OVER the best part of the last week and a half, my family — along with my parents-in-law — spent our summer “holiday” in France and Italy.
It was not much by way of a typical holiday, I have to say. None of those long days lazing by the swimming pool with a cold bottle of beer in hand situations at all. Yes, there were still sight-seeing visits to the attractions, but not to the usual ones like theatres and shopping centers.
Due to the special request of my wife Cynthia, we decided that this year’s vacation was going to be a different one in every sense. First off, she wanted it to be with her mom and dad, whom she loves most dearly. Second, instead of the amusement parks, she wanted to take a pilgrimage of sorts to some of our faith’s most revered sites. On the year when she turns the age that most of us consider to be a turning point in our lives, she wanted to have time for reflection, rather than just relaxation.
So off we went; first stop — Paris, the City of Lights. Although known mainly for its romantic draw, Paris — unknown to me until now – is home to a good number of religiously significant destinations, among them the Church of the Sacred Heart in Montmartre and the Church of Our Lady of the Miraculous Medal in Rue du Bac.
As a young boy growing up, the Sacred Heart School as well as the Asilo de la Medalla Milagrosa were familiar associations to me. Thus, actually visiting the places where these schools took their names from is really quite a fascinating experience.
Next, it was off to the mountains of the Pyrenees, to the small town of Lourdes where Our Lady appeared to a young French shepherd girl at the turn of the last century. I have to say that visiting the place was an experience quite like no other that I have ever had.
Nowhere have I ever been to before where I have seen so many people from so many countries, races and backgrounds than in that small town up in the French Alps.
Every country in the Christian world (and even many from those that are not) must have been represented there. There were so many people with all manners of disability, in crutches, walking canes, wheelchairs and even stretchers — all there in the fervent belief that they may yet be cured from the illnesses that afflict them.
After coming down from Lourdes, it was just a quick stop in Paris to recharge, and then we were off again, this time to the home of Catholicism — Rome.
Of course, no visit to the city would be complete without a stop at the Vatican.
The only drawback was that this time of the year, the pope was not around, preferring his summer home up in the hills of Castel Gandolfo to the simmering heat of the Italian capital. So we went up there too, to catch a glimpse of the Holy Father as he was delivering his usual Sunday message to the faithful.
The last stop in our Italian itinerary was to the little town of Lanciano, some three hours away from Rome. A small church there is home to what is acknowledged to be the first and greatest Eucharistic miracle the world has ever witnessed — that of the host and wine actually turning into flesh and blood during consecration in the Holy Mass. Documented by many scientists as actually being of human flesh and blood, the relics are still there for the faithful to behold — perfectly preserved all these years, though exposed to the elements, and free from artificial preservatives of any kind.
More next week.
Published in the Sun Star Daily, Saturday, August 18, 2007 (http://www.sunstar.com.ph/static/ceb/2007/08/18/bus/batuhan.cebu.coop.eyes.berry.market.html)
Saturday, 18 August 2007
Saturday, 11 August 2007
Tipping the balance...finally
WE have covered a lot of ground on the subject of Business Performance Management over the last few weeks.
Our basic premise was that in most organizations today, it is very difficult to get all the parts working together as a coordinated whole. This is true especially in large and “professionally-run” organizations. While the people who work in them know their individual roles and responsibilities, not all have the entrepreneurial vision to understand what it takes to manage a total business.
We introduced the metaphor of an orchestra, complete with skilled and talented musicians, which without the presence of an experienced and competent conductor will not be able to produce melodious music.
Applying this to business organizations, we then explored the ill effects of the over-reliance on the “one version of the truth” from our accountants, which many still use to measure and manage the performance of organizations.
But as we took pains to point out, financial numbers show us only the effects of our past actions. They tell us precious little about what we need to be doing in the present, and even much even less of where we ought to be focusing our efforts on in the future.
One of the recent and most significant advances in management that has come about to address this major shortcoming in business performance management (BPM) is the introduction by Kaplan and Norton of the Balanced Scorecard.
Although both finance professionals by background, they realized the folly of relying on financial statements alone to run a business, and wisely pointed out that to both gauge ongoing performance and guide future action, a much broader perspective is required.
