The Balanced Scorecard: Translating Strategy Into Action (40 page)

As illustrated in Figure 12-5, the operation of the strategic management system draws upon the skills, experience, and responsibilities of several traditional management functions. It would be easy for the ongoing operation of the scorecard strategic management system to be decomposed into these traditional functional roles, with each department doing its individual job well. We feel, however, that effective maintenance of the system is so important to its success that, as with the case of the communicator, it should be in the hands of a single, qualified individual.

Most organizations today have a leadership void for this system. No executive in a traditional organization has the responsibility or perspective to manage a strategic management process, and it is unclear who should assume this responsibility.

The chief financial officer (CFO) is one logical custodian of the new process. Many CFOs, however—particularly those who come from an accounting, internal control, and audit background—have reached their current positions because of their ability to manage a rigorous, disciplined, and focused financial system. These are not necessarily the traits required for managing a holistic, innovative, judgment-based, people-intense management process built around achieving stretch targets for customers, internal processes, employees, and systems.

At this time, therefore, the specific identity of the manager of the strategic management system is unclear, but unless organizations place someone in this role, they may fail to capture all the benefits from operating an integrated system. Such a manager serves an important and visible role for the organization, and the function provides new experiential and growth opportunities for the individual. Someone will eventually assume this position. In the interim, the transitional change agent, who helped to embed the scorecard into the strategic management system, will likely take initial responsibility for managing the ongoing process.

Companies initially adopt the Balanced Scorecard for a variety of reasons, including clarifying and gaining consensus on strategy, focusing organizational change initiatives, developing leadership capabilities at strategic business units, and gaining coordination and economies across multiple business units. In general, organizations can achieve these targeted objectives with the development of an initial Balanced Scorecard. But the development of the scorecard and, especially, the process among senior managers to define the objectives, measures, and targets for the scorecard, ultimately reveals an opportunity to use the BSC in a far more pervasive and comprehensive manner than originally intended.

The Balanced Scorecard can be the cornerstone of an organization’s management system since it aligns and supports key processes, including:

Further, by integrating the Balanced Scorecard into the management calendar, all management processes can be aligned with and stay focused on implementing the organization’s long-term strategy.

Over the past few years, as our experience with scorecard programs has accumulated, we have been (pleasantly) surprised at the impact and generality of the concept. What started out as a quest to improve performance measurement systems has evolved into an approach that helps executives solve perhaps their most central issue: how to implement strategy, particularly one that requires radical change. In retrospect, we now understand why this behavior is so consistent and pervasive. The process of developing a good Balanced Scorecard gives an organization, usually for the first time, a clear picture of the future and a path for getting there. In addition to producing and developing an organization’s pathway to its vision, the development process has engaged the energy and commitment of the entire senior management team. Given this clarification and management consensus about what the future organization should look like, enthusiasm and momentum have been created. Expectations have been raised. The inevitable question is, How can we make sure that we achieve our vision?

When organizations make the critical transition, from vision to action, they experience the real excitement and gain the real value from developing a Balanced Scorecard. The initial development of a scorecard should always lead to an ongoing series of management processes that ultimately mobilizes and redirects the organization. Each management process involves linking the Balanced Scorecard to drive some aspect of longer-term, strategic, balanced behavior.