In part one of this article, Maria discussed the way in which Balanced Scorecard can inject a new way of seeing into organisations based on systemic vision, as opposed to the more usual mechanistic and fragmented view which more normally prevails within business cultures.
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.
Holonomics Education is now extending and evolving Balanced Scorecard through our Holonomics approach, which develops a more systemic understanding of the methodology through a dynamic way of seeing. This has allowed us to develop extremely innovative programmes of cultural and organisational transformation with businesses and organisations by bringing Balanced Scorecard together with our Customer Experiences with Soul framework, the Flourishing Business Canvas and the Future Fit benchmark, developing authentic next-generation enterprises which are able to operate from an expanded form of consciousness.
Building Next-Generation Organisations with Balanced Scorecard, Part Two
Maria Moraes Robinson
Balanced Scorecard is a methodology which enables a company to look at itself in a more systemic way i.e. a more balanced way, including both the long and short term. It is much more than just a tool for organising indicators, it is a way of managing and enables an organisation to look at itself in a more integrated way.
In my previous article on Balanced Scorecard, I discussed the way in which systems thinking is one of the most fundamental contributions to a successful implementation. I also discussed the way in which I have been developing and expanding the way in which Balanced Scorecards are implemented through our Holonomics approach. In this article I would like to introduce the Balanced Scorecard methodology for those who may not currently be familiar with it, and explain more about what our Holonomics approach is, and how it can be applied to the implementation of BSC.
According to Bain & Company, the Balanced Scorecard methodology is one of the top ten management tools used by business executives in the world. It is not just a tool to increase stakeholder value in a business; its uses are far wider than that. The Balanced Scorecard links financial measures to operational measures, and translates organisational strategy into four classical perspectives: the financial perspective, the customer perspective, the internal perspective and the learning and growth perspective. As Robert Kaplan said, the Balanced Scorecard has shifted the focus of businesses from concentrating purely on shareholder value to understanding the need to include the community as well.
In our 2014 Harvard Business Review Brasil article, Holonomic Thinking, Kaplan sent me this quote:
In today’s networked and global world, collaboration across organisational boundaries has become a critical competency for innovation and success. Solving complex problems for customers or for society rarely can be accomplished using capabilities only within a single enterprise, whether an individual company or a government ministry. Co-creating a strategy map and Balanced Scorecard helps to align multiple entities to a holistic, shared vision for success.
As you can see, Kaplan is emphasising the need for holistic vision. The first third of our book Holonomics: Business Where People and Planet Matter is dedicated to what we term ‘the dynamics of seeing’. Before we can fully understand systems thinking at a profound level, I always first take executives into the dynamic way of seeing and understanding systems, so that they can then more fully appreciate the shift in perspective which a successful implementation of BSC entails.
Although neuroscientists understood that the brain was not divided into a rational side and an emotional side in the early 1980s, people today still believe this to be true, often describing themselves or other people as being ‘left-brained’ or ‘right-brained’. While this is a useful figure of speech, the reality is somewhat more complicated.
The term ‘holonomic thinking’ there describes a powerful new way of thinking which teaches business leaders how to innovate and solve problems creatively by using four ways of knowing – thinking, feeling, sensing and intuition. Our Holonomics approach brings biomimicry, systems thinking, spirituality, nature’s interconnectedness, philosophy, literacy, physics, biology, business and the five universal human values of peace, truth, love, right-action and non-violence all together in a way that opens leaders’ eyes to uncommon dimensions of thought that have very practical applications.
David Norton has explained how there has been a shift in our economic models whereby ‘the foundation of the world is now in intangible assets’. The task that we face is to measure intangible assets; therefore, if we shift into a holonomic way of seeing, which is a higher level cognitive function than merely physical sensation (seeing physical objects), then we can start to make progress from mistakenly modelling counterfeit systems to being able to truly comprehend authentic systems. For David Norton, ‘description is the ground level of the discipline’.
The Balanced Scorecard methodology links intangible assets, such as people’s knowledge and competencies, to tangible results, that is, financial performance. There is often a pressure on managers and leaders to focus solely on results, but this can lead to a blind spot, that of time. In our Western paradigm a focus on the speed of growth has led us to lose sight of the time that nature requires to respond, transform, and grow. It is one of the great aspects of Balanced Scorecard that it refocuses our thinking back on time, showing that we need time to develop capacity, competencies and to improve processes, before we can improve the results. For example, the way in which Balanced Scorecard considers time in management systems – long, medium and short term – creates a fundamental link between operations and strategy. The short term is no longer seen as separate from the long term, but now acts in service to the long term.
The description of an organisation’s strategy is contained within a model termed the ‘strategic map’ and as such it represents one of the most important ways in which an organisation develops shared vision and understanding across its divisions and departments. Kaplan has observed that ‘the very act of translating the strategy into a strategic map transforms people’. People become more committed to the strategy and are better able to develop consensus, two key pillars of Balanced Scorecard. As our world becomes ever more networked, companies and organisations are co-creating their strategies with stakeholders.
Balanced Scorecard can be seen as an entire management philosophy, but as I wrote in my previous article about Balanced Scorecard, for those who do not have a systemic understanding, many aspects can be easily missed when implementing it. While many businesses and organisations still aim just to maximise the performance of separate parts, such as teams, divisions, and profit centres, Balanced Scorecard allows a more nuanced relationship between the parts and the whole. The ‘whole’ in this context is articulated in the strategic map, representing the vision and the purpose of the organisation. Members of the organisation are encouraged not just to maximise their best locally, but to do what is best for the overall strategy, for now they can see the whole.
With this more systemic vision of the whole organisation, resources can be reallocated to any problematic aspect of the organisation which requires the most effort and attention. One of the key activities is the communication of the strategy to all members of the organisation, which can also include wider stakeholders. By bringing people into the process, you are creating meaning for them, and allowing them to understand the relationship between the parts and the whole. The whole is not imposed on them as a ‘super-part’ (the philosopher Henri Bortoft used the term ‘counterfeit wholeness’ to describe this stance).
Activities enable people to better understand their own contributions. Engagement with people is not just through rational thinking, but through feeling, linking them emotionally with the strategy, thereby motivating them and helping them to develop their own performance.
Performance of the organisation is further enhanced by the strategic map, in that it encourages focus, allowing people to better understand what they can and cannot do. The values of the organisation become aligned with the way of doing things, the culture, such as the way of treating customers and suppliers. Balanced Scorecard is an open system, in that it encompasses all the issues facing an organisation, such as sustainability and community relationships. Every major issue which has an impact on the overall performance can be given the same level of importance as financial matters. For all of these reasons, Balanced Scorecard can contribute to fostering a collective sense of authentic wholeness in an organisation, when implemented by a conscious leadership from a wider systemic perspective, with a strong sense of values and purpose.
Maria Moraes Robinson is the CEO of Holonomics Education Brazil and is an internationally recognized educator 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.