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Making the Business Case

Making the Business Case

A compelling business case is required for any major change program to be green-lighted. This is as true for the Balanced Scorecard as for any other transformation effort. Quite simply, a senior management team will not (and should not) countenance the time and money requirements for a full scorecard design and rollout without there being clear and tangible business benefits. 

A Matter of Survival

For some companies the business case requires little consideration – it’s a matter of survival. This was the case at the communications company Saatchi & Saatchi when they launched their scorecard program in 1997. The alternatives were crystal clear – turnaround the business quickly or face extinction. Saatchi & Saatchi’s senior team shaped a new strategy, set stretching three year financial targets and chose the scorecard as the strategy implementation framework. As the scorecard director Paul Melter says: “We did not have the luxury of getting it wrong. We had one shot – and the clock was ticking.” The stretch targets were hit six months ahead of schedule, and today this financially successful organization is still a committed scorecard user.

Most scorecard proponents do not have such a burning platform. As a result they may become frustrated that they do not receive the wholehearted support from their management colleagues from the moment they present the idea of the Balanced Scorecard. They become disillusioned they cannot move straight to go with the scorecard effort.

Making Use of the Time-Lag

However, the time it takes to move from suggesting a Balanced Scorecard implementation to actually beginning the program should not be looked upon as a problem but an opportunity. If the time is used constructively to explain the concept to management and answer their often legitimate concerns so as to get the right people on board and committed, then the wait will have been well worth it.

For instance, use the time to showcase successful scorecard implementations from other companies, especially in your own industry or sector. That a competitor can demonstrate tangible benefits from a scorecard rollout is sure to capture the attention of the senior team. And every industry and sector now has a library of success stories in the public domain. 

Also, we now have a wealth of books and articles by the scorecard co-creators Drs Kaplan and Norton and others that include case studies as well as practical templates for scorecard design and implementation. Such material can also be purchased and distributed amongst senior managers. Indeed, one senior manager from a large Indian company purchased 150 copies of the book: Mastering Business in Asia: Succeeding with the Balanced Scorecard (co-written by Corporater Newsletter’s Editor James Creelman) for the purpose of educating his top managers as to the potential benefits of the scorecard.

Case Example: Royal Canadian Mounted Police

More commonly, of course, scorecard champions purchase one of the books by Kaplan and Norton. This was the case at the Royal Canadian Mounted Police (RCMP), which is now a Balanced Scorecard Hall of Fame award recipient. Prior to building the scorecard at RCMP, a period of about six months was spent raising the awareness of the senior management team and other staff about the potential strategic and operational value of the Balanced Scorecard. This included a video linkup between the RCMP senior team and Kaplan and Norton. Also included were practical examples of successful scorecard implementations in other police forces, most notably the Swedish Police Force and the Australian Federal Police.

Use the Scorecard to Make the Case

Clearly, for commercial organizations the business case must describe how scorecard implementation will ultimately deliver financial benefits – and in what timescale (as was the case at Saatchi & Saatchi). For non-profits the ultimate benefit will be couched in more community-focused terms.

One approach is to use the Balanced Scorecard itself as a way of communicating to senior managers the ultimate benefits, as well as giving them a roadmap. This can be done by a simple one line cause and effect diagram.

For instance, if you believe that the organization will benefit from developing a certain strategic skills set, then use that as a single learning and growth objective, with accompanying measures, targets, and initiatives (with milestones, budget, etc.) when communicating to management teams.  Through the scorecard causal process it is then possible to show how developing these skills will impact customer-facing processes (maybe another objective), through to performance from single objectives from each of the customer and financial objectives. In essence, a compelling ROI can be shown alongside other benefits, such as improvements in customer satisfaction. Using such a simple and practical illustration of how the scorecard process works can go some way to secure buy-in.

Long-Term Benefits

But as well as financial outcomes, as part of building the case, it is important to explain how a scorecard implementation will drive wider, and sustainable, operational and other benefits.

For instance, using an 18-month horizon, describe how management meetings will be different from pre-scorecard days. Many experts would argue that a properly implemented scorecard should mean half the number of management meetings, taking half the time but being twice as effective. This is a compelling proposition.

