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Digg it UP - An Introduction To The Balanced Scorecard Management Framework
IntroductionSailing involves passion! You have to be impelled to do it. It is not even like riding a bicycle, which may be fun but will also enable you to get from A to B. Dinghy sailing is not a practical pursuit. You will only do it if you really love it. Just like starting a business.Dinghy sailing may not immediately seem to have lessons for starting a business. However, my experience with both convinces me that it offers some valuable learning for entrepreneurs. Read why I think this is so.Watching the windBefore you go for a day's sailing in a dinghy, there is a lot to be prepared. It may look like the sailor is fiddling around, looking at the sky, scanning the horizon and seeming to hesitate before getting launched. He is probably going back and forth to the clubhouse, clutching bits and bobs, as well as looking around at pennants fluttering in the breeze, or burgees swivelling at mast heads. He may change his clothes and life jacket. All this has a
Measures – Your Basis for
It seems to me when I was young, that the holiday season didn't start until after Thanksgiving. Not after the 4th of July. By September I am so sick of hearing about what people are doing for the holidays, that I just don't care anymore.There doesn't seem to be any Christmas spirit anymore. Oh sure, you see the occasional Nativity Scene, but even then it is only on church properties. What is wrong with a symbol of the holiday being on public property? We recently had an incident here in Detroit, where someone complained about Christmas trees at our airport being decorated. They apparently thought the Christmas tree was a symbol of the Christian religion and felt that it was being shoved down their throat. So the trees, which were beautiful, were taken down, to appease this one person. What about the majority? Wasn't the Christmas tree started by a pagan group...not sure on that. But it bears thinking about....the Christmas tree is NOT a religious symbol.I can almost understand the Nat
In the late 1980s, vast numbers of companies were rapidly adopting Total Quality Management (TQM) principles, yet many of these organizations found themselves struggling to tie TQM to their bottom-line results, because TQM efforts tended to focus on isolated improvement projects that too often were not directly linked to strategic goals.
Kaplan & Norton Studied Leading Organizations
Recognizing this problem, Doctors Robert S. Kaplan and David Norton studied many organizations that were overcoming this problem and successfully creating this strategic linkage to improvement. From these studies, The Balanced Scorecard (BSC) concept was born and described in a 1992 Harvard Business Review article and in subsequent books by Doctors Kaplan and Norton.
What is a Balanced Scorecard?
The Balanced Scorecard approach suggests that companies examine performance across a wide range of “balanced” indicators, rather than the more typical approach wherein executive management teams focus almost exclusively on high-level financial outcomes. This helps a company focus on broader aspects of its strategy and mission by exposing the causal relationships amongst all of an organization’s key “stakeholders,” which includes not only its financial stakeholders, but also its customers, employees, and other constituents.
Perspectives on Performance
A company’s critical stakeholders and most important strategic focus areas are represented on Balanced Scorecards within what are called perspectives. These groupings should show the cause and effect relationships between the company’s selected focus areas. Using the perspectives described by Kaplan and Norton, this would mean a Balanced Scorecard would be organized with the “Financial” perspective at the top, followed by the “Customer perspective,” then “Internal Processes,” and finally “Learning and Growth.”
Tailoring Perspectives to Other Organization Types
The Kaplan and Norton perspectives work well in for-profit companies since the fiscal outcomes are shown as most important. Other types of organizations, including not-for-profit associations, governmental organizations, and healthcare systems often select additional or alternative perspectives to more appropriately represent their mission. For example, “Clinical Outcomes” is a common top-level perspective among hospitals, whereas “Constituent Satisfaction” is a helpful perspective for many gove.
Objectives – What You Want to Achieve
Grouped under each perspective should be an organization's “critical few” objectives – ideally no more than 10 of the organization’s most important organizational goals. These should be written in short, verb-noun format (e.g., “Increase sales of core products”) and should reflect the current year’s strategic plan. Objectives should articulate the business needs of the organization, so it is critical to determine these before proceeding to the measures. Too many organizations jump straight to the measures without first framing the objectives, which can lead to measures that do not adequately address strategic opportunities.
