A previous post identified seven areas where the Balanced Scorecard (BSC) and Lean Six Sigma (LSS) need each other.
The first item on the list has to do with defining strategic objectives. This is, obviously, a crucial component of defining an organization’s strategy. If the strategic objectives are ill-defined and poorly written, then there is no hope in being able to effectively communicate the strategy to the rest of the organization.
Fortunately, the BSC methodology does well in providing an effective process for extracting the actual strategy from the organization and translating it into terms (i.e. strategic objectives and themes) that are actionable and meaningful. Very often, however, the results of the process are more strategic objectives than the organization can effectively manage. It can be debated as to how many is too many, but everyone agrees that you can have too many strategic objectives; whether that number is in the low to mid-20s as most BSC methodologies recommend, or higher.
Narrowing the list down to a manageable level can be a painful process and be subject to the loudest voices and those with the most endurance. A more structured process that leverages the subjective expertise of the team members in prioritizing and reducing the number of objectives to a manageable size would be an asset to this important part of the BSC process.
Here are two tools from LSS that are useful for prioritizing and reducing a list of items.
- Multivoting (also called Nominal Group Technique) With this tool, team members are allowed to vote for a certain number of items on a list. The items with the highest number of votes are selected – based on a pre-determined number of desired items. There are recommendations as to how many votes a team member gets for a certain size of list and the cut-off number of items on a list before proceeding to a new vote. It is important that voting be done privately to avoid bias. Multivoting works well with a large number of team members.
- Paired Comparison Analysis With this tool, items are compared two at a time and the comparison is given a value. The items with the highest values are selected – based on a pre-determined number of desired items. There are two ways to approach this. One is to create a matrix with the items listed vertically and horizontally and the pairwise comparison ratings entered into the matrix. Here is a summary of how that approach works. Another is to simply work down the list moving higher rated compared items up. The result is a completely prioritized list.
When developing a BSC and there are a large number of strategic objectives, don’t get tied down with endless debate about which objectives are the most important. Add some structure and discipline to the process with one of the two tools described above.