Big Picture Strategy

Introduction

Planning: You Are Using the Wrong Tools

Back in the early 2000s, I was a vice president of marketing at GE, a diversified global company then admired for its management discipline and track record of steady growth. I worked for the equipment leasing arm of GE Commercial Finance. We financed equipment such as copy machines, computers, earth movers, etc. A few years before I joined, the company had adopted the “balanced scorecard” methodology to develop a prioritized list of goals as well as metrics to track progress toward those goals.

The objective of using the scorecard method was to align all departments on the health and direction of the company. The scorecard was a one-page summary divided into financial, human resources, commercial, and operational measures, and it reported whether or not each department met the prescribed goals. The scorecard was calculated weekly.

But if the scorecard method was supposed to create a consensus on a forward-focused strategy, it failed. The only way the system brought us closer was physically: leaders from each team would meet in a room every Monday morning to review the latest scorecard. Yet because each team was motivated by different incentives, the metrics conflicted. Reaching some of the targets made achieving others impossible.

For example, the operations team had aggressive cost-cutting goals, while the sales and marketing teams had double-digit revenue growth goals. These turned out to be diametrically opposed objectives. ...