Balanced Scorecards and KM

Knowledge Management is a discipline often accused of running programs whose success is essentially unmeasureable. This then leads to accusations of "not delivering value", and sometimes even the scaling down or elimination of KM programs within the organisation as another "failure".

Clearly, providing effective tools for KM measurement is vital! This is not the same thing as insisting on quantitative metrics, but there should still be a way to evaluate the success or failure of KM programs. A great way to do this is to directly link KM programs, and their impact, to organisational strategic goals.

The "Balanced Scorecard" is one possible place to start, with its emphasis on the idea that if you can't measure it, you can't manage it. A typical Balanced Scorecard consists of four stages:

  • articulating your firm's strategy
  • communicating that strategy and linking it to relatively objective measures which clearly reflect your progress (or lack thereof) towards achieving the strategy
  • setting targets for individuals to inspire them to reach higher on those measures, or KPIs
  • feedback and learning to monitor the effectiveness of the Scorecard

Another key aspect of the Balanced Scorecard is that it promotes the creation of measures that go beyond purely financial performance. The four key areas of measurement that should be addressed in any Balanced Scorecard are:

  • financial perspectives (linking strategic objectives to financial success)
  • customer perspectives (identifying customer segments and devising measurements to measure satisfaction against each segment)
  • internal business processes (measuring the success of specific business processes designed to achieve strategic goals)
  • organisational learning and growth (typically measuring employee satisfaction, retention and productivity)
  • Joe Firestone has also looked at enhancing the Balanced Scorecard into what he calls an Adaptive Scorecard. This emphasises the need to separately measure "intelligence performance measures" (i.e. creative learning) from "operational performance measures" (i.e. routine learning and execution).

    This may also be possible to achieve through two separate Balanced Scorecards: one measuring operational outputs (designed and approved by the CEO), and another measuring creative outputs (designed by the KM, and approved by the CEO).

    This would add a layer accountability at both the KM and CEO level, and help ensure that the organisation takes creative learning seriously and is committed to continuously developing and implementing improvements.