Today, at least on paper, many organizations seem to be using balanced scorecards in their BPM processes. In fact, a number claim to be employing it as their main BPM tool. And yet it is apparent that this seemingly widespread acceptance is nowhere near enough to redress the imbalance.
As the story told by my friend the Finance Director illustrates, old habits die hard.
Business organizations, despite their pretensions to having embraced the merits of balanced BPM measures, are still predominantly judged by their financial results. Whether such financial success was obtained at the expense of the business’ future viability, seems to matter little in the equation.
This happens despite the fact that over the years, many companies have been found to have “massaged” their numbers in various ways, to make it appear that their organizations have performed well, when in truth they were already in dire straits. When it comes to the crunch, financial numbers still take precedence over everything else.
It is difficult to work successfully toward a goal, unless a business knew exactly which goal it was wants to achieve.
Perhaps it is with this preceding statement that we can conclude our entire series on the Balanced Scorecard.
If we are to finally tip the scales towards having a BPM system that tells us the whole story about our businesses — we need to stop relying on financial numbers alone as the main criteria for determining which ones in our organizations deserve rewards, and which ones require punishment for their actions.
Published in the Sun Star Daily, Saturday, August 11, 2007 (http://www.sunstar.com.ph/static/ceb/2007/08/11/bus/batuhan.tipping.the.balance...finally.html)
Our basic premise was that in most organizations today, it is very difficult to get all the parts working together as a coordinated whole. This is true especially in large and “professionally-run” organizations. While the people who work in them know their individual roles and responsibilities, not all have the entrepreneurial vision to understand what it takes to manage a total business.
We introduced the metaphor of an orchestra, complete with skilled and talented musicians, which without the presence of an experienced and competent conductor will not be able to produce melodious music.
Applying this to business organizations, we then explored the ill effects of the over-reliance on the “one version of the truth” from our accountants, which many still use to measure and manage the performance of organizations.
But as we took pains to point out, financial numbers show us only the effects of our past actions. They tell us precious little about what we need to be doing in the present, and even much even less of where we ought to be focusing our efforts on in the future.
One of the recent and most significant advances in management that has come about to address this major shortcoming in business performance management (BPM) is the introduction by Kaplan and Norton of the Balanced Scorecard.
Although both finance professionals by background, they realized the folly of relying on financial statements alone to run a business, and wisely pointed out that to both gauge ongoing performance and guide future action, a much broader perspective is required.
Today, at least on paper, many organizations seem to be using balanced scorecards in their BPM processes. In fact, a number claim to be employing it as their main BPM tool. And yet it is apparent that this seemingly widespread acceptance is nowhere near enough to redress the imbalance.
As the story told by my friend the Finance Director illustrates, old habits die hard.
Business organizations, despite their pretensions to having embraced the merits of balanced BPM measures, are still predominantly judged by their financial results. Whether such financial success was obtained at the expense of the business’ future viability, seems to matter little in the equation.
This happens despite the fact that over the years, many companies have been found to have “massaged” their numbers in various ways, to make it appear that their organizations have performed well, when in truth they were already in dire straits. When it comes to the crunch, financial numbers still take precedence over everything else.
It is difficult to work successfully toward a goal, unless a business knew exactly which goal it was wants to achieve.
Perhaps it is with this preceding statement that we can conclude our entire series on the Balanced Scorecard.
If we are to finally tip the scales towards having a BPM system that tells us the whole story about our businesses — we need to stop relying on financial numbers alone as the main criteria for determining which ones in our organizations deserve rewards, and which ones require punishment for their actions.
Published in the Sun Star Daily, Saturday, August 11, 2007 (http://www.sunstar.com.ph/static/ceb/2007/08/11/bus/batuhan.tipping.the.balance...finally.html)
Saturday, 4 August 2007
A balance of truths
EVER heard of Rashomon?
This acclaimed piece of work, from the great Japanese filmmaker Akira Kurosawa, explores the relativity of truth, i.e. the premise that there is no single version of what is “true” — this being subject to whichever point of view one happens to take on an event or incident.
If Kaplan and Norton were fans of Japanese cinema, I would not have had any doubt that their inspiration for the balanced scorecard came from Kurosawa himself.
