The Unvarnished Truth: Why Balanced Scorecards & Performance Management Efforts Fail

I’ve seen statistics thrown around that between 50 and 78 percent of “Balanced Scorecard” efforts “fail.”^* Gartner’s latest research reports the number at about 50%, but when you look at the survey targets and numbers, it would be hard to put a lot of faith in that number. 

I do know -- from seeing hundreds of implementations over the last decade and coming in to “clean up” problems -- that it's true that many do fail. And I know why.

But before we go there, I want to point out why I have the terms “Balanced Scorecard” and “fail” in quotes. First, I’ve seen lots of performance management efforts termed “Balanced Scorecard” that bore only passing resemblance to the principles laid out by Kaplan & Norton^✝. I’ve also seen lots of efforts that employ the nuts and bolts of the “Balanced Scorecard” but neglect other elements needed for successful strategy execution. So when you see reports on Balanced Scorecards, just understand whether or not what they're assessing is the real deal.

Then there is the word “fail.”  What does “fail” mean?  Failed to live up to the expectations of the executive team? Failed to save the job of the CEO? Failed to get updated with new data and used to drive business reviews? There are plenty of interpretations for this term, too.

So without strong numbers on how many of these efforts fail or what failure even means, I’ll go out on a limb and say the primary reason that virtually all such efforts fail is: timid, unfocused, or unengaged executives. Usually you can even trace it to a single executive who -- if things were different -- could not only prevent scorecard failure, but could actually use the scorecard to drive true breakthrough improvement. Usually, that executive is at the top of the organization in question. I will call this person the Breakthrough Roadblock (BR).

I’ve seen lots of BR’s. In the next post, I’ll list the things I think are needed from an executive to assure the success of a strategy execution effort. Later, I’ll try to categorize BR personality types based on what I've seen in the field over the past ten years or so. I don’t claim to be exhaustive or authoritative on this topic. I’d really like to hear from you.

✝By the way, while researching this blog, I found lots of interesting fodder on the question “Who created the Balanced Scorecard?” Surely a topic for a future post.

*Based on our client retention rate at ActiveStrategy, our clients have experienced a much better success rate than the world at large.

Comments

[Carlos Maxwell]

Great article Jeff - Too many times people think that the fact there is a scorecard in place, everything will magically be fixed. Organizations are made up of people whose behaviors drive changes, not scorecards. It's like blaming the hammer when you just bashed your thumb! So when BSC implementations "fail", what really failed, the tool or the people?