The Balanced Scorecard and Agile
For future success, leaders need to believe in strategic management. The balance scorecard can be used for strategic risk analysis, for strategic long term goals, for translating those long term goals into objectives and for strategic control.
There are some risks associated with strategic management.
- leaders who spend time on operations and only one hour a year on strategic thinking
- leaders who do not involve all relevant role players in the analysis resulting in ideas not being expressed or known
- leaders defining strategy but failing to communicate the what, the why, the where, then when, the how and the who
- leaders failing to create a culture of change as strategic management and organisational change work together requiring flexibility and creativity for success
- leaders getting stuck in the success mode and becoming over-confident in that current success.
- leaders failing to create clearly defined and measurable objectives and outcomes and therefore don’t know if strategies have been implemented
A strategy for managing these risks is the balanced scorecard.
- The vision risk – does everyone know our vision and strategy
- The management risk – are executives too involved in operations, are middle managers protecting their turf
- The resource risk – are budgets linked to strategy, do we have the capability and capacity
- The people risk – are rewards linked to strategy, are we employing the best and retaining only the best
In terms of the King Report the board are responsible for creating, implementing and controlling the strategy.
A balanced scorecard is aligned to the vision of the organisation and assists with tracking and translating long terms goals into short term objectives. These objectives reflect the critical success factors – what must go right for success. The four quadrants of the balanced scorecard set objectives that drive performance.
- Learning and development- to achieve our dream how will we adapt to change and incorporate continuous improvement i.e. through training, coaching and mentoring
- Internal business – to provide the best for our customers what processes add the most value and require maximum discipline i.e. reengineer operating processes for on-time quality delivery every time
- Financial – what must we succeed at in order to appeal to our shareholders i.e. increase return on assets
- Customer – what features, capabilities and services appeal to our loyal and very individual customers i.e. customisation at for the individual at the drop of a hat
There is great value in the balanced scorecard for the strategic process. Being Agile means we are adaptable, flexible and welcome change. Co-creative teams prefer collaboration and interaction above processes in Agile. The strategic process is ongoing and is in line with Total Quality Management, Six Sigma, PMBoK and Agile. To aid the iterative strategic process requires great leadership who themselves are learned and developed in best practices. These leaders walk the talk and create the environment necessary for flexibility, for change, for adaptability. These great leaders collaborate, engage and ensure that root causes analysis is part of the culture within the organisation, a mind-set, an attitude among all employees, in order to ensure sustainability and great returns. All of this is in line with Agile. People get a little jittery when we talk about monitor and control within an Agile environment. Monitor means to track, review and report on performance. Control means to conduct collaborative retrospectives or lessons learned and to establish the root causes of deviation in order to take corrective or preventative measures. All of this is in line with Agile.
The balanced scorecard for strategic control.
- was the vision translated and consensus obtained by clarifying that vision thus allowing people to act
- was communication, education conducted and were rewards linked to objectives that promoted accountability
- was investment capability and capacity and that of all resources aligned to strategic initiatives
- were collaborative retrospectives conducted that reviewed strategy, obtained feedback and lessons learned through data gathering, testing assumptions, validating and correcting strategy.
The balanced scorecard is a strategic management tool that can overcome the barriers to effective strategic management regardless of whether you use the Waterfall approach or the Agile approach.
Don’t let anyone fool you that Agile is adhoc, that Agile is unstructured, that Agile has no timelines!!!