#54 What 'Balanced' Really Means For Measures

When most of us hear the term 'balanced measures' we see the Balanced Scorecard flash before our eyes. The success of this decade-and-a-half old framework has been both a windfall and a worry. Yes, our mid-1990's fever for good measures that actually measured what mattered was somewhat tempered by Kaplan and Norton's medicine. But it's unprecedented success brought on a new fever: the expectation that a balanced suite of measures is a simple plug-and-play bolt-on to your business' performance scorecard. No thinking required, just grab some KPIs and stick 'em in the right perspective (financial, customers, internal processes or learning and growth).

Many of the organisations I work with share with me this rationale for seeking help from a performance measure specialist: the Balanced Scorecard hasn't made measurement any easier for us. They aren't using the four original Balanced Scorecard perspectives, and if they are, they aren't really comfortable with the fit to their unique organisation. The natural remedy is to turn our brains back on, and think more deeply about what balance really means to our unique organisation, BEFORE we worry about balanced measures. Here are some prompts that will help you improve the balance in your organisation's overall performance.

Stakeholder Groups

How does each stakeholder group with some investment in your organisation define success for your organisation? What's important to your shareholders, regulators, owners, customers, partners, employees, and community, important enough that doing it better would mean they feel your organisation is more successful, and they ramp up their support for it's future success?

Business Processes

How you do business is more important that what business you do. Your end-to-end processes impact very significantly on the results your organisation gets through their very design. What are the impacts of service delivery, research and development, marketing and sales, procurement, and other essential business processes on your overall organisational success? Ignoring any of the important processes is balance-heresy, and makes it too easy for parts to succeed at the expense of the whole organisation.

Strategic, Tactical and Operational

You don't have one scorecard, a single basket of measures. If any one person in the organisation wants to know all the measures throughout the organisation, they are micro-managing and thus mis-managing. Which results are strategic, which are tactical, which are operational? Better balance comes hence when there is a logical cause-effect relationship between these layers of results (and thus their measures). This balance does wonders for throwing resources at the right initiatives for success.

Lead Versus Lag

If you're like me, you are completely over hearing the "driving a car by looking in the rear vision mirror" metaphor for managing organisational performance with lag measures. But it's still a good point. Which results are the end products or ultimate outcomes for your organisation? Measures of these are your lag measures, and it's still important to track them. Which results offer clues about what those end products or ultimate outcomes might look like in the future, based on how things are now? Measures of these are your lead measures, and you need to track these too!

Short Term, Medium Term, Long Term

The Japanese apparently plan with future generations in mind, decades into the future. The Western world considers long term planning to be 5 or maybe 10 years from now, but really only manages within a 12 month timeframe. Better balance will come from sorting which results are day to day, which are month to month, which are year to year, and which are truly longer term. This balance helps put the right measures into the right decision processes.

Test your strategy for balance before you design measures.

One of the most frequent reasons (if not the supreme reason) for poorly balanced measures is starting with a poorly designed strategy. If your strategic plan reads like a case study of motherhood statements and management-speak, you're in trouble. Tease out the results you understand this strategy to be implying (dig deeper behind the jargon) and examine those results for balance using the above prompts to get you started.