THE BALANCING ACT
Achieving Breakthrough Performance Using the Balanced Scorecard Four barriers to strategy implementation How the Balanced Scorecard Framework to deal with these barriers Three Steps in Building a Balanced Scorecard Benefits of using the Balanced Scorecard

Here are some interesting figures, hard to believe: more than 90 per cent of effectively formulated strategies do not get successfully implemented. A Fortune cover story on success of strategy implementation concluded that in about 70 per cent of the cases the real problem is not bad strategy but bad execution. In the Asian region, we estimate the failure rate of the best strategies to be between 70 per cent and 90 per cent. Our joint survey with the CFO Magazine on how many people understand their company’s strategy, threw up alarming figures. While 60-70 per cent of the top management understood their strategy, when it came to the middle management, the figure dropped to about 40 per cent and further to less than 10 per cent for line employees! Now, these figures were for the US / EU companies, so imagine what it would be like for companies operating in the Asia/Middle East!

Most management systems revolve around a budget. How often is the question asked, “Is this in our strategic plan?“ rather than the often heard one, “Is this within this year’s budget?” Organizations often give up activities as the year goes by if the budget needs to be pruned without realizing that some of those activities may be necessary to reach strategic objectives. Linkages between strategic objectives and action plans are often weak.

When the organizations get into the strategic planning cycle, one or more of these usually happen:

• Not all key people participate in finalizing strategy
• Divisions/SBUs do not finish their strategic plans or even action plans in time for corporate strategy to reflect all key priorities comprehensively
• The long term strategic planning exercise does not end on time
• The budget is treated as the strategic plan

The problem is not that organizations can’t formulate strategies. Rather the issue is that the task of implementing strategy is time consuming, and riddled with vested interests, ambiguity, even lack of acceptance of the strategic plan. The strategy document remains isolated, ‘for your eyes only’. The above research indicates that 85 per cent of senior management teams spend less than an hour per month to discuss strategy. 95 per cent of the typical workforce does not understand strategy.

Research has identified that there are typically four barriers to strategy implementation viz. Vision Barrier, People Barrier, Operational Barrier and Management Barrier. The challenge most companies have today is to build a robust and balanced strategic management process.

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