Using Balanced Scorecards to Manage Strategic Alliances

Note: This is a special guest post from Michael Contrada, Founding Partner of Bull River Group, an ActiveStrategy Strategic Consulting Partner.

Creating internal organizational alignment is one of the key benefits of adopting the Balanced Scorecard. Less appreciated is the power of the Scorecard strategy management approach when it comes to driving alignment and results across two separate, but strategically related, organizations.

An excellent example of this application of the framework was presented by a provider of security services at the recent ActiveStrategy client conference this past May.  The organization shared how it uses performance measures to track and communicate performance to its key customers.  As part of their contractual agreements, in fact, the security provider’s customers get direct access (in ActiveStrategy software) to current performance across several dimensions, including audits, response time, incidents, turnover, and IT uptime. This approach allows the service provider to demonstrate success, highlight individual location performance, and foster a forward-looking dialogue on their relationships with key customers. This is a great example of a practice that is growing in importance across many industries.

At an upcoming ActiveStrategy webinar (on August 10th at 2 pm ET), Randy Cole, my colleague at Bull River Group, will discuss another example of using the Scorecard approach to drive alignment across organizational boundaries.  His webinar will focus on Strategic Alliances where the goal is not simply monitoring performance against SLAs but the joint accomplishment of shared strategic goals — “making one and one equal three.”  These kinds of strategic partnerships are increasingly important, but are also difficult to manage successfully. The obstacles include:

1.    Over-reliance on financial and legal factors
2.    Lack of shared understanding and agreement on the drivers and actions required for success
3.    Focus on control as opposed to building a long-term relationship 

Experience suggests that two partners working together to build a joint Scorecard management process goes a long way to overcoming many of the barriers of traditional strategic alliances. The webinar will include a case study and describe the approach that was used.

For readers who want more information on this topic of managing strategic alliances with the Balanced Scorecard, I recommend looking at the article by Kaplan and Norton in the Harvard Business Review January-February 2010.

And if you would like to further discuss how to get the most value out of strategic alliances now or after the webinar, please comment below or send me your questions.

Comments

[edneal]

Nice post. Great read as well. Thanks!