An ideal and text-book scorecard implementation process follows this cascade. The global organization’s executive committee creates the first Strategy Map and Balanced Scorecard. Each divisional head that sits on that committee then creates their own scorecard system with their direct reports, the business unit heads. In turn, the business unit heads build their own scorecard with their own direct reports, typically the functional heads, and so on. As a result, the organization creates a family of fully aligned and cascaded scorecards.
However, an analysis of 14 years worth of examples of how organizations have actually built scorecards shows that this has typically not been the case. Indeed, one leading Balanced Scorecard expert, who has been involved in scorecard consultancy since the birth of the methodology comments. “I’ve probably been involved in up to 300 scorecard implementations and less than 30 started at the executive table.”
Typically the scorecard is piloted at a lower level in the organization before wider adoption.
The Benefits of Scorecard Pilots
And there are very good reasons why the scorecard should be piloted. Indeed, except where a burning platform demands haste, we would always recommend a pilot program. As discussed in the article ‘Making the Business Case’, a successful pilot exercise can help convince sceptics as to the value of the scorecard methodology and lessons learned can be invaluable for later implementation.
Case example: BKK
The value of pilots is clearly demonstrated by a review of some successful scorecard users. Norway’s energy and broadband provider BKK first piloted the Balanced Scorecard within two BKK companies. According to Controller and scorecard manager Tore Jensen, the pilots served as proof of concept, and the successes were used to market the scorecard as a potentially powerful performance management system to other business units.
Case example: Scottish Enterprise
Within Scotland’s main economic development agency Scottish Enterprise consecutive pilots within two business units were also useful in proving the efficacy of the scorecard concept. It also highlighted the critical importance of the senior team being actively involved in building the scorecard to build ownership and galvanize others into action. Julian Taylor, Scottish Enterprise’s Director of Strategy Development and Network Performance, add that the pilot served a further useful purpose.
“The text books say that you need the CEO as champion. To get him on board we wanted to show the benefits of the scorecard, rather than just turn up with a promise that this theory would deliver results. He, quite rightly, had to be convinced that this was potentially more beneficial than the many other ideas that he is introduced to on a regular basis.”
Following the success of the pilots, the Scottish Enterprise corporate level Strategy Map and Balanced Scorecard were created at the same time as maps and scorecards were being developed for the other 11 business units and eight national teams.
Case Example: Subordinate Courts, Singapore
Scottish Enterprise also uses the pilots to build awareness within other units. This was also true at Subordinate Courts, Singapore, which piloted the scorecard within one of its six divisions. During the pilot exercise the scorecard steering committee made concerted efforts to communicate progress and learnings to the other units. This was a purposeful strategy to both build awareness and pre-emptively tackle cultural difficulties that might emerge, such as around fear of measurement for example. The thinking was that when it came to full rollout, the scorecard would be ‘nothing new’.
Chan Wai Yin, Director of Research and Statistics Unit at Subordinate Courts comments:
“The pilot program proved that the scorecard provided a clear advance over the existing performance measurement system…we also discovered that the scorecard significantly improved communications. Being a two-way system whereby employees could better report and discuss performance we found it actually changed the whole paradigm of performance monitoring, improvement and measurement.”
Also, the pilot found that the originally designed scorecard architecture would require some changing to be more appropriate for Subordinate Courts culture and stakeholder responsibilities. It was much easier to make such alterations following a pilot than in the midst of a full cascade.
The examples cited thus far are of successful pilots that catalyzed enterprise-wide scorecard rollout. Pilots can, of course fail. And the potential of failure is another reason for conducting pilots. If a scorecard implementation fails within a local unit then the door remains open for later pilots and so the possibility of an eventual full enterprise rollout. If the scorecard is built first at the corporate level, and then fails, there is a strong likelihood that it won’t be given a second chance – at least within the tenure of the sitting CEO.
Choosing the Pilot Unit
A further key consideration regarding pilots is where they should be conducted. There are several key factors to bear in mind. Firstly, the chosen unit (or function as it is not unusual for HR or Finance departments to be a pilot) should be where it is easy to see improvements but where the unit is not in such a bad state that sceptics could argue that any performance management intervention would make a positive difference.
More, the selected unit should have a management team that is supportive of the scorecard or at least is change embracing. There is no point trying to pilot a scorecard in a unit where the management team is change resistant. Subordinate Courts, Singapore chose the small Claims Tribunal division for its pilot as it was a self-contained unit (so that performance could easily be monitored through a Strategy Map and Balanced Scorecard) and the management team was open to new ideas. Also, at Scottish Enterprise, its two pilots were with the local management teams that expressed an interest in the scorecard. As Scottish Enterprise’s Julian Taylor comments:
“For any organization planning a scorecard implementation, I would always recommend a pilot program. It will also pay dividends over the longer-term.”