Dealing with Dilemmas: Where Business Analytics Fall Short

Foreword

By Dr. David P. Norton

Co-creator, the Balanced Sorecard, and Founder and Director, Palladium Group, Inc.

Organizations exist to create value for their stakeholders. Strategies deribe how they intend to create that value. Mastering the formulation and execution of strategy must be viewed as a central competency of every organization. Research shows this to be an elusive goal: 80 to 90% of organizations fail to execute their strategies. There are two basic reasons for these paltry results. First, there is no generally accepted way to deribe a strategy. Unlike the financial domain where frameworks like income statements and balance sheets exist to support measurement and communication, the deription of business strategies becomes a set of sound bites developed by inspirational leaders. Second, management systems are not linked to the strategy. Personal goals, budgets, investments and compensation are linked to short-term operational and financial goals. If you can't deribe a strategy, you can't link it to the management system. You can't manage what you can't measure. And you can't measure what you can't deribe. It should not be surprising that 80 to 90% of organizations fail to execute their strategies.

When Bob Kaplan and I developed the concept of a Balanced Sorecard nearly 20 years ago, we were faced with this dilemma. Intellectually, all agreed that organization performance must be looked at in the long term. Accountants used the term "going concern" to convey this. Yet ...