Failure to grasp fundamentals at the outset, such as scope and organisational impact, are resulting in lack of appreciation for the scale of change, and a subsequent inadequate provision of resource to drive break through results. Organisational inertia means that behaviours and processes don't change easily. This leads us to ask the question
is change the real challenge behind successful scorecards?
Scorecard, the performance king
Traditional management control techniques that have grown out of the financial management discipline over a century, are essentially static (assume planning once a year approximates to static) and ingrained in successful business managers today.
The advent of the scorecard – some 10 years ago - represented a radically new way to implement business strategy. Utilising measures of external factors, such as broad economic indicators, market share and sales forecasts that impact the business was a fundamentally new approach in mainstream planning and control for companies.
'If it's worth doing, it's worth doing well', goes the old adage; unfortunately not a trend that has applied to scorecard implementations. Such has been the frenzy around scorecards that experienced business managers have often abandoned basic logic in the rush to what they seem to believe is an assured route to breakthrough results.
The reality is scorecards like organisational change require senior executive commitment and tenacity. While scorecards can and do deliver performance improvements in isolated middle tiers of an organisation, touted breakthrough performance happens when the scorecard is rolled out across the entire organisation, has the support of senior management and changes the behaviour of a vast number of the workforce.
The scorecard was designed as a strategy planning and implementation tool, delivering more articulate and precise definition of the components of strategy, which can be utilised to drive resource mobilisation and align operational activity. The challenges come not from proper definition of the organisations strategy but application of that strategy across all areas of the business – The process of driving change!
The challenge of change
So the success of scorecards involves organisational change. Sadly the likelihood, and subsequent rate, of change in an organisation is not determined by what is best for the organisation. Rather a complex cocktail of organisational influence determines if and how fast change occurs to support strategy implementation. Managing change along the following dimensions should be a fundamental part of any scorecard implementation:
- Managing political bias,
- Driving transition in employee behaviour and working practices,
- Motivating constructive behaviour.
The puzzling art of driving change and achieving breakthrough results with the scorecard does not end with an understanding of what organisational dimensions to manage. Traditionally some industries have proven more emphatic to change needs than others. Also within industries individual companies react very differently to change challenges posed by external events, particularly competitive and regulatory challenges.
So why do some companies and indeed some industries have a higher capacity for change? The answer is as simple as needs must.
Take British Telecom (BT) as an example. A decade after UK telco deregulation, BT was still fighting local loop unbundling to thwart a flood of nimble competitors. They succeeded only in delaying the inevitable growth of fixed line voice services from new entrants such as The Car Phone Warehouse. However the company utilised this delay to better understand its unique differentiators and develop a new long term growth strategy.
Enter the recent and inevitable destruction of voice pricing models thanks to Voice over Internet Protocol (VoIP). In the most current analysis of the winners and losers from the inevitable penetration of free telephony by the economist, BT was classed as one of the global operators least at risk. Less at risk than mobile operators whom we normally consider more innovative and ready for change!
The bottom line here seems clear; deregulation forced BT to deal with competition and develop a capability for change management in response to external events. This new change capability has enabled it to monitor and react to subsequent, more devastating external events better than traditionally more innovative competitors.
The change maturity benchmark
How do you know what level of change your organisation can embrace? Working with clients over many years has enabled us to develop the change maturity model™ to help companies to better grasp the prerequisites for change and hence successful scorecard implementation.
Change capability is a function of systems, processes and culture. As with most organisational issues, all three are in fact related and a measure of one dimension is indicative of the overall situation. This is particularly fortunate for practitioners as softer, human factors contributing to culture are elusively difficult to quantify.
Technology alignment with business performance is easier to understand. During the past two decades a myriad of technology-led performance improvement initiatives have been embraced by different degrees, across different industries.
By focusing on the best-practice processes in a given industry, we can look to the degree of transaction automation, functional integration and capacity for collaboration to provide a benchmark indicative of change capability. The simple truth is that driving high rates of change or successfully improving performance with scorecards requires a prerequisite state of process, system and cultural readiness.
Figure 1
The change maturity model can be considered as a generic starting point regardless of industry and utilised to develop a rough benchmark of change capability. Using the change maturity map, shown in Figure 1, scorecard practitioners should determine the maturity level of the organisational at the outset and develop an approximation for change capability for the organisation.
This change capability should be considered when scoping and resourcing scorecard projects. Particular attention should be paid to the basic questions posed at the outset of this article, relating to the overall objective of the initiative and the realistic achievable benefits.
Using the principles of the change maturity model™, we are often able to determine the level of success or failure of a scorecard initiative within the first six weeks of the project, by comparing the change required by the defined success criteria with the organisations change capability.
Recommendation
The components of any strategic management system, including scorecards, must integrate all of the following organisational functions: strategy formulation, performance reporting, operational planning and review, human resource management and IT.
We recommend businesses take a more holistic approach to scorecard feasibility planning (the mobilisation phase), to asses the true rate of change and integration required to achieve targeted or breakthrough results.
Companies must realistically judge if they have the competencies to drive through the required change, set success criteria, resource and commission the scorecard initiative accordingly.
Failed scorecard projects often reduce an organisations appetite for change by undermining organisational confidence. Organisations must focus more resources on pre-project mobilising activities to avoid such catastrophic failures. Mobilization should enable the project sponsor to match the level of change sought to achieve scorecard success with organisational change capability.
The mobilisation phase should also be used as an opportunity for the project team to grasp the impact of, and integrate into its project activities, the change dimensions that need to be managed, namely:
- Managing political bias,
- Driving transition in employee behaviour and working practices,
- Motivating constructive behaviour.