Accountants often speak of “the one version” of the truth, appropriating this authoritative mantle for the “one set of numbers” that they produce. Many organizations still believe this claim, and continue to base their decisions on what this “truth” is telling them. In fact — and pardon the obvious pun — nothing could be further from the truth.
For example, let us take the event of an organization meeting or exceeding its planned budget. One of my friends who happens to be a finance director for a well-known consumer goods organization, told me that they had just made budget for the year. Consequently, they are all going to get rewarded with handsome bonuses. Under his “truth,” they have done very well.
After a lengthier conversation with him, however, it became painfully apparent that despite making their bonuses, they were perhaps no different from Nero, sitting back and relaxing while their business was rapidly going down in flames.
A major component of their budget achievement came from “cost-cutting,” an exercise that by now is as ubiquitous as the computer in any organization. For example, to ensure that they pushed maximum volume out the door, they re-allocated their advertising and media spending to consumer and trade promotions, enticing short-term purchases and filling the distribution pipeline in the process. Overall, they spent less, and seemed to have been able to sell more for their money.
However, looking at the other indicators for their business, things were not looking quite as rosy. Their flagship brands were under threat by the major multinationals.
Market shares, which only a few years back were in the double digits, had dwindled to single figures. Their distribution system, which in the past used to be their differentiating competitive advantage, was becoming less potent, with lower cost third party distribution vastly improving over time.
From another vantage point, this business could not have been any sicker. And from this version of the truth, management should have been reprimanded, not rewarded. The problem is, no one is looking at things from any other perspective, but the financial one.
Balanced scorecards, whatever connotations it may have on managers of organizations, are nothing more than the Business Performance Management (BPM) equivalent of Akira Kurosawa’s Rashomon. The set of measures that it attempts to capture are so designed, that at any point in time they are able to capture the many version of truth that exist — covering the past (financial indicators), the present (operational indicators) and the future (marketing, research and development, strategic indicators, etc.).
Problem is, organizations still have to make the mental leap that is needed to make balanced scorecards work as intended — that accounting numbers are but one version — among many — of the real truth.
Invariably, even among those actively using balanced scorecards in their organizations, their performance and reward systems are still heavily focused on financial results, clearly exposing which “truth” they consider to be more truthful than the others.
Published in the Sun Star Daily, Saturday, August 04, 2007 (http://www.sunstar.com.ph/static/ceb/2007/08/04/bus/batuhan.a.balance.of.truths.html)
This acclaimed piece of work, from the great Japanese filmmaker Akira Kurosawa, explores the relativity of truth, i.e. the premise that there is no single version of what is “true” — this being subject to whichever point of view one happens to take on an event or incident.
If Kaplan and Norton were fans of Japanese cinema, I would not have had any doubt that their inspiration for the balanced scorecard came from Kurosawa himself.
Accountants often speak of “the one version” of the truth, appropriating this authoritative mantle for the “one set of numbers” that they produce. Many organizations still believe this claim, and continue to base their decisions on what this “truth” is telling them. In fact — and pardon the obvious pun — nothing could be further from the truth.
For example, let us take the event of an organization meeting or exceeding its planned budget. One of my friends who happens to be a finance director for a well-known consumer goods organization, told me that they had just made budget for the year. Consequently, they are all going to get rewarded with handsome bonuses. Under his “truth,” they have done very well.
After a lengthier conversation with him, however, it became painfully apparent that despite making their bonuses, they were perhaps no different from Nero, sitting back and relaxing while their business was rapidly going down in flames.
A major component of their budget achievement came from “cost-cutting,” an exercise that by now is as ubiquitous as the computer in any organization. For example, to ensure that they pushed maximum volume out the door, they re-allocated their advertising and media spending to consumer and trade promotions, enticing short-term purchases and filling the distribution pipeline in the process. Overall, they spent less, and seemed to have been able to sell more for their money.
However, looking at the other indicators for their business, things were not looking quite as rosy. Their flagship brands were under threat by the major multinationals.
Market shares, which only a few years back were in the double digits, had dwindled to single figures. Their distribution system, which in the past used to be their differentiating competitive advantage, was becoming less potent, with lower cost third party distribution vastly improving over time.
From another vantage point, this business could not have been any sicker. And from this version of the truth, management should have been reprimanded, not rewarded. The problem is, no one is looking at things from any other perspective, but the financial one.
Balanced scorecards, whatever connotations it may have on managers of organizations, are nothing more than the Business Performance Management (BPM) equivalent of Akira Kurosawa’s Rashomon. The set of measures that it attempts to capture are so designed, that at any point in time they are able to capture the many version of truth that exist — covering the past (financial indicators), the present (operational indicators) and the future (marketing, research and development, strategic indicators, etc.).
Problem is, organizations still have to make the mental leap that is needed to make balanced scorecards work as intended — that accounting numbers are but one version — among many — of the real truth.
Invariably, even among those actively using balanced scorecards in their organizations, their performance and reward systems are still heavily focused on financial results, clearly exposing which “truth” they consider to be more truthful than the others.
Published in the Sun Star Daily, Saturday, August 04, 2007 (http://www.sunstar.com.ph/static/ceb/2007/08/04/bus/batuhan.a.balance.of.truths.html)
Saturday, 28 July 2007
For Auld Lang Syne
WITH the gentle rhythm of the ocean waves lapping against the white-sand shore, the soft amber glow of the garden lights warmly bathing the lush surrounding greenery in a velvety hue, and the balmy breeze of a dreamily moonlit tropical night all conspiring to create the picture-perfect venue — the stage was set at last for the long-awaited event.
Twenty five years in the making, and logistically as challenging to coordinate as any of NASA’s space shuttle missions, all roads led to this place that night — the Ocean Pavilion of Shangri-la’s Mactan Island Resort and Spa.
Pinoy Votes: Sun.Star Election 2007 Coverage
View here the list of local winners
Many came from lands far away to be there.
From Connecticut, South Carolina and Flo-rida in the East, and Arizona and California in the West — those who now call the United States home made the long pilgrimage across the Pacific to be there. Those now settled in Canada came too.
On the other side, across the Atlantic, from Cheshire in the United Kingdom, via Jakarta, Indonesia — I made my own way back. Interrupting his official tour of Thailand, another one of us flew in just in-time — in true military precision — to join in the festivities. And while those residents of Cebu and other places in the Philippines may not have covered as much physical distance, all of them unselfishly set their important commitments and obligations aside, to be one with the rest of us that evening.
For the members of the University of the Philippines College Cebu’s High School Class of 1982, this was a momentous event that no one wanted to miss. It was 25 years and four something months ago, when we marched up on that stage to receive our hard-earned high school diplomas — and accepted the challenge from our teachers, friends, families and ourselves — to be the best that we can be. And to a man and woman, each of us has responded splendidly, in our own unique and individual ways.
Among our ranks we now count numerous doctors, lawyers, managers, scientists, engineers, businessmen and women, journalists, nurses, members of the clergy, as well as military officers — and whatever the career persuasion — responsible parents and individuals all.
Across the globe we have touched and improved the lives of many — treated the ill and infirm at home and beyond, engineered the success of countless businesses across a number of continents, ministered to the spiritual needs of our brothers and sisters, and defended the lives and liberties of the men and women of our country – whether in courts of law, or in dangerous battlefields without any law.
The diversity of our endeavors is perhaps only a logical outcome of our origins — after all, we are molded by the university renowned for producing exceptional leaders of men.
Yet there was something extraordinary in the way all of us made good account of ourselves, and this we can only attribute with gratitude to the mentoring and guidance we received from our beloved professors, many of whom were there that night to share the special celebration with us.
Far from being a pompous occasion attended by middle-aged men and women who, by the nature of their accomplishments we would perhaps expect to be preoccupied with their own sense of self-importance — it was a night without egos, just a magnificently joyous communion — a journey back into the gentler, kinder times of our youth — when for an evening everyone was young and 15 again.
Even our ageless teachers seemed to regain that extra spring in their steps, aided no doubt by the pride in their hearts at seeing their erstwhile young charges blossom into mature and responsible individuals.
I cannot quite remember how it all ended — and that’s probably because for me, and for many of us, it really never has.
