What is a Balanced Scorecard - This presentation provides an overview of the Balanced Scorecard. The Balanced Scorecard is a methodology that works from the top down. Starting with a company Mission and Vision, translating that into a Strategy with linked Objectives, Metrics and Initiatives.
2. Overview
• As defined by the Balanced Scorecard Institute:
“The balanced scorecard is a strategic planning and management
system that is used extensively in business and industry,
government, and non-profit organizations worldwide to align
business activities to the vision and strategy of the organization,
improve internal and external communications, and monitor
organization performance against strategic goals”.
• Which is a bit wordy, so what does it do:
• Aligns your business to your strategy
• Monitors performance against business goals/objectives
• And therefore, improves internal and external communications
• All of which should improve your profitability and/or efficiency
3. What does it look like?
One of the best ways to visualise a Balanced Scorecard is to look at a
Strategy Map.
• A Strategy Map is
an integral part of
a Balanced
Scorecard and
provides a way to
externalise what
an organisation is
trying to achieve is
an easy-to-read
format
• A typical Strategy
Map might look
like the diagram to
the right:
4. The ‘Balance’
• The ‘Balance’ in a Balanced Scorecard is brought about by an examination of
both financial and non-financial objectives and measures
• These objectives and measure are categorised as applicable to four areas or
‘Perspectives’, they are:
• Financial Perspective – The high level financial objectives and financial measures
of the organisation that help answer the question – How do we look to our
shareholders?
• Customer Perspective – All objectives and measures that are directly related to the
organisations customers, focusing on customer satisfaction. To answer the question
– How do our customers see us?
• Internal Business Process Perspective – The objectives and measures that
determine how well the business is running and whether the products or services
conform to what is required by the customers, in other words, what should we be
best at?
• Learning and Growth Perspective – The objectives and measures concerning
how well our people perform, their skills, training, company culture, leadership and
knowledge base. All aspects that lead to continuous improvement. How can we
improve and create value?
6. Where do I start?
• With your strategy of course!
• A Balanced Scorecard may include a scorecard, but don’t start with the
scores (measures), that would be folly.
• Start by determining what your organisation is trying to achieve, then break it
down into manageable pieces, measure it and define initiatives:
• Don’t be tempted to jump straight to initiatives either! They come last.
Strategy
What do we want to
achieve?
Objectives
To achieve part of the
strategy
Measures
To measure our
success
Initiatives
How we are going to
succeed
7. Invest in software
• Yes, you could create a Balanced Scorecard with a spreadsheet, but
don’t be fooled into thinking you can manage it effectively with one.
• You don’t need software to determine what your strategy is, or even
your objectives, do this first.
• Software will help you keep control of your strategy by:
• Keeping everything in the same place
• Linking Measures to Objectives
• Linking Initiatives to Objectives and/or Measures
• Creating ownership (for Objectives, Measures and Initiatives)
• Ensuring visibility of all elements of the strategy at all times
• Quickly highlighting what is succeeding and what is failing
• Allowing your team to work together to ensure strategic success
• Good software ensures you use best practice when creating measures