Is Balanced Scorecard harmonized with Business Agility?

14.08.2018

Yes and No!

Let's define business agility to get on the same page. Agile business has two characteristics:

A) Sensitivity: As soon as there is a change in market, processes, internal or external environment there is an alarm that informs leaders.

B) Flexibility: Ready to change and to get changed.

Many people consider balanced scorecard as an in flexible structure. Strategy map and KPIs that should be followed until the end! This mindset makes the road map difficult. It puts a big pressure on our shoulders with no result.

Some people pretend that they do understand the above issue but in reality they still insist on old procedures and solutions.

Rare people understand it and start acting.

But how?

First of all let's agree that KPIs as it is clear from the name are indicators are showing our performance or the result of our performance. It is possible in many cases to define some other indicators on risk, showing us possible problems that we may encounter in future. For example: we all know that when a product is launched other competitors try to minimize our market share and expand their share as much as possible.

Considering this issue, we should find out how we can keep ourselves always competitive and how we can expand our market share too?

Unfortunately, many people in this case look at financial indicators and they try to watch their profit as a sensitive indicator but this is wrong!

It's too late to move when our profit is already touched by market situation. That is why we call these KPIs the lagging ones.

Then the question is that which indicators can be sensitive indicators to warn us from market change and industry change?

The reply is based on the nature of the industry but few suggestions can be based on a combination of market trend and your market share or work-order forecast that is defined according to history of your market and the needs of consumers. If you wish to make it a bit advanced try to study consumer behavior or market trend forecast.

Regarding flexibility indicators there are many suggestions but I pick the simplest one and the most practical one:

Whatever KPI that exists in your learning and growth pillar of the scorecard can help you to make a flexible organization meanwhile studies has shown that the most flexible organizations are learning organizations.

Flexibility is not something that you can create in one night. It needs to change the mindset and then practice the instructions step by step.