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We believe that this advancement pushes us beyond the Balanced Scorecard, so that scorecard development is first and foremost about identifying the objectives and measures that most contribute to execution, regardless of their place in Kaplan and Norton’s four perspectives: financial, customer, internal process, and learning & growth. We also believe that if a company identifies the causes and outcomes that most impact their success, their scorecard may be unbalanced from Kaplan and Norton’s point of view, and that is completely acceptable from our point of view. So how is this a departure from where Kaplan and Norton have led us with the Balanced Scorecard?

A few years back, David Norton wrote a piece entitled “Beware: The Unbalanced Scorecard” where he advocated a perspective that all organizations, no matter what strategy, industry, or makeup, should balance their scorecards. By balanced, Kaplan and Norton typically mean that the scorecards report on more than just traditional financial measures, hence the four perspectives. However, he even went so far as to suggest that good scorecard would have about 23 – 25 measures grouped by the four Balanced Scorecard perspectives as follows: Financial 22%, Customer 22 %, Internal Processes 34% and Learning & Growth 22%.

We absolutely agree that a good scorecard reflects a diversity of measures, but just how balanced between these perspectives does a scorecard really need to be? From our point of view, if you are a hospital trying to focus on improving patient care, by all means have 50% of your scorecard pointed in that direction. Or if your organization claims market share by offering the most innovative products in the personal electronics industry, why not unbalance your scorecard in the direction of innovation? Or if your company is in the middle of moving towards a strategy that competes for customers based on price, why not focus on the cost of everything?

We began building Strategy Maps with measures (what we call Performance Frameworks - see http://www.performancelabinc.com/capabilities.html) a couple of years ago. Like strategy mapping, the process starts with an organization’s overall strategy and then, using a cause and effect questioning process, identifies the effects (or outcomes) that must be realized to achieve the overall strategy. We then have the cause conversation, which identifies the primary activities, processes, initiatives that will achieve the effects. Once these are mapped, we assign key performance indicators that help us track progress on both cause and effect levels.

Identifying a comprehensive set of powerful measures to drive execution is a function of having multiple points of view represented in this discussion. This usually means that each major division and function plays a role in the development of a strategy map and scorecard. We think the use of a strategy mapping process like “Performance Frameworks” to build a scorecard, without “force-fitting” objectives and measures into Kaplan and Norton’s four perspectives is far more effective in building a scorecard. The quality of the resulting scorecard, therefore, is in no way determined by whether or not the measures are “appropriately” balanced, but by whether or not the scorecard is truly reflective of the organization’s strategy and the path to managing the effective execution of that strategy.

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