Saturday, July 18, 2015

Balanced Scorecards

Being able to quantify things makes them much easier to manage. You can compare them. You can say which ones you prefer. Which ones are more important? You can see if you are improving. You can prioritise. An ordered world helps you figure out what matters. What causes what? Then you can do more of the things that cause the results that you want. Boom. The world makes sense.

By quantifying things, you can use equations to create models of how the world works (aX = Y + e). If I have ‘a’ many Xs, I will get a Y plus some noise, the (e)rror. So, almost Y. Regression models let you build up complicated equations that explain things. Almost. Simple models let you test whether different things (an action and an outcome) are connected. They help the world make sense. You can plan.

The desire to quantify can be very powerful. It assumes there is an underlying order that we just need to understand, and we can bend things to our will. An underlying order plus some noise. Noise is the bit that makes results differ from what we expect. However we explain the world, it is more complicated than that.

There lies the problem. In reality, whenever we test something we are only seeing the results that occurs with that very specific set of conditions. I might prefer Apples to Oranges. But if it is half time at a rugby match I prefer Oranges. I might prefer waking up early to miss a horrible sardine style sweaty commute, but it depends how I feel at the exact moment my alarm goes. aX only equals Yish if there are no oranges, sardines, rugby etc. Then only if I feel like it. It depends.

A popular management tool in the workplace is the Balanced Scorecard. It takes all the aspects of your job and breaks them down into quantifiable targets, then assigns weights to each of the targets depending on their importance. Slowly but surely you add more and more things that are important, until even the very important thing end up getting weights of 10%. Something like getting along with your colleagues may get just a 1% weighting. If you don’t get on with your colleagues, the other 99% may not matter at all.

Balance Scorecards and Rock Balancing

Balanced Scorecards give the illusion of manageability. In my experience the best managers I have come across are able to dispense with these tools. The problem is this is not scalable. The magic ingredients they added were time and trust. The very best manager I ever had wasn't even my manager. She managed a team alongside me, and we worked together. But I learnt more from her than from anyone else about how to get the best out of people. Her super power was listening, the occasional challenging question, a sense of humour and a genuine sense of empathy. I wasn't a cog in her eyes.

Knowledge comes from the front lines. It comes from a deep understanding of the specific set of conditions. It comes from the qualitative stuff that glues the quantitative stuff together. It comes from the stuff you can't quantify. The stuff you can't communicate. The main lesson I learnt from her is that the best way to manage is not for people to work for you, it is for them to work with you. Balanced Scorecards are an attempt to allow for distance between where decisions are made and where they are implemented. The truth may be that you can't do that.

It’s more complicated than that. Conditions matter. It’s simpler than that. Trust people.
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