In working with lots of mission-driven organizations to help build and implement their Balanced Scorecards, I’ve noticed a certain over-eagerness to invert the BSC development process by moving from development of strategic objectives to developing and implementing the set of strategic initiatives before settling on a set of strategic measures and then moving to initiatives.

After witnessing this desire to gloss over measures and dive right into initiatives a number times, I think I’ve figured out why organizations tend to do this and I want to warn against it.

First of all, initiatives are “things you do,” so it is a lot easier and more satisfying to come up with a list of important things you are doing or want to do than a list of ways to measure your progress.  This is especially true at mission-driven organizations as they are, by definition, driven by their mission and believe they are engaged in very important work.

Second, most initiatives are pre-existing – you are already doing them, so you don’t have to spend a lot of time and energy coming up with them out of thin air.  Developing measures, on the other hand, is hard work and a lot of mission-driven organizations don’t have very good non-financial measures.

Don’t Jump Ahead to Initiatives

So, often organizations want to move right to inventorying existing and developing new initiatives once they agree to their strategy map with its strategic objectives because they can see how initiatives align to their strategy.  However, I’ve seen problems arise with effective scorecards when initiatives are developed before measures.

The recommended method is to develop objectives, measures, and then initiatives.  This is because the objectives are your 10-15 key strategic goals for the next three to five years, the measures tell you how you will track your progress in achieving these objectives, and the initiatives are the projects that will help you move the dial on your measures to demonstrate you are improving your strategic performance.

On the other hand, when organizations develop their initiatives before their measures, they create a disconnect.  While their initiatives may still seem aligned to their strategic objectives, their measures often tend to track progress on achieving their initiatives rather than on achieving their strategic objectives and this is an important distinction.

Measures Must Provide Information on the Objective, Not an Initiative

The hypothesis behind how the BSC is effective is that you measure your progress on achieving your strategic objectives and if you aren’t doing well, you develop and implement an initiative that will improve your performance on that objective.  You will know that your performance is improving because your measure data will improve after you’ve implemented the initiative.

However, if your measures are tracking progress on your initiatives, they are not giving you information on how well you are achieving your strategic objectives.  In this case, a measure could tell you everything is going well because your initiative is proceeding well.  However, the measure does not tell you whether you are improving your performance on the strategic objective.  It is very possible that your organization could be implementing the initiative well but not seeing any improved performance on the objective because the initiative isn’t well-aligned to that objective.