Deploying Strategy Using Balanced Scorecards

The fast, rapidly changing face of business, combined with advanced performance management technology is changing the way business performance is managed.

In the past, strategies were defined in large documents and measured through activity-based costing and financial performance indicators.

Whilst most companies developed such strategic plans; less than 10% were successful at rolling out that plan down and across the entire organisation.

In addition, corporate peformance is more than just financial performance. It represents performance of three critical, interconnected elements:

• People
• Process
• Technology

Not Just An Executive Activity

Corporate strategy is NOT just an executive activity. Strategy is something that EVERY employee should be involved with EVERY day.

Balanced Scorecard is the most effective means to successfully implement strategy throughout an organisation. In spite of good intentions, few companies today are successful in gaining the most from their assets, by being innovative and flexible. Programs generally kick off with gusto, and are quickly abandoned through sheer size and complexity.

Balanced Scorecard provides a whole new way of thinking and operating. It makes performance measurement as simple as it can possibly be. BSC is therefore, the most likely to succeed methodology of implementing your corporate stategy.

To create a strategy-focussed organisation you need to:

1. Translate strategy into operational terms
2. Align the management of the organisation to the strategy
3. Mobilise change through strong, effective leadership.
4. Make strategy part of everyones job and KPI’s
5. Adopt strategy as a continual everyday process

The Balanced Scorecard framework has been adopted throughout the world, in all industries, in all sizes of organisation.

Using Balanced Scorecards

Organisational Size

Balanced Scorecards are not only for large organisations; they have proven success in organisations with as few as 25-30 people. They key benefit for small businesses is that it frees up entrepreneurial energy and is a great tool in bringing people together to accomplish the strategy. It changes the focus from ‘Who is Right’ to‘What is Right’

Balanced Scorecard Data

Balanced Scorecards do not need access to large volumes of data; only 23 pieces of data are needed to implement Balanced Scorecard; and following implementation, the requirements for data collection will be less than before.

Impact on Reporting

You will find your organisation will need less reports, and each report will add a lot more value.

Technology Investment

Technology linking BSC measures to enterprise transactional system is the ideal solution, but it is not essential. For smaller deployements, Balanced Scorecard has been implemented using MS Excel spreadsheets.

Ongoing Management

Early BSC models were based on Activity-Based budgeting, which required longer to implement, massive amounts of time to maintain and were not easy to change. In contrast, moderm BSC deployments use Time Based Budgeting, which takes much less time to implement and very little time to manage. In addition, the other business benefits from TBB are huge.

Change Management

Management styles do need to change to effectively use Balanced Scorecards. However, this change is essential to meet the new age of agile business, and the BSC is a great tool for facilitating that change. Old styles of management involve self-protective exclusion from sharing information. This lack of collaboration stifles organisational innovation and change. BSC is based upon sharing information that helps every employee know the value of tehir role, and how best to perform their jobs efficiently and effectively to accomplish corpoate goals.

Overall, BSC is a new management technique for organizations that want to achieve excellence in both strategy and operations. It is THE most successful methodology of empowering an organisation to meet the fast paced demands of todays market.

Successful companies create value in one of three ways:

• product innovation
• operational excellence, or
• customer satisfaction.

Balanced Scorecard closely integrateds these elements together, resulting in a more comprehensive set of measures by which companies are managed and performance rewarded.

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