Balancing the score

Balanced scorecards gave Mustafa Sultan a new way to see its business, but making the most of them is proving a long process. Eliot Beer reports.

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By  Eliot Beer Published  March 26, 2006

|~|saher200.jpg|~|Saher: The most important factor in choosing the package was actually the team which would be implementing it.|~|For a diversified company, with operations spanning a number of different fields, maintaining an overall view of the operations and effectiveness of the organisation can be hard. This was precisely the problem Mustafa Sultan Enterprises (MSE) of Oman faced; its solution: balanced scorecards (BS).

"One of the key reasons we wanted to implement balanced scorecards was because of a perceived 'disconnect' in the company," says Minoo Saher, MSE's CEO. "People were not connected to the strategic thought processes, and they could not see the value of their day-to-day activities to the thought processes and the plans of the senior management. We also wanted to link people's activities and performance with their rewards, so if someone were doing the job they were supposed to they would be rewarded for it."

The firm first tried to implement scorecards about two years ago, working on them manually. But executives soon came to the conclusion that this would not be effective, and that MSE needed a system to pull all of the information together, according to Saher.

MSE went through a rigorous selection process for the BS system, finally selecting QPR and their integrators Iycon, based in Dubai. Saher says his company wanted a BS system, which would be applicable to all sections of the company equally, rather than favouring some over others. It also wanted a relatively straight-forward solution, both for cost reasons and to maintain parity with MSE's deliberately slimline IT infrastructure; the company has a core IT team of just four people, based around a core ERP system from Great Plains, and various vertical systems for the different businesses.

"But the most important factor in choosing the package was actually the team which would be implementing it," says Saher.

"We had our own way of assessing the vendors and integrators; we wanted to see to what extent they would be able to hold our hands through the process. On this basis, we chose Iycon and QPR, as we felt they had a good understanding of the different businesses we would be implementing the scorecards for."

An interesting element of the BS project at MSE is that not only the drive, but also the oversight came from the CEO himself, rather than the IT department. Saher explains that, although in many ways it was an IT project, he wanted the scorecards to operate and be seen differently.

"I didn't want this to be an IT project, because that means people will see it in a certain way, which we needed to avoid," he says. "We needed to get people to understand that the project was not another top-level management reporting tool, we weren't checking up on our employees. We want BS to be accepted and to help people do their own jobs better, and so the perception was very important."

Saher is very frank as to the implications of the project. He says BS has helped MSE reveal weaknesses within the organisation, something he is pleased about. Only by identifying and eliminating the weak points and increasing organisational transparency will the company be able to better its offerings to customers.

Saher says: "I think we are learning that when it comes to the customer perspective, for example, we have tried to work out the value proposition for some of our businesses, and we have found that, even in businesses where we have been established for many years, a lot of people have great difficulty identifying that value proposition. We're bringing the weaknesses in the company to the fore, and I think that's a good thing, because you can deal with them.

"Most of our sales and marketing team are in the habit of coming into the office and leaving straight away to speak to their customers, without consulting the system first to see what the value proposition might be, and we are changing this. We carried out a customer satisfaction survey as part of this, and it's a good mixed bag in terms of the responses we have received from the customer at the moment, but the advantage is the organisation as a whole is consciously aware of what we're trying to seek when we say we're looking for a value proposition to deliver."

One of the challenges of implementing the BS system has been to identify the optimal metrics for the scorecards, in order to measure the critical functions within various roles.

Saher says this is still causing issues, two years after the initial implementation, and is something which he and the management at MSE is having to deal with constantly.

"We will know when we've got something completely wrong, because the scorecard will throw up a ridiculous result," he says. "But the real concern is that there are times when the metrics are incorrect but the results look ok; there's no real way to trace that at the moment."

As with Raza Taqvi, MSE's IT manager, Saher says it is actually still too early to tell what sort of results BS will bring to the company. The firm is in the middle of updating the system at the time of writing, and both Taqvi and Saher say the interesting stage will come when they have worked out the optimal BS methodologies for MSE.

This is one of the areas that Saher says he might have approached differently with the benefit of hindsight. Instead of having disparate teams to design the metrics for each vertical sector within MSE, he says it could have been better to use a central team for all of the companies.

"I think we're still in our infancy as regards BS," says the CEO. "We're at the stage when people are nodding their heads and going 'Mmmm-hmmmm', rather than anything more critical, but we're evolving. I would not be right in saying we have actually started seeing a lot of tangible benefits come out of the system yet, and that is more to do with us than the software; there's an organisational learning process which is moving at a certain pace."||**||

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