Jan 26, 2010

Balanced Scorecard for SMBs

My friend couldn’t come for a meeting because he was attending a fire! He is running a small firm; some implementation at a customer site didn’t go well as expected. He and his team had to work round the clock to bring this fire under control. Many small firms occasionally face these fires and customer wrath. Can Balanced Scorecard help them to reduce these fires?

The Balanced Scorecard has been embraced by thousands of organizations around the globe as an effective way to execute their strategy and for transforming their business. It is not surprising that Balanced Scorecard takes several months to implement in large organizations.

Is Balanced Scorecard appropriate for only large firms and not for SMBs? First I convinced myself before advising my friend. In some organizations, issues are complex not because the processes are complex, but because of the wrong organization structure and lack of alignment. In a small organization, organization structure and the processes are simple. Business Scorecard originated as a measurement system and I looked at the analogy: a bike has only a few dials, a car has more, a old jumbo jet may have a hundred dials in a dashboard and a modern aircraft may have a dashboard with only a few dials! (Alert will pop up only if there is an issue). So a scorecard for a small firm makes sense and should be easier to develop than for a big firm.

I remembered the quote by the reputed Management Consultant Paul Niven “Whether you have one, one thousand, or one million employees the roots of success remain the same”. After all, even a small organization will have their vision/mission, a strategy, a need to measure performance other than financial outcomes, and a need to accomplish goals with limited resources. Since Balanced Scorecard aims to bring alignment of employees with the organization strategy and goals, it is very much applicable for small organizations too.

Can Balanced Scorecard eliminate the business fires? If you have a sound strategy and a tool to execute it, why can’t? I offered to help my friend by developing a business scorecard. How did we go about and what lessons we learnt: that I will share with you in the next blog.

Read more on Business Scorecards at CXOdashboards.com.

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