I received a text message from a friend today:  “My brother-in-law needs to build a balanced scorecard.  Where can he find examples?” ~Sigh~ That is like asking me, “My brother-in-law needs to get from New York to Texas.  Where can he find any old Google Map screenshots?”  The crux of the matter is: What is the real question here? Is he asking to learn to properly build a strategic balanced scorecard that will be used to help an organization transform, grow, or thrive?  Or is he asking to see what plan others in similar companies have implemented in order to transform, grow, or thrive in their unique situation?  These are fundamentally different questions.  Unfortunately, the questioner usually has no idea of the difference. Hence, the classic mistake.  Thinking you can look at enough examples and construct your own strategic balanced scorecard by copying and pasting.  This is ludicrous.   It’s like picking up a random phone that is open to Google Maps and blindly following the blue dot to wherever the prior owner programmed it to go. In reality, you only need to see one example of a strategic balanced scorecard to learn how to READ and USE one.  The STRUCTURE of the scorecard, just like the STRUCTURE of Google Maps, is consistent.   The CONTENT of scorecards are unique, just like the CONTENT of directions mapping is unique from request to request.  The directions depend on where you are now, where you want to go, and your desired mode of transportation.  If you can read one map, you can read them all.  If you can read one scorecard, you can read them all.  But each strategic balanced scorecard will take a unique organization from a unique current state to a unique future state. Academic Stress and Achievement Therefore, seeing example after example will not help you CREATE a usable scorecard to achieve the results YOU desire.   Knowing HOW to create the elements of the scorecard (similar to knowing how to tell Google Maps you want to go from Point A to Point B using a car) …that’s what is critical. To learn how to create a strategic balanced scorecard (and see some examples!), we invite you to explore The Institute Way:  Simplify Strategic Planning & Management with the Balanced Scorecard. Or contact us and let us show you how.

I love to watch Shark Tank and I’ve been known to purchase a product that the Sharks reject.

So, what was the problem?  Why don’t the Sharks bite on a good product?  Because it’s not about the product.  It’s about the business.

I’ve observed business owners make the same 3 missteps in Shark Tank over and over.  The owner is passionate about his/her product.  They BELIEVE in it.  But…

1. Customer Value Proposition:  They cannot articulate what sort of customers they would attract and what it is about the product or its usage that would ATTRACT those customers as compared to the competition.  This is fundamental.  And if you listen closely, Mark Cuban will usually ask questions about this.  Skipping this step is a mistake.

2. Knowing the Numbers:  When the Sharks ask questions about customer base, sales, cost of production, market share, and such, they are assessing the current results of the business…not wishful thinking.  Business valuation is based on some combination of current results.

3. Growth Strategy:  The Sharks will ask a lot of questions as they look for drivers of future performance.  They are looking for a growth strategy.

And here is where things usually break down in the Tank.  The owner cannot clearly articulate a viable strategy for reaching customers and growing the company to serve them.  They cannot explain how the investment is connected to future results.

Sometimes a Shark has prior experience with a similar company and feels confident in his/her ability to identify the drivers after the investment.  Other times, the Sharks give up because they cannot perceive a strategy to grow the company.

I’m waiting for the day when an owner shows up in the Tank with a plan similar to one that a start-up client of ours used to rapidly obtain investment funding.  By laying out a clear picture of his growth objectives and how he intended achieve them…using a strategy map that connected the dots between drivers and results, this client laid out exactly how he would use the money and why.  For example: To build staff capacity needed to grow, he needed to improve the knowledge and skills of his employees.  He specifically wanted $10,000 to fund some specific training.  Increasing capacity via his employee skills would drive a key process objective: to enhance vendor relationships.  To further improve vendor relationships, the client asked for $15,000 to build a vendor database which would also differentiate him from the competition.  And, improved vendor relations would increase efficiency in related processes which would free up staff to serve a larger client base.  To grow the client base, he asked for $10,000 for specific marketing activities.  And so on…it was all connected: from investments through resultant profit projections.

