Three Balanced Scorecard Usage Insights
The depth of insight we have gained from the short and simple survey is remarkable - the current survey (which closes on 30 November 2017) is the most complex we have run and yet it has just 36 questions.
For this feature we highlight three of our insights from the survey that we think are particularly informative. Let us know what you think! Did we pick the right ones?
Insight 1 - Most Balanced Scorecards are developed in-house
We were quite surprised by this finding - Balanced Scorecard was introduced by two management consultants in 1992 and is in some ways a classic ‘consultancy led’ concept.
Yet consistently our survey has shown that about 40% of Balanced Scorecard designs are created by the managers who will use them. By comparison, only about 15% of designs are consultancy led (falling to less than 10% recently).
Management led design is a really good thing: teams who designed their own Balanced Scorecards report substantially higher satisfaction with the device compared to teams with Balanced Scorecards designed by others.
However a valid concern about Management led design concerns the quality of the Balanced Scorecard designs produced. Despite there being really good reasons for teams to use modern 2nd or 3rd Generation Balanced Scorecard designs (they really do work better), each year we continue to see about one third of reported designs using the definitely outmoded and inferior 1st Generation design approach.
The best cure for this is education - and 2GC are proud to offer best-in-class how-to training for management teams based around the design and use of the latest 3rd Generation design methods.
Insight 2 - Balanced Scorecard is used for strategic management
Most management teams use their Balanced Scorecards to manage the implementation of strategy.
This is not a surprise, but it is important to have gained insights about.
Balanced Scorecard first became widely known about in the early 1990s and it quickly gained popularity: remaining consistently one of the top-ten management tools. Balanced Scorecard was designed as a tool to aid strategy implementation, but due to the concept’s simplicity and popularity many have since attempted to redefine it to fulfil other roles - including Operations Management, Quality Management, Risk Management and Incentives / Rewards. Our survey gives insights into why these attempts to redefine Balanced Scorecard appear to have been unsuccessful.
The survey shows that Balanced Scorecard is valued most for its ability to change business behaviours and actions - elements that are critical success factors for strategy implementation (which is all about making change happen) but perhaps less important in other areas.
Knowing about how Balanced Scorecard is used is important - as it is clear that how it will be used affects how it needs to be designed. The approach one uses to create a strategic Balanced Scorecard is necessarily quite different to one designed and intended for an operational or incentive type role. Get the design approach wrong, and the Balanced Scorecard you produce is far less useful.
Insight 3 - About one in four Balanced Scorecards are badly reported
There are several strong arguments for saying that involvement in the process of designing a Balanced Scorecard is as important as involvement in its end operation. However in the long run, a Balanced Scorecard adds most value when it is actually being used, regardless of its design, and so the design priority should be on achieving this.
In fact this ‘usage problem’ was a key driver to develop more advanced 2nd and 3rd Generation Balanced Scorecard design methods, where there was the need to create Balanced Scorecards that users would actually engage with!
So it was curious and frustrating to find in the 2GC Survey results that a significant proportion of Balanced Scorecards are too infrequently reviewed to be wholly beneficial.
There are several possible reasons why we see these problems with Balanced Scorecards not being used, one of which concerns how Balanced Scorecards are being reported.
About one third of Balanced Scorecards are reported manually - with not even standard office software being used to help format the results. A further third use reports generated in standard office software such as MS Excel. For even moderately complicated Balanced Scorecard systems, we think that these methods may be contributing to lack of usage - the Balanced Scorecards are just too much work to report.
We are hoping to gain more insights from new questions in this year’s survey.
Help us - fill in the survey now!
Although the survey ends soon - it is perhaps not too late to contribute. Completing the survey only takes about 10 minutes and can be done anonymously if you prefer. If you give us some contact details we’ll let you know when the results are available, and enter you into our prize draw for one of three $100 Amazon vouchers!
If the survey has closed, why not sign up to our update service and we’ll keep you informed both on when the results come due, and also when next-year’s survey starts up.