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17 July 2009 • 7:00 am

Scorecard Blues (plus Three Other Colors)

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To my chagrin, the term ‘scorecard’ is widely used in both the disciplines of performance management and strategy execution, and without further qualification, has an imprecise variety of meanings. To some, it may mean a large collection of indicators of operational performance. To others, it is an ambiguous shorthand for ‘balanced scorecard,’ which is a well-developed set of related ideas and practices around strategy management and execution. Ambiguity comes from the fact that to some, the term ‘balanced scorecard’ means simply a collection of measures that has been balanced according to some real or imagine scheme. On far too many occasions, I’ve been approached by a conference attendee with a request to review and comment on his so-called ‘balanced scorecard,’ only to find that the proud offering is a only collection of operational measures with no connection to strategy. This is the basis of my Scorecard Blues. So let me be blunt: if a set of measures has been selected without the prior development of a strategy map, it cannot be properly called a balanced scorecard.

Even without the qualifier of ‘balanced,’ a ‘scorecard’ is seen as a group of measures, and / or the visual representation of those measures, and / or the tool for managing measurement data. Many software tools called ‘scorecards’ have been developed to facilitate the collection, analysis, and presentation of scorecards, both for operational and strategic use. Because the term ‘scorecard’ has so many diverse meanings and uses, it simply cannot be used alone without further explanation. But there is one trait that attaches to nearly every individual’s own definition of the term ‘scorecard.’

The lowest common denominator of nearly all ‘scorecards’ is the ubiquitous red – yellow (amber in Europe) – green summary indicator scheme (hence RYG). more