Read The Balanced Scorecard: Translating Strategy Into Action Online
Authors: Robert S. Kaplan,David P. Norton
Tags: #Non-Fiction, #Business
The Balanced Scorecard: Translating Strategy Into Action (43 page)
Build the Implementation Plan
T
ASK
8. D
EVELOP THE
I
MPLEMENTATION
P
LAN
A newly formed team, often made up of the leaders of each subgroup, formalizes the stretch targets and develops an implementation plan for the scorecard. This plan should include how the measures are to be linked to data base and information systems, communicating the Balanced Scorecard throughout the organization, and encouraging and facilitating the development of second-level metrics for decentralized units. As a result of this process, an entirely new executive information system that links top-level business unit metrics down through shop floor and site-specific operational measures could be developed.
T
ASK
9. E
XECUTIVE
W
ORKSHOP
: T
HIRD
R
OUND
The senior executive team meets for a third time to reach a final consensus on the vision, objectives, and measurements developed in the first two workshops, and to validate the stretch targets proposed by the implementation team. The executive workshop also identifies preliminary action programs to achieve the targets. This process usually ends up by aligning the unit’s various change initiatives to the scorecard objectives, measures, and targets. The executive team, by the end of the workshop, should agree on an implementation program to communicate the scorecard to employees, integrate the scorecard into a management philosophy, and develop an information system to support the scorecard.
T
ASK
10. F
INALIZE THE
I
MPLEMENTATION
P
LAN
For a Balanced Scorecard to create value, it must be integrated into the organization’s management system. Our recommendation is that management begin using the Balanced Scorecard within 60 days. Obviously a phase-in plan must be developed, but the “best available” information should be used to focus the management agenda, consistent with the priorities of the scorecard. Ultimately, the management information systems will catch up to the process.
TIME FRAME FOR IMPLEMENTATION
A typical scorecard rollout project can last for 16 weeks (see timeline in Figure A-2). Obviously, not all of this time is taken up with scorecard activities. The schedule is largely determined by senior executives’ availability
for interviews, workshops, and subgroup meetings. If people are available, on demand to the project—an admittedly unlikely situation—the time schedule can be compressed. An advantage of doing the project over a 16-week period is that the senior executive team has time between scheduled events—interviews, executive workshops, and subgroup meetings—to contemplate and reflect on the evolving structure of the Balanced Scorecard and the strategy, the information system, and, most important, the management processes that it will signify.
The architect’s (and consultants’) involvement is heavy at the front end of this timetable, up to about the end of week 6 when the first executive workshop is held. In the second half of the timetable, the client, the senior executive team, should be taking more responsibility for development of the scorecard. The architect then shifts to a staff and facilitating role, helping schedule the subgroup meetings and assisting in the conduct of these meetings. The more that the senior executive teams are responsible for the subgroup meetings and the subsequent executive workshops, the more likely that the Balanced Scorecard project will culminate in a new approach for managing the business.
Figure A-2
A Typical Balanced Scorecard Timeline
At the completion of the project schedule, the senior and top middle managers of the business unit should have obtained clarity and consensus on the translation of the strategy into specific objectives and measures for the four perspectives, agreed on a rollout plan to implement the scorecard, including, perhaps, new systems and responsibilities for capturing and reporting data for the scorecard, and have a broad understanding of the management processes that will be changed as a result of having scorecard measures at the heart of the organization’s management systems.
SUMMARY
Our experience has shown that an organization’s first Balanced Scorecard can be created over a 16-week period. At that point, an organization is moving toward implementation where it can make the Balanced Scorecard the cornerstone of its management systems, as described in
Part Two
of the book.
NOTES
1
. The title of such a person varies. We have seen such titles as VP quality improvement and productivity, VP continuous improvement, VP business process redesign (or reengineering), and VP process improvement.
2
. Simplifying, but only slightly, we have seen two types of financial officers in organizations. The first type views his or her role as a change agent in the organization. This person understands the limitations of using only financial measures of past results for guiding the organization in its new competitive environment, and wants the finance group to use its capabilities in data gathering, information systems, measurement, and auditing to develop and operate new systems of measurement, communication, and control. Such a finance executive could indeed be an architect and, subsequently, the process owner of the unit’s Balanced Scorecard. The second type of financial officer, however, jealously guards the objectivity, auditability, and integrity of the financial numbers currently
being produced. This officer feels that adding softer, more subjective, and less auditable numbers to the responsibility of the finance organization will dilute its fundamental mission and compromise its ability to measure and control the financial numbers to the high-quality standards established over decades of practice. This second type of financial officer, typically from an accounting and auditing background, is not a good candidate to be the architect for the Balanced Scorecard project, nor, subsequently, to maintain it as a central management system.
3
. The chief financial officer and either the chief executive officer or the chief operating officer should be interviewed to learn about the financial objectives for the SBU.
Robert S. Kaplan
is the Arthur Lowes Dickinson Professor of Accounting at the Harvard Business School. Formerly he was on the faculty of the Graduate School of Industrial Administration at Carnegie-Mellon University and served as dean of that school from 1977 to 1983. He consults on the design of performance and cost management systems with many leading companies in North America and Europe; regularly offers seminars in North America, Europe, and Israel; and has lectured throughout the world. Currently he serves on the boards of the J. I. Kislak Organization (in Miami) and Renaissance Solutions and on the Academic Committee of the Board of Trustees of the Technion (Israel Institute of Technology). His research focuses on new cost measurement and performance management systems for the rapidly changing environment of manufacturing and service organizations. The author or co-author of eight books and more than 100 articles, Kaplan is the recipient of numerous awards for both his teaching and his publications.
David P. Norton
is president of Renaissance Solutions, Inc., an international consulting firm specializing in performance measurement and organization renewal. Previously he cofounded Nolan, Norton & Company, where he spent 17 years as president, prior to the firm’s acquisition by Peat Marwick. He is a trustee of Worcester Polytechnic Institute and a former director of ACME (The Association of Consulting Management Engineers). He has served on numerous client steering committees and received an Award for Excellence for his support to the Department of Defense on its approaches to corporate information management.
