I am very happy to be introducing this article by Maria Moraes Robinson who is the CEO of Holonomics Education Brazil. Maria is an internationally recognised author, consultant and keynote speaker in strategy, change management, sustainability, human values and the Balanced Scorecard methodology. She is a published author in Harvard Business Review Brasil, and the co-author of the books Customer Experiences with Soul: A New Era in Design, Holonomics: Business Where People and Planet Matter, Strategy Management: Experiences and Lessons of Brazilian Companies and The Strategic Activist.
As a leading business strategist Maria worked personally with Robert Kaplan and David Norton introducing and developing Balanced Scorecard methodology in Brazil and Latin America across many sectors including telecoms, technology, petrochemicals, steel, energy, transportation and education. Created by Robert Kaplan and David Norton, Balanced Scorecard methodology is the fifth most used management tool in the world. Created from a systems thinking philosophy, it does not simply focus on financial outcomes; it translates organisational strategy into four classical perspectives: the financial perspective, the customer perspective, the internal perspective and the learning and personal development perspective. It means every major issue, which has an impact on overall performance, can be given the same level of importance as financial matters, allowing people to understand and encompass all the issues facing their organisation, such as sustainability and community relationships.
Designing Next-Generation Organisations with Balanced Scorecard
Maria Moraes Robinson
After almost twenty-five years since its creation, and thousands of implementations, the Balanced Scorecard (BSC) methodology designed by Robert Kaplan and David Norton in the early 1990s still generates many heated discussions. At the centre of these discussions lies the question of the effectiveness of the tool and the extent to which it brings positive results to the organisations which implement it.
My experience of both working directly with its creators and participating in many implementations has provided me with firsthand knowledge in the way in which the Balanced Scorecard methodology is educational, allowing people to see the relationships which exist between the different areas and activities within organisations. It injects a new way of seeing into organisations based on systemic vision, as opposed to the more usual mechanistic and fragmented view which more normally predominates. As a tool, its educational nature and step-by-step process of implementation introduces a more systemic understanding of organisations.
Being willing to see the organisation from a systemic view is exactly the missing link which, when not present, promotes failure in thousands of implementations.
Every methodology has an approach behind it, a way of doing that needs to be respected and taken into account before it is implemented. In this case, the BSC methodology invites organisations to take on a new perspective, in fact, its real perspective, that of the relationships which are inherent connections which already exist in organisations. However, for this deeper perspective to be understood, our Holonomics approach proposes that the critical factor is acceptance for the need for the organisation to change its mindset, and expand awareness of itself. In order to build a Balanced Scorecard it is not enough to ‘implement’ a tool or methodology considering only its technical side, methodically following the step-by-step construction. Following stages is only one part of the equation, and, I have to say, a very small part.
The movement that the implementation of a new methodology provokes must be much more profound than simply following steps. It is a movement of change of perception. And to be effective, it must occur at all levels. As David Norton says, “Implementing strategy means implementing change at all levels”. Most of the time this is a little-noticed aspect. When implementing the methodology, many people always want the highly positive results that it advocates while not taking the time and effort to promote changes. This is asking for the impossible.
Because the implementation of BSC impacts and affects the organisation’s modus operandi, attitudes, interactions, processes, models of management and decision making, leadership therefore plays a fundamental role. Effective leadership does not simply happen with the participation of the leaders in some meetings, for example, the construction of the strategic map, while not giving the support required. Nor does it become effective with the simple statement that the leaders are sponsoring the BSC implementation project, but do not demonstrate any significant transformation in its way of leading.
Methodologies are not magic wands that will do all the work alone simply by being acquired. It is also not the full responsibility of the consultancy hired to facilitate the implementation of the BSC. As Norton said, it is a change at ALL levels in the organisation, and this especially means at the leadership level. There is no effective change when we expect others to change, but we don’t change ourselves.
Before implementing a Balanced Scorecard it is imperative that leaders truly understand that they will foster a change in the way that their organisation perceives itself and the quality of relationships. The methodology is implemented to establish a new management model in an organisation to achieve the strategy defined in the strategic planning. This is your desired end result. Once the lenses through which people see are changed, the essence of the whole organisation will be transformed. It is essential to clearly understand the nature of codependency inside the organisation, and therefore, the need for each person to do their work well and in a coordinated way with others. The fantastic thing about this tool is that in its own process of construction, step by step, people are already learning to see themselves as co-dependents and to see the processes of which they are a part. The process is as important as the result.
Interactions between people from diverse areas are necessary to build a high quality strategic map. The definition of good and effective indicators depends on a deep understanding about the business itself and its purpose. The process of defining goals that will cause the expected level of change by the strategy is a fundamental step which highlights where the organisation wants to get, how to get there, and where the weak points are that have to be improved to perform better. The discussion to define the strategic projects that will promote the change proposed by the strategy and the goals, is a highly valuable moment of meaningful conversations between all the areas of the organisation.
The BSC is, in essence, a tool that organizes dialogues, and because of this, the organisation needs to develop competency in promoting and facilitating dialogues. The BSC is a management tool, and therefore it is about communication and listening. That means that people in companies need to learn how to talk, how to conduct dialogues and, especially, how to listen. If there is no fluent and genuine communication, how do you have a BSC that works? The magic happens in the interactions, not in the business intelligence software that calculates and reports the indicators. A conversation, when done well and which contemplates the rich diversity that exists in the organisation, is what will really make the strategy come alive and ready to be executed. The BSC is just the vehicle for this.
Nowadays much is being said about the need for collaboration within organisations. But what does collaboration really mean? Do we know how to collaborate? The many failed BSCs are living proof that it is necessary to develop the organisation’s awareness of itself before implementing it. In order for it to be effective, it is a tool that requires collaboration. Like any other tool, the BSC is not effective if not used correctly. Without this understanding, we will continue to blame the messenger while at the same time failing to understand that we are responsible for the quality and effectiveness of the message it brings.