As I journey back to the other side of the world — at once inspired and humbled by the reminder of where I came from 25 years ago — I take with me the wonderful memory of that perfect evening, with the famous words from the immortal song by the Scots bard Robert Burns still loudly ringing in my ears:
And there’s a hand my trusty fiere,
And gie’s a hand o thine
And we’ll tak a right guid-willie waught,
For auld lang syne
To all my friends and teachers, let there not be any goodbyes this time around, just a fond farewell, and ‘til we all meet again.
NOTE: Special thanks go to the organizing committee (Marcelo, Randy, Virgil, Joy, Carlyn, Emi, Alma, Rex, Leslie and Naresa) for their kind generosity and indefatigable energy in putting together the perfect event. The series on the Balanced Scorecard will conclude next week.
Published in the Sun Star Daily. Saturday, July 28, 2007 (http://www.sunstar.com.ph/static/ceb/2007/07/28/bus/batuhan.for.auld.lang.syne..html)
Twenty five years in the making, and logistically as challenging to coordinate as any of NASA’s space shuttle missions, all roads led to this place that night — the Ocean Pavilion of Shangri-la’s Mactan Island Resort and Spa.
Pinoy Votes: Sun.Star Election 2007 Coverage
View here the list of local winners
Many came from lands far away to be there.
From Connecticut, South Carolina and Flo-rida in the East, and Arizona and California in the West — those who now call the United States home made the long pilgrimage across the Pacific to be there. Those now settled in Canada came too.
On the other side, across the Atlantic, from Cheshire in the United Kingdom, via Jakarta, Indonesia — I made my own way back. Interrupting his official tour of Thailand, another one of us flew in just in-time — in true military precision — to join in the festivities. And while those residents of Cebu and other places in the Philippines may not have covered as much physical distance, all of them unselfishly set their important commitments and obligations aside, to be one with the rest of us that evening.
For the members of the University of the Philippines College Cebu’s High School Class of 1982, this was a momentous event that no one wanted to miss. It was 25 years and four something months ago, when we marched up on that stage to receive our hard-earned high school diplomas — and accepted the challenge from our teachers, friends, families and ourselves — to be the best that we can be. And to a man and woman, each of us has responded splendidly, in our own unique and individual ways.
Among our ranks we now count numerous doctors, lawyers, managers, scientists, engineers, businessmen and women, journalists, nurses, members of the clergy, as well as military officers — and whatever the career persuasion — responsible parents and individuals all.
Across the globe we have touched and improved the lives of many — treated the ill and infirm at home and beyond, engineered the success of countless businesses across a number of continents, ministered to the spiritual needs of our brothers and sisters, and defended the lives and liberties of the men and women of our country – whether in courts of law, or in dangerous battlefields without any law.
The diversity of our endeavors is perhaps only a logical outcome of our origins — after all, we are molded by the university renowned for producing exceptional leaders of men.
Yet there was something extraordinary in the way all of us made good account of ourselves, and this we can only attribute with gratitude to the mentoring and guidance we received from our beloved professors, many of whom were there that night to share the special celebration with us.
Far from being a pompous occasion attended by middle-aged men and women who, by the nature of their accomplishments we would perhaps expect to be preoccupied with their own sense of self-importance — it was a night without egos, just a magnificently joyous communion — a journey back into the gentler, kinder times of our youth — when for an evening everyone was young and 15 again.
Even our ageless teachers seemed to regain that extra spring in their steps, aided no doubt by the pride in their hearts at seeing their erstwhile young charges blossom into mature and responsible individuals.
I cannot quite remember how it all ended — and that’s probably because for me, and for many of us, it really never has.
As I journey back to the other side of the world — at once inspired and humbled by the reminder of where I came from 25 years ago — I take with me the wonderful memory of that perfect evening, with the famous words from the immortal song by the Scots bard Robert Burns still loudly ringing in my ears:
And there’s a hand my trusty fiere,
And gie’s a hand o thine
And we’ll tak a right guid-willie waught,
For auld lang syne
To all my friends and teachers, let there not be any goodbyes this time around, just a fond farewell, and ‘til we all meet again.
NOTE: Special thanks go to the organizing committee (Marcelo, Randy, Virgil, Joy, Carlyn, Emi, Alma, Rex, Leslie and Naresa) for their kind generosity and indefatigable energy in putting together the perfect event. The series on the Balanced Scorecard will conclude next week.
