The Balanced Scorecard was created in 1992 by a couple of Harvard guys (Kaplan and Norton). It changed the way people look at the success of a business. Prior to the concept, people evaluated performance exclusively in financial terms. In addition to financial measurement, the Balanced Scorecard provided a framework that included measurements for Internal Business Process (to satisfy shareholders and customers, what business processes must your company excel at?), Customers (to achieve your company’s vision, how must you appear to customers?) and Learning & Growth (to achieve your company’s vision, how will you sustain your ability to change and improve?). This represents a major step forward, to which we should all be grateful.

Here is the problem with the approach. It can take more than a year to reach consensus across a set of 15 or more metrics (called Key Performance Indicators). I have participated in this process a couple of times in Fortune 500 companies. While cathartic, it requires tremendous energy and commitment. And, in each case, after we moved to the execution phase, we had considerable difficulty keeping a large number of metrics in our heads each day. I imagine that is true across the board. This makes the Balanced Scorecard a great theory. One that needs to be improved upon for practical, real-world success.

We use a concept called Business Drivers and Operational Drivers. I don’t know who to give credit to for having created the Business Driver concept, but thanks! Essentially, Business Drivers are those things your organization can impact that will increase revenue (i.e. if you are a pharmaceutical company, a new malady that you can create a wonder drug to cure will not qualify as a business driver as you cannot, hopefully, impact the introduction of new disease). An example of a common Business Driver is “Increase the number of qualified leads/prospects”. Operational Drivers are those things your organization can impact that will decrease costs. An example of a common Operation Driver is “Decrease the cost to support an order”. Together, these two driver types result in profit. It is your responsibility to balance them properly.

We limit our clients to no more than five Business or Operational Drivers (sometimes we bend the rule). We have also found that any reasonable person can probably draft the business rules for any company or organization with 80% accuracy. In our practice, it typically takes less than an hour for the exercise.

The reason it is so important and worth discussing, is that it gives everyone affiliated with the organization (internal employees, dealers, consultants and suppliers/vendors) a clear picture of what you need to do to succeed. That means that every program developed internally or externally should be squared with your drivers (with the ability to measure success). Then, you can establish goals for each driver and determine if a particular program is performing as expected.

Are your marketing programs measurable?

John-Scott Dixon, President - ThoughtLava

I have over a decade of experience managing and leading the Ecommerce efforts of medium and large companies. I have held sales, sales management, marketing, operations, IS/IT, legal and executive management positions in start-up to multi-billion dollar organizations. I have also served as an adjunct professor of Ecommerce for the MBA program of the University of Missouri. I led the Ecommerce initiative for Sprint PCS (PCS) and Sprint (FON) as Vice President of Ecommerce. I led the integrated marketing efforts for Insight (NSIT) as Senior Vice President of Marketing and Ecommerce. Today, I am the President of Thought Lava, an integrated marketing and Web strategy consulting company. We generate and direct the flow of creative ideas to develop Internet marketing strategies that increase revenue and reduce operational costs while supporting your brand. Contact us at info@thoughtlava.com or 877.567.LAVA to begin a discussion.

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