The client called us to SHOUT, “We got the $250,000 funding!  No questions asked!”  Amazing?

Not really.  They used the proper tools to connect the dots and communicate their plan and to attract the investment.

So, would YOUR business attract a Shark?  Or would you be rejected in the Tank?

To learn how to create a plan that is clear and easy to communicate…and to execute…we invite you to explore The Institute Way:  Simplify Strategic Planning & Management with the Balanced Scorecard.

A rarely-used Major League Baseball backup player who spent the entire game (and most of the season) on the bench made a game-winning play…from the bench.  Yes, you read that correctly. It wasn’t a highly paid player on the field.  The game was won by someone sitting on the bench.  How is this possible?  

Sitting in the dugout, Detroit Tiger Hernan Perez spotted that a Kansas City Royals runner failed to tag 3rd base on a crucial play. That set off a sequence that resulted in an out instead of the go-ahead score for Kansas City as Detroit beat the Royals 3-2.

”I have to give credit where credit is due,” Tigers manager Brad Ausmus said. ”Hernan Perez was the guy who initially noticed it, sitting on the bench watching the game.”  This was a rare and newsworthy event.

Perez understood the big picture and found a way to contribute to the win.  This focus on the big picture (the team was playing to win) is what we call strategic thinking.  He was paying attention to the game, not just to his primary job function to be mentally and physically ready in case the coach sent him into play.

By keeping his head up with his eyes on the game, he saw an error that could help his team achieve their goal of winning.  And he took action to call attention to it.  This action, from the bench, resulted in Detroit winning the game.

Similarly, every member of an organization has a unique vantage point – they may be positioned to see things that others don’t see. The question is, will they understand what the bigger picture meaning of what they see?  Will they take action?

Even those who are not direct contributors, those in support functions, need to understand the game plan of your business.  If they understand what you are trying to accomplish and how you intend to get there, they may surprise you with their ability to contribute to the achievement of your goals from their unique vantage point.

Do you struggle to help support staff feel involved in the “real business” of your organization? Do you ever wish you could get your employees to understand the big picture and independently take action to help you succeed toward long-term goals, no matter what their current job is?

To learn more about how to translate your strategy into something that is clear and easy to communicate in a way that employees can understand and effectively contribute to, we invite you to explore The Institute Way:  Simplify Strategic Planning & Management with the Balanced Scorecard.

Or contact us and let us show you how.

Imagine you take your car to the car dealer to get serviced. Before you give your car to the service manager you see the following performance statistics posted on the wall:

• Average time to wait for an appointment after requesting one—27 days
• Number of people who requested an appointment but didn’t get one—46,000

