The Strategy Focused Organization

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How Balanced Scorecard Companies Thrive in theNew Business Environment

THE STRATEGY-FOCUSEDORGANIZATIONTHE SUMMARY IN BRIEF

In 1996, Robert Kaplan and David Norton introduced the BalancedScorecard performance measurement method, which included not only tradi-tional financial measures but also such qualitative measures as employee sat-isfaction, corporate mission and customer loyalty. In The Strategy-FocusedOrganization, they show how the following five principles transform theBalanced Scorecard from a tool for performance measurement to a tool forcreating a strategy-driven performance management company:

1. Translate the strategy into operational terms. Use the BalancedScorecard to describe and communicate strategy in consistent, insightful,operational terms.

2. Align the organization to the strategy. For organizational strategiesto work, they must be linked and integrated across many functions finance, manufacturing, sales, marketing and so forth. The BalancedScorecard can link these disparate and dispersed functions.

3. Make strategy everyones everyday job. Use the BalancedScorecard to educate the organization about strategy, help employees devel-op personal objectives, then compensate them based on their adherence toand implementation of the business strategies.

4. Make strategy a continual process. Use the Balanced Scorecard tolink strategy to the budget process; review strategy regularly in managementmeetings; and develop a process for learning and adapting strategy.

5. Mobilize change through executive leadership. Through a methodof mobilization, governance and strategic management, executives canembed new strategy and new culture into their management systems, creat-ing a continual process to meet the strategic needs of today and tomorrow.

Formulating strategy is one endeavor. In this summary, you will learn how to make strategy work.

Concentrated Knowledge for the Busy Executive www.summary.com Vol. 23, No. 1 (3 parts) Part 1, January 2001 Order # 23-01

CONTENTSPrinciple 1:Translate Strategy intoOperational TermsPages 2, 3

Principle 2:Align the Organization tothe StrategyPages 3, 4, 5

Principle 3:Make Strategy EveryonesEveryday JobPages 5, 6

Principle 4:Make Strategy aContinual ProcessPages 6, 7

Principle 5:Mobilize Change ThroughExecutive LeadershipPages 7, 8

What Are the Pitfalls ofImplementation?Page 8

By Robert S. Kaplan andDavid P. Norton

FILE:STRATEGIC M

ANAGEM

ENT

In todays business landscape, it has never been moreimportant to implement solid strategies the uniqueand sustainable ways by which organizations createvalue. Yet, research reveals that companies have anincreasingly difficult time executing the strategies theyneed to remain competitive. One reason for this is clearlythat while these strategies, and the business issues behindthem, are changing constantly, the tools for measuringthe effectiveness of these strategies have not kept pace.

Many corporations still use tools that measure successin terms of tangible assets investments in inventory,property, equipment, etc., and the resulting returns. Thedecentralized nature of business that prevails today, how-ever, values more intangibles (knowledge, capabilities,

relationships).Constantchanges in tech-nology and thecompetitiveenvironmentdictate that allbusiness units,support unitsand employees

be linked to strategy and that all have a common lan-guage to communicate strategy, as well as the processesand systems to implement it.

The Balanced Scorecard was initially conceived as anorganizational performance measurement tool thatincluded non-financial as well as financial measures.By ensuring that all of the objectives and measuresinherent to it are derived from an organizations visionand its resulting strategy, Strategy-FocusedOrganizations have transformed the BalancedScorecard from a performance management tool into astrategic tool. Com-panies like Mobil, CIGNA andChemical (Chase) Retail Bank have used the BalancedScorecard approach to focus their organizations onstrategy by adhering to the five key principles that willbe explained in detail in this summary:

1. Translate the strategy into operational terms. 2. Align the organization to the strategy.3. Make strategy everyones everyday job. 4. Make strategy a continual process.5. Mobilize change through executive leadership.

