7 Reasons on Why Do You Want to Use a Balanced Scorecard. The Most Effective Tools for Translating Strategy into Action.

Why Do You Want to Use a Balanced Scorecard?
You need to know your organization’s purpose for implementing a Balanced Scorecard before you begin developing one. It takes intense, hard work to develop a Balanced Scorecard that becomes a part of your organization’s culture. If the Balanced Scorecard isn’t driven by the organization’s core purpose, its power to guide your organization will move to a lower priority, and people will lose commitment as they face daily crises.

The Balanced Scorecard is not a tool of performance management. It is a tool to translate strategy into action, to remove silos, and to promote a culture of high performance. A lot happens during the development and implementation of a Balanced Scorecard: Extra work is required of executives and managers, the walls between silos are reduced or eliminated, new channels of communication are opened, the value placed on performance changes, and much, much more.

Organizations don’t change easily. In a cultural version of Newton’s first law, they are bound by their inertia. I’ve seen small organizations of less than a hundred people have as much difficulty changing as large organizations. So why go through all the work, intensity, and effort that the Balanced Scorecard requires? Because the Balanced Scorecard has proven itself to be one of the most effective tools for translating strategy into action, aligning the entire organization around that strategy, and monitoring the execution of strategy.

Before you begin developing a Balanced Scorecard, you must know the purpose for doing that in your organization. You must clearly understand why the CEO and executive sponsor want to implement a Balanced Scorecard. The purpose could be driven by internal or external pressures. Some reasons might be:
 Internal:
o A new CEO wants to implement a new strategy and align the culture with that strategy
o Two organizations are merging and need to create common cultures, visions, and processes
o Silos in the organization are so strong and pervasive that they are pulling the organization apart
o The Board of Directors and stockholders demand increased performance
 External:
o Demographic changes threaten to detrimentally affect the workforce
o Competitors are releasing new products that threaten your position
o Customer needs and buying patterns are changing

Be clear on the purpose of the Balanced Scorecard so that you know what to emphasize and where to spend your resources. For example, if you believe that the purposes of the Balanced Scorecard are to significantly increase performance at all levels and to build a permanent culture change of high performance, then you would incorporate in your Balanced Scorecard implementation:
 Development of a culture of high performance
 Development of an HR plan for Strategic Job Analysis
 Development of performance methods such as Six Sigma or Lean
 Cascading scorecards down to the personal level
 Expectations of significant high-performance results in one to three years

If, instead, your CEO and executive sponsor want to use the Balanced Scorecard as a vehicle to reduce department silos and increase horizontal and vertical communication, you would focus on:
 Creating an easy-to-understand Strategy Map posted in communal areas
 Hosting ongoing “Town Hall” meetings to communicate and gather feedback
 Building interdepartmental teams that optimize results for the organization, not for silos
 Near-term results

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