Bringing Your Balanced Scorecard Alive with Collaborative Innovation

By: Doug Collins

Robert Kaplan and David Norton popularized the Balanced Scorecard twenty years ago. Its simple, visual framework helps organizations depict linked sets of goals that define strategy. Today, with new mindsets, practices, and technologies, people have more opportunities to engage in helping their organizations envision the future. The scorecard, however, can at times seem like an Easter Island statue, offering mute, impenetrable witness to firm performance. In this article Doug Collins explores opportunities for people to bring alive the scorecard by applying the practice of collaborative innovation.

What Does Success Look Like?

Every leader at times fears that the people in the organization do not have a shared understanding of vision and mission. They grasp the importance of getting everyone on the same page. They communicate goals at every opportunity. They commission banners for the lobby, coffee mugs for the desk, and t-shirts for the torso.

Leaders with this mindset embrace the Balanced Scorecard to share organizational intent. The scorecard offers simplicity. It lends itself to visual storytelling. One can, over a cup of coffee, use the scorecard to engage a colleague on the value the organization aspires to deliver to the customer and what the organization must do to do so.

Yet, obstacles limit the scorecard’s use. A cottage industry of consultants has created a variety of multi-step methodologies to implement the scorecard. Information technology groups transform the scorecard’s simple, visual approach into nested dashboards that mimic the flight deck of a Boeing 747. Complexity deters people from trying to create a basic scorecard of their own, which defeats its purpose.

At the same time, the practice of collaborative innovation invites leaders, acting in the role of campaign and challenge sponsors, to frame and reframe the critical questions facing the organization. The scorecard can provide highly relevant context for this activity. In turn, the practice can engage the organization in reaching a shared understanding of intent.

In this article I create a simple example to show a way in which leaders can engage their organization—and, by extension, bring the strategic planning process alive—by tying the scorecard to the practice of collaborative innovation.

By way of reference, Arthur Van Gundy explored this linkage in his stellar book on framing innovation challenges, Getting to Innovation. Kaplan and Norton describe the Balanced Scorecard in their classic article on this subject.

Telling Your Story

Imagine you run a consulting practice that advises retailers on where to open and close their stores. You serve clients within a couple hours’ drive of your office. You have built a good base over ten years and have worked with all the major, local players. You find that you can grow the business by more deeply engaging clients who value the quality of your work, but who buy your services piecemeal, by project, today.

Internally, your organization employs many highly educated and experienced people who pursue a variety of practices to deliver value to the client. They engage on matters ranging from optimizing site configurations to facilitating envisioning sessions that help clients gain perspective on the next generation of storefront design.

You note that while your team members enjoy cordial relations with one another, the specialized nature of their work causes them to engage the clients as individuals, from the consultative sales process through to the delivery of your services offerings. You see that this silo approach discourages deeper, firm-wide engagement with clients.

In response, you draft a simple scorecard that you use to engage people to gain their perspective on the firm’s direction (figure 1).

Figure 1: a basic scorecard for your retail consulting firm

Innovating the How

You find that sitting down with people to discuss the scorecard works very, very well. People in your organization come from the worlds of architecture, design, and display. They resonate with the simple, visual approach. They value the opportunity to engage on the critical question of firm-wide intent.

You observe that your talks spawn impromptu ideation sessions around the connected levels that comprise the scorecard. Your people use their firsthand knowledge of the clients to explore possibilities for building thought leadership with customers, for example, and for assigning targets to that strategic goal.

These engagements encourage you to open the conversation to all members of the organization, many of whom work from home or at client sites. You decide to embrace the practice of collaborative innovation and pursue the internally focused, enquiry led form.

Where to start? I offer the following guidance.

• Start now. The perfect time to start the strategic conversation never comes. The uncluttered group calendar remains as elusive as the Loch Ness Monster during Scottish high season.
• Start at any level of the scorecard—unless your organization confronts a burning platform that everyone knows they must address to live another day (e.g., the loss of a major client or a severe shortcoming in quality). If you are lucky enough to have a burning platform, then use it as the focus for collaborative innovation. Common sense suggests you will find a lot of energy throughout the organization in terms of how best to extinguish it.

The conversation you encourage around the scorecard provides the value. The conversation opens the door to people engaging on and reaching a shared understanding of intent.

Returning to our example, you might link the practice of collaborative innovation to your scorecard as follows, by framing one of the following critical questions, each of which maps to a level (figure 2).

Figure 2: mapping critical questions that drive collaborative innovation to the scorecard

Per figure 3, I find that the scope of the ideas that people contribute in response to the questions that you pose tends to widen as you move from the learning and growth level to the financial level. The people who participate in the collaborative innovation activity think in more conceptual terms at the higher level in forming their ideas and comments. The learning and growth and the internal business process levels tie more directly to their firsthand knowledge, leading to more concrete ideas.

Figure 3: the scope of ideas tends to widen as the questions move from learning and growth to financial levels

To this end, your practice of collaborative innovation may yield more insights for the near term when you start at these levels and more insights for the longer term when you start with the customer and financial levels. Both work as valid places to start. Rely on your discretion to know where to begin.

Regardless of where you start, you will want to refer the people who participate in the activity to the scorecard. Providing that view enables them to think holistically—strategically—as they form their ideas and comments. The results and behaviors you observe in your first challenge will guide you where to go for your next challenge.

Final Food for Thought

The Balanced Scorecard contains no magic. Using it does not guarantee you a compelling strategy. However, it is powerful. Its power lies in its simple, visual clarity. Its simple, visual clarity invites discussion. Engagement.

Applying the practice of collaborative innovation to extend that engagement across the organization makes sense when people work remotely, when people work in functional silos, and when people find themselves at odds in terms of envisioning a shared, better future.

As the leader of your organization, you bring many gifts to the table, including the gift of insight. Do not refrain from taking pencil in hand to sketch your organization’s scorecard as a way to begin the critical conversation. Do not refrain from opening the conversation to the organization at large on both the elements that comprise the strategy and the measures of those elements by applying the practice of collaborative innovation.

We live in an increasingly connected, engaged world. You reach your leadership potential as you learn how to convene and structure conversations whereby all the engaged parties can create a shared understanding of strategic intent—of that better future. Combining the scorecard with the practice of collaborative innovation gives you a powerful approach for leading in modern times.