Balanced