During a recent conversation with a leader who was preparing a balanced scorecard for his business, I was asked how many objectives he should have. I have been advising businesses for years that they need to have no more than 15 to 18 objectives across the four perspectives of their scorecard. This is fine for large organisations that can share the objectives across all their managers.
But what can you do if you run a small business?
If you are frustrated by not being able to achieve your objectives and targets maybe it is because you are attempting too much. I once worked with the improvement projects office in a large organisation. Over the two year period since they had been established they had achieved nothing. We took a stock take of the organisational improvement projects they had underway. I counted 57 projects, many of which had conflicting outcomes. We managed to cull these back to 9 and eventually the Board signed off on the top three. Six months later those projects were completed and the projects office was back in dialogue with the Board on the next priorities.
Research shows that if you try to achieve 2 to 3 objectives then you are likely to achieve those 2 to 3 objectives. If you attempt to tackle 4 to 10 objectives you will actually only achieve 1 or 2, and if you attempt 11 or more objectives you will achieve none of them. In summary the more that you attempt to do beyond 3 objectives or goals, the greater the risk of not achieving what you want. We certainly saw that in the improvement projects office.
In a balanced scorecard where you have 15 or more objectives, you need to spread these across individuals who have no more than 3 objectives each. Otherwise you will not achieve what you want. Where you run a small business, or have less than 5 managers you cannot make progress across your entire scorecard. You must prioritise your objectives. While you could focus on just one perspective this tends to produce lumpy business. Suppose you decide to focus all your attention on the customer perspective. This will result in a lift in financial performance in the short term. However without investment in internal processes this short term lift may not be sustainable into the longer term.
Where you require sustainable growth, I recommend prioritising 3 objectives, one from each of the customer, internal process, and learning and growth perspectives. By doing so you are working in areas which will simultaneously affect the short, medium and long term financial results of your business. Even if you are a solopreneur you can do this, and avoid the boom-bust cycles we often see because of a lack of balance in organisational improvement activities.
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