CIO —
Robert S. Kaplan and David P. Norton developed the Balanced Scorecard as a method for executing strategy and measuring value. By identifying business goals, the actions required to achieve them and metrics for determining whether they are met, companies can align their financial management, customer activities, business processes and organizational development.
In Alignment, their fourth book, the authors contend that the Balanced Scorecard approach should be used to align large, diverse corporations. Plenty of companies have done this, judging from the many examples (including Ingersoll-Rand and Hilton Hotels) that Kaplan and Norton use to illustrate their argument. Less well-tested at this point is the use of the methodology to foster better collaboration between companies and external stakeholders, such as boards of directors, investors and trading partners.
For CIOs who have used the Balanced Scorecard to manage IT value at the business-unit level, the book provides fresh thinking about how IT contributes to the overall enterprise. In short, say the authors, IT must innovate, by providing products and services that help business units differentiate themselves to customers. But for such value-added contributions, it could be more cost-effective to outsource IT, Kaplan and Norton suggest. At the heart of the book is a simple idea: that alignment is created when different units within a company have shared objectives and agreed-upon ways to measure progress toward those objectives—the elements that make up the Scorecard. Balanced Scorecard devotees will be familiar with the complexities of developing Scorecards and “cascading” them throughout an organization. A chapter on this subject offers useful examples of companies that worked through this process based on their corporate structures, cultures and the prior experience of business units with their own Scorecards.
