Monday, December 20, 2010 7:47:51 PM The Top Ten Balanced Scorecard Mistakes: Best of Reader Feedback A few weeks ago, we asked for input from this community in compiling a list of the top 10 mistakes of the balanced scorecard. Obviously we touched a nerve because we were overwhelmed by great feedback. Thank you for all your insightful comments. We’ve sorted through your observations and boiled them down into a list. Any such list is necessarily subjective, so we hope this generates more discussion and feedback. 1. Lack of focus: Too many people, too many objectives, too many metrics, and too many scorecards When it comes to scorecards, less is more. Too often, beginners start out with too many people, too many objectives, too many metrics, and too many scorecards. When an organization tries to juggle too many things, it inevitably cannot deliver on all of them. When too many people are involved, the process slows to a crawl. Often these groups wind up with too many objectives because they cannot reach consensus on a few key ones. This kind of confusion obscures clear lines of accountability and discourages employees. Therefore, err on the side of less at the beginning. Weed out objectives by asking yourself tough questions: Can you realistically manage all the objectives on your list? Are they complementary or conflicting? What is the impact of not doing them? Do they really matter? Similarly, less is more when it comes to teams. When starting a BSC process, don’t involve so many people that it becomes unwieldy or political. Limit it to a few people who know what they’re doing and who have executive support and the authority to make the appropriate changes. They should have a broad understanding of the organization and good people skills so that they can inspire others. Rather than holding big meetings, assign team members to work individually with other players or business units to tackle specific questions and then present their findings to the group. 2. Biting off more than you can chew As we mentioned, organizations often try to do too much too fast—the classic “biting off more than you can chew” phenomenon. They get excited about the BSC and become enamored with the idea that it can instantly address all their top priorities across the organization. If they dream too big, they will become frustrated by the reality of putting these things in motion. Instead, they should begin with small-scale projects so that they can learn the ropes and work out the inevitable bugs. For example, an organization might do a one-year pilot with its leadership team. It’s impossible to know whether you have the right metrics and initiatives until you have lived with them for a while.
The pursuit of perfection—an admirable trait in many respects—can also undermine the value of the BSC. The BSC is an effort in ongoing process improvement, not some elusive end state where everything is done correctly. In order to make progress, we have to free ourselves from the onus of trying to be perfect. As Voltaire said, “The perfect is enemy of the good.” Better instead try to embrace the idea of a “Zen flaw”—the tradition of some craftsmen of putting a deliberate imperfection in their work to free themselves from the burden of perfectionism. 3. Failing to set clear and realistic milestones Another classic mistake is failing to establish clear benchmarks of progress. Employees need milestones to know whether they are moving in the right direction and making appropriate progress. Without them, it’s too easy to become bogged down or lost in a new, unfamiliar process. If you’re not sure what’s realistic, look for external benchmarks. How can you improve your standing versus your competitors? How can you increase market share? Compare yourself to the top players in your industry and ask yourself how you might overtake them. 4. Adopting initiatives without formal methodology for execution The odds of success are greatest when carefully chosen initiatives...
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