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Choosing Strategic Objectives Strategy mapping is the most important task in building a Balanced Scorecard. Get the map right and it becomes much simpler to select meaningful measures, targets and initiatives. Unfortunately many companies stymie their scorecard efforts because they make basic mistakes in mapping. Just a few examples follow. The Number of Objectives Most importantly, there is a tendency to choose too many objectives – 40, 50 or even 60+ is not uncommon. The result is an organization map that describes everything the company does rather than a Strategy…
Choosing Strategic Measures In another article on this website, we looked at strategy mapping, which is the most important step in creating the Balanced Scorecard system. Here, we consider how to select strategic measures which, despite a still commonly held belief to the contrary, is not the most important step. In a scorecard hierarchy of importance, metrics follow both selecting objectives and choosing initiatives (where work gets done). The function of metrics is to monitor progress toward strategic objectives, and in doing so test the efficacy of the strategy. It…
Choosing Strategic Targets This is the third in a series of four articles that collectively provides key learning for the basic architecting of the Balanced Scorecard. Respectively, the first and second articles considered strategy mapping and choosing strategic measures. The next looks at strategic initiatives, while in this article, we focus on choosing strategic targets. The Problem with Targets Of course, all organizations set targets. However, these are still predominantly financial, with most fixed for an annual, budgeted timeframe. Within the Balanced Scorecard, equal attention must be paid to both…
Architecting a Balanced Scorecard requires organizations to master four techniques – effective strategic mapping, selection of the right strategic measures, selection of the appropriate strategic targets and choosing the right strategic initiatives. This article focuses on the last, namely, choosing strategic initiatives. Next to the identification of the strategic objectives, selection of strategic initiatives is the most important component of the Balanced Scorecard framework. They are more important than metrics. While the Strategy Map describes the logic of the strategy and the Balanced Scorecard identifies measures and targets for each…
Scorecard Pilots An ideal and text-book scorecard implementation process follows this cascade. The global organization’s executive committee creates the first Strategy Map and Balanced Scorecard. Each divisional head that sits on that committee then creates their own scorecard system with their direct reports, the business unit heads. In turn, the business unit heads build their own scorecard with their own direct reports, typically the functional heads, and so on. As a result, the organization creates a family of fully aligned and cascaded scorecards. However, an analysis of 14 years worth…
The Dos and Dont's of Using Consultants As with any major change programme, an early decision in a Balanced Scorecard effort is whether or not to engage the services of an external consultant. Those who decide to invest in consultancy support have many external firms to choose from. Making the right choice can deliver substantial benefits to the business and truly kick-start the scorecard program. A wrong decision can be costly financially but also strangle at birth the scorecard effort. This article provides a checklist on the do’s and don’ts…
Personal Scorecards: Aligning Individual Performance with Strategic Objectives. Principle three of the five principles of the strategy-focused organization, as described by Drs Robert Kaplan and David Norton, is ‘make strategy, everyone’s job’. Key sub-components of this principle are ‘balanced paychecks’ (i.e. align employees compensation to strategic goals via the Balanced Scorecard) and ‘personal scorecards’ (create scorecards at the individual employee level). We discuss compensation and the Balanced Scorecard system elsewhere in this section. In this article we focus on personal scorecards. The Final Step in an Ideal Scorecard Cascade In…
Making the Business Case A compelling business case is required for any major change program to be green-lighted. This is as true for the Balanced Scorecard as for any other transformation effort. Quite simply, a senior management team will not (and should not) countenance the time and money requirements for a full scorecard design and rollout without there being clear and tangible business benefits. A Matter of Survival For some companies the business case requires little consideration – it’s a matter of survival. This was the case at the communications…