There’s an entire micro-industry out there called The Balanced Scorecard. It is simultaneously one of the most simple, and therefore effective tools in business, as well as an incredible waste of time and resources in some organizations based on how they implement it. Join us this week, as we discuss how individual managers can effectively use the concepts of the Balanced Scorecard to make better decisions, and better run their businesses.
Monday’s Tip: Have metrics from at least four different perspectives. If you’ve only got “one number”, you run a serious risk of damaging your business. Use the four standard Balanced Scorecard perspectives as your starting point: Financial, Customer, Internal Process, Learning/Innovation.
Tuesday’s Tip: Don’t ignore your leading indicators. Most companies do well with lagging indicators like those often found in the financial perspective. Make sure you attempt to measure leading indicators, like how well your organization learns and innovates.
Wednesday’s Tip: Link your leading indicators to firm performance. How do your indicators (or those of your department) contribute to the larger business? If you can draw this link clearly for people, they are much more like to embrace performance metrics.
Thursday’s Tip: Tell people their score regularly. A Balanced Scorecard that is never referred to or kept secret is a waste of time. Put performance metrics where people will see them, and encourage them to better understand them.
Friday’s Tip: Allow your metrics to change over time. You should start by measuring something. Over time, you will figure out what measures are meaningful, and which ones are not worth continuing to track. Don’t be afraid to change them over time.