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The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment Hardcover – September, 2000

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In their previous book, The Balanced Scorecard, Robert Kaplan and David Norton unveiled an innovative "performance management system" that any company could use to focus and align their executive teams, business units, human resources, information technology, and financial resources on a unified overall strategy--much as businesses have traditionally employed financial management systems to track and guide their general fiscal direction. In The Strategy-Focused Organization, Kaplan and Norton explain how companies like Mobil, CIGNA, and Chemical Retail Bank have effectively used this approach for nearly a decade, and in the process present a step-by-step implementation outline that other organizations could use to attain similar results. Their book is divided into five sections that guide readers through development of a completely individualized plan that is created with "strategy maps" (graphical representations designed to clearly communicate desired outcomes and how they are to be achieved), then infused throughout the enterprise and made an integral part of its future. In several chapters devoted to the latter, for example, the authors show how their models have linked long-term strategy with day-to-day operational and budgetary management, and detail the "double loop" process for doing so, monitoring progress, and initiating corrective actions if necessary. --Howard Rothman


" . . . Kaplan and Norton show they know how to follow a good opening act [The Balanced Scorecard] without losing their own balance." -- American Way, December 2000

In this fast-moving economy of big ideas and trendy business strategies, one can sometimes lose track of what's in and what's out. If the last round of big ideas (disruptive technologies and chasm-crossings) was about finding the right product and market, this year's model is about getting it done. As companies turn again to profitability and leveraging existing resources and assets, managers are gravitating toward ideas that help them execute their strategies.

The Strategy-Focused Organization, then, comes at an auspicious moment. In a follow-up to their influential and popular 1996 book The Balanced Scorecard, Harvard Business School professor Robert Kaplan and consultant David Norton take their popular ideas about measuring success and show how to build an organization that puts those ideas to use.

Kaplan and Norton have rolled out their balanced scorecard model in hundreds of companies, including such marquee clients as Cigna, Mobil and UPS. They have built a successful consulting practice based on it and are now seeing other books crop up about using their tool.

Like many consequential management devices, the balanced scorecard is fairly straightforward. The authors argue that companies all too often focus on the wrong numbers. Managers obsess over outcomes or lagging indicators instead of harder-to-measure factors such as cycle time, customer satisfaction and levels of innovation. The solution is a more balanced scorecard, and in the first book Kaplan and Norton go into great detail on how to build one.

The underlying principles here are not new. The authors build on a tradition of process-focused quality initiatives stretching from Six Sigma and Total Quality Management all the way back to Frederick Taylor's scientific management. Kaplan and Norton, however, move the notion forward somewhat by more explicitly linking their measures to successful outcomes. Employees more easily see how increasing cycle time or reducing defects, for example, can affect financial performance and customer satisfaction.

The scorecard describes and tracks a company's given goals. Kaplan and Norton argue in their new book, though, that their approach can also help managers execute those goals by acting as a sort of corporate superego. "Measurement creates focus for the future because the measures chosen by managers communicate to the organization what is important," they write, somewhat grandly claiming that at many companies their scorecard system "replaced the budget as the center for management processes. In effect, the balanced scorecard became the operating system for a new management process."

Kaplan and Norton deliver on the subtitle's promise of showing how companies use the balanced scorecard. While at times the book reads a bit like a Harvard Business School case writ large – no surprise, given that many of the examples cited were subjects of HBS case studies by the authors – the book presents a wealth of finer points and stories about the tool in practice.

While the balanced scorecard promises great reward, it also calls for a large commitment. The authors suggest, for example, that every employee construct personalized balanced scorecards. They advocate regular, detailed communication of the numbers. Such practices can, if pursued too vigorously, channel an inordinate amount of time and energy to the process of "excellence" rather than the business of getting things done. Several quality-obsessed companies of the '90s fell prey to such habits.

Still, most companies could do far worse than overemphasize doing the right things. At a time when companies increasingly need to deliver on strategy rather than come up with the next big idea, Kaplan and Norton help pull together meaningful measures for a knowledge-based economy. A fairly simple idea, but as the authors argue, execution is everything.

