a brief primer on strategy maps: A strategy map is a one page picture of your business strategy. It includes your organization’s mission, vision, customer or stakeholder value proposition, and core values and it outlines the strategic objectives your company needs to focus on to deliver value and achieve the desired business results. The strategy map is the ideal vehicle for creating, clarifying, communicating, and managing a company’s long-term, value-creating business strategy (if you would like to learn more about strategy maps, just search for my other blog postings on this topic). See a sample strategy map here: Download Sample Mining Company Strategy Map 

 

When talking about the strategy map with your decision-maker I would recommend that you take a simple two step approach to making a solid pitch. Though these ideas aren’t “rocket-science”, they’ve always stood me in good stead when having these types of conversations with decision-makers.

 

Your first step is to get your decision-maker’s attention focused on strategy maps. How can you do this? Begin by thinking about or, better yet, finding out what your decision-maker knows about strategy maps. Is it an idea they learned about in business school? Have they read HBR articles on the topic? Have they got any hands-on experience with strategy maps? Will the idea of a strategy map be entirely new to them? Having a good grasp of your decision-maker's knowledge of, and experience with, strategy maps is an essential first step in getting them interested in strategy maps.

Use this knowledge to share the appropriate level, and type of, information about strategy maps with your decision-maker. My best advice is to make the information you share, and the discussions you have, as practical, credible, and personalized as possible. Don’t discuss strategy maps as a theoretical concept. Provide some visual examples of strategy maps used in real organizations (practical) and, if you can, put together a draft strategy map for your organization based on your existing knowledge of your company’s customer and business strategy (personalized). More importantly, be prepared to talk about how leading strategy map adopter companies use their strategy map to actually communicate and manage for success (the credibility factor). A good source of information for you is still Kaplan and Norton’s 2004 book Strategy Maps (here’s a link).  

Being able to talk about the strategy map “in action” in well-known successful companies will help establish strategy maps as a powerful and practical tool, rather than a theoretical B-school exercise, for your decision-maker.

 

At this point, you have your decision-maker’s attention focused on strategy maps and, if you’re lucky, you have them convinced that strategy maps are worth taking a closer look at. At the very least, they’ll agree that strategy maps work for those organizations. But do they agree that strategy maps will work for, and help, your organization? Perhaps not.  Your next step is to convince your decision-maker that the answer is YES.

 

There’s a really great book that I would recommend to everyone who works with, and is trying to influence, decision-makers as they make critical business management decisions and choices. It’s called The Key to the C-Suite by Michael J. Nick (here’s a link) and it will help you have more effective discussions with executive decision-makers. In this book, Nick reminds us that the primary objective in private sector organizations is to be as profitable as possible with the key levers for success being sales growth and cost management. While this is a rough cut (strategies are a little more nuanced and varied in terms of the final equation for producing profitability), the important thing to realize is that when decision-makers make their choices and “buying/investment” decisions, they use a very tight set of metrics that are related to these objectives to guide those decisions. In his book, Nick outlines a variety of major C-suite metrics including Return on Assets (ROA), Return on Equity (ROE), Earnings and EBITDA, Operating Costs, Profit Margin, etc.

He then outlines a really solid approach/process that internal and external personnel can use to demonstrate how a specific solution addresses specific business problems and, as a result, helps deliver better business performance on key business metrics that matter to executives and decision-makers (see chapter 2). Called a "Value Inventory Matrix", it walks you through a process of defining real business issues in measurable terms, identifying a solution and outlining how it will impact the problem, also in measureable terms, and, finally, identifying which C-suite metric(s) solution adoption and implementation will have the greatest impact on.

What about in the public and non-profit sectors? Does this Value Inventory Matrix approach outlined in The Key to the C-Suite still apply to those sectors? I would say yes, however, it’s likely that you’ll have to adjust your list of relevant C-suite metrics. For example, while metrics relating Budget Utilization/Performance, Funds Raised, Operating Cost Management, Organizational Efficiency/Productivity, and Stakeholder Satisfaction and Impact are often more relevant measures in these sectors, depending on the nature of the organization, it’s not inconceivable to think that some of the private sector metrics may also apply.

 

You can leverage Nick’s approach in pitching the strategy map to your decision-maker. The key is to look at your own organization, identify the key business metrics used by your decision-maker, and list relevant organizational business issues to create a custom Value Inventory Matrix that is relevant to your company and supports the case for the strategy map as a viable and valuable solution.

Based on my experience, here are the top 3 benefits a strategy map can deliver to an organization, the typical business problems it solves, and the associated impacts it has on key C-suite business results metrics.

 

Strategy Map Benefit #1: It keeps your organization always focused on, and investing in, the things that deliver value and really move your business strategy forward (because everyone is on the same page making aligned choices and business decisions)

 

Strategy Map Benefit #2: It ensures that your business model is always aligned with/will deliver your mission, vision, and customer/stakeholder value proposition

 

Strategy Map Benefit #3: It makes your organization more “competitive”/a leader in your market placeAND in the eyes of your customer/stakeholder (by allowing you to test and improve or adjust your business strategy as required quickly)  

 

Sample Business Problems Addressed:

Wasted $$ on inappropriate capital expenditures and other purchases and investments (benefits #1 + #2)

Misallocation of resources (i.e. time, people, $$) (all benefits)

Slow decision-making = lost business opportunities (benefits #1 + #2)

Poor customer/stakeholder actions and decisions = lost customers/poor stakeholder satisfaction and support (all benefits)

Old actions/doing the same things the same old way isn’t producing the same results anymore = under-performance on key performance indicators in all areas (i.e. people, process performance, customer/stakeholder outcomes, financial results) (benefit #3)

Root cause problems are not clearly identified (benefit #3)

 

Sample Business Impacts/C-Suite Metrics Impacted with Strategy Map Use:

ROA, ROE, Earnings, Budget Performance, Net Profit, Sales Revenues, Funds Raised, Operating Costs, Organizational Efficiency/Productivity, Stakeholder Satisfaction

 

There may be additional benefits, business problems, and associated impacts that are important for your company. As I mentioned earlier, the key to success on this second step of designing and making your strategy map pitch is to build a customized case for strategy map use in your organization. In my experience, you need to demonstrate that the strategy map addresses real problems (not theoretical ones) that are causing real pain in your organization right now AND you must show the quantifiable impact its use will have on the key business metrics and results that are important to your decision-maker.

 

From time to time, all of us have wanted to “sell” a decision-maker on an idea, approach, or tool that we think could make a real difference to the performance of our organization. The key to a successful pitch is to combine your personal credibility both within your organization, and with the decision-maker in question, with an approach that first grabs their attention and then makes a compelling case that demonstrates the real impact the new idea could have on eliminating existing organizational problems and pains, and improving key business results.

 

What impact could a strategy map have on your organization and its key business results metrics? Why not start crafting your “pitch” today?  

 

Have you had an experience pitching a new business management idea, tool, or approach in your organization? How did you do it and how did it go? I’d love to hear your story.  *  What do you think of the Value Inventory Matrix as a tool for thinking through your strategy map pitch? Why or why don’t you think it would help/work? Please let me know what you think!  *  Did you try working with the Value Inventory Matrix to craft your strategy map pitch? What does the Matrix look like for your organization? I’d love to see it.  *  Are you an executive decision-maker? What advice would you give to those of us who are "pitching" you our ideas? How can we make a more compelling case? Please share your insights with us!