Principle 1: Translate Strategyinto Operational Terms

In order to be a Strategy-Focused Organization, youmust put strategy at the center of your organizationsmanagement process. Strategy cannot be executed if itcannot be understood; it cannot be understood if it can-not be described. In the past, however, there has beenno generally accepted framework for describing strate-gy and the value created from intangible assets.

The Balanced Scorecard links the intangible and tangi-ble assets in value-creating activities. Using strategymaps of cause-and-effect linkages, it describes howintangibles are mobilized and combined with other assetsto create value-creating customer value propositions.

Specifically, strategy maps illustrate the processes fortransforming intangible assets into tangible customerand financial outcomes, providing executives with aframework for describing and managing strategy in aknowledge economy. The example illustrated on thefollowing page (of a fashion retailer specializing inwomens clothing) shows the key components of thestrategy map.Four Perspectives

The strategy map and Balanced Scorecard provide aframework to look at a value-creation strategy fromfour different perspectives:

1. Financial the strategy for growth, profitabilityand risk, viewed from the perspective of the share-holder.

2. Customer the strategy for creating value and dif-ferentiation from the perspective of the customer.

3. Internal business processes the strategic priori-

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THE STRATEGY-FOCUSED ORGANIZATIONby Robert S. Kaplan and David P. Norton

THE COMPLETE SUMMARY

The authors: Robert S. Kaplan is the Marvin BowerProfessor of Leadership Development at HarvardBusiness School. David P. Norton is President ofBalanced Scorecard Collaborative, Inc.

Copyright 2001 by Harvard Business SchoolPublishing Corporation. Summarized by permission ofthe publisher, Harvard Business School Press, 300 NorthBeacon Street, Watertown, MA 02472. 400 pages.$29.95. 1-57851-250-6.

(continued on page 3)

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Strategy-FocusedOrganizations have

transformed the BalancedScorecard from a performance

management tool into a strategic tool.

ties for various business processes, creating cus-tomer and shareholder satisfaction.

4. Learning and growth the priorities to create aclimate that supports organizational change, inno-vation and growth.

The arrows in the strategy map show the cause-and-effect relationships between elements in each perspec-tive, clearly displaying how such intangible assets asstrategic awareness feed into themes that eventuallyyield tangible results.

Within each of the strategic themes, a second strategymap and Balanced Scorecard [on the right] breaks downinto detail how the theme affects the customer objec-tives that result from the theme. In this example, we seehow sourcing and distribution affect customer objec-tives of product quality and product availability that, in

turn, drive customer retention and revenue growth, aswell as the internal processes (factory management andline programming) that contribute to those objectives.

In Balanced Scorecards, value-creating processes andcritical roles for intangible assets are clearly portrayed,in the correct context of how those intangibles createvalue, providing the measurement and managementframework for knowledge-based strategies.

Principle 2: Align theOrganization to the Strategy

The Balanced Scorecard provides a powerful frame-work for business units to describe and implement theirstrategies. A Strategy-Focused Organization, however,requires more than just having each business unit use itsown Balanced Scorecard to manage a great strategy; thestrategies and scorecards for all such units should bealigned and linked with one another. Synergies can then

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The Strategy-Focused Organization SUMMARY


Principle 1: Translate Strategy intoOperational Terms(continued from page 2)


A Fashion Retailers Strategy Map

The Revenue Growth StrategyAchieve aggressive, profitablegrowth by increasing our shareof the customers closet.

Financial

The Productivity StrategyImprove operating efficiencythrough real estate productivity andimproved inventory management.

