Today's Organisations - Horses on Steroids

Present models of ONLY ROI driven businesses are not sustainable.  CFO of Narayana Hrudayalaya today quoted in ET- CD, " kind of returns PE players are asking is not possible in healthcare industry." 

Yes healthcare industry is not only PROFIT driven but PEOPLE driven. Number of people impacted while making some profit to take care of future investments. Mere ROI focus is not sustainable nor desirable.

Why only healthcare ? Every industry today is in severe cut throat competition. Ethical conduct is replaced by END only matters,  Q on Q and ROI, ROCE kind of performance matrix. 

Balance Scorecard approach by some of the corporate is welcome step but how much it has helped in stress reduction and happiness enhancement is a  matter of research. 

These PEs and their insatiable appetite for ROI is deciding ROI benchmarks world over.  

Huge ROI will drive happiness for a few at the cost of unhappiness and stress for many. 

Today's organisations are like Horses on steroids in race course. 

Huge bonus and extravagant packages at the top level makes the organisation look like a race course. Bets on the houses are so huge that they have to run and run and win at all cost. 

Fortunately horses run only in race course but ROI hungry Shareholders & CEOs run all across the society. Examples of Ranbaxys and Satyams and many more unearthed are the products of such rush for crazy ROIs.   

Are you balancing for ROI or overall HAPPINESS ?

My last post Is Balance Scorecard relevant today? received good response from practicing professionals in one voice they stated YES Balance Scorecard is and will always remain relevant. 

Balance Scorecard is relevant but what we are out to balance that need to change according the competitive business , social and environment land scape.

We can not have ROI only mindset to align all other balancing factors serving that. ROI at what social, ethical, emotional & environmental cost? Present balance scorecard do not takes into account these factors. 

After identifying all these stakeholders a balanced strategy to make all of them happy should be worked out. All of them deserves equal weightage. Thereafter further breaking down is to be done to achieve happiness of each of the constituents.     

In achieving only ROI based balancing other aspects like governance, ethical and socially responsible behaviors can & shall not be ignored. All these must be incorporated in overall balance card.

Is Balance Scorecard relevant today ?

Dr Robert Kaplan & Mr David Norton introduced powerful model of Balance Scorecard during the last decade of 20th Century. It clearly makes the organisational focus broader merely from financial focus.  Model has become successful and used by many organisations across the globe. Main tenet of the models are as under: 

1) Financial Perspective : To succeed financially how should we appear to our shareholders. What are our financial goals? 

2) Customer Perspective : To achieve financial goals what should be our customer strategy? 

3) Internal Perspective : To achieve our financial and customer goals what kind of business processes we must have? 

4) Growth and Learning Perspective : To remain competitive what kind of people competency we should have or develop?

It is working well for many organisations. However in changing times this balancing also should under go change. 

What are we aiming to balance through Balance Scorecard ? As can be seen from the tenet it is only and only about WHAT part of strategy. Again on top of the strategy it is  Financial Perspective and all other perspectives are serving the financial perspective. 

It has to change. Financial Perspective and WHAT part of the strategy is important However unless its HOW is defined with keeping in mind environmental effect of doing business , social & ethical behaviors and making all stake holders happier by rightful conduct , it fails to balance the society in which the business operates. 

We first need to think to balance the negative impact the business generates before we decides about balancing business strategy for self use. New tenet of balance scorecard should be as under: 

1) Happy Customers : How to make our customer happier when they are dealing with us ?

2) Happy Employees : How to make our employees who are working for us happier ?

3) Happy Community : How to conduct business with social commitment, ethical conduct with every stakeholder incl Govt.  ?

4) Happy Shareholders : Here financial, internal processes and learning & growth perspectives of existing Balance Scorecard can fit in.

Balance Scorecard in its existing form is missing some of the important balancing requirements.  

Do you think differently ? Please share your views.