The Balanced Scorecard (BSC) is an excellent management tool that ensures you have a holistic and balanced strategic plan as well as a way to track performance over time to assess whether goals are being met. The SBC examines the following four areas of priorities that are important to your business.
Financial priorities: If we succeed, how will we look to our shareholders?
Goals in the financial area fall into two categories: revenue generation and productivity improvement. A solid strategic plan has one goal in each of these activities. The financial perspective contains priorities that explain how your company looks to shareholders, who are usually owners and investors. By serving your customer well, you increase your revenue generation. By improving your internal business process, you enhance productivity improvement. Your financial goals may include the following:
Revenue generation:
To increase revenue by 10 percent annually
To increase gross profit by 10 percent annually
To increase sales by 10 percent annually
Productivity improvement:
To decrease expenses by 5 percent
To increase net profit by 10 percent
To improve overall efficiency as measured by output over a period of time
To improve overall productivity (doing more with what you have)
Customer priorities: How do we provide value to our customers?
Customer priorities support the financial goals. These goals focus on meeting the needs of the customer through products and services. All your external goals fall into this category. Crafting new and current customer goals is a good way to structure this section. Following are some important long-term strategic objectives for valuing your customers:
New customer goals:
Introduce existing products into a new market.
Introduce new products to new and existing markets.
Anticipate future customer needs through customer feedback.
Expand sales to the global marketplace.
Current customer goals:
Expand sales to existing customers.
Increase customer retention.
Increase customer loyalty.
Cross sell existing products or services to current clients.
Achieve and maintain outstanding customer service.
Develop and use a customer database.
Anticipate future customer needs through customer feedback.
Internal priorities: What processes must we excel in to satisfy our customers?
Internal business process goals serve several purposes: Support the customer and financial goals, focus on administrative processes that have an impact on creating customer value and satisfaction, and focus on internal management activities and operational functions needed to support the products and services. Look at your list of internal priorities for this section. Here are some long-term strategic objectives to prioritize your internal goals:
Acquire enhanced CRM data mining capabilities.
Improve internal processes.
Increase efficiencies through the use of wireless or virtual technology.
Increase community outreach.
Develop and implement a promotional plan to drive increased business.
Establish one new strategic alliance annually.
Improve internal communications.
Redirect or restructure available resources.
Improve distributor and supplier relationships.
Improve marketing, advertising, and public relations.
Capitalize on physical facilities (location, capacity, and so on).
Improve organizational structure.
Employee priorities: How must our organization grow and improve?
Employee priorities drive everything else in your plan. Without your team, you don’t have an organization. These goals focus on developing people, increasing the company’s knowledge base, improving through innovation, and discovering best practices. Work on these long-term strategic objectives with your employees:
Continually discover and adopt current best practices.
Align incentives and rewards with employee performance.
Employ professionals who create success for customers.
Develop a broad set of skills useful for customer support.
Develop a team who understands strategy.
Transfer knowledge from your leading-edge clients.
Continually develop a set of best practices in your industry and your clients’ industries.
Improve labor relations, human resource development, and training.