Customer

Internal

Learning andGrowth

ShoppingExperience

Right ProductBuildingImage

ProfitableGrowth

Growth Productivity

ShoppingExperienceAvailability

CompleteOffering

Price/Benefit

ConsistentQuality/Fit

FashionDesign

BrandImage

StrategicAwareness

GoalAlignment

StaffCompetencies

TechnologyInfrastructure

Sourcing andDistribution

Theme

ShoppingExperience

Theme

FashionExcellence

Theme

AchievingBrand

DominanceTheme

Build theFranchise

OperationalExcellence

IncreaseCustomer Value

Financial

Customer

Internal

Learning

Profitability

RevenueGrowth

Operating income

Sourcing andDistribution Theme Measurement Target Initiative

20% increase

Same store growth

12% increase

Likes Program

ProductQuality

ShoppingExperience

A ClassFactories

Line PlanManagement

FactoryRelationship

Skills

MerchandiseBuying/PlanningSystems

Return rate - Quality - Other

Customer loyalty - Ever active - # units

Reduce by 50% each year

Quality Management

60% 2.4 units

Customer Loyalty

Merchandise from A factories

Items in stock

70% by year 3

85%

Corporate Factory Development Program

% of strategic skills available

Strategic systems vs. plan

Year 1 (50%) Year 3 (75%) Year 5 (90%)

Strategic Skills Plan

Merchants Desktop

develop from efficient interactions between those units interactions which must be explicitly recognized in thestrategies and scorecards of each unit.

Many organizations share common business processesand require a corporate role to ensure their most effec-tive use; others share common technologies and knowl-edge. A corporate scorecard should articulate the ration-ale behind keeping different business units operatingwithin a corporate structure rather than spinning themoff into individual, independent entities.

A corporate scorecard can clarify two elements of acorporate-level strategy: Corporate themes values, beliefs and ideas that

reflect the corporations identity and must thus beshared by all business units. Corporate role the actions mandated at the corpo-

rate level that create synergies at the business unit level.Shared Services Units

Organizations can also create synergies by aligningthe internal units that provide shared services. Theseshared service units are created at a corporate or divi-sion level because of economies of scale and the advan-tages of specialization and differentiation that theseunits can create for example, purchasing, manufac-turing, distribution, real estate, etc.

For example, the Limited (an apparel retailer witheight retail divisions, each with its own target audienceand retail chain) has a real estate division, whichacquires and manages retail properties. The real estatedivision is a single organization that can be deployed tothe benefit of all eight retail divisions.

The Limited also has one division that manages therelationships with factories that supply products for theeight retail divisions. The company has found that it ismore cost-effective to concentrate such expertise in asingle shared services division, rather than have each ofthe retail divisions manage its own capabilities in thosecritical areas.

The challenge is for the centrally supplied service tobe responsive to the strategies and needs of the businessunits it serves. These units should be aligned throughthe creation of a Balanced Scorecard for the sharedservice unit that adds value and responsiveness to thestrategies of the business units. In an ideal world, therewould exist a top-down strategic architecture thatdefines the corporate role and how shared service unitscontribute to the corporate strategy; often, however, thisarchitecture does not exist. In the absence of that archi-tecture, shared service units can use the BalancedScorecard in a somewhat different manner, using one oftwo models: the strategic partner model and the busi-ness-in-a-business model.

The strategic partner model allows for the sharedservice unit to be a partner in the process of the businessunits development of Balanced Scorecards. SuccessfulBalanced Scorecard companies typically first developscorecards for business units that sell products and serv-ices to external customers, then develop shared serviceunit scorecards. The linkage between business unit andshared service unit scorecards requires four components:

1. A service agreement between the business unitsand shared service unit that defines expectationsabout services and costs.

2. The shared service unit scorecard, whichreflects its strategy to support the service agree-ment with the business units.

3. A linkage scorecard, in which the shared serviceunit accepts accountability for improving select-ed measures on the business unit scorecards.

