6th April 2004 - The Balanced Scorecard, Strategy to Action

Today I finished reading "The Balanced Scorecard: Translating Strategy into Action" by Robert S. Kaplan and David P. Norton. This thorough book leads the way for managers to implement measurement systems that are in line with strategy, both short- and long-term. This book is particularly remarkable if you are working in the field of Business Intelligence since its approach of turning strategy into measures is particularly useful for working through a project of aligning IT resources with business strategy and objectives.

The book is also a tremendous paradigm shift in terms of traditional financial reporting and measurement, the entire balanced concept is the idea of balancing measures in time as well as working with both hard and soft measures. Kaplan and Norton are basically the fathers of the balanced scorecard idea.

A word of caution: although the holistic idea of balancing everything important is both sound as well as promises high business value, it must be emphasized that such an approach must never jeopardize organizational agility. The balanced scorecard implementation process can potentially result in the effective execution of an ineffective strategy in a hyper-volatile world –the world simply changed during the implementation. To compensate for this, bottom up feedback loops must be established in order for this approach to be applicable and continuously adjusted to the world around the organization.

I also think that an alternative management system centered on core competencies rather than strategy should be considered, such a system might in the long run be more efficient in the contemporary hyper-volatile world; "The Balanced Scorecard" was conceived in 1996, a time where the internet was yet to make a fingerprint on the globe. Leadership in the interconnected world is just as much about feeling and reacting as it is about strategizing.

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Updated 2004-04-06

 
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