I reckon most of my the people visiting this blog know one or two things about enterprise performance (not that I am an expert here). Well, although trying to, systematically, formalize a business strategy and then executing it had its root since the early 20th century but with the focus on the finical runs as the dominating factor to measure the success of the organization. But this hasn’t been renovated and modernize until 1992 when Norton and Kaplan published their “The Balanced Scorecard – Measures That Drive Performance” article in Harvard business review. That paper pumped new blood into multinational originations, where survival to competition in the modern neoliberal era was lief or death. Before Norton and Kaplan framework, new strategies, or changing ones to face new market challenges, relied on directly transforming the organization’s goals into initiatives and portfolios without considering the overall health of the organization. The Balanced Scorecard did help the industry as a whole to build a better understanding of how a minor change in the strategy might have a significant impact across all functions within the enterprise, and how it is in everyone’s responsibility to help to realize the organization’s vision.
But I have witnessed many times that this framework tends to fail miserably, and people immediately abandoning it due to reasons in understanding the organization’s aspirations and then capturing it through the Balance Scorecard. This eventually will limit the use of the Scorecard KPIs to become part of the operational dashboard.
Typically within the board member’s meeting, the CEO will be bombarded with the shareholder’s concerns. No matter what toolkit is used to capture and convey the strategy, the shareholders will eventually abstract their desire into their aspirations and goals. And then sideline some of those demands as initiatives without fitting it into an overall scorecard framework. I know everyone wants to add the “increase revenue” or “decrease operating cost” objectives within the financial perspective, but at the end of the day, the shareholders will always ask for those, in particular, every time they sit with the organization’s representative. This limits the objectives in all prospective into predefined set objectives that might never change. This becomes something like fishing fishes from a small pond; no matter what you do, you will get the same objectives every time. Now what the shareholders want to see, along with the KPIs, are the status of their specific demands in relation to the cascading KPIs from the strategy and how it feeds into an overall view of the organization’s achieved goals. This eventually makes the KPI as an internal tool to assess the Organization Performance rather than the Enterprise Performance (the difference between the two is subtle).
Also, I have seen that the momentum in trying to get the Scorecard to succeed within the first couple of tries becomes a burden to the business that reaches a level of neglect by the bottom line of business. Trying to teach everyone the importance of the KPIs will go in vain if the strategy is missing to think of the enterprise as a system with its complexity and unpredictability (the System Thinking and Engineering theory has plenty to learn from). The bottom line of business doesn’t care that much about the overall strategy as long as he has his own personal and professional goals met. Even middle-management who are busy in ensuring the business continuity and fighting their political battles might give little to none for understanding and contributing to the Scorecard. I have seen many saying they don’t care about those KPIs, but if it is cascading, then we can find away.
I know there is a need to capture the performance of the organization, and the Scorecard framework is a great tool once it is functioning. But I am not seeing it succeeding within the people I met. I don’t know if it is related to the culture or immaturity of the local enterprise, but I feel there is a need to associate the Organization Value to the Scorecard and anchoring the KPIs into the Value. I am throwing ideas out of my head, so my statement might not make sense; nevertheless, complicating the organization by yet another management will do more harm than good.