Baseball and the balanced scorecard

Management by Baseball (a PublicOrgTheory favorite) has a thoughtful post on baseball and the balanced scorecard:

For one thing, competition in Baseball is a lot more fierce than the endeavor you’re in because success is zero-sum. For every win there has to be a loss — none of that rising tide lifts all moats stuff. That’s not true in business or in War. The second unarguable reason is that in baseball, you have to win right now, and you have to do without seriously affecting your chances of winning tomorrow. It’s a long haul, and you can’t just do what most publicly-traded corporations do (or the Governor and legislature of California do) and slide gains or losses between fiscal quarters to make things look good. The daily table of standings in the paper prevent any corporate-like attempt to fog the truth. Finally, winning is inevitably measured on a balanced scorecard. You need to win in the measurable ways (game wins, attendance), but just as much in the immeasurable ways (development of young players, resting of old ones, level of “good will”, intensity of interest of current fans and kids who could be paying fans in a decade). Sandy Alderson, the brains behind the gathering of brain power that built the A’s when they were a persistently excellent franchise, is as successful a formulator of scorecard balancing as you can find anywhere in North American management (a lot on that in an earlier entry). Baseball’s just better at all these competitive challenges than is the norm for “good” in any other endeavor.

In sum, you have to win today and tomorrow, in measurable and in immeasurable ways in a zero-sum system where every win guarantees a loss in the system. And I promise you that in your endeavor, you have it easier than that.

I’m a fan of both baseball and the balanced scorecard, and I think the similarities and differences described here are useful in thinking about performance management in any organization or, indeed, any endeavor at all.  I have seen organizations do performance well and others do it such that the exercise is a complete waste of time and a political mess unrelated to anything other than turf.  Those organizations that do it well tend to do other things very well, at least anecdotally.  (There is a body of research examining the relationship between the balanced scorecard and profitability.)

The strength of the balanced scorecard rests on establishing a conscious thought pattern of causal linkages, specifically:  individual capability —> ability to perform organizational processes —> customer-facing results —> firm financial results.  Bizarrely, I have observed a difficulty among many intelligent senior executives at grasping this very simple idea.  To some degree though, this is in one sentence an explanation of how organizations work.

That is not to say that everything that happens in an organization is directly causal.  I take on faith the idea that there is a certain amount of randomness in any human endeavor.  As evidence, take a look at the compendium of people killed at baseball games.  I suppose there’s Newtonian cause and effect there, but there’s a randomness fairly dissociate from the intentions of the game itself.

I don’t generally discuss this with client organizations–it’s enough of an endeavor to embed the above sentence successfully–but I have a suspicion that balanced scorecard metrics don’t really matter that much.  Sure, they tend to be closer or further from what actually happens in organization, but I suspect that adopting the above sentence as a given and thinking through what measures might work is more important than the measures themselves.

All that said, baseball is a powerful metaphor for explaining the balanced scorecard precisely because of the zero-sum stakes.  Once the consequences are established, there is a much clearer understanding of how the logic and the process works.  Make no mistake–the balanced scorecard is a process, one of refining and becoming more conscious of performance.  For winning teams, that process is perpetual.

[Image:  Seattle Post-Intelligencer]

One response to “Baseball and the balanced scorecard

  1. In the above post, they explained the strength of the balanced scorecard. And they used Baseball as a examble to explain the blanced scorecared. Nice presentation, we can get clear idea from this.

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