Preface

SHORTLY BEFORE WRITING THESE WORDS, I looked up at the bookshelves lining my office and took in the artful panorama of colors, designs, and intriguing titles. My gaze soon fixed upon the row dedicated to the Balanced Scorecard and strategy execution, and as I reflected on the many titles, it wasn't long before I realized that anyone picking up this new book would quickly arrive at two questions:

1. Why does the world need another Balanced Scorecard book?
2. How is this one different?

LOOKING BACK AND LOOKING AHEAD

To answer those questions let's take a brief tour of the Balanced Scorecard's history. The tool began, humbly enough, as a system for organizations to improve their ability to measure effectively. For centuries the primary measurement of business had been financial. The Balanced Scorecard, while acknowledging the importance of financial yardsticks, represented a breakthrough by supplementing financial metrics with the drivers of future financial success in three distinct, yet related, perspectives of performance: customer, internal process, and learning and growth. The Balanced Scorecard also requires that performance measures used by an organization be derived from its unique strategy. Only then could strategy execution be tracked with rigor and discipline. This first-generation Balanced Scorecard, devoted almost exclusively to improved measurement, was immensely successful and popular, helping organizations around the globe better assess the execution of strategy through a balanced set of measures spanning the Scorecard's four perspectives.

Despite the model's success, a number of early adopters struggled with identifying the best measures to gauge the execution of strategy and often lamented a lack of context during the selection process. To overcome these challenges and assist in identifying better indicators, some Scorecard pioneers began prefacing the discussion of measures with the broader question of “What must we do well?” in each perspective. The answer to that was known as an objective. For example, a customer perspective objective could be “Provide differentiated solutions.” As time went on, organizations began paying additional attention to objectives and many created graphical representations featuring the objectives as they flowed through the four perspectives. These documents became known as strategy maps, and proved to be a breakthrough evolution for the Scorecard system. Once the objectives were in place on the strategy map they clearly articulated and communicated the organization's strategy, creating an enhanced context for the measurement challenge and making it simpler to isolate metrics. For our earlier example of “Provide differentiated solutions,” the accompanying measures might then be “Time spent with customers” and “Win rate on new projects.”

The evolution continued through the next several years with the advent of strategic themes, enhanced software systems, and linkages from the Scorecard to vital management processes such as risk management and corporate governance. Additionally, as the Scorecard has grown, so too have the management systems at its boundaries. A number of so-called gurus have created elaborate management frameworks, of which the Balanced Scorecard is but one component. These systems often feature complex diagrams mapping organizational processes and typically suggest that in order to be successful, an organization must engage in each of the sophisticated steps offered.

We now return to the first question presented at the beginning of this preface. One of the chief reasons I decided to write this book, and why the world really does need another Balanced Scorecard tome, is because, as the new management frameworks have proliferated, they have frequently crowded out, and even overshadowed, the Balanced Scorecard itself. These complex conceptual structures promise many benefits that practitioners are eager to reap. However, most organizations possess limited resources and thus spread those available means thinly across the entire spectrum of activities, often failing to devote the effort necessary to create a robust Balanced Scorecard that will serve as the foundation of their efforts. The unfortunate product of this diffuse effort is a Scorecard that is unable to fulfill its responsibility as a vital tool in the execution of strategy.

The modern toolkit for strategy execution is vastly overstuffed, making it difficult for organizations to determine which of the many processes, tools, or interventions to pursue in order to execute their strategy. It can quickly become overwhelming and prove to be a major drain of resources, resulting in a cursory attempt to check off all of the boxes, which undoubtedly leads to suboptimal results. I don't wish to appear a Luddite, rejecting the natural progress of tools with which I've been associated for close to 20 years. I simply recognize, and have seen many times, that without a robust Balanced Scorecard at the core, these sophisticated systems are prone to failure, which inevitably leads to frustration, and ultimately inhibits the indispensable organizational capability of the twenty-first century: strategy execution.

The nature of competition is changing for virtually all organizations today, the methods for creating and implementing strategy are evolving, and the velocity of change is increasing. What has not changed, and what the Balanced Scorecard is still uniquely suited to deliver upon, is the necessity to effectively execute strategy and know, very simply, whether you're winning or losing. To do that, the Scorecard must be cleverly constructed and skillfully utilized. This book, based on two decades of practical experience, intense research, and unremitting passion, was written to ensure both of those conditions of success are an inevitable outcome of your reading investment.

HOW IS THIS BOOK DIFFERENT?

Most critics agree that a film or novel that goes deep—delving fully into the emotional theme of the work, or the protagonist's unique and compelling journey—is more fulfilling and satisfying than an artistic endeavor that goes wide, broadly skimming the emotional or storytelling surface. A number of books on the subjects of Balanced Scorecard and strategy execution suffer from the latter trait. Their authors attempt to cover every aspect of the model, often without the knowledge or experience to do so effectively. This does the reader a great disservice, as a glossy veneer of knowledge is potentially more harmful than no knowledge at all. In this book I've chosen to focus exclusively on what leading research, real-life experience, and thousands of client implementations around the world have demonstrated to be the most essential aspects of successfully developing and utilizing a Balanced Scorecard.

Some pundits will argue that what is most important is not the Balanced Scorecard itself, but the strategic conversations it brings forth throughout the boardrooms and corridors of the organization. There is no doubt that having the right conversations with the right people is vital to success, and in this book I'll discuss that topic at length. However, before you can have the stimulating conversations that lead to strategic learning and new heights of success, you must have a fundamentally sound Balanced Scorecard from which you can generate the appropriate questions and discussions. This book presents you with the crucial balance of the Scorecard system as both a noun—encompassing the objectives, measures, targets, and initiatives that form its core—and a verb, using the data produced to conduct more focused and strategic discussions throughout the organization, driving unparalleled results.

In addition to my hands-on work with the Balanced Scorecard, this book draws on the latest research in change management and emerging neuroscience (how brain functioning impacts work and life). Successful implementation of the Scorecard system requires the adept utilization of change techniques, and throughout the text you'll find anecdotes and case studies demonstrating how the application of key change principles will enhance your implementation's effectiveness. Complementing the tenets of change management are insights from leading researchers in neuroscience who are applying their findings to the workplace. In this book, more than my previous texts, you'll also find increased emphasis on how to design, create, and facilitate the workshops that lead to the most robust Balanced Scorecards. Those sections, and many others, benefit greatly from the latest findings in neuroscience.

WHO WILL BENEFIT FROM THIS BOOK?

This book is aimed primarily at three audiences: those developing a Balanced Scorecard for the first time, those who have developed a Scorecard but are not getting the results they need, and those creating or struggling with any type of corporate performance management system.

For those new to the Balanced Scorecard system, the text will provide you with the absolute essentials you must master if you hope to achieve the results that only a Balanced Scorecard can produce. After nearly two decades of experience with the system, I've witnessed and utilized every tip and technique that can increase the odds of success, while developing strategies to eliminate the many pitfalls that can await those undertaking this endeavor. My experience and research have been distilled into vital landmarks to ensure yours is a successful Balanced Scorecard journey.

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