Where's the Strategy?

I just turned 40 last week and since I spent much of my birthday thinking about today's blog, it dawned on me that I need a social life.  Nevertheless, here we go...

The most common problem I find with strategy execution after the first few months of implementation is: the organization’s balanced scorecard loses its strategic focus and turns into mere reporting.

The ripple effects are these:

1. Extra work for front line staff without the payoff of executive review
2. Executive staff dissatisfaction with the results their scorecard is achieving
3. Diminished alignment of projects to strategic objectives

By making sure you do the following on your balanced scorecard framework, you can prevent these from happening to your organization:

• Put (and keep) objectives on your balanced scorecard. Especially larger organizations are tempted to skip the pure scorecard presentation that includes verb-noun objective phrases and opt for a stoplight chart or a measure dashboard. The problem with this approach is that you lose the answer to “WHY ARE WE MEASURING THIS IN THE FIRST PLACE?”
     
  Going a step further, the combination of objectives on the scorecard tells the team how your organization will achieve its vision. Insist that you maintain the scorecard view along side other views because your teams need to see the link from the measure to the desired strategic objective.
     
  
• Set good targets for the measures that live on your scorecard.  Measures are not enough, they must have targets. Only by setting a target and telling the team why you set that target, will the team know what priority and sequence you have placed on achieving results for the measure.
     
  
• Link initiatives to the scorecard/objectives/measures. The careful choice and sequencing of initiatives (projects) that you place on the scorecard tells the team where your priorities lie. Without choosing which initiatives will and won’t be worked on, your teams may not be spending their time on efforts that are linked to the strategy.
     
  
• Require that variance reports be written (and reviewed).   I recommend requiring explanations for underperformance on a measure IF AND ONLY IF management will review that explanation in a performance review. This reinforces who owns and cares about the strategy. If management doesn’t review the explanations, then the front line will quickly associate their effort on the scorecard as nothing but extra work.
     
  
• Set good agendas for your balanced scorecard performance reviews.  Too often I see performance reviews without agendas. Require the reviewees to set the agenda ahead of the review. This reinforces the team doing their homework ahead of time and gives them a chance to show their manager that they understand what the strategy is and what is driving performance that will achieve the strategy.