Proven Ways to Improve Performance and Maintain Results
12 February 2016
Over the coming year we’ll look at a proven management framework known as the “Balanced Scorecard” and because it is a hefty framework we’ll focus on one perspective or platform for each article. This article will introduce you to the concept.
A lot has been written about balanced scorecards and there are various organisations and/or individuals who purport to know what it is. Having used this framework to achieve success for various organisations over the last 15 years I know it works.
What is the Balanced Scorecard?
Very simply put, the balanced scorecard is a way to achieve your vision and strategy by ensuring focus is evenly spread across the four key areas of business. It is natural to focus heavily on the financial aspects i.e. what revenue is coming in, what costs are you incurring, what does the debt management look like etc. While it is essential to focus on the financial aspect of business, your focus needs to span evenly across the four platforms with measureables defined or mapped from the vision and strategy (the strategic plan).
What are the four perspectives or platforms?
Robert Kaplan and David Norton developed the Balanced Scorecard in the 1990s at the Harvard Business School and it includes:
How does strategy fit with the scorecard framework?
Most organisations are familiar with strategic or business planning and use a variety of processes and systematic thinking to develop these. In some cases the resources required for the planning phase are significant, while in other cases they are not. During my career I have been involved in a number of planning cycles and unfortunately I have seen some organisations that consider the strategic plan process as a “check box” exercise. Consequently, they do not develop it further than filing it away for the following annual planning cycle.
I believe this is because the dots between strategic planning and the execution of the strategies within the plan have not been connected. The “how to” is missing and I strongly believe that using a framework such as the balanced scorecard is the “how to” execute, and equally important, measure the factors that are critical to achieve the vision and strategic plan.
By measuring and reporting we build satisfaction for the stakeholders including the business owners, the customers of the business, and the staff who work within the business and who now have relevant systems and processes that allow them to deliver the outcomes in the strategic plan.