Tom Ehrenfeld writes the Just Managing column for TheStandard.com. -- From The Industry Standard

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Product Details

  • Hardcover: 416 pages
  • Publisher: Harvard Business Review Press; 1 edition (September 2000)
  • Language: English
  • ISBN-10: 1578512506
  • ISBN-13: 978-1578512508
  • Product Dimensions: 9.5 x 6.4 x 1.3 inches
  • Shipping Weight: 1.8 pounds (View shipping rates and policies)
  • Average Customer Review: 4.5 out of 5 stars  See all reviews (41 customer reviews)
  • Amazon Best Sellers Rank: #171,787 in Books (See Top 100 in Books)

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The Strategy-Focused Organization
Building on their Balanced Scorecard approach, Kaplan and Norton have developed an impressive framework in The Strategy-Focused Organization for the implementation of strategy. They have found that 90% of strategic initiatives fail due not to formulation but to implementation difficulties. Successful implementation of strategy requires all parts of an organizations to be aligned and linked to the strategy, while strategy itself must become a continual process in which everyone is involved. The Balanced Scorecard, originally seen by the authors as a measurement tool, is now presented as a means for implementing strategy by creating alignment and focus.
Financial measures report on lagging financial indicators. The Balanced Scorecard aims to report on the drivers of future value creation. The book shows in detail how this is done from four perspectives: Financial, customer, internal business perspective, and learning and growth (these are outlined on p.77). These four perspectives produce a highly detailed framework when combined with the five principles of a strategy-focused organization: 1: Translate the strategy to operational terms. 2: Align the organization to the strategy. 3: Make strategy everyone's everyday job. 4: Make strategy a continual process. 5: Mobilize change through executive leadership.
Absorbing every detail of this book will require many hours. The sheer detail of this complex system requires considerable attention, perhaps more than some readers can muster, but clearly distinguishes this work from many books full of business fluff. The style tends to be turgid and pedantic while being admirably complete.
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Format: Hardcover
If you have not already read Kaplan and Norton's The Balanced Scoreboard, I presume to suggest that you do so prior to reading this book. However, this sequel is so thoughtful and well-written that it can certainly be of substantial value to decision-makers in any organization (regardless of size or nature) which is determined to "thrive in the new business environment." Research data suggest that only 5% of the workforce understand their company's strategy, that only 25% of managers have incentives linked to strategy, that 60% of organizations don't link budgets to strategy, and 85% of executive teams spend less than one hour per month discussing strategy. These and other research findings help to explain why Kaplan and Norton believe so strongly in the power of the Balanced Scorecard. As they suggest, it provides "the central organizing framework for important managerial processes such as individual and team goal setting, compensation, resource allocation, budgeting and planning, and strategic feedback and learning." After rigorous and extensive research of their own, obtained while working closely with several dozen different organizations, Kaplan and Norton observed five common principles of a Strategy-Focused Organization:
1. Translate the strategy to operational terms
2. Align the organization to the strategy
3. Make strategy everyone's job
4. Make strategy a continual process
5. Mobilize change through executive leadership
The first four principles focus on the the Balanced Scorecard tool, framework, and supporting resources; the importance of the fifth principle is self-evident. "With a Balanced Scorecard that tells the story of the strategy, we now have a reliable foundation for the design of a management system to create Strategy-Focused Organizations.
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Format: Hardcover
The Strategy-Focused Organization clearly deserves more than five
stars. It is one of the ten most important business books of the past
decade. The book successfully outlines an enormous improvement in
communications practices for making important changes in for profit
and nonprofit organizations. The communications stall is the most prevalent one
in most organizations. Application of the authors' ideas can bring
about a significant improvement in our society.
This book is an
interim report on the application of the authors' concept, the
Balanced Scorecard (introduced in 1992 and described in the book of
the same name, published in 1996). The purpose of the book is to
provide "a roadmap for those who wish to create their own
Strategy-Focused Organization . . . [by employing the Balanced
If you don't know what the Balanced Scorecard is,
let me briefly describe it for you. A Balanced Scorecard adds several
important measures to the ones normally found in the accounting
system, designed to measure those areas where performance most
directly and powerfully affects strategic position. Such areas
include innovation, organizational learning, effectiveness in key
tasks, and performance with key audiences like customers. The
measures are chosen to reflect the systematic effects of how the
organization's overall value and performance are improved, and are
displayed in a Strategy Map that communicates those ideas to one and
all. In doing so, the Balanced Scorecard is the applied solution to
many of the issues raised about how to establish a learning
organization in Peter Senge's The Fifth Discipline.
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Comment 71 of 73 people found this helpful. Was this review helpful to you? Yes No Sending feedback...
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