Oh, Balance Scorecard Is Missing!

Oh, Balance Scorecard Is Missing!

Goals and targets frequently reside in the forms of Balance Scorecards (BSC). Handling of BSC for us was a practice for years. In 2010 according to some respectable surveys, it was the most widely adopted performance management framework. Since its original incarnation by Drs. Robert S. Kaplan and David P. Norton in the early 1990s as a performance measurement tool, the BSC has evolved to become a strategy execution framework[1].

In the first year of our lean and agile transition, we have discontinued the BSC. One reason for doing so was to reduce the tracking of just performances with the hard-fact measurements. Even following the logic of SMART goals (Specific Measurable Assignable Realistic Time-related) we couldn’t tell where was the highest value. What was the most important among the goals? Having 8-10 or more goals to reach is simply defocusing. Everything had the same priority! If we take a look at the Theory of Constraints and applying the concept here, can we say which one of those is our biggest bottleneck to solve first? Is it a focus on finance, customers or own people? Is it the learning and knowledge of the whole organization or a delivery on time with 100% accuracy?

Another reason was a misalignment with a concept of continuous improvement and PDCA. The BSC was a pretty static and focusing one year on the same stuff questions our readiness to open the door for a bigger value when needed. Theoretically, we could have changed the goals any time, but I am not sure how many organizations really do it. This statics removed a need to continuously improve. Bonded to a period of one year, the BSC is discontinuing focus on improvements and setting too long distance between review milestones.

Annual was simply too slow!

Mike Rother in his book Toyota Kata – Managing People for Improvement, Adaptiveness, and Superior Results explains how our wishful thinking prevents us to see the reality and mechanism to reach better results. He introduced the knowledge threshold term. With the best current knowledge we can see the things up to the knowledge threshold and we can accordingly predict and estimate a certain period in advance. Variations and business dynamics shorten this period.

After the knowledge threshold, we are convicted to learn and go through the unknown territory. Moving over such a “cloud” would most probably not be a straight line to reach the next wanted condition, but rather slalom through different obstacles and impediments. Our knowledge threshold was never one year-long, but we were pretending as it was.

Continuous improvement is a constant day by day activity embedded in our daily ceremonies. It extends our current knowledge threshold and helps us to reach our goals on a persistent and efficient way!


[1] Source: Wikipedia