Published in the Sun Star Daily. Saturday, July 28, 2007 (http://www.sunstar.com.ph/static/ceb/2007/07/28/bus/batuhan.for.auld.lang.syne..html)
Saturday, 21 July 2007
Balancing your scorecard (part 3)
THEY say that those who do not remember the past are condemned to repeat it. However, while this may be true, those who know only the past are damned many times over.
Certainly, in business we know this to be the case. That’s why commercial success stories are often called visionaries – they seem to literally be able to see what their consumers of the future desire — and hence they are able to modify themselves well beforehand to ensure that they have, and they are, what it is that their consumers desire.
Pinoy Votes: Sun.Star Election 2007 Coverage
View here the list of local winners
This must therefore be a dilemma for business organizations. For most of them, all that they can see is their past. Nothing at all about their present. And more importantly, not a thing about what their actions in the past and the present are doing to their future.
All because of the way they measure their own performance.
Accounting numbers, which is what most organizations rely on for gauging the effectiveness of their actions, are nothing but historical facts. Period-end financial statements like balance sheets are snapshots at certain points in time, and flow statements like profit and loss accounts are simply aggregations of past activity.
While financial statements may look impressive and important, in reality — by themselves — they are of limited use for management information.
It’s like driving a car by looking only at your side and rear view mirrors, with the windshield blacked out. While you know that up to a point you have managed to avoid a crash, there is no way of telling if a disaster is just about to happen.
So if driving this way is no good for traffic safety, then why should managing with only financial information be good enough for business?
The answer is — it is not. Enter balanced scorecards.
While not a totally new invention, as versions of the idea have existed in various forms at different stages in the past, Norton and Kaplan were the first to have their innovation gain widespread acceptance within the business community.
In a sense, a number of factors have conspired to make this happen, such as, for example, the increasing sophistication with which we can now obtain information about our organizations. Powerful IT (information technology) systems and large data warehouses present us with opportunities that business leaders in the past did not have at their disposal.
And yet, most organizations employing the tool have not really done themselves justice. But rather than the tool being at fault, it is the users who are to blame.
For so many years, effective management has been premised on the belief that specialization is the only way to run a business. While at a certain stage in our industrial development this has made possible the rapid progress and advancement of commercial organizations, the approach has also placed a severe limitation on the capacity of companies to work as unified units, and hindering their capability to move in a common direction.
Funnily enough, it is the function commonly entrusted with measuring and controlling performance that perhaps shares most of the blame.
Accounting and finance organizations have increasingly appropriated for themselves the task of telling businesses how well they are doing, and making everyone else believe that this is the “correct” way of judging performance.
Nothing short of a fundamental rethink of our current models of effective business management, therefore, is imperative if we are to finally accept that the way to our future is not found by blindly focusing solely on the events of our past.
ANNOUNCEMENT: Best wishes to the members of the UP College Cebu High School Class of 1982, who will be having their Silver Jubilee Anniversary Reunion starting at 6 p.m. today at the Shangri-la’s Mactan Island Resort and Spa, Cebu. Alumni who have yet to make up their minds are warmly encouraged to come and see their old friends. All past and present faculty members associated with Class ‘82 are likewise cordially invited to participate in the festivities. For further details please contact Virgil Urgel (09204039138), Joy Go (09178515601), Carlyn Relampagos (09-209005970) or Randy Cabahug (09173229923).
Published in the Suns Star Daily, Saturday, July 21, 2007 (http://www.sunstar.com.ph/static/ceb/2007/07/21/bus/batuhan.balancing.your.scorecard.(part.3).html)
Certainly, in business we know this to be the case. That’s why commercial success stories are often called visionaries – they seem to literally be able to see what their consumers of the future desire — and hence they are able to modify themselves well beforehand to ensure that they have, and they are, what it is that their consumers desire.
Pinoy Votes: Sun.Star Election 2007 Coverage
View here the list of local winners
This must therefore be a dilemma for business organizations. For most of them, all that they can see is their past. Nothing at all about their present. And more importantly, not a thing about what their actions in the past and the present are doing to their future.
