Being an MBA graduate, I passed with rose-tinted glasses, ready to conquer all in the corporate world. However, reality struck very hard when I began working with big family owned organizations. I realized not everything is as simple as an HBR case study and there are complicated aspects we never thought of while at our books and PPT presentations.
One such experience is the implementation of a Balanced Scorecard (BSC) in a family-owned business. When our CEO came up with the idea to implement it, we had a good half-day discussion on his vision, mission and where he saw the organization in the short (one year), mid (five years) and long term (above 10 years). Armed with this knowledge and our CEO’s confidence, my BSC-certified boss and I decided to pay homage to Kaplan & Norton and took an oath to implement it. Little did we know that not everything is similar to our MBA BSC case studies and the reality of employees of family-owned businesses is completely different. In these organizations MBAs are a rare breed. Nortan & Kaplan might as well be Hollywood directors to them.
So how should one go about implementing a BSC in such organizations?
The first step is to define the key influencers in the organization. Yes, this is something not openly discussed in books about BSC. In a family-owned business, implementation of such tools cannot be successful without the buy-in of key influencers. Usually these include top management, heads of departments and, of course, owners.
Second, it’s extremely easy to convince a VP who is an MBA graduate to implement BSC. However, making BSC an acceptable tool to VPs with 25 years of experience in industries such as construction or supply chain and started their careers as site engineers or warehouse managers is a different ball game altogether. So a pitch for BSC should be completely Indianized with local examples. It should present clear outcomes, like expected EBITDAs or cost optimization and, most importantly, what is in it for them in terms of business or SBU profits, key SBU performance indicators and their own growth. Also, create an implementation schedule, just like any project. MS Projects can be a handy tool for this.
Next comes the longest and toughest part, the creation of a BSC for each SBU. This is done by bringing together key people and almost literally locking them in a room for brainstorming. In our case, some of the discussions were very heated and were followed by walkouts. The implementer has to be highly focused and patient and has to keep the discussion on track. (Refer Edward De Bono’s Six Thinking Hats as a tool to conducting a meeting).
The next step involves the actual trickling down of the BSC to different departments and creation of Key Performance Indicators (KPIs). We did this in a celebratory manner by creating a launch campaign, showcasing the BSCs in a gathering, to create an impact and explain the seriousness of the activity in the employee’s mind. As we were dealing with a wide variety of employees from workers to directors, we completely Indianized the activity by renaming the BSC as Vikas Patra and the KPIs as Lakshya Patras.
Finally, there comes the actual tracking and showcasing of results at the end of the financial year and revamping the tool annually.
Sustainability of the BSC is a long-term matter. The activity needs continuous effort from every employee in the organization. A tool like it, if implemented with the right spirit, helps in creating a culture of performance in the organization. The key is implementing it correctly and negotiating the pitfalls while doing so.