We have had a very positive experience working with Organized Change. They designed a survey for one of our global teams to help design an organizational change and develop scenarios for our strategies. Organized Change is a dependable collaborator who can be relied upon to help us meet our goals.
David Chaudron, PhD
Part 1 of this article is here.
After a full understanding the relationships among the drivers and between the drivers and measures is reached, the next step is to create a SMART target or objective. A SMART target is:
Specific
Measurable
Agreed upon
Realistic &
Time-bound
In reality, though, a SMART target is not enough. A SMART project must be created as shown in the following example describing not only the target, but the methods, timetables and resources needed to accomplish the task: We will reduce the current cost-per-barrel by 20% by the end of April 2005 by:
Adding a 10% bonus to all employees salaries for every 10% drop of the cost-per-barrel
Moving to a completely asset- or area-based organizational structure
Creating a team to eliminate non-value-added steps from the administrative and operations functions, so that only critically essential functions are kept.
The implementation plans for these steps are attached, including personnel assignments, workloads, budget assignments, sequence of implementation, etc.
I look at the successful implementation of the Balanced Scorecard (BSC) as an equation:
Success = Measurement X Technique X Control X Focused Persistence X Consensus
First of all, success is a function of what Measures you use. If you don't measure the right things and the measures don't reflect what is really going on, much will be done in an organization, but little will be accomplished.
Second, what Techniques or methods also have a significant bearing on success. Techniques fall into two categories:
Large-scale, or major techniques:
Examples include restructuring, tying pay to measurements, putting added resources ($ and people), adding or changing customers or products, re-engineering processes, change of strategy, addition or change of core competencies, etc.
Small-scale, or minor techniques result in small changes in drivers:
Motivational speeches, problem-solving teams focused on technical issues, displaying graphs to employees on bulletin boards, etc.
The key to using these techniques is to realize that if major improvements in BSC measures are needed, then large-scale change techniques must be used. This facts usually causes great distress in the organization, because many think major improvements can be made only by tinkering with the organization, rather than making fundamental change. If management is willing only to use small-scale techniques, then they must expect only modest improvements in balanced scorecard measures.
Another part of the equation is control. Once management has brainstormed a list of possible actions that might accomplish its SMART target, these actions need to be categorized into four levels:
Level 1 action: in control of action and effects are inside your organization
level 2: action: in control of action, but effects are outside your organization
level 3 action: not in control of action, but it affects your driver
level 4 action: not in control of action, but does not affect your driver
For management to be successful, they must
Concentrate on level 1 & 2 actions
Gain control of, or compensate for, level 3 actions
And if they do not have sufficient control over the actions necessary to achieve their SMART target, then they must lower their expectations on what they can accomplish and either set a lower target, or abandon the target altogether. Otherwise, it just isn't SMART!
Focused persistence, otherwise known as project management, is another key in the equation. Project management includes having a timetable(beginning and end) for each task, periodic reviews of accomplishments, resources and people assigned to each task and most importantly, a sincere drive to accomplish the tasks. Use of such tools as Gantt charts, PERT charts, etc. are essential tools in this process.
The last, but just as critical factor is consensus. The best laid plans, with a thorough knowledge of measures, drivers, and with sufficient resources will fail if there is not agreement enough among those with sufficient power to block BSC implementation. Key power brokers need to be involved in decision-making, and as many others as possible in the various stages and steps outlined here. Among some opportunities for involvement include:
Communicate with them on the importance and status of the project
As part of planning and decision-making
Implementation of action
Suggestions for improvement
Keeping in mind these factors when implementing the balanced scorecard will substantially increase your chances of success. Though every factor in the equation above does not have to be perfect, and can compensate for one another, all must be present to some extent for BSC to be implemented.