Balancing your scorecard

THESE days, the use of the balanced scorecard as a business performance management tool is so commonplace, it has almost become the management equivalent of British cuisine’s ubiquitous chip, or in local parlance, our daily bowl of rice.

Pioneered by Harvard Professor Robert Kaplan and leading management consultant David Norton in the late 90s, it is considered a breakthrough in management thinking, integrating the different parts of a business and aligning their energies towards realizing their common corporate objective.

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All of this sounds intuitively simple. After all, why should a business not work toward a common objective? This is almost a question that would certainly elicit a response of “duh” from most of our American friends. It seems so obvious that it should be the case, but the reality is not quite as straightforward.

From years of working in corporate management, I have often wondered about this myself, and I am constantly amazed at how disorganized management seems to be in most large businesses.

The entrepreneurs among us would probably laugh at this scenario. After all, small businesses are always very clear about what it is they want to do. They want to have a product or service that is very attractive to a market that they have identified, and they want to be able to deliver this product or service at an economic cost that allows them to make an acceptable return over what their customers are willing to pay for the product or service.

But this is the truth, and it is no laughing matter.

It is all a question of scale. From experience, I know that as companies get larger, the more they seem to be less and less certain about what it is they really want to be doing. There are those that are the exceptions, and invariably they are the ones that go on and become successful in what they do.

The crucial difference between an entrepreneurial organization and a large corporation is always the person at the top. With the former, the driving force is the person’s original vision for the organization, which is clearly communicated throughout the rest of the business. Everyone knows what they are all about, especially in family corporations where the main players tend to wake up together in the same house.

In a large organization, we tend to have a collection of managers from different backgrounds and persuasions, with different beliefs and value systems, and varying degrees of identification with the company’s set of values and principles.

The result is what you would expect from an orchestra — melodious and sweet when under the baton of a skilled conductor, but totally chaotic and cacophonous when under the control of someone who does not know how to harmoniously blend all the instruments together.

The problem is that people who work in companies normally, by themselves, haven’t the faintest idea how to run a complete business on their own. While they may know finance, marketing or operations as a discipline, how all of the activities fit together to complete a harmoniously working whole is not something that they always understand.

Imagine having a group of people drive a car collectively, which none of them can control on their own. Whoever is doing the directing must make sure each individual controls the steering wheel, brake, clutch etc. in a coordinated fashion, or an accident would surely be the most likely outcome.

ANNOUNCEMENT: The UP Cebu High School Class of 1982 will be having its Silver Jubilee Anniversary Reunion at the Shangri-la’s Mactan Island Resort and Spa on July 22, 2007. All jubilarians are encouraged to attend. For details please contact Virgil Urgel (09204039138), Joy Go (09178515601), Carlyn Relampagos (09209005970) or Randy Cabahug (09173229923).

Published in the Sun Star Daily, Saturday, July 07, 2007 (http://www.sunstar.com.ph/static/ceb/2007/07/07/bus/batuhan.balancing.your.scorecard.html)