Change and the Balanced Scorecard

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Developing Strategy. Change and the balanced score card.Change is inevitable. All markets are galloping forward. Any firm that doesn’t want to change is (relative to their market) travelling backwards. And travelling backwards compared to customers’ needs must only mean that the firm will progressively be less and less able to satisfy them. It’s the road to ruin.

But change is difficult.

We’ve heard about change agents – magicians who go in to a firm to make change happen. We’ve heard about approaches to change – like ‘unfreezing’ the present, making a change and ‘re-freezing’ to make the change stick. And we’ve heard that change only occurs when driven by politically powerful players in the firm.

Maybe there’s some truth in each but there’s no universal model that managers can follow to get successful change – until now, so read on.

Fundamentally, the best form of change is continuous incremental improvement. The Japanese and Chinese have the phrase ‘kaizen’ – change for the better. It’s used to describe continuous improvement in all functions and employees. Kaizen has been proven as the best approach. But how does it apply to people?

Balanced Scorecard

In the 90s, consultant Robert Kaplan and academic David Norton, did some research to determine just what should be in a firm’s strategy and how strategy should be described. They came up with a simple approach that could easily be used to track the progress of change. They called the resulting tool the ‘balanced scorecard’.

The essence of the scorecard is that once the mission, values and vision have been determined, strategy can be defined using four perspectives – financial, customer, processes and learning and growth.

They determined that there’s a causal flow from stuff done in learning and growth all the way through processes and customer to financial. And the learning and growth perspective centres on people. People therefore determine what happens at the financial level and ultimately determine whether or not the firm meets its vision.

People Scorecard

The Kaplan and Norton work determined that firms must set objectives in the four perspectives. But how does a firm get objectives met in learning and growth? How can people be ‘persuaded’ to change? What does a manager DO to get change?

Managers can say what change is needed, what performance is to be achieved – but they must be able to say how.

The secret is in understanding what causes performance.

Performance is caused by four in-person characteristics: competencies, behaviours, identities and values. To get someone to change, one or more of these must change. Change a person’s values and you perhaps change learning and growth. That perhaps changes the firm’s processes which evolves the vision. That’s the causality at work.

These internal characteristics describe the person’s internal ‘scorecard’.

But even with the best will, a manager can’t just flick a switch and change some of the people scorecard. They need some mechanisms for change.

Mechanisms for Change

We all have mental models about everything we do – driving a car, writing a blog, recruiting a new member of staff. Humans change the way they work by changing their mental models.

To effect change, managers must change their staff’s mental models.

There are five mechanisms to effect change in mental models: mentoring, coaching, training, leadership and consulting.

  • Mentoring is where a subject matter expert works with the employee to help them attain competency;
  • Coaching works where the employee has the skills and knowledge but has some blockage preventing change;
  • Well-designed and delivered training works to change any or all of the personal scorecard;
  • Leadership is where the leader works with the employee one-to-one or in a group and unblocks issues and illuminates the goal;
  • Consulting is often needed to enable change – like suggesting new methods or giving new frameworks.

So balanced scorecards can be used to think through, set and manage change, all the way from vision to change in mental models.


This blog has illustrated an integrated model that connects interventions in the employee’s life to the result in progress toward corporate vision. It’s a micro-model that managers can use.

Contact us: +44 0(01444 810454, +44 (0)203 700 3014But counter arguments persist. Many say that people need to be told to do things differently by someone who holds significant power, like the CEO/MD. That might work.

And some say that group dynamics should be used – persuade key people in groups and they’ll influence the rest. That might work too.

Whatever happens, managers must work with their people to get change. It’s not about parachuting in some third party agent. It’s about changing relationships between manager and subordinate. It’s a manager thing.

The manager must create a ‘felt need’ for change. ‘Felt need’ is where the employees believe that things will be better after and that takes leadership. The manager must then work with them through mentoring, coaching, training, leadership and consulting to change their mental models.

Call us if you need support with developing your balanced scorecard and then implementing your firm’s change plan.

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