All because of the way they measure their own performance.
Accounting numbers, which is what most organizations rely on for gauging the effectiveness of their actions, are nothing but historical facts. Period-end financial statements like balance sheets are snapshots at certain points in time, and flow statements like profit and loss accounts are simply aggregations of past activity.
While financial statements may look impressive and important, in reality — by themselves — they are of limited use for management information.
It’s like driving a car by looking only at your side and rear view mirrors, with the windshield blacked out. While you know that up to a point you have managed to avoid a crash, there is no way of telling if a disaster is just about to happen.
So if driving this way is no good for traffic safety, then why should managing with only financial information be good enough for business?
The answer is — it is not. Enter balanced scorecards.
While not a totally new invention, as versions of the idea have existed in various forms at different stages in the past, Norton and Kaplan were the first to have their innovation gain widespread acceptance within the business community.
In a sense, a number of factors have conspired to make this happen, such as, for example, the increasing sophistication with which we can now obtain information about our organizations. Powerful IT (information technology) systems and large data warehouses present us with opportunities that business leaders in the past did not have at their disposal.
And yet, most organizations employing the tool have not really done themselves justice. But rather than the tool being at fault, it is the users who are to blame.
For so many years, effective management has been premised on the belief that specialization is the only way to run a business. While at a certain stage in our industrial development this has made possible the rapid progress and advancement of commercial organizations, the approach has also placed a severe limitation on the capacity of companies to work as unified units, and hindering their capability to move in a common direction.
Funnily enough, it is the function commonly entrusted with measuring and controlling performance that perhaps shares most of the blame.
Accounting and finance organizations have increasingly appropriated for themselves the task of telling businesses how well they are doing, and making everyone else believe that this is the “correct” way of judging performance.
Nothing short of a fundamental rethink of our current models of effective business management, therefore, is imperative if we are to finally accept that the way to our future is not found by blindly focusing solely on the events of our past.
ANNOUNCEMENT: Best wishes to the members of the UP College Cebu High School Class of 1982, who will be having their Silver Jubilee Anniversary Reunion starting at 6 p.m. today at the Shangri-la’s Mactan Island Resort and Spa, Cebu. Alumni who have yet to make up their minds are warmly encouraged to come and see their old friends. All past and present faculty members associated with Class ‘82 are likewise cordially invited to participate in the festivities. For further details please contact Virgil Urgel (09204039138), Joy Go (09178515601), Carlyn Relampagos (09-209005970) or Randy Cabahug (09173229923).
Published in the Suns Star Daily, Saturday, July 21, 2007 (http://www.sunstar.com.ph/static/ceb/2007/07/21/bus/batuhan.balancing.your.scorecard.(part.3).html)
Saturday, 14 July 2007
Balancing your scorecard (2)
WATCHING the British Grand Prix over the weekend was a visual demonstration in total coordination. Traveling at speeds well above what many normal drivers can even imagine, the competitors race with very little room for error – with the slightest lapse of concentration potentially costing them their own lives.
With business being the way it is these days, running companies is almost like driving Formula One racing machines. A wrong turn and somebody else could be in the lead. Similarly, an opening spotted before others have noticed it could put an organization very quickly in the forefront.
Pinoy Votes: Sun.Star Election 2007 Coverage
View here the list of local winners
The problem is – very few CEOs drive their companies like Lewis Hamilton pilots his McLaren.
Most large organizations are uncoordinated, lumbering, and slow to adapt to change. In the context of Formula One racing, many would have collapsed a long time ago, if not for the fact that their competitors are likewise velocity-challenged.
Rather than the high speed sport of motor racing, looking at companies operate is mostly like watching a game of lawn bowling – and played in slow motion at that.
Without a doubt, the way they are organized has got a lot to do with it. And of course, the way their performance is measured only makes the problem even worse.
Last week, we introduced the metaphor of multiple drivers controlling one vehicle, with neither of them knowing how to drive a car on their own. There cannot be a more appropriate way to describe how many companies are run these days.
Specialization, for all the benefits that it brings, is a major culprit in promoting fragmented thinking. Each division, department or section does its own thing, often with very little understanding of how they affect the total organization.
