Balanced Scorecard Article > Driving Formula 1 Strategy on all Four Cylinders

Driving strategic change in an organisation requires the focus and energy of a Formula 1 racing driver. It also requires the best engine.
One engine that can drive fast, effective strategy implementation is the Balanced Scorecard.

Yet for many leaders, a limited understanding of the scorecard leaves them aware of it’s potential benefits but unable to see or extract its full power.
Just as an F1 engine runs on four cylinders, the scorecard drives strategy implementation with four powerful principles.

Understanding and harnessing all four simultaneously is like fine tuning an engine to get maximum thrust. Without good strategic engineering, many leaders get limited traction with strategy implementation. Or users of scorecard conclude that the engine just doesn’t work.

The 4 Cylinders; Four Principles that drive Strategic Implementation

The four principles underlying the Balanced Scorecard are common sense, immutable building blocks of strategic change. They are briefly listed below, and then we elaborate on each.

1. Tell the Strategy Story, again and again
Translate vision into action and show the drivers of success with compelling communication

2. Engage commitment to change
Involve, energise and build a case for change

3. Measure the drivers of success
Motivate new behaviours, and balance hard measures with soft

4. Navigate to maintain alignment
Learn and improve quickly, share knowledge and maintain alignment

Driving F1 Strategy with the four principles

1. Tell the Strategy Story, again and again
As Michael Schumacher waits for the start of the Formula 1 race he has one clear vision in his mind – the chequered flag waving as he crosses the finish line first. With this compelling vision of success he is able to plan his strategic approach, execute the plan and navigate his Ferrari to yet another victory.
The strategy story is about vision and success, and how best to get there. A clear picture of the longer term success that strategic change can bring enables everyone in the organisation to understand it. Showing the cause and effect relationships that are fundamental to getting there helps build shared deeper connections with how the strategy will be implemented.

As weather conditions change, it may be necessary for Schumacher to switch the car’s tyres to maximise speed through the bends. This cause and effect is easy to grasp and that is exactly the way the strategy story must be told; just a clear and simple roadmap with mumbo-jumbo, jargon or clichés. A good road map shows in pictures how and where everyone fits, creating a line of sight between personal/ team priorities and the high level strategic goals.

2. Engage commitment and motivate participation in change
Crucial to Schumacher’s race strategy is the role played by his highly trained and committed pit crew. That waving chequered flag also requires a team that shares the same dream in order to cross the line first. For effective strategic change this same team engagement is critical in three ways.

Firstly it builds a new level of trust and involvement between management and the workforce as the dialogue shifts from traditional one-way download to two-way conversation.

Secondly it enhances the strategic decision making process by seeking feedback and input from those working more closely with the customer and the day to day issues. The team is given the opportunity to understand the reasoning for change and asked to contribute to the process – indeed a refreshing approach in winning the race for effective strategy.
Thirdly, a high trust, high engagement team can make changes faster. And this is critical for an F1 pit crew.

3. Measure the drivers of success
Formula 1 success is not only about crossing the line but is also measured by 'soft' indicators such as relationships with key people (eg. sponsors, fans and venues) as well as the performance of other stakeholders (eg. PR agents managing the public image of F1 drivers.)

While the strategic roadmap tells the strategy story, it needs to be monitored, measured and amended as circumstances change. This should not include 'hard' facts alone – the basis of a ‘Balanced’ Scorecard is a combination of outcome/output indicators with behaviourally based lead measures.

By measuring the drivers of success it is possible to check whether these are creating changes in overall results.
As an example, imagine a situation where customer satisfaction is linked to repeat sales. Both of these outcome measures will show overall progress. But what if three activities are agreed as having the greatest influence on driving customer satisfaction; 1. the experiences of contact with service operators; 2. the efficiency of order fulfillment; & 3. the level of proactive support offered

In this case lead measures such as moments of truth responses, speed of delivery processes(eg. turnaround, close out times), and proactive customer care contact, are indicators of future customer satisfaction and therefore future repeat sales.

Whilst many lead indicators are subjective and difficult to capture, there is still great benefit gained in reviewing their progress.
This requires a tolerance for ambiguity.. a difficult concept to grasp for measurement purists. However, successful F1 drivers utilise ‘sense’ and observation to help them make quick decisions does not rely on data alone.

4. Navigate to Maintain Alignment
The final cylinder in a smooth running scorecard engine involves review, learning and refinement of the strategic plan amongst all members of the team.

Back on the track, communication between race driver and pit crew allows the team to constantly adapt and adjust strategy throughout the race.
Learning together reinforces engagement and builds more alignment and focus. Where the implementation process begins to deviate from course, quick detection and consensus decisions allow corrective action to be applied to the cause, thereby influencing the impact on the effect.

In practice, this involves groups of people coming together on a regular (say quarterly) basis, to review progress against a balanced set of indicators. This helps groups quickly identify where new behaviours and activities are not happening, plans to increase traction, and re-evaluation of the overall road map to ensure the strategies are driving desired results.

For example, the decision to change tyres before the race, when rain is threatening requires a complex set of conversations and risk analysis. By involving a wide range of stakeholders in the team, the culture is strengthened and aligned, leading to higher levels of ownership to new decisions. Engagement can lead to quicker removal of roadblocks, and shared celebration in success.

The Chequered Flag

By understanding and fine tuning these four strategic principles, it is possible to build an F1 Strategic implementation team supported with a powerful, coherent and practical 4 cylinder strategic engine.

by
David Pointon & Mike Roberts
DaPo Consulting

---

DaPo Consulting are experienced implementers of the Balanced Scorecard. They provide education, coaching, and facilitation to support the design, implementation and re-invigoration of scorecard in organisations.