4. Customer feedback from the business units onthe performance of the shared service unit.

The business-in-a-business model can be employedwhen business units do not have Balanced Scorecards; insuch situations, the shared service unit must view itself asa business and the business units as its customers. Theshared service scorecard defines the relationship. This

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Shell Services InternationalThe Shell Services International (SSI) division of

the Royal Dutch/Shell Group of Companies providednonroutine services in consultancy, IT, business serv-ices and human resources to Shells business units.SSI used the Balanced Scorecard to develop multiplelevels of service, in accordance with the needs of thebusiness units it served. This multi-level system wasachieved largely due to the enhanced measuringcapabilities that the Balanced Scorecard provided,including cost figures and performance measuresrelated to the following: Customer satisfaction. Quality/speed of support. Customized technical measurements. Business alignment/ease of doing business.These measurements and resulting service-level

agreements changed the mindset of the businessunits from focus on cost-related factors to quality andservice-centric concerns.

Principle 2: Align the Organizationto the Strategy(continued from page 3)

approach works best in such functional organizations ashuman resources, IT, finance, marketing and R&D. Thescorecard enables executives of these functional units tobuild a management approach that motivates their organi-zations to be customer-focused and competitive.

Principle 3: Make StrategyEveryones Everyday Job

In the past, aligning all employees to a strategy wasnot critical. In the age of sequenced, repetitive, task-based manufacturing jobs, employees did not have tounderstand or implement strategy; they simply had toperform the narrow tasks management assigned themand trained them to do.

Today, this type of work is virtually obsolete, replacedby knowledge-based work. Employees must be alignedto the strategy in order to create value. Indeed, there areseveral critical factors that require intense alignment ofemployees to organizational objectives: While many companies focus on employee satisfac-

tion by bulking up compensation and benefits packages,this satisfaction does not imply commitment from theemployee to the goals of the company. Companies might claim that employees are their

most valuable asset, but the frequency with which theycheck employee attitudes and skills reveals a differentstory. Not all employees are equally important to their

employers; those who directly affect customer experi-ences and relationships are not always the ones who aregiven the most compensation and training. Some companies are implementing programs to

involve customers more directly in the hiring, training,and rewarding of key employees.

Strategy-Focused Organizations understand that, ulti-mately, employees are tasked with implementing strate-gy, and are often the ones who come up with the inno-vative ideas that make strategies work. These organiza-tions use the Balanced Scorecard in three distinctprocesses to align their employees to the strategy: creat-ing strategic awareness, defining personal and teamobjectives, and linking incentives and compensation tothe Balanced Scorecard.Creating Strategic Awareness

Employees must learn about and understand the strat-egy before they can help implement it. Executives mustuse communication processes at the launch of their new

strategy, starting with education and followed by 1) test-ing to ensure that employees understood the message; 2)checking that employees believe the strategy is beingfollowed; and, 3) determining how many are teachingothers about it. Think of a product launch. You wouldntput a new product on the shelves without telling cus-tomers about it; dont expect the strategy to generatemuch excitement or buy-in if you havent evangelized itto your employees.

Your communications program should have the fol-lowing objectives:

1. Develop an understanding of the strategythroughout the organization.

2. Develop buy-in to support the strategy.3. Educate the organization about the Balanced

Scorecard measurement and management sys-tem for implementing the strategy.

4. Provide feedback, via the Balanced Scorecard,about the strategy.

Defining Personal and Team ObjectivesEmployees must understand how they can influence

the successful implementation of the strategy.Homogeneous organizations whose outcomes are easy tomeasure sales organizations, for example canfocus on a few primary metrics. More complex organiz-

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Principle 2: Align the Organizationto the Strategy(continued from page 4)

Sears Strategic Learning MapsSears, Roebuck and Co. uses visual representations

of strategy, or learning maps, to help employeesunderstand the changes that are occurring and howthey can contribute to successful implementation ofchange initiatives. These maps consist of images andpathways designed to create employee discussions ofa strategic theme.

One such learning map helped Sears develop avision of its future in retail sales. The map showed awinding street that started with pictures of the retailenvironment in the 1950s, and progressed throughsuccessive decades until the street showed the envi-ronment of the 1990s: Wal-Mart, J.C. Penney, TheLimited, etc. The maps were accompanied by tablesand charts that defined the context for employees torespond to three strategic themes about the company:that it was a compelling place to shop, work and toinvest. Employees had to answer the question, Whatare the implications of these themes on our businessand our team?

