Balanced Scorecard Strategy For Dummies
The balanced scorecard method is a business analysis technique that translates an organization's mission and vision statements and overall business strategies into specific, quantifiable goals. This technique also lets you monitor the organization's performance in achieving these goals. Sometimes, it's an uphill climb to convince the powers that be that the balanced scorecard strategy is the way to go; but once everyone is on board, these tips can help you make the balanced scorecard strategy really work.
Why Use the Balanced Scorecard Strategy?
Sometimes you have to convince people to use the balanced scorecard approach, and often, you have to keep reminding people why such an approach can benefit your company and its goals. If you find yourself in either of these situations, here are some great responses:
To grow your business, increase your market shares, improve your business processes, and have fanatically loyal customers
To have a clear picture of what your business is really doing and why
To effectively manage your business and beat the pants off the competition
To establish a system for measuring your business performance and to allow you to make the right decisions, on time, every time
To enable your people to do the right things right, the first time
But these responses are only empty promises if you don't use the balanced scorecard strategy correctly. Don't lose sight of these tips as you follow through with the balanced scorecard approach:
Don't view the balanced scorecard strategy as a flavor-of-the-month approach to quick and easy answers to your problems.
Be persistent and thorough in establishing your strategies, tactics, and key performance indicators.
Communicate your scorecards and dashboard throughout your business and advertise how you're doing, what you're doing, and why.
Use teamwork and involve your people in your balanced scorecards.
Never give up the ship!
Building the Balanced Scorecard for Your Business
Building your balanced scorecard strategy requires that you take these fundamental steps so that it will be strong and deliver the benefits you want and need for your business to thrive and grow:
Develop your vision, mission, and guiding principles.
Develop your strategy map.
Develop your scorecards for the four legs.
Develop your balanced scorecard measures and dashboards.
Establish your leadership and management team's alignment, authority, and responsibilities.
Top Five Balanced Scorecard Analysis Tips
Analysis is a vital part of a business's balanced scorecard strategy and is something you'll be doing often. Here's how to keep your analysis running in the right direction:
Always look for any key performance indicators that are not measuring up and performing as required.
Perform root cause analysis on those key performance indicators that are not performing as required.
Look for positive and negative trends in your key performance indicators.
Use statistical analysis or the Six Sigma tool set to gain a better understanding of your data and information.
Take the time to really understand what the information is telling you.
Tips for Building Balanced Scorecard Dashboards
A key component of the balanced scorecard strategy is building dashboards to quickly reveal analysis results. Here are some tips for making dashboards that work for your business without wasting time or resources:
Keep your dashboards to one page and one page only!
Focus on the data and information and resist the temptation to put in a lot of useless color, glitz, and fancy presentation graphics.
Make sure your dashboard information jumps out at you and doesn’t require a lot of scrutiny and analysis to understand what it’s telling you.
Be careful in selecting any dashboard software solutions, making sure that the software and its provider fit your needs, not only for today, but for many years to come.