Organizations and business leaders adopt the Balanced Scorecard for lots of different reasons. Sometimes they want to bring a more rigorous business performance measurement approach to their organization. Other times, they are looking for a more concise set of outcome metrics to up-level external results reporting. Sometimes business leaders are looking for a way to keep on top of the things that keep them up at night and the Balanced Scorecard seems like a great tool to help them do just that. Others believe “what gets measured gets managed” so they use the Balanced Scorecard to communicate what’s important to the people in their organization.
There are almost as many reasons WHY business leaders decide to adopt the Balanced Scorecard as there are business leaders themselves.
In my years of helping organizations design and implement Balanced Scorecards, I have found that, as long as everyone in an organization is on the same page about the primary reason why the organization is using the Balanced Scorecard, the reason behind Balanced Scorecard adoption doesn’t limit the level of success achieved thorough Balanced Scorecard use.
(That being said, troubles do happen when organizations start trying to use their Balanced Scorecard to do multiple things at once – like external compliance reporting and internal strategy management. Multiple WHY’S always dilute your Balanced Scorecard, and its effectiveness)
However, what DOES impact the traction and success of the Balanced Scorecard in organizations is HOW the organization uses their Balanced Scorecard. That is, it’s the cultural attitude an organization has to measurement and, more specifically, business performance that’s tracking below expectations, that is a strong predictor of Balanced Scorecard utilization success or failure.
In my experience, organizations with a persistent “red is dead” approach to performance results have a fundamental cultural flaw that will eventually trigger a Balanced Scorecard collapse.
So what is a “red is dead” culture? It’s one where underperforming results are met with negative reactions from business leaders including directing attacking questions squarely at the person who is unlucky enough to be bringing the problem results into the leaders’ cross-hairs. A “red is dead” culture usually pervades all levels of an organization from the top right down through the entire management structure so that even front line employees know exactly what the organization’s attitude is about underperformance.
How can you tell if your organization has a “red is dead” culture? Just ask yourself how comfortable you’d be bringing “bad” news or underperforming results to the attention of an executive in your organization. If the very thought makes you queasy then your organization has a “red is dead” culture.
Now, to be fair, not all “red is dead” cultures are created equal. In the mildest cases, bringing areas of underperformance to executives’ attention on repeated occasions ends up branding individuals as the chronic purveyors of bad news. However, in the worst cases, results review meetings become a close-quarters paintball session where the chances of getting out “alive” are slim to none when presenting red results is on the Balanced Scorecard agenda.
In organizations with a “red is dead” culture a lot of work goes into preventing underperforming or “red” results from making it onto the Balanced Scorecard. Results get manipulated. Targets get changed. Performance ranges get negotiated and altered. Considerable energy goes into trying to hide the truth. And when underperforming results do make it to the Balanced Scorecard, employee stress levels rise and everyone associated with the offending results takes a “duck and cover” approach as the Balanced Scorecard meeting nears.
Everyone grows to resent, and even hate, the Balanced Scorecard until the predictable rebellion that rises up against it ends with the Balanced Scorecard as the primary casualty.
A “red is dead” culture is extremely unhealthy yet it isn’t unusual in many of the organizations I see. The problem is that, to maximize the value of the Balanced Scorecard in an organization – to allow it to fulfill its WHY – organizations have to be willing to see, admit, and deal with real performance issues. In addition, they need to see them as organizational, not personal issues, and be mature enough to face them collectively.
However, organizations with a “red is dead” culture really have a bigger problem in my opinion – a problem with confronting all sorts of disappointing truths about their business.
Changing a “red is dead” culture isn’t easy but it’s necessary if you want to tap into the power of the Balanced Scorecard to change and improve your organization and operations, business strategy, and results.
Some organizations try to address their “red is dead” culture by moving away from their traffic light/red, yellow, green approach to performance results color-coding. However I don’t need to tell you that the problem runs deeper than this. Exchanging a red color with a sad face icon or exclamation point symbol doesn’t change the fact that results are performing below expectations. A new warning sign will still trigger the same organizational response and behaviors!
What IS required is a change in attitude – one where underperformance and “bad” news of any kind are seen as opportunities for learning and improvement.
This may sound a little simplistic but it’s as easy (and difficult!) as that.
The first step in making this important change is to realize that your organization has a “red is dead” approach to business performance that’s below expectations. Once leadership agrees that this is in fact the case, and that it’s getting in the way of moving the organization forward, you’ve got something to work with.
The next step is to (1) adopt a mindset that truly sees underperformance, bad news, and business problems as opportunities for improvement and then (2) demonstrate the behaviors that align with this new perspective. For example:
Not pouncing on underperforming results is a good start.
Asking tough organizational questions in a way that probes the issues fairly and from a place of understanding and support (rather than attacking the messenger) is key.
Encouraging respectful group discussions and collaboration about potential solutions makes problem sharing safe and an expected behavior.
And enabling learning and internal best practice modelling accelerates the pace at which your organization, strategy, and results improve.
When behavior like this becomes the norm throughout your organization, you’ll know that you have successfully conquered your “red is dead” culture. From there, once you’ve got this change mastered, the next frontier you’ll naturally gravitate towards is an active search for new opportunities for improvement so that your organization can stay ahead of the change curve.
Is your Balanced Scorecard an object of fear in your organization? Is shaming and blaming a normal part of your company’s Balanced Scorecard results review process? If so, it’s a sure sign that you have a “red is dead” culture.
To salvage your Balanced Scorecard investments it’s important to take corrective action now. It’s never too late to start working towards creating a company-wide mindset that embraces seeing underperformance and “problems” for what they truly are – opportunities to work together to build a healthier organization and accelerate its progress, results, success, and impact!