Wednesday, February 28, 2018

Take a Balanced Scoreboard Approach to Making a Leap of Digital Transformation

With a balanced scoreboard, the management can become more confident and more accurately judge the coming curves and obstacles on the path.

The purpose of managing performance is about setting performance measurement to evaluate the status of strategy management, making objective assessments, adjusting plans, setting metrics, evaluating performance and understanding results. Digital is not a one-dimensional technology upgrade only, it is multi-dimensional business expansion. A well-balanced scorecard measuring key strategic performance indicators provide the management team both a data-based story and a holistic picture on how to fix critical issues and make a leap of digitalization.

The digital transformation scorecard helps to connect multidisciplinary management dots: A scorecard assesses the progress of the set goals and provides the business management a wider perspective on its strategic decisions about digital transformation by considering the impact on finances, customers, internal processes and employee satisfaction. A well-balanced scorecard measures key strategic measures along with the things that drive those measures. The well designed balanced scoreboard with well-selected metrics can harness information-based communication and lead to continuous improvement. It is a matter of leadership guidance to steer the journey of digitalization in the right direction via understanding the purpose of doing that and engaging on that. Performance management is not an isolated management discipline. At the executive level, performance management should get the management to sit down and connect multidisciplinary management dots to tell the full story with the business context, and ensure the business as a whole is superior to the sum of pieces. It is critical to define the right set of measures which should cover all areas that contribute to business value creating.

The digital transformation scorecard allows you to focus on the most important things and tailor the needs of varying business stakeholders: A well designed balanced scoreboard helps to measure things really matter, and ensure that these measures are quantitative, and implement whatever mechanisms you need to be able to gather the information and measure them in an objective way. Without scorecards, it will become like searching for a needle in the haystack. It is also important to provide a “balanced” view of tradeoff variables. A balanced scoreboard is very useful for facilitating discussions and ensuring decision makers understand the various trade-offs and make the overall strategic balance, business dependencies, and constraints between components, individuals, and overall risk exposure. Thus, it takes skills to design effective scoreboard. The right sets of metrics are those used to inform the multidimensional performance result tailoring varying business stakeholders, to drive people engagement throughout the enterprise for improving business performance ultimately and accelerate business changes relentlessly.

The digital transformation scoreboard measures the outcome of the change and digitalization: There are operational changes, technological changes, and behavioral changes. There are incremental changes and transformative changes. You are leveraging balanced scorecard in measuring the outcome of the change. That metric needs to be “SMART.” (Specific, Measurable, Attainable, Relevant, and Time-bound). Ultimately, the success of the change program is measured by results that are important values to the organization. People can see what the outcome will look like throughout the transition, and then there should be a consideration for a balanced scorecard that measures the progress of the goals you want to achieve. The balanced scorecard measures key strategic performance indicators along with the things that drive those measures. If these values have not been clearly identified at the outset, you cannot get the true alignment of your organization and all working toward the same goals and outcomes, you lack clarity and purpose of direction for changes. It is important to measure performance, create Key Performance Indicators, monitor, and measure before and after for validity and value proposition to the organization. The ultimate goals for change measurement are to harness communication, optimize the organizational structure, streamline processes and systems, improve performance, accelerate growth, and maximize the business potential.

The digital transformation is a radical change. The successful businesses are the ones that can manage change fluently in a structural way via leveraging the balanced scoreboard approach. Measuring change involves first accurately identifying where you are now, and then clearly identifying where you want to be. With the support of measurement, the management can clearly evaluate each stage of change, and point out clearly wherein the business gets the benefit of taking up the activities so far to form a stepping stone for the big jump. With a balanced scoreboard, the management can become more confident and more accurately judge the coming curves and obstacles on the path, and get into actions in a creative, positive and proactive way, to lead the digital transformation journey smoothly.


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