Measures – Your Basis for
How many times have you recommended a service or a product to a friend, colleague or family member?If you are like me then it would have been Once, twice, or three, times.The fact is that if you are satisfied with something then you will naturally recommend it to someone.Today I will show you how you can get your customers to recommend you, your products and services over and over again.Most business owners fail to acknowledge recommendations and as a result do not receive many more.Always remember to thank your customers, especially in the case of receiving referrals from them.The other day Albert, one of my long established customers recommended his sister Rebecca to me for some consultancy work.That very same day I called Albert and thanked him for his recommendation. He was very pleased with my acknowledgement and said that he would continue to recommend me because he was more than impressed with my level of service.There would have been n
What is a Balanced Scorecard?
The Balanced Scorecard approach suggests that companies examine performance across a wide range of “balanced” indicators, rather than the more typical approach wherein executive management teams focus almost exclusively on high-level financial outcomes. This helps a company focus on broader aspects of its strategy and mission by exposing the causal relationships amongst all of an organization’s key “stakeholders,” which includes not only its financial stakeholders, but also its customers, employees, and other constituents.
Perspectives on Performance
A company’s critical stakeholders and most important strategic focus areas are represented on Balanced Scorecards within what are called perspectives. These groupings should show the cause and effect relationships between the company’s selected focus areas. Using the perspectives described by Kaplan and Norton, this would mean a Balanced Scorecard would be organized with the “Financial” perspective at the top, followed by the “Customer perspective,” then “Internal Processes,” and finally “Learning and Growth.”
Tailoring Perspectives to Other Organization Types
The Kaplan and Norton perspectives work well in for-profit companies since the fiscal outcomes are shown as most important. Other types of organizations, including not-for-profit associations, governmental organizations, and healthcare systems often select additional or alternative perspectives to more appropriately represent their mission. For example, “Clinical Outcomes” is a common top-level perspective among hospitals, whereas “Constituent Satisfaction” is a helpful perspective for many gove.
Objectives – What You Want to Achieve
Grouped under each perspective should be an organization's “critical few” objectives – ideally no more than 10 of the organization’s most important organizational goals. These should be written in short, verb-noun format (e.g., “Increase sales of core products”) and should reflect the current year’s strategic plan. Objectives should articulate the business needs of the organization, so it is critical to determine these before proceeding to the measures. Too many organizations jump straight to the measures without first framing the objectives, which can lead to measures that do not adequately address strategic opportunities.
Measures – Your Basis for
When Thomas Edison’s light bulb finally burned for 45 straight hours he said, “If it will burn that number of hours now, I know I can make it burn a hundred.”What does this have to do with internet marketing?Everything.You see, if you can make 1 sale, you should be able to make a hundred sales.The problem is many internet marketers are only making a sale here or there (if any at all), but if you are making ANY sales…you should be making MANY sales.Here are some tips on how to multiply your sales:
Sell the reprint/reproduction rights to your products. In doing so, you can make the equivalent of 15-20 sales in a single sale.You could upsell to your customers. When a customer arrives at your order page, tell them about a few extra related products you have for sale. They could just add it to their original order. Remember, if a customer is willing to buy one thing from you, they are likely to buy several things from you.When you make
Perspectives on Performance
A company’s critical stakeholders and most important strategic focus areas are represented on Balanced Scorecards within what are called perspectives. These groupings should show the cause and effect relationships between the company’s selected focus areas. Using the perspectives described by Kaplan and Norton, this would mean a Balanced Scorecard would be organized with the “Financial” perspective at the top, followed by the “Customer perspective,” then “Internal Processes,” and finally “Learning and Growth.”
Tailoring Perspectives to Other Organization Types
The Kaplan and Norton perspectives work well in for-profit companies since the fiscal outcomes are shown as most important. Other types of organizations, including not-for-profit associations, governmental organizations, and healthcare systems often select additional or alternative perspectives to more appropriately represent their mission. For example, “Clinical Outcomes” is a common top-level perspective among hospitals, whereas “Constituent Satisfaction” is a helpful perspective for many gove.
Objectives – What You Want to Achieve
Grouped under each perspective should be an organization's “critical few” objectives – ideally no more than 10 of the organization’s most important organizational goals. These should be written in short, verb-noun format (e.g., “Increase sales of core products”) and should reflect the current year’s strategic plan. Objectives should articulate the business needs of the organization, so it is critical to determine these before proceeding to the measures. Too many organizations jump straight to the measures without first framing the objectives, which can lead to measures that do not adequately address strategic opportunities.