And as just a few other examples, describe how areas such as reporting, budgeting, governance, staff communications and project management will be in 18 months time compared today. In short, make a compelling case as to how the scorecard will make a measurable difference to performance.

More, take the time to explain how the scorecard will make life easier for managers.  Basically, managers are not going to sign up to the scorecard if they perceive that it will simply add to their work burden – ‘one more thing’ that they have to do. Indeed, a central premise of the scorecard is that the performance clarity and focus it delivers should make life easier for time-stretched executives.

The business case should also describe how capabilities will be created within the organization for managing with the Balanced Scorecard over the longer-term (or more usefully managing strategy execution). This will help avoid the scorecard, even if green-lighted, being seen as a short-term intervention before moving on to the next great management idea – or fad. Indeed many organizations avoid using the term Balanced Scorecard because of the danger of it being perceived as a short-term fad or a way by which senior management can show they are up to date with the latest management thinking. As one practitioner noted; “We did not talk about the Balanced Scorecard but about implementing a robust, disciplined and structured way to dispatch good management in the organization.”

Staff Buy-In

As well as selling the benefits to management, it is sensible to think through how to secure buy-in from the general employee-base. And again, it may be prudent to avoid using the term Balanced Scorecard, and thus avoiding the shop-floor or frontline cynicism that may accompany a perceived ‘flavor of the month’.

Case Example: Centrepoint Properties Case Example

Or at least the term Balanced Scorecard might be avoided for a short time, as demonstrated by this example from the Singapore-headquartered  Centrepoint Properties Limited (CPL) – a property investment, development and management company with a portfolio of premier retail, commercial and residential properties worth over $1 billion. 

On rolling the scorecard out in 2001, CPL overcame potential resistance at staff levels by using a highly interactive workshop-based communication process.

Facilitated by the HR team, in a workshop setting, staff were given a task through which they were encouraged to think and act like entrepreneurs. In small groups staff members had to make a proposal for a retail space in a CPL-owned shopping mall. They completed an actual proposal submission process. At this stage, the facilitators deliberately did not discuss the Balanced Scorecard, as the goal was to get staff to be themselves and to think through how best to set up their own business. So they created the business concept, with figures, projections, etc.

After the staff had completed the exercise (and only then) the facilitators introduced the four perspectives of the Balanced Scorecard. The scorecard made sense to staff members because they could see why they need all four perspectives to successfully manage a business – build staff capabilities and robust internal processes, delight customers and make money.

Returning though CPL viewpoint, staff members were introduced to the Strategy Map and brainstormed across the four perspectives to understand how they could contribute within their own departments. Carol Yong Meng Dai, Senior Manager, Human Resources comments,

“At the end of the workshop, employees were much clearer about the company’s direction and how they can individually contribute towards the achievement of strategic goals.”

Pilots

Another way to build a compelling business case and securing the buy-in from resistant managers and staff is to first pilot the scorecard in a local location.

Additional Info

  • Summary:

    The introduction of a Balanced Scorecard program is a major enterprise performance management initiative or change program, involving considerable time and money for the full design and rollout. Hence, it is important to develop a clear idea of the business benefits.

    This calls for building a compelling business case. When business faces a question of survival, as one example in the article shows, this is probably made easier. Such cases are an exception and most scorecard initiatives are proposed in organizations that face a ‘business as usual’ situation. In such scenarios, the proponents need to develop a clear plan for championing the Balanced Scorecard program.

    The article seeks to identify the steps Balanced Scorecard proponents can take to build a business base with regard to the short-term and long-term benefits delivered by the methodology. Some of the steps include explanation of the concept to management; elaboration on the connection to reporting, budgeting, governance, staff communications and project management; answering legitimate concerns from key players; presenting successful scorecard implementations from the same industry or sector; describing the capabilities that will need to be developed; and even identifying the right literature or material to educate and create awareness about the Balanced Scorecard methodology.

    The article also discusses how organizations can use the Balanced Scorecard itself as a way of communicating the ultimate benefits to senior managers.

    Presenting real cases, the article asserts that the main objective in building a business case is to give business users a clear idea of how the Balanced Scorecard will make their jobs easier and make a measurable difference to performance. The article also alerts potential Balanced Scorecard proponents to pitfalls such as the scorecard being reduced to a fad or flavor of the month.