My big problem with the Balanced Scorecard approach to strategy and performance management is that is, well, too balanced. It makes everything of equal importance.
In most Balanced Scorecard projects and reports I’ve seen, there is a general assumption that all goals carry the same weight. The end result is that the management of the business becomes unnecessarily complex and confused, with managers trying to keep on top of a dozen or more measures.
I don’t work that way.
When I work with my clients we determine what their #1 goal is, and use that goal to drive their agenda and strategy. We then identify other KPIs to counter-balance our goal and make sure that it is delivered in the right way, but we don’t give everything equal weighting.
As set out in the chart, it is like having one major weight being counter-balanced with several smaller weights. In that sense, our scorecard is purposefully unbalanced.
For example, in 2012 I worked with Topps Tiles to set a #1 goal of growing market share from 25% to 33%. Or, as the leadership team put it, the aim was to grow Topps’s share from 1-in-4 of UK tile sales to 1-in-3.
The team counter-balanced that measure with other KPIs – sales, profit margin, conversion rates, customer satisfaction and operating cost ratios – to ensure that the share growth was both profitable and strategically sustainable.
But the big breakthrough the team made was that, all other things being equal, increasing market share was the factor they wanted to pursue to drive the retailer’s ambitions. As a result of the new focus, the executive team made decisions to exit from wood flooring and other non-tile ranges, develop a new ‘boutique’ store format, and improve the offering for Topps’s trade customers.
As Matthew Williams, the CEO of Topps Tiles commented, “Among other things Stuart Cross helped us define a specific and clear goal that galvanised the entire organisation and has been a key part of our success.”
Are you suffering from an excessive number of conflicting objectives? Or have you identified your #1 goal and focused your organisation on delivering it in the right way?
© Stuart Cross 2017. All rights reserved.