Strategic Direction

Balanced scorecard and emerging strategies: Understanding implementation in large and complex
organizations
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(2017) "Balanced scorecard and emerging strategies: Understanding implementation in large and complex organizations",
Strategic Direction, Vol. 33 Issue: 4, pp.25-27, doi: 10.1108/SD-01-2017-0016
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 Balanced scorecard and
emerging strategies
Understanding implementation in large and complex organizations

Review
Have you ever been into a construction engineer’s office on a large scale project? Aside
from the large cups of tea or coffee and plans that litter the room, you will typically see the
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walls dominated by huge project plans for the build. There will be multiple plans – typically
in form of Gantt charts – that plan each portion of the build in a step-by-step process. It
looks mightily impressive, although increasingly many project managers would argue that
being so prescriptive about timelines is only doomed to fail.
However, the key point is that with a complex build, multiple projects will overlap and be
interdependent, and as such there is a need for engineers to have an overview of what
needs to be done next at any given stage. In theory, this sort of logic should see the project
through, but logic rarely prevails on a build, and problems crop up on a daily basis. Lack
of raw materials, breakdowns, sickness and myriads of other hold-ups can cause chaos –
and the parallel with large firms and their strategic planning initiatives are not difficult to
see. Luckily, there has been no shortage in advice from practice and academia as to how
to deal with all this potential chaos.

Devil in the detail

Perhaps the biggest single academic theory to gain traction in practice in modern business
is the balanced scorecard, first put forward by academics Kaplan and Norton in the early
1990s. Its application has been assessed and reassessed in hundreds of different
scenarios, and the latest of these has been completed by Lawrie et al. (2016) in their
research article, “Multi-level strategic alignment within a complex organisation”.
The study looks at the adoption and implementation of the balanced scorecard at multiple
levels in a complex organization based in the Middle East, with key considerations regarding
how this activity fed into corporate strategy, and the effectiveness of the implementation over
a four-year period from 2008. All of this is set against the wider context of strategic planning as
a way for firms and their senior management to plan and drive forward organizations.

The next generation

One of the problems encountered with earlier generations of the balanced scorecard was
the difficulty in adopting multiple scorecards across a business, particularly on top of each
other. While this affected the first two generations, the so-called “3rd generation balanced
scorecard” enabled cascading down from scorecard to scorecard. Typically, this new
version of the balanced scorecard has three key characteristics:

DOI 10.1108/SD-01-2017-0016 VOL. 33 NO. 4 2017, pp. 25-27, © Emerald Publishing Limited, ISSN 0258-0543 STRATEGIC DIRECTION PAGE 25
  First, an over-arching “Destination Statement” is put forward by the senior management
team of an organization designed to brief stakeholders about the future direction and
performance expected from the firm. This in turn highlights the key strategic targets for
each part of the business to enable the vision to be realized.
 Underneath the senior team, each department or business unit sets its own destination
statement which reflects its own goals, which are known as “contribution statements”,
and in turn this is used to identify the strategy of the work unit.
 Finally, these contribution statements are used to define for lower levels of the
organization what their direction should focus on, and in turn this aids communication,
defining of training needs and designing of processes to maximize their impact,
back-up the chain and achieve the original visions set out in the contribution and
destination statements.

Case study approach

To analyze the effectiveness of this next generation version of the balanced scorecard, the
authors looked at the implementation of the approach in a large energy company based in
the Middle East over four years from 2008. The company had seen rapid growth and at that
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time, it was operating in one Gulf state with a workforce of around 10,000 people. The
senior management was concerned about the integration of smaller firms into a larger
organization, and as a result, it had separated into four linked businesses. This presented
problems around the strategic reimagining of the firm and its implementation, and so a
model of strategic planning was needed, which was the updated balanced scorecard.
The date set for the destination statement was January 1, 2013, and planning used a
three-phase approach:
 Corporate-level work – this included the creation of the destination statement, setting
high-level strategic objectives and develop the design process for the change
programs; it was undertaken over five clear stages by dedicated teams.
 Initial cascading of the balanced scorecard – this focused on seven units that reported
directly to the senior management team of the energy company, split between the
operational and support sides of the business. The process mirrored the first phase as
closely as possible.
 Cascading of the business unit-level balanced scorecards – the initial focus was on
around 15 per cent of all the business units in the wider firm, and necessitated many
more balanced scorecard designs that included additional revisions. This included the
design to be in Arabic rather than in English to better reflect the linguistic skills of the
participating units.

Implementation
While the first phase was implemented as planned, the second phase faced issues
surrounding variable engagement from different units. It was observed that while there was
good support from those who had used the balanced scorecard approach before, there

With a complex build, multiple projects will overlap and be

interdependent, and as such there is a need for engineers to
have an overview of what needs to be done.

PAGE 26 STRATEGIC DIRECTION VOL. 33 NO. 4 2017

 Perhaps the biggest single academic theory to gain traction in
practice in modern business is the balanced scorecard.

was a lack of clarity around the future roles of two units in particular, and engagement also
varied according to the positivity of the respective heads of each business unit.
Nevertheless, overall implementation followed and was judged a success. Key outcomes
included the following:
 strategic control was gained over the first tranche of business units over a total of 16
months;
 key staff gained in-depth knowledge of the program and its methodology, which would
form the base for further multi-phase implementation; and
 behaviors were observed to change following implementation toward the new strategic
goals, including reports of improved communication around how the goals were
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achieved.
In conclusion, the authors reported that a large-scale implementation of multiple balanced
scorecards can be implemented in a reasonable timeframe, with the main considerations
including the use of a cascade approach, aligned strategic frameworks and locally
cognizant strategic activities.

Comment
The article “Multi-level strategic alignment within a complex organisation” by Lawrie et al. Keywords:
(2016) provides an in-depth look at how a large, complex organization was able to Performance management,
implement the balanced scorecard in multiple levels and phases. Such a case study can Strategic alignment,
teach business change managers a good deal about the theoretical as well as the practical Balanced scorecard,
considerations of such an implementation, particularly in the context of the Middle East. Strategic control

Reference
Lawrie, G., Abdullah, N.A., Bragg, C. and Varlet, G. (2016), “Multi-level strategic alignment within a
complex organisation”, Journal of Modelling in Management, Vol. 11 No. 4, pp. 889-910.

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