Through use of the map and a series of town hallmeetings, Sears communicated its vision and enabledemployee involvement in the day-to-day effortsrequired to make that vision reality.

tions must share the outcomes and strategy they are try-ing to achieve. They will allow individuals and teams todefine personal objectives that can influence and willhave an impact on the organizational objectives.

The city of Charlotte, N.C.s Department ofTransportation (CDOT) linked the departmentsBalanced Scorecard measures to the departments high-priority programs and assigned individual work teams toeach of those programs, including measurements ofaccountability and performance. Each of the 41 pro-grams had a one-page report that included their objec-tives, the action steps required to implement the pro-gram, the desired outcomes, responsible managers, criti-cal factors and program-specific performance measures.This method and its inherent accountability factorsenhanced the motivation of frontline teams by mappingtheir day-to-day activities up to high-level business unitand corporate objectives.Linking Compensation to the Balanced Scorecard

Employees should feel that their organizations suc-cesses result in shared rewards for those who broughtabout those successes namely, the employees.Conversely, when the organization experiences short-falls, employees should feel some pain. Incentive andreward systems provide the link between organizationalperformance and individual rewards.

Citicorp (now Citigroup, Inc.) linked the three tiers of itsBalanced Scorecard (corporate, business unit and personalperformance) to levels of compensation. The performanceof the business unit, for example, was based on six dimen-sions: financial performance; customer/franchise perform-ance; strategy implementation; risk and control; people;and community standards. Each component of the businessunits performance scorecard was scored either below par,at par, or above par with bonuses at branch managementlevel tied to those scores. This scheme provided strongincentives for managers not to under-perform on any of thesix performance dimensions.

Principle 4: Make Strategy aContinual Process

One reason so many organizations have difficulties inimplementing strategy is that these companies have atleast one (sometimes many) disconnects between howthey manage strategy and how they manage operations.These companies use their budget as a planning andcontrol system, creating a loop that defines resourcesallocated to operations (inputs) and the performance tar-

gets required to hit their budgetary goals (outputs). Strategy-Focused Organizations use a double-loop

process, integrating the management of budgets andoperations with the management of strategy. TheBalanced Scorecard creates a reporting system thatallows the progress against the strategy to be monitoredand corrective actions to be taken as required. Thescorecard also serves as a link between the operationscontrol process and the learning and control process formanaging strategy.

This management system enables you to do threeessential things: Link strategy and budget. Stretch targets and

strategic initiatives on the Balanced Scorecard link therhetoric of strategy with the rigor of budgets. Close the strategy loop. The Balanced Scorecard

links with feedback systems to provide a new frame-work for reporting and a new strategy-centered focus formanagement meetings. Test, learn and adapt. The Balanced Scorecard

explicitly states the hypothesis of the strategy, allowingit to evolve in real time as new ideas and directionsemerge from the organization.

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Principle 3: Make Strategy EveryonesEveryday Job(continued from page 5)

National Bank OFS: Using theScorecard as a Budget Filter

National Bank Online Financial Services (OFS) usedits Balanced Scorecard to develop a process to screenand rank budget initiatives. Management first sortedinitiatives into two categories strategic andbusiness as usual by grading each initiative on aset of three criteria:

1. Helps OFS achieve a strategic objective(defined by the strategic themes on the BalancedScorecard).

2. Builds competitive advantage.3. Builds sustainable points of differentiation.The second screen focused on the initiatives that

drew upon the resources from several functionalunits and required significant costs and time toimplement. The effect of these screens was to sepa-rate operational budgeting tasks from strategicbudgeting tasks. Senior management only wanted toconsider strategic projects that could create newcapabilities for supporting strategic objectives. Andit worked the two screens filtered hundreds ofinitiatives down to about a dozen, which were thenranked and considered for the budget based on thestrategic themes from the Balanced Scorecard.

