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April, 2007

Making Scorecards Actionable Newsletter # 26 (2007)

Content of Making Scorecards Actionable Newsletter # 26 (2007)

» Test your organisation’s scorecard skills
» Do we really want to learn (or remember)?



TEST YOUR ORGANISATION’S SCORECARD SKILLS

To start with, we would like to take this opportunity to market our free web based “BSC Analyser”. It can be found on the web site www.makingscorecardsactionable.com (you find it in the menu to the left). The questionnaire contains twelve statements and you are prompted to react on each of them. Given the answers you submit, the system will compare your practice with what we preach in our book, and rate it based on what we think is important to make scorecards actionable. Check it out, and see if you agree with our automated opinion about scorecard implementations.



DO WE REALLY WANT TO LEARN (OR REMEMBER)?

Documenting one’s ambitions and achievements, like in a scorecard, has as one of its greatest benefits that it enables learning. For instance, we approach 100 target customers trying to sell something, and 25 respond; or our improved intranet gets 100 more hits from our employees, and the internal support unit is relieved of 25 calls for assistance. We expected only 20, and are happy; or we expected 50, and are disappointed. In both cases we have learnt something. Both about customer reactions, or those of our employees, and about our ability to forecast such reactions.

If something turns out better than expected, few will resist this type of learning. It is when things turn out less happy that we often find it hard to accept it.

I’m not talking about the reasonable doubt that this one “experiment” proves anything. (But if the outcome is happy, many will want to believe so.) Nor is it always wrong to question the measurement, or claim that the 100 targets or hits were not really the kind of targets or hits we intended, so the 25 is irrelevant because of that. I’m interested in the frequent post-fact reaction that we never really expected 25. That was overoptimistic; something we just discussed but of course could not promise; and did I really say so?

It’s human to revise one’s memories. Some psychologists claim that what we remember is not really what happened (in this case, what we said), but a revised version that we created last time we thought about the event.

If we want to make it easier to revise what happened we should of course avoid documenting it. Documents may embarrass us later.

Now you may say that revising memories is a kind of learning. Next time we try something similar we may remember that 25 out of 100 is the likely outcome. But then we have not learnt anything about our imperfect judgement. A series of failed predictions should be important in teaching us our difficulties in judging – either that our existing beliefs need revision, or that we are just not able to foresee what will happen. Both may be important insights.

So we should try to estimate, just in order to learn. This requires us to take a positive attitude towards wrong predictions. As predictions often are part of budgets or project targets this is more difficult in practice than in theory. In budgeting, this is an old debate: how to avoid conservative targets that are easy to reach, and behaviour where people aim to hit such targets rather than perform optimally? Maybe rewards for hitting (easy?) targets should be combined with rewards for disproving old beliefs, ie learning?

If so, such rewards should ideally be for interesting learning: for instance disproving patterns that many have believed in, or providing convincing evidence about patterns that have been debated and questioned. Only rarely will proof be scientifically valid; but firms live by accumulating experience, and so any recorded evidence may have value.

Our favourite method of formulating expectations and so creating the preconditions for learning is strategy maps. Setting down concrete targets, even when uncertainty is high, is one way of preparing to learn. It is not always easy to explain that such targets will not be held against you if you fail in reaching them. But we believe that if you manage to do so, and get rather more detailed and quantified strategy maps, it will benefit your learning.






MAKING SCORECARDS ACTIONABLE NEWSLETTER is a bi-monthly update on our experiences and opinions on how scorecards and strategy maps can be made actionable – to help organisations realise their intended business strategies. The newsletter is compiled and distributed for free by the authors of the book “Making Scorecards Actionable – Balancing Strategy and Control”. Also make sure to check out www.makingscorecardsactionable.com to get up to date information about our seminars, to evaluate your organisation’s BSC skills according to our computerised BSC Analyser and to download presentations from the document archive.
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