Taking strategy out of the boardroom
“Canteen placemats are great communication tools. I’ve found that a balanced scorecard (BSC) printed on a placemat helps people digest the message over lunch, if you’ll pardon the pun.” Carel Boers is a former bank director. As a turnaround partner, he has coached many companies through successful organisational changes to achieve better performance. Together with Professor Kurt Verweire and Dr Geert Letens, the latter a change management expert, Research Fellow at Vlerick and lecturer at the Royal Military Academy, he comments on how BSCs can bring strategy to life.
“A BSC is a great tool for people to visualise their role and position in an organisation. The trick is to translate your targets into a language everyone understands so that they all know how they can contribute to those targets,” explains Boers. “Defining a strategy is relatively easy. It’s implementing it that’s the challenge.”
Verweire smiles: “Mind you, a good many companies have trouble developing a clear and sound strategy. But you’re right in saying that the proof of a strategy is in the implementation. BSCs, and strategy maps for that matter, help create a common understanding. They can take strategy out of the boardroom.”
Autonomy within boundaries
Letens: “The BSC paints a picture of how the internal and external, and short- and long-term goals of your entire organisation are interconnected and, as such, it helps to steer performance in the desired direction. It allows you to define areas of autonomy, but within boundaries. This balance between autonomy and shared direction is a key factor for successful implementation of BSCs. Another challenge lies in the use of the BSC: if you employ it as a simple control tool, you won’t secure support and commitment from your organisation.”
Verweire: “That’s precisely why so many companies become disappointed with BSCs and stop using them.”
In the analysis phase, Boers works his way from the financial perspective to the customer perspective and, via the internal process perspective, to learning & growth. In the implementation stage, however, he works the other way round, tending to focus first on the learning & growth perspective. “Management and employee development is the key to success. An organisation can only grow if you enable and encourage your people to grow in responsibility. I usually work with unlimited budgets for training & development. I trust people not to ask for more than they can comfortably handle.”
Boers has coached financial service institutions as well as non-profit organisations, and even the Dutch police. “The financial perspective in your BSC is not always profit; it can be value, social value if you like. But the approach and the criteria for success are the same, regardless of the type of organisation. If you believe that by developing your people you can expand your organisation and improve performance, then BSCs can be used anywhere.”
From left to right: Kurt Verweire, Geert Letens, Carel Boers
High impact changes
The results are often nothing short of spectacular. At the German Cooperative Bank Berlin, for example, net profit surged tenfold, staff turnover plummeted from 27% to 8%, while absenteeism dropped from 9% to 2%.
 A strategy map is a visual representation of the strategy of an organisation. It illustrates how the organisation plans to achieve its mission and vision by means of a linked chain of continuous improvements. It also illustrates the cause-and-effect relationships between different strategic objectives and their measures, or key performance indicators (KPIs) that are included in a balanced scorecard.
The Balanced Scorecard
Kaplan and Norton developed the concept of the balanced scorecard (BSC) in the early 1990s. It was originally intended as a performance measurement tool that added non-financial performance measurements to traditional financial metrics to provide a more balanced view of an organisation’s performance. Kurt Verweire: “The BSC concept views an organisation from four perspectives. You then develop, measure and monitor metrics relative to each of these perspectives. Over the years, the BSC has evolved from a control tool to a communication tool supporting change. Used well, it can help overcome the barriers to change and secure commitment to your strategic plan.”
How to make change happen
Kurt Verweire warns that balanced scorecards alone are no guarantee of success. “Introducing BSCs in particular, and performance management in general, involves change. Studies indicate that 70% of all change initiatives fail.” In “Managing for Performance Excellence”, the case study of the German Cooperative Bank Berlin illustrates the importance of an enabling organisational context and change management. Carel Boers was the mentor of one of the key actors. Kurt Verweire, Regine Slagmulder, Geert Letens and Jonathan De Grande are the authors of the case study.
Create a burning platform
Make sure people understand the need for change. Create a common sense of urgency. The Cooperative Bank Berlin sparked that sense of urgency by demonstrating that most of its loans were sold at a loss.
Address obvious issues
There is no easier way to gain commitment than to address issues that will prompt people to say, “That’s what I’ve been saying for years!”
Expect and accept resistance to change
People don’t like change and some need more convincing than others. Different parts of the organisation will adapt to change at a different pace.
Focus on the willing
Don’t waste time trying to convince everyone. Some people will choose to leave or will have to be asked to leave. During the turnaround at the Cooperative Bank Berlin, about one-third of the staff left.
Let results speak for themselves
Work to gain credibility through successful pilot projects. Pick one that will make a difference. A successful turnaround of a department accounting for 60% of sales and one-third of the workforce secured the green light for a company-wide rollout at the Cooperative Bank Berlin.
Balance top-down and bottom-up
To achieve sustainable change, experience has shown that it is best to balance top-down vision and commitment with bottom-up engagement and autonomy.