Two ProcessesStrategy-Focused Organizations must view their budg-

ets for financial numbers and resource allocation as aris-ing from two different processes: operational budgetingand strategic budgeting.

Operational budgets consist of a forecast of the rev-enues expected from sales of goods and services and theexpenses expected to be incurred, under efficient opera-tions, for the goods and services to be produced anddelivered to customers. Spending decisions can bedetermined by first estimating the production and salesvolumes for the next period, then forecasting thedemand for activities, calculating the resource demands,and determining the actual resource supply.

Operational budgets reflect expenses expected to beincurred to support recurring operations; this aspect ofbudgeting is informed by the Balanced Scorecardbecause of its connection to the business model forgrowth in existing businesses. Operational budgetingdoes not, however, represent the most significant oppor-tunity for the scorecard to redirect and align the organi-zation to its growth strategy, particularly if the strategyrepresents a distinct departure from the past.

Strategic budgeting authorizes the initiatives requiredto close the planning gap between desired breakthroughperformance and that performance that is achievable bycontinuous improvement and business as usual. Itauthorizes spending initiatives that enable an organiza-tion to develop new products and services, new capabili-ties, new customer relationships and expanded capacityfor future growth. The Balanced Scorecard helps organi-zations determine the quantity and mix of spending intheir strategic budget.

Principle 5: Mobilize ChangeThrough Executive Leadership

Implementing new strategies requires large-scalechange; the term transformation has emerged to differenti-ate the scale of change required by business strategy fromthe continuous improvement that organizations routinelyperform. The leaders of Strategy-Focused Organizationslead transformations, not small-scale changes.

Getting transformations started, however, is often achallenge commensurate with the scale of the change.Some companies engage in strategic transformations outof a burning platform motivation their organiza-tions were failing, and drastic measures were in order.Some examples include:

Bob McCool, of Mobil North American Marketingand Refining (NAM&R), who implemented strategy-based organizational changes after his companysexpenses and capital had doubled, its margins had flat-tened, and its volumes were trending downward. Gerry Isom, of CIGNA, who used the Balanced

Scorecard to turn around the Property and Casualtydivision of the company when its ratio of outgoingexpenses to incoming premium revenues far exceededthe industry average. Bill Catucci, of AT&T Canada, who came to the

company when it was close to bankruptcy, losing $1million every day.

In other cases, the companies were successful; ratherthan resting on their laurels, however, their leaders cre-ated stretch targets to eliminate complacency and drivecreative efforts. Some examples include: Jack Welch, who, shortly after becoming CEO of

General Electric, energized the company by declaringthat every division should become Number One orNumber Two in every market they served. The changetransformed his company from a lumbering giant to agiant with the speed and agility of a small enterprise. Douglas Newell, who, as head of the Internet bank-

ing division of National Bank OFS, set a goal tobecome the Number One Internet banking company inthe world. Newell used the Balanced Scorecard to setstretch targets that kept the division ahead of the pack inthe fast-moving world of the Internet.

These and other leaders set remarkable goals, goalsthat fell far outside their organizations comfort zones,goals that required total organizational commitment toachieve them. They also recognized the benefits ofusing measurement to lead their change efforts.Executives that create Balanced Scorecards for theirstrategic initiatives help build their strategy, the team toimplement that strategy and the commitment from theteam that is required for success.

Its easy to build a business plan that addresses andmeets specific growth objectives; the hard part is identi-fying how that growth will be achieved. The BalancedScorecard helps organizations specify in detail the criti-cal elements for their growth strategies: targeted customers where profitable growth will

occur; value propositions that lead customers to do more

business and at higher margins with the company; innovations in products, services and processes; investments in people and systems to enhance

processes and deliver differentiated value proposi-tions for growth.

