Thursday, April 16, 2015

Scorecard as a Strategy Management Tool

The goals of applying scoreboard are to translate the vision and strategic planning into operational goals; communicate strategy and link it to individual performance.

The balanced scorecard (BSC) is a strategy performance management tool - a semi-standard structured report, supported by design methods and automation tools, that can be used by managers to keep track of the execution of activities by the staff within their control and to monitor the consequences arising from these actions.

Scorecards make the meaning of success tangible for your organization. Scorecards translate your strategy into concrete terms and help you track its implementation. Scorecards also reflect operational issues, they are developed in a way that specifically directs attention to your strategy and future direction. But the challenge is the practical application of this tool. Theoretically, most managers know how it works, understand the application, or the practicality of this management tool. We would appreciate a basic practical pictorial view of what the Scorecard should contain and address. Scorecards and dashboards must be aligned with strategies and KPIs. This sounds like a "no-brainer," but, many scorecards fail miserably simply because they were designed in isolation, not taking into account corporate strategy, not identifying key stakeholders, introducing KPIs that can't be reported from the database, etc. Effective communication and the ability to build strong relationships are vital elements.

The scorecard helps you a lot when it is into execution mode, not in the paper mode. The success of the strategy is not only based on how well you have planned but how well it is executed. One of the strengths of the scorecard is that they enable practical use of the success factors and performance management concepts. It puts these key success enablers in the spotlight for all team members and unifies their efforts to achieve the common goals. Scorecards help greatly with prioritization. It is too easy to be swamped by reports and dashboards. The scorecard allows you to focus on it. Without scorecards, it will become like searching for a needle in the haystack. Scorecard definitely is a pointer, however, it is important to identify the performance in a constrained environment. So basically, if your scorecard is able to decipher or consider the risk responses during the period then, it would point progress more correctly. This rule applies to the individual as well as organizational performance.

Make sure that the management of your scorecards does not become an industry in itself. Technology is supposed to be simplifying routine tasks not generating more! Where possible automate the loading of data from your organization's systems particularly for financial and operational data you will have, from which you can extract the relevant subset of information. You may not have your targets in these systems, but they can be loaded once or a few times a year, so you have them stored ready to compare with your actuals. When considering a scorecard, the main part of the challenge lies in building an adapted structure, in line with your objectives. Problems often come at this stage when too many measurements from the beginning are considered: often more than needed. And this proliferation of KPIs measurement will often prevent users comprehension because of too much distractive information, Then, getting a logical structure is a tough part of achieving, and is not a one-shot process. It is then better to start with a small structure that answers your very first strategic questions and then makes evolve the scorecard into a more complex, accurate, and specific environment.

The goals of applying scoreboard are to translate the vision and strategic planning into operational goals; communicate strategy and link it to individual performance. It enables feedback and learning and adjusting the strategy accordingly. Still, it’s just a tool, the means to the end, not the end.


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