Invariably, they view their colleagues with suspicion, even contempt, for doing “unnecessary” things, and not understanding their own points of view.
How often do we see marketing at odds with production, with both disagreeing with finance? Possibly enough times to convince ourselves that this is actually how things should be.
The conflict is all a matter of perspective – time perspective that is.
Marketing thinks in the future, production deals mainly with the present, and finance mostly dwells in the past. This to me best illustrates what the whole problem is about.
Most of us non-marketing individuals often think that our marketing colleagues just waste company money, with campaigns that do not seem to produce tangible benefits that we can accurately measure. Those of us who have never stepped on a factory floor will have no appreciation for the day-to-day problems our production colleagues face to get our products out the door.
Why does this happen?
Well, think about it carefully. Most companies measure performance by the numbers that their accounting systems produce. Therefore all we see are historical costs – consequences of actions that have already taken place – without regard to the future benefit that they could bring, or otherwise the potential harm that they could cause.
Clearly therefore, any measurement system that focuses mainly only on the past, must be consigned to remain there.
ANNOUNCEMENT: The UP Cebu High School Class of 1982 will be having its Silver Jubilee Anniversary Reunion at the Shangri-la Hotel, Mactan, Cebu on the 22nd of July 2007. All alumni 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 14, 2007 (http://www.sunstar.com.ph/static/ceb/2007/07/14/bus/batuhan.balancing.your.scorecard.(2).html)
With business being the way it is these days, running companies is almost like driving Formula One racing machines. A wrong turn and somebody else could be in the lead. Similarly, an opening spotted before others have noticed it could put an organization very quickly in the forefront.
Pinoy Votes: Sun.Star Election 2007 Coverage
View here the list of local winners
The problem is – very few CEOs drive their companies like Lewis Hamilton pilots his McLaren.
Most large organizations are uncoordinated, lumbering, and slow to adapt to change. In the context of Formula One racing, many would have collapsed a long time ago, if not for the fact that their competitors are likewise velocity-challenged.
Rather than the high speed sport of motor racing, looking at companies operate is mostly like watching a game of lawn bowling – and played in slow motion at that.
Without a doubt, the way they are organized has got a lot to do with it. And of course, the way their performance is measured only makes the problem even worse.
Last week, we introduced the metaphor of multiple drivers controlling one vehicle, with neither of them knowing how to drive a car on their own. There cannot be a more appropriate way to describe how many companies are run these days.
Specialization, for all the benefits that it brings, is a major culprit in promoting fragmented thinking. Each division, department or section does its own thing, often with very little understanding of how they affect the total organization.
Invariably, they view their colleagues with suspicion, even contempt, for doing “unnecessary” things, and not understanding their own points of view.
How often do we see marketing at odds with production, with both disagreeing with finance? Possibly enough times to convince ourselves that this is actually how things should be.
The conflict is all a matter of perspective – time perspective that is.
Marketing thinks in the future, production deals mainly with the present, and finance mostly dwells in the past. This to me best illustrates what the whole problem is about.
Most of us non-marketing individuals often think that our marketing colleagues just waste company money, with campaigns that do not seem to produce tangible benefits that we can accurately measure. Those of us who have never stepped on a factory floor will have no appreciation for the day-to-day problems our production colleagues face to get our products out the door.
Why does this happen?
Well, think about it carefully. Most companies measure performance by the numbers that their accounting systems produce. Therefore all we see are historical costs – consequences of actions that have already taken place – without regard to the future benefit that they could bring, or otherwise the potential harm that they could cause.
Clearly therefore, any measurement system that focuses mainly only on the past, must be consigned to remain there.
ANNOUNCEMENT: The UP Cebu High School Class of 1982 will be having its Silver Jubilee Anniversary Reunion at the Shangri-la Hotel, Mactan, Cebu on the 22nd of July 2007. All alumni 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 14, 2007 (http://www.sunstar.com.ph/static/ceb/2007/07/14/bus/batuhan.balancing.your.scorecard.(2).html)
Saturday, 7 July 2007
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.
Pinoy Votes: Sun.Star Election 2007 Coverage
View here the list of local winners
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)
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.
Pinoy Votes: Sun.Star Election 2007 Coverage
View here the list of local winners
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)
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