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Principle 4: Make Strategy A ContinualProcess(continued from page 6)


Without clear specifics on these elements, employeescannot reinforce one anothers efforts to implementstrategy.

Ultimately, however, the ability to create a Strategy-Focused Organization depends less on structural anddesign issues and more on the leadership of the organi-zations senior executive. The leaders listed above creat-ed a climate for change, and provided the vision forwhat that change could accomplish, as well as the gov-ernance process that promoted communications, interac-tive discussions and learning about their strategies.

Indeed, most of these strategy-focused leaders foundthat their most important challenge was communicationof their strategy to those whose job it was to implementit. They had to gain the hearts and minds of all theirmiddle managers, technologists, sales forces, frontlineemployees and back-office staff. They developed theirvisions of what success would look like and the out-comes they wanted to achieve, then let their employeeshelp find innovative ways to accomplish the strategicmission. In so doing, they found it more effective tocommunicate vision and strategy, rather than to try tocontrol the actions of their subordinates; they used theBalanced Scorecard as a communications tool, not acontrol tool.

What Are the Pitfalls ofImplementation?

Although many companies enjoy the benefits fromtheir Balanced Scorecard management systems, imple-mentation failures do occur. More often than not, thesedisappointing results are self-inflicted, owing to factorsinternal to the business rather than attributable to exter-nal events. These pitfalls tend to fall into two categories:design failures and process failures.Design Failures

Some failures occur when companies build poorBalanced Scorecards. They may use too few measures intheir perspectives, failing to obtain a balance betweenthe outcomes they are trying to achieve and the perform-ance drivers of those outcomes. Others include too manymeasures and never identify the critical few.

Failures also occur when units within the company arenot aligned with an overall strategy. If each unit followsits own path in developing a Balanced Scorecard, organi-zations will not have a common strategic vocabulary they will instead have a Scorecard Babel. The manage-ment system collapses when each unit approaches its

scorecard differently, with no overall link to group orcorporate strategies. Senior leadership is then unable tomobilize at any level, local or organization-wide.Process Failures

The most common causes of implementation failures,however, are due to poor organizational processes,which tend to fall into at least one of seven commoncategories: Lack of senior management commitment. Senior

management must articulate the organizations strategyand bring about consensus if consensus about the strate-gy is difficult to achieve. They must also be emotionallycommitted to the strategy, investing time and resourcesto see the strategy through. Too few individuals involved. Commitment must

come from the appropriate decision-makers in an organ-ization to keep business practices in line with strategicgoals. The excuse that individuals (particularly key sen-ior managers) already attend too many meetings is nota valid one. Keeping the scorecard at the top. The opposite

error of not involving senior executives is to involveonly senior executives. For the scorecard to be effective,it must be shared with everyone in the organization. An over-long development process (the Balanced

Scorecard as a one-time measurement project). Someteams believe they only have one chance to launch thescorecard, so they want to produce the perfect score-card, spending months refining it so long, in fact,that it never gets implemented. The most successfulimplementations, however, start with missing measure-ments; the organizations simply learn by doing. Treating the Balanced Scorecard as a systems

project. Sometimes, the Balanced Scorecard is imple-mented by consultants that specialize in installing largesystems. These consultants spend months and millionsof dollars automating and facilitating access to thou-sands and millions of data observations collected by thecompany. This has little to do with the engaging strate-gy that should be at the center of the BalancedScorecard management system. Hiring inexperienced consultants. Using inexperi-

enced consultants or consultants who deliver theirfavorite methodology under the rubric of the BalancedScorecard is a recipe for failure. Introducing the Balanced Scorecard for compen-

sation only. Linking strategy to compensation is a pow-erful lever to gain the attention and commitment of indi-viduals to strategy. Some companies, however, forgetthat they must translate the strategy into terms each oftheir employees can understand and use in their everydayactivities a key component of implementation.

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Principle 5: Mobilize Change ThroughExecutive Leadership(continued from page 7)

Documents

The Strategy Focused Organization