In these times of economic turbulence, strategy execution has become the new mantra for executives who seek growth. Executives are demanding more of their strategy efforts; a strategy must be sound and executed before any benefits can be realized. The Balanced Scorecard explains that one major risk confronts all organizations who hope to achieve strategic success.
Is your organization achieving the promised benefits of its strategy? If not, it's likely that you are doing something wrong. You may have a flawed strategy that requires some rethinking. Or, perhaps your strategy is a good one but you are not executing it well.
In either case you can't really be sure what the root cause is until you know that your strategy is being implemented. You can't test the hypothesis of your strategy in theory; you have to test it in the field.
If you have already implemented a Balanced Scorecard you are well along the path to discover whether your strategy will deliver the results you seek. Your strategy map lays out your periodic reports and strategic hypotheses, and review meetings provide opportunities to see how well these hypotheses are working. If you have implemented your strategy through the use of this management framework you should be well along the path to become a strategy-focused organization.
But if you aren't sure if your strategy is sound — or if you are having trouble executing it — it's not too soon to assess your approach to strategic management to understand whether you have done everything possible to achieve the promise of your strategy.
According to a study just released by Bain and Co., the Balanced Scorecard is now in use in approximately 60 percent of organizations around the world. This figure is up from 50 percent reported two years earlier (a 20 percent growth rate over this period). The study reports that companies are increasing their use of “compass-setting” tools such as strategic planning, benchmarking, and mission and vision statements as they search for growth opportunities in a tough economic environment. The Balanced Scorecard clearly provides an opportunity to integrate these “point” solutions.
Numerous factors explain the increased use of the Balanced Scorecard; foremost among them is the fact that it works. In a recent study of Balanced Scorecard usage in Europe, none of the 42 companies in the study currently using this management approach plan to discontinue use.* In fact, the level of commitment increases as usage becomes more sophisticated. Even for those just getting started, there is 100 percent commitment to continue the practice. Among the top five benefits associated with this management approach was the fact that it was shown to improve company results in the long-term.
Avoid the pitfalls
But, in spite of a 60 percent penetration rate and rave reviews from demanding users, there is always the risk that you may not get it right. Many organizations fail to achieve the benefits of their strategy because they fail to make strategy execution a core competency. The pitfalls that await those who don't embark upon this journey with adequate understanding and executive commitment are well documented. Pitfalls that can put your scorecard program at risk include: