What you measure is what you get
Amanco has been a pioneer inmeasuring the impact of its TBLstrategy, building on the ideas ofRobert Kaplan, a Harvard profes-sor of accounting who in the 1990sdeveloped a method of extendinga company’s measure of its perfor-mance beyond the financial. Onthe understanding that what youmeasure is what you get, he set outa concept he called the ‘BalancedScorecard’.
This added otheryardsticks of company performance,such as customer satisfaction andlevels of innovation, to the classicprofit and loss account. The ideaaroused widespread interest.Amanco has extended the idea ofthe Balanced Scorecard to embraceboth social and environmentaldimensions. It has begun to producewhat it calls a ‘Sustainability Score-card’ (see Figure 6 on page 41), andits efforts stimulated Kaplan himselfto co-author a Harvard BusinessSchool case study entitled ‘Amanco:Developing the SustainabilityScorecard’.
It is a constant chal-lenge for companies to measure theimpact of the sustainability elementof their strategies, and Amanco hasgone as far down this road as any.Amanco first introduced its Sus-tainability Scorecard in 2003 andit has been continuously refinedever since. Initially it focused on thesocial impact on employees and thecommunities around its factories.But it has since been expanded toinclude business with low-incomecustomers, fighting corruption inthe sector, and indicators on acci-dent prevention and eco-efficiency.It is difficult to measure the impactof every aspect of Amanco’s sustain-ability strategy. The specific benefitof efforts to lead the debate onwater resources and transparency,for instance, cannot be quantified.But Jorge Ramirez, the company’sfinancial director, is convinced thatthe extensive media coverage thatthese initiatives receive has a posi-tive effect on consumers’ awarenessand attitude towards the company.There is less doubt about the ben-efits of the company’s efforts toreduce waste and to lower accidentrates. These are all measured andmanaged, and have a positive impacton costs.The BoP segment, although still small,already generates over $4 million inrevenues and the company believesthe BoP idea has high growth poten-tial, projecting that income from itwill double year-on-year. Since theinitial project in Guatemala, thecompany has developed new ideasincluding a pilot financial servicesprogram for the residential buildingand installation segment in Brazil,launched in 2005. The programprovides credit cards to low-incomecustomers who lack access to thebanking system – enabling themto purchase building materials.Amanco has also set up a pro-gramme to train plumbers fromlow-income groups, certifyingthose who successfully completethe programme as ‘Doctores deConstrução’, a brand which addsvalue for the plumbers. For Amanco,this is also part of developing thecompany as an alternative to themarket incumbents in Brazil, whowere already working with thewell-established plumbers. “Theonly way to success is with surprise – doing something differently,”says Salas.To some extent Amanco’s distinc-tive culture is self-sustaining. Thecompany attracts the sort of em-ployees that want to make it work,and who gain satisfaction from theidea. Amanco has frequently beennamed as a Top 100 employer inBrazil, and in 2007 Amanco Ecuadorwas cited as the fifth best employerin all Latin America.
C o u r t e s y o f A m a n c o
RS Kaplan and DP Norton, ‘The balanced scorecard: measures that drive performance’,
Harvard Business Review,
Ricardo Reisen de Pinho and Robert Steven Kaplan, ‘Amanco: Developing the Sustainability Scorecard’, Harvard Business School Case 9-107-038, January 2007.
Citations by the Great Place to Work Institute, www.greatplacetowork.com/ (27 August 2007).