SPECIAL GUEST BLOG By Harley Murphy, Strategic Change Mentor, Mentors.ie

I had the pleasure in mid-October of listening to Professor Robert Kaplan at the Staff Balance event in Dublin.  Kaplan & Norton developed the concept of the Balanced Scorecard (BSC) in 1992, which is now used globally by thousands of leading companies. The Gartner Group estimates that over 50% of large US firms had adopted the BSC by the end of 2000. It is now widely used throughout Ireland, the UK, Continental Europe, Scandinavia and Japan.

The Balanced Scorecard has been recognized as the most widely used performance management tool (Bain & Co.). Kaplan & Norton have led its evolution from it’s early incarnation as a performance measurement system to it’s now widely adopted place as a strategy development/ execution system. At the highest conceptual level the Balanced Scorecard has been defined as:

‘A framework that helps organizations translate strategy/(change) into operational objectives that drive both behaviour and performance.

I have added ‘change’ to the definition above as that is what I wish to cover in this article. Strategy and Change Management are, of course, very close bedfellows these days. Indeed, Kaplan & Norton have quoted as stating:

“Managing strategy is synonymous with managing change.”

Professor Kaplan has an excellent article on leading change using the Balanced Scorecard framework in November’s Balanced Scorecard Report, published by Harvard Business Review.  In this article he outlines how the six stages of the Kaplan/Norton strategy execution system can be utilized as a methodology to operationalise the eight stages of John Kotter’s eight principles of change.  John Kotter, who is recognized as one of the most influential writers on leadership and change, describes these in his book, Leadership Change.

Professor Kaplan notes the absence of any role for measurement in Kotter’s eight principles and I consider this a really crucial point. During my own considerable experience in leading major change projects, in a number of financial services companies, I was often struck by the lack of a structured company wide approach to measuring the success (or otherwise) of major projects. This is what first attracted me to the Balanced Scorecard approach eight years ago.

Some other key points made in the article were:

• the role of leadership in creating the vision for change;
• the importance of creating the climate for change;
• that resistance often comes also from senior managers;
• the power of the Balanced Scorecard tools in helping the leadership team to articulate clearly the cultural, structural and operating changes necessary for the transition to the envisioned state and gain commitment.

Scorecard measures eliminate the ambiguity and provide clear answer to every employee to the questions:

• Does my company have a strategy for success?
• How does my coming to work each day play a role in the company’s success?

The multiple perspectives of the Balanced Scorecard provide a balance between the longer term outcomes – for clients & shareholders – and the near term improvements in processes, staff capabilities and IT which are intended to drive these outcomes.

The change goals of the organization are aligned through the cascading mechanism built-in to the Balance Scorecard which flows right down to the personal objectives set for each employee.

Monthly Change Review meetings are held to review a pre-defined agenda.

In summary, this change management tool helps everyone understand how they contribute to organizational goals & strategies, supports meaningful performance measures across four linked perspectives and aligns all business units & staff to deliver the change objectives.