Balanced Scorecard & Six Sigma Essay

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Total Length: 639 words ( 2 double-spaced pages)

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BSC has been criticized for being essentially backward-looking, and thus fails to set goals for the future that can truly push the organization forward. The contention that more than 70 per cent of Balance Scorecard implementations fail should be taken with something of a grain of 'salt' given that this may be due in part to faulty human processes, although a Six Sigma advocate might stress that reducing human error should be a goal of any performance management system, and this illustrates the failure of BSC.

The fundamental failure of BSC is in its lack of creativity -- its focus on financial performance encourages short-term 'tweaking' and a focus on quarterly or annual results, rather than upon long-term performance improvements. Although the approach has been reformed to give strategic advice, the focus on metrics and statistics can tend to deemphasize unexpected shifts in the environment, such as changes in technology or an increase or decrease in risk. A rapidly changing business environment can severely impact the utility of a scorecard.

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Given that "a typical scorecard may take five or six months to implement. An additional number of months may be needed to fine tune the structure," and "total development time is often one year or longer" consider how many scorecards had to be discarded after the impact of the current credit crisis and recession (McKenzie, 1998). Of course, this was true of virtually all business plans and models, one could argue, but the highly detailed and unresponsive nature of the BSC planning process makes it particularly questionable in value for today's volatile strategic and financial environment.

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