PREVIOUS NEWSLETTER

April, 2010

Making Scorecards Actionable Newsletter # 44 (2010)

Content of Making Scorecards Actionable Newsletter # 44 (2010)

» The smell of success!
» Expert’s workshop in Stockholm
» Interesting BSC reading on the web
» What did you think about this newsletter?



THE SMELL OF SUCCESS

How should a Balanced Scorecard performance report be designed? That question has been discussed more or less since the framework was introduced by Kaplan and Norton back in 1992. The typical answer among BSC prophets is to design the report such that it is intuitive to interpret, often containing numbers as well as more visual expressions. All from the beginning, speedometers and other gauges in the cockpit has been suggested as a way to describe performance and capture the interest of the reader.

Still, a written report, regardless if it contains eye catching images or not, will only speak to the readers’ visual sense. How about all the other senses we – as humans – have been given; our ability to listen, to taste, to feel and to smell?

Sound is an apparent mode of communication, since that is the medium we use when we talk. In our book e.g. we argue that the scorecards and the strategy map should be used to create a dialogue between different stakeholders within the organization and make them talk and listen to each other. Thus, the content of the scorecard will not only be reported in written or visualized form on paper or on the intranet, it should also be communicated in the daily conversations in the organization – where people talk to each other. Even though the spoken message may be more elaborate than the written, it is often a more time consuming mode of communication. It is e.g. not possible to browse through a spoken presentation in the same way as you can browse through a document and get an overall impression of its content.

So, how could we address the other human senses in order to communicate our most basic message in the scorecard: whether we have executed our strategy as intended or not? One of our clients is thinking of embedding a non-written message in the paper-base performance reports. In addition to the texts and graphs on the paper, he will add a fragrance to all reports that is sent to units that have performed above par. All ready when receiving the letter, the recipient – and even the other members in her management team – will know what to expect. The unit’s performance is communicated even before anyone has had a chance to look at the document.

This organization is now struggling with the challenge to find a smell that is a universally accepted as “good”. At the moment, freshly baked cinnamon rolls or the smell or roses are the top candidates. But also the fresh smell of lemons is a runner up candidate. The second question the group is addressing is how to apply the fragrance to the paper. We participate in this project and it has been fun to watch the group dynamics in the task force, as some of the members demonstrate an extensive experience (from early teenage years) on how to boost-up love letters.

Fortunately the organization is only thinking about adding a fragrance to communicate success. They believe it is enough to underpin the positive feedback loops, i.e. adding a fragrance to reports that are above par. A more cynical organization (if there are such organizations) could also use a fragrance-based feed back mechanism to signal sub-par performance. Which kind of smell that would be, is fortunately outside the scope of our knowledge.

It would be interesting to know if any of you have tried to address any other of our human senses in order to enhance the message we want to communicate in our performance reports. What does it sound like when we realize our strategy? How does it feel when the strategy is executed? And what does success taste like?

Please send as a note if you have thought about any of these questions in your organization. Please send an e-mail to carl-johan.petri@makingscorecardsactionable.com.



EXPERT’S WORKSHOP IN STOCKHOLM

May 18, professor Nils-Göran Olve and Dr. Carl-Johan Petri will run a full day seminar in Stockholm, aimed for participants who have an extensive personal experience from working with scorecards. During the seminar we will share experiences with each other and try to, collectively, create new (Scandinavian) knowledge on challenges and benefits from describing the business strategy in strategy maps and from managing organizations with Balanced Scorecards.

For more information about this seminar visit our education partner Civilekonomernas Informations AB’s website: http://www.civilekfor.se/templates_epilite/Page____3139.asp



INTERESTING BSC READING ON THE WEB

In this edition’s summary of interesting reading on the web, we happened to end up with some sort of HBS-focus. The first two links are to Harvard Business School and the third refers to a more practical, yet very interesting, news article on a retail company that has changed their incentive system to address also non-financial achievements.

| One Report: Better Strategy through Integrated Reporting | In Robert G. Eccles and Michael P. Krzus brand new book “One Report: Integrated Reporting for a sustainable strategy”, the authors argue for the need of a more balanced performance report, than the typical balance sheet and profit- and loss statement. In most of their reasoning in the book, and in the accompanying interview, they speak like full blown BSC practitioners. This is, however, not a praise for the BSC in disguise. The authors explicitly refer to the merits of the Balanced Scorecard. But there is of course a difference between BSC and the One Report. Actually two apparent differences. First of all, Eccles and Krzus have created a performance report for external use; the recipients of the One Report, are stakeholders outside the company whereas the authors argue that the scorecard is designed to be used within the company. The other difference is that the balanced scorecard is somewhat more generic regarding what kind of strategies it can help realize. The subtitle of Eccles and Krzus’ book however, indicates that their model is especially geared towards strategies with a major focus on social and environmental ambitions.

You find the full article on Harvard Business School’s website: http://hbswk.hbs.edu/item/6392.html

| Conceptual Foundations of the Balanced Scorecard | Robert Kaplan has just recently published a paper in Harvard Business School’s Working Papers series. For those of us who are interested in the concept as such and how it was developed, this is a really interesting text. One could even call it a biography of the Balanced Scorecard: How did it all start? What was the original ambition? How has the concept changed over time and what will happen to the Balanced Scorecard concept in the future?

You find the full article on Harvard Business School’s website: http://hbswk.hbs.edu/item/6395.html

| Carphone ringing in the retail changes | The final article in this summary is less academic, but still very interesting. It is an interview with Steve Blan at the British retail company Carphone. In the interview Blan explains why he decided to re-do the company’s incentive system from scratch. Moving from a bonus model that was solely based on turn over in the store, to a model that is based on the Balanced Scorecard format. The most dramatic change was the shift from variable to fixed salary. They raised the basic salary with 50 % and changed the variable determinant of the bonus from sales to customer satisfaction. Customer satisfaction is measured as Net Promotor Score, where customers who score 9 or 10 (out of 10) are believed to be active promoters of the store. And the more active promoters a store generates, the better the bonus to its employees. Blan also argues that there are linkages in the business, similar to the logic in the Balanced Scorecard framework: “If you focus on getting people to do the right thing by giving great customer service then the money will follow”. Here is a practical example of a company that actually is putting the money where the moth is. And according to Mobile Magazine, the effects have been positive. Blan concludes: “We have a three year plan to really put customers back at the centre. We’ve achieved a lot in 12 month and we are ahead of the curve. We had our best Christmas period ever despite the recession”.

You find the full article on Harvard Business Schools website: http://www.mobiletoday.co.uk/News/news.aspx?id=64971



WHAT DID YOU THINK ABOUT THIS NEWSLETTER?

Please, help us improve this Newsletter. Follow the link below and give us some quick feedback (only three questions) on the Newsletter: http://www.surveymonkey.com/s/WTL3BLY






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.
  Back