Eng. Miguel Rivas Roces
MBA New York University
Professor, Adolfo Ibáñez University, Chile.

Many business owners, school principals, heads of various public services, and other organizations often tell me about their failed attempts at using the Balanced Scorecard, saying it's been impossible to implement it as a useful working methodology. This is true. A high percentage of Balanced Scorecard implementations fail in their attempt to become a practical methodology for organizations. Here are some explanations and recommendations from my experience in Chile and other South American countries.

The BSC (Balanced Scorecard) is a planning and control methodology and must be integrated with the budget, project control, work programs, operational dashboards, business processes, etc. It is not a tool isolated from everything else, but rather a tool integrative.  Although it may seem unusual, the first reason The reason the BSC fails is because there is inadequate planning of the elements that make up the Balanced Scorecard. In other words, the components that should feed the planning and control system do not exist. A bad start. If you want to plan systemically, all planning components must be available for the central plan. The lack of adequate planning at intermediate and upper levels is not a BSC problem, but rather poor management by the responsible executives.

The second reason The failure is because it is not taken seriously. It is usually seen as another of the novelties brought by MBA graduates, but the budget remains the central planning tool, despite all its limitations in measuring only the use of money in certain items and leaving aside efficiency and competitiveness, something that at the time of the great seminars is the most common argument used by the executives themselves. Absolutely inconsistent between what is said and what is done.

The third reason The failure stems from confusing what one *wants to do* with what one *can do*. Shortly after implementing a system in a health center, where they refused to hire any systems consultancy, the executives had created more than 1,000 management indicators, confusing the BSC (Balanced Scorecard) with command and control dashboards. The worst part was that out of those 1,000 indicators, more than 600 were impossible to generate because the information didn't exist in the basic systems (IT and accounting). Their excessive enthusiasm came back to bite them.

A fourth reason It is the almost absolute ignorance of management executives about the functionalities and properties of computer systems. Management and information generation run on separate tracks; they do not communicate, they live in separate worlds, almost unrecognizable to each other, even though any executive recognizes that we are in the information or knowledge age. Another overwhelming inconsistency.

I recommend that all executives study deeply what information systems, business intelligence, metainformation, knowledge, productive intranets, enterprise systems (ERP), executive information systems, etc., are today. If what you know you learned five years ago, it is absolutely obsolete. It's not about turning them into programmers or systems analysts, but rather into knowledgeable individuals of their own information sources. Just as it's important to know the outside world of the macroeconomy that affects the country and the management environment, it's important to know the internal workings of the company and the information microenvironment. When you invite an economist to give a talk, hopefully, you would also invite a management engineer.

The fifth and final reason, last but not least, is the lack of real leadership in committing to a comprehensive planning and control methodology by senior management. In many cases, I've had the perception that some executives would prefer the BSC implementation to actually fail because that way they can get a “thorn out of their side.” If top management is not committed and embraces the methodology, any implementation runs a high risk of failure since, in the end, aren't planning and direction two of the most relevant functions of an executive? If they don't perform their role as such and expect things to succeed almost by spontaneous generation, isn't that precisely an attitude prone to failure?

So, the flaws are not in the BSC methodology, which is very simple, but in the company's internal management itself. An old Spanish proverb says: “What nature doesn't give, Salamanca can't lend.”.