Not too reassuring is it. Would you leave your car or look somewhere else? Some Veteran Administration facilities have a performance history like this. According to a recent review of the VA requested by President Obama, the agency is in deep trouble—average wait time for an appointment is 27 days and 46,000 veterans never got an appointment after requesting one. Some veterans died while waiting for appointments, although it’s not clear if the delays in medical attention contributed to the deaths. At some VA facilities performance measurement data were misreported to make executives’ performance appear better than it was. Fraudulent performance reporting was used to help justify executive performance bonuses. (A department audit reported that three out of four facilities had a least one instance of false wait-time data and in some facilities two sets of books were being maintained.) This type of behavior is called “gaming the system”. It’s a consequence of a culture overly focused on the wrong things (wait times) and a measurement system that emphasizes process performance over outcome performance. We shouldn’t be too surprised by the VA experience. When the wrong things are measured and incentivized, the wrong behaviors almost always result. Focusing on the wrong measures and missing or minimizing the right measures created a climate of misreporting and deceit at some VA facilities, leading some executives to get credit for and bonuses based on reported good performance while all along the opposite seems to be true. Almost $300 million was paid out by the VA in 2013 for performance bonuses to employees, including nearly 300 senior leaders. (Maybe some of these executives should give their bonuses back to the VA for poor performance!) We’ll leave for another discussion the bigger question—what is systemically wrong at VA that encourages a behavior to keep two sets of books on performance? Some critical questions come to mind. Where does customer satisfaction (veterans and their families are the customers) fit into the performance reporting and incentive equation? Shouldn’t satisfaction with medical service be heavily weighted in determining executive bonuses? If performance and reward are based mostly on process measures—like wait time—and wait time is being misreported, shouldn’t one assume that outcomes like effective medical care would suffer and that cheating to gain bonuses could occur? How can an organization choose the “right” measures?  Start with the end in mind (desired results/accomplishments) and work backwards through the processes that lead to the desired outcomes and to the resources required to produce the program outputs that yield the desired outcomes. Make sure the desired results are expressed in unambiguous language. Then test the developed measures to make sure you’re not measuring what doesn’t matter, or worse, measuring the wrong things and incentivizing the wrong behaviors. Whether you are a hospital, a car dealership, or any other business, government or nonprofit, the same principles apply for developing good performance measures. The unintended consequences of doing measurement badly are, in the case of the VA, potentially life threatening. Can your organization afford to do performance measurement badly, or not at all? You can learn more about developing measures that matter in our book, The Institute Way: Simplify Strategic Planning and Management with the Balanced Scorecard. You can order the book on our website or on Amazon.

My business intelligence (BI) and analytics software salesman friend said something interesting to me the other day over lunch. He said, “I don’t sell software, I sell gym memberships. When someone joins a gym they are not really buying the membership. They are buying the dream of improved health and a better physique. Their intention is to work out every day and fulfill that dream, despite the fact that few people ever actually follow up. Selling BI software is the same way. I’m not selling the software; I’m selling the dream of improved insight and competitive advantage.” The unspoken implication was that few people ever get significant benefit from their software system, a conclusion I have also observed over my years in strategic performance management. There are many common reasons that your strategic performance management software system might be getting less use than the gym membership you bought last January.  Below are the top 4 that I’ve seen as well as some tips for avoiding them. Reason 1: You bought into the hype but not the skills I overheard a CEO recently saying that he needed to buy into the big data craze.  It was clear that this person had no idea what big data or predictive analytics meant, but he definitely needed to buy some.  Many people seem to think if they just buy some software, within weeks a “number cruncher” will magically come down from a mountain with answers to all of their problems. That is like thinking that if I buy a shovel, a garden will magically appear in my back yard. Performance management and statistical analysis skills are critical to creating value in this field. Reason 2: You keep the results a secret The first question some people ask when considering a performance system is, “how do I keep everyone out of my data?”  Security around private customer, employee, or some financial information is an absolute must, but a surprising amount of strategic organizational performance information can be shared with leaders and managers.  Leaders need information to make decisions and limiting access can communicate that strategy management is something to be left to only a select few.  Analyzing data is only the first step.  The dialog around why the results occurred and what should happen next are just as critical. Reason 3: You only use out-of-the-box performance report design The standard templates provided by the software companies are almost always designed to make the software sell well, as opposed to informing YOUR strategic decision making. Good performance reports communicate three things clearly: 1) How is OUR organization currently performing, 2) Why are WE getting the results that we are getting?  And 3) What are WE doing to improve our results? Reason 4: You count and report on everything that can be counted. Just because the vendor promises that this tool can handle the volume doesn’t mean that this is a good idea. Strategic performance management is about focusing on the most critical things first. I would recommend selecting a handful of critical performance gaps and focus your data collection, analysis, and improvement efforts on those.  Teach everyone in your organization how to do this effectively before you expand to other areas. There are many more common mistakes, but these four are top of mind for me.  Please share other mistakes you’ve seen in the comments section below. For more about how to improve your performance analysis, see the Performance Analysis chapter of The Institute Way: Simplify Strategic Planning and Management with the Balanced Scorecard.