Measures – Your Basis for
Marketing is a vital aspect of a business’ operations. It
has been said that, “Nothing happens in business until a
sale is made”. Marketing is about how sales are made and
marketing planning is about being proactive in determining
how sales are to be made. Developing a marketing plan is
the tool businesses use to overcome weaknesses in
competitiveness and to increase sales.Without a marketing plan, a business can only be reactive
to changes in the market and competition. This situation
means that management is always trying to catch up to
everyone else. A marketing plan can put the boot on the
other foot. The process of developing a marketing plan
means that management is now being proactive, developing
positive strategies and initiatives to create competitive
advantage and boost sales.The Planning ProcessThe planning process involves finding answers to a number
of important questions:Do we have enough customers?
Who are our curr
The Kaplan and Norton perspectives work well in for-profit companies since the fiscal outcomes are shown as most important. Other types of organizations, including not-for-profit associations, governmental organizations, and healthcare systems often select additional or alternative perspectives to more appropriately represent their mission. For example, “Clinical Outcomes” is a common top-level perspective among hospitals, whereas “Constituent Satisfaction” is a helpful perspective for many gove.
Objectives – What You Want to Achieve
Grouped under each perspective should be an organization's “critical few” objectives – ideally no more than 10 of the organization’s most important organizational goals. These should be written in short, verb-noun format (e.g., “Increase sales of core products”) and should reflect the current year’s strategic plan. Objectives should articulate the business needs of the organization, so it is critical to determine these before proceeding to the measures. Too many organizations jump straight to the measures without first framing the objectives, which can lead to measures that do not adequately address strategic opportunities.
Measures – Your Basis for
All online registration systems will allow you to automate your event registration by moving registrations from manual to online, but only some will have the ability to process payments online. There should be no PDF downloads, no printed forms, and absolutely no faxing or mailing allowed. You should never have to take credit card numbers over the phone and manually key them in because all registrations should be processed instantly over a secure connection. Registration fees should show up in your merchant or bank account effortlessly.Many planners still process payments by hand, either by paper or phone. But this is a massive waste of time and energy. Why spend human effort to do something a well-equipped web site can do better, faster, and cheaper? The clear answer is that you shouldn't.You should choose a system that allows you to use your own merchant account to collect payments or use the company’s merchant account if you do not already have one. The company’s merchant account
Measures – Your Basis for Achievement
The next step is to identify measures that will best determine if the business is on track to achieve each objective. These are also called KPIs (Key Performance Indicators) or metrics. As with objectives, focus is key. Each objective should have at most three measures attached. These measures should be the best indicators of achievement for that strategic goal. Careful consideration should go into measure selection to ensure that the desired behaviors will be encouraged by each measure and that they will indeed indicate whether strategic needs are being met.
Stoplight Indicators – Are You On Track?
After selecting the most important measures, it’s critical to set performance goals or targets so that the measure owner and management will understand expectations. Based upon these goals, certain thresholds may be set, which will trigger a visual performance indicator to appear (most often a red, yellow, or green arrow). These allow the measure owner and others viewing the scorecard to quickly spot problem areas that require additional focus or resources.
Initiatives – Projects that Address Performance Gaps
Finally, an organization should identify initiatives that will address critical areas of underperformance. Initiatives are time-specific improvement projects (with identified start- and end-dates) that are aligned to strategic, yet underperforming measures or objectives. A quick look at the red and yellow stoplight indicators on a scorecard often provides a good first step for assigning new initiatives or for evaluating priorities for stretched improvement resources. Close attention should be paid to initiatives, since these should help close the gaps on your Balanced Scorecard (and turn yellow stoplight indicators into greens). If this is not happening, initiatives should be reevaluated to ensure they are addressing the root cause of the performance gap.
Key to Success: Creating a Balanced Scorecard Framework
A Balanced Scorecard should be thought of as more than a single scorecard; to get real business benefits, it must be deployed as a framework of linked, aligned scorecards that are tailored to each area of the company. A cascaded scorecard framework allows the organization to communicate its strategy from the top down, aligning employees throughout the business to specific, measurable actions that each contribute to the strategy.
Cascading Scorecards
To cascade scorecards down and across various business units, functional areas, and management groups, you must
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