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Balanced Scorecard Dynamics

Mihai Ionescu, Senior Strategy Consultant, Owner Balanced Scorecard Romania, Author.

During several BSC implementation projects, I've been asked this very interesting question: 'What do we do with the achieved Objectives?'

'We keep them on the Strategy Map, together with the other Objectives' was the default answer. But is this the correct one? Let's look at the diagram below.

So, we normally put the Objective P2 on the Strategy Map for the duration of the planning & execution cycle - let's consider an yearly cycle - so we'll focus on this Objective's achievement from January until December. However, in many cases, we don't work to achieve the Objectives all year long.

Let's say that we have, in the example above, two Strategic Initiatives (I-15 and I-22) supporting the achievement of the Objective P2. They start in February and are finalized in August (together with their realization periods). Assuming that their effect is the one expected and the Objective is achieved, it looks like we don't need to further focus on it from September until December, where focusing on it has the meaning of doing something about it.

Here comes the nice question: 'Then why should we keep the Objective P2 on the Strategy Map from September onwards?'. I know that the BSC practitioners who argue that the Objectives on the Strategy Map don't necessarily have associated Initiatives to support their achievement will answer 'Because we need to monitor and still focus on it, as we do with any other Strategic Objective'. I have to admit that I've always marveled in front of this concept of focusing on something but not doing anything about it.

The truth is that Balanced Scorecard is a Strategy Execution framework, not a Strategy Monitoring one. In regard to this, I often use the military analogy of 'positions to be conquered' and 'positions to be defended', the latter being the strategic strengths of an organization that need to be monitored, in order to prevent loosing them. Something that we do related to some of the so-called Risk Objectives - but that's another topic.

As any model is a simplification of reality - the fact is that the Strategy Map is 'the most expensive piece of real estate' in the BSC model, because for the sake of the compromise that we have to make between the simplicity and the reflection of the reality, there are always certain Objectives that we would have wanted to place on the Strategy Map, but they didn't qualify for that, in favor of more important ones.

So, in this context, can we afford to keep on the Strategy Map an accomplished Objective that we don't need to do anything else about but to keep it's achieved status under supervision ... while other Objectives (which didn't qualify initially) are kept off the Strategy Map?

Many people that learned about the Kaplan-Norton BSC framework (the Execution Premium Process - XPP) must have wondered why do we call the fifth stage 'Monitor & Learn'. And, furthermore, some may have wondered what exactly do we do during the Scorecard Review Meetings (less frequent than the Strategy Review Meetings) and how.

The purpose of this article is to argue that the Scorecard Review Meetings shouldn't be limited to just to the Scorecard - they should include the Strategy Map review, as well, aiming to take off the map the accomplished Objectives (to be entered into a supervision period) and to replace them with new Objectives, eventually some that go beyond the 'position successfully conquered' through the achievement of the Objectives entering the supervision.

This approach gives the Balanced Scorecard a more clear dynamic, allowing the organization to periodically refocus on the 'positions to be conquered', while the ones 'conquered' are monitored / supervised separately (off the Strategy Map).

Those interested in the subject of the Balanced Scorecard Dynamics are invited to supply their questions, observations and critique, along the lines of the considerations (and diagram) that have been presented here.

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