Harvard prof on how to sustain good work

On April 14, Dr Robert Kaplan, a professor at Harvard Business School, held a day’s training in Nairobi for senior managers, CEOs and other business leaders, on the balanced scorecard performance management system.

Dr Kaplan is the co-creator of the 20-year-old tool for managing performance in organisations, but it is only fairly recently that it began to catch on in the country and in parts of Africa, thanks partly to local expert on the subject, Mr Peter Kahihu, who runs the Balanced Scorecard Institute of Africa and the Strategic Leadership Centre in Nairobi. ELLY WAMARI spoke with Dr Kaplan for insight into the balanced scorecard system. Following are excerpts.

Q. Organisations in Africa have remained behind in the implementation of the balanced scorecard, yet this is a tool that you started promoting in 1992. What do you make of such a delayed uptake here?

The balanced scorecard requires a certain level of management sophistication... Let me break it down this way: You first start a company. You launch a new product and build it to serve villages. There is no one else around so you get the business and you can support yourself.

You measure your performance through the financial system – income statements and balance sheets. These are foundational.

You get a little better and expand geographically to serve more villages. You reach a certain scale and you start competing against other organisations doing the same thing. At that point, you have to think, “How do I do better than them?” You start to think about the kind of strategy to follow. That’s when you start to use this more sophisticated management tool.

Q. Now that we are talking a lot more about the balanced scorecard, are we getting there? Are we becoming more sophisticated in management?

Yes. I can actually track the stage of economic development around the world as to when I get invited to give my first speech. In China, I didn’t get invited until 2003. They had a whole bunch of development going on. That was my first visit to both China and Russia. These two countries were actually leaving socialism and going to more market based economies. It was about the same time that I was also invited to the Middle East. I haven’t been to Vietnam yet, but I have been to Malaysia and Singapore multiple times because they are further advanced in their economic development. So, yes, Africa is now at take-off stage. This is my first training in Kenya. I have been to South Africa, but that is a more advanced economy. Two years ago, I went to Nigeria – again a developing nation and beginning to be the biggest GDP in Africa.

Q. You have mentioned Singapore and many of us know it as a country that has brought about some good level of efficiency in its public service. Would you know if the public service in Singapore uses the balanced scorecard?

Yes, Singapore is using the balanced scorecard a lot in the public sector. I think it goes back more than 10 years. Every public sector agency is almost mandated to have a performance measurement system. Many of them have adopted the balanced scorecard.

Q. I recently met someone who introduced himself as a Kaizen coach. We got talking about performance management, and he said he preferred the system called Hoshin Kanri to the balanced scorecard. Your views?

Hoshin Kanri is a very hierarchical process, which takes specific objectives and cascades them downward. The issue there is that the employee at the end of the process gets specific goals to himself that he assumes are related to this high level goal, but the employee never quite understands the chain back up.

Now, the strategy map of the balanced scorecard process is the more general version of Hoshin Kanri, with which we want to cascade high level objectives to front level employees, but at the same time give these employees visibility on the reverse path because there could be things that they could do other than the ones the managers think of, that may help push success up there.

The balanced scorecard is top-down vision and bottom-up implementation. But also, the employee has visibility into the whole strategy. You can’t get that with Hoshin Kanri because it’s very hierarchical coming down.

Q. In your book, The Execution Premium, you suggest that organisations should establish an office for strategy management. Who should occupy this office?

It’s a challenging position. The holder has to combine two sets of capabilities. One, they have to be analytic because the balanced scorecard is a measurement tool.

That’s a lot of left brain skills. The person has to be comfortable with numbers and thinking about the process that generates numbers. But that person also needs right brain skills.

These are people skills. To get people to go along, the holder of the office has to win their commitment by persuading them and by being a good person to get along with. So, communication and interpersonal skills are important in this office, more than the technical background of the holder.

Q. Sounds like a full-time job. Should it be?

It’s not a career job. It’s something that somebody can do in the middle of their careers, maybe for three years. The way to look at this is to think about a military organisation. You have generals who are in charge of developing strategies and battle planes, and are ultimately accountable for success or failure. But all generals have chiefs of staff, who are assigned to them.

The job of the chief of staff is to make the general successful. They get meetings scheduled and invite the right people.

They have the agenda. They take notes during meetings and do follow-ups afterward. We actually got our inspiration from the chief of staff function when we made the suggestion.

And it’s a little bit more than that. It’s not just managing the general’s (CEO’s) time, but really about helping the strategy of the CEO to be implemented.

Q.At what point in the development of the balanced scorecard did you stop and say: This is it! This is the system we must now push for?

It was around 2004. We realised that in many organisations, their first balanced scorecard was a big success, but only for a period of time.

They developed a scorecard. There was a lot of energy and success, but after 18 months, the system fell through because it had simply become a reporting process.

In a few organisations though, we noticed they had taken the project leader from the balanced scorecard project and given them a permanent position. They called them chief of performance management, chief transformation officer and so on. The title varied but the roles they had was the same – to keep refreshing the balanced scorecard.

Every year, we did an update, they were the ones who scheduled and provided information for the strategy review meetings. Based on these organisations that sustained the balanced scorecard, we realised that they had a permanent group – a small group of individuals, maybe one person, to keep the process going. That provided the inspiration.