Balanced Scorecard: Management Not Measurement
2 July 2021
Balanced Scorecard: Management not Measurement
The Balanced Scorecard is a strategic performance management tool designed for managing strategic performance and not only as a measurement and reporting tool. Kaplan and Norton suggest that the process of strategic performance management consists of four critical processes:
- Clarifying and translating the vision and strategy
- Communicating and linking the strategic objectives and measures.
- Planning and setting targets, and aligning strategic initiatives
- Enhancing strategic feedback and learning
Clarifying and Translating the Vision and Strategy
The process of identifying the strategic objectives and visualising them in a Strategy Map is the starting point for any Balanced Scorecard implementation. Consensus needs to be achieved among senior leaders in an organisation about the key objectives and they way they interrelate. There are often iterations between identifying objectives and mapping them into causal maps as a Strategy Map ensures that all objectives and measures are linked to overall deliverables and isolated objectives or ‘pet projects’ are avoided.
Communicating and Linking the Strategic Objectives and Measures
Communicating the overall vision in form of Strategy Maps with associated KPIs throughout the entire organisation means that objectives are much better understood and local objective and targets can be placed into the overall strategic context. A two-way communication system should be put in place to encourage dialogue between the business units and executive management in order to engage people in the strategy process and to allow feedback.
Planning and Target Setting, and Aligning Strategic Initiatives
Targets should be established for each of the objectives and measured by the KPIs. The target setting process is best done in the context of the strategic initiatives and projects that are linked to each of the strategic objectives. Targets should take into account causal-and-effect lag times and should be stretching but achievable.
Enhancing Strategic Feedback and Learning
In the final stage of the management process, the Balanced Scorecard is integrated into a strategic learning process. Together with Kaplan and Norton I agree that this process is the most important aspect of the entire scorecard management process. It is important to put processes in place which enable managers to learn from their performance information and improve their future decision making. In addition, Strategy Maps and KPIs should be used to challenge and test the business model in order to refine and improve it over time to continuously improve performance.
Related Articles
Quantum Computing: What Every CEO Needs to Know
The digital revolution has been built on a foundation of classical bits, which represent either a 0 or a 1.[...]
How IBM And AWS Are Partnering To Help Clients Address Cybersecurity And Sustainability Challenges
Building the right partnerships is just as important for giant international tech companies as it is for anyone else. And now is a more important time for them to be doing it than ever before.[...]
Artificial Intelligence In Manufacturing: Four Use Cases You Need To Know In 2023
In 2023, Artificial Intelligence (AI) is becoming increasingly essential to the day-to-day operations of manufacturers all over the world.[...]
Generative, Predictive, Prescriptive AI: What They Mean For Business Applications
So many people are talking about generative artificial intelligence (AI) these days that it’s easy to forget it’s just one category of AI application that’s making a difference to businesses today.[...]
How To Make Your Business Quantum Safe
Quantum computing poses one of the biggest future security risks to companies. In this article, we look at how you can navigate the quantum revolution and make your businesses quantum safe. [...]
How to Create a Successful Freemium Business
Step into the world of freemium business models and learn how to balance free and premium offerings effectively. [...]
Stay up-to-date
- Get updates straight to your inbox
- Join my 1 million newsletter subscribers
- Never miss any new content
Social Media