As Balanced Scorecard practitioners know, Kaplan and Norton recommend five principles for strategy focused organizations:
- translate the strategy to operational terms;
- align the organization to the strategy;
- make strategy everyone’s everyday job;
- make strategy a continual process; and
- mobilize leadership for change.
The City of Charlotte, NC applied these principles to become a Balanced Scorecard Hall of Fame winner.
I’m struck by the fact the words ‘metrics,’ ‘measures,’ and ‘indicators’ are nowhere to be found in the recommendation. As I’ve argued before,
The term scorecard has encouraged practitioners to think that the most important part of a balanced scorecard deployment is metrics (or KPIs) — i.e. the things that keep score. Unfortunately, metrics by themselves are unlikely to increase the performance of an organization.
Instead, I’ve encouraged organizations to go beyond keeping score to ensure everyone has a common understanding of both what they are trying to accomplish (goals and objectives) and how they intend to accomplish them (programs and initiatives). Organizations that align goals, initiatives, and metrics increase internal and external transparency, become more productive, and can respond to performance issues and market changes more quickly. They become alignment focused organizations.
In a related vein, Ganga Harvey reacts to the confusion between human capital management and strategy management by coining the phrase performance-focused organization. In her words, a performance-focused organization is “one that ensures a structured, coherent focus on Performance at all levels as an integral part of the way in which they do their day to day business.” She encourages us to consider performance management at workforce, process, and organizational level. Although she doesn’t use the word, I think she’s talking about cascading.
There are strategy focused, alignment focused, and performance focused organizations. Whichever you choose, be sure you focus.
I agree entirely. There is an art to setting KPIs, goals and targets. Most organisations do not understand this, and are content to “think up” some metrics in an hour as part of a day long workshop. It is not enough, if the organisation is really focused on performance.
Thanks for the link. Great to read your blog.