Growing revenue, improving profitability and reducing cost come out as the most important priorities of the 1208 respondents that took part in Bain & Company’s 14th Management Tools and Trends Survey 2013 report – something they’ve been doing for over twenty years now. Well I guess there is no big surprise there as the slow recovery from the global economic downturn has left many executives struggling to find new ways to invest the massive cash piles their companies are sitting on. But what is less expected is that executives are using fewer management tools to guide their businesses— and using them more strategically.
Previously cost reduction tools such as downsizing and offshoring were prominent, but this time out, the five management tools that respondents said they used most often were strategic planning, customer relationship management (CRM), employee engagement surveys, benchmarking and balanced scorecards (BSC). That balanced scorecards figure in this list at all is quite remarkable; that they should be the most frequently used tool in EMEA is truly astonishing. It certainly runs counter to the sales figures of most software vendors, where BSC solutions are far from being the cash cow in any performance management portfolio.
So what’s happening here? My guess is there are a couple of factors that contribute to the BSC coming out so high:
- Respondents completing the survey tick off the management tools they think Bain & Co would expect their company to be using. You wouldn’t want to appear a laggard by saying that your company doesn’t use this much written about tool would you?
- Respondents make little distinction between the BSC with its embedded methodology that maps strategy to initiatives and KPIs – and simple scorecards and dashboards that just track metrics but have no underlying methodology. Now there is nothing wrong with either scorecards or dashboards and both have an important role in performance management, (click here for a great piece on the differences between scorecards and dashboards by Gary Cokins). But they are not the balanced scorecard as set out by Kaplan and Norton.
As Gary Cokins points out, some companies say they have a balanced scorecard when all they’ve done is transferred their management reports from a spread sheet into visual dashboards with traffic lights and directional arrows and others say they’ve got a BSC when they’ve trimmed down a plethora of measures to form what they now call KPI’s. But unless the KPIs were derived from mapping strategy as part of a formal BSC methodology, who is to say whether they are the right measures to track? As Kaplan and Norton have repeatedly pointed out, it’s not the visualization that makes the difference; it’s following the BSC methodology and that’s where solutions such as SAP Strategy Management that embed all of the steps have a critical role.
Perhaps Bain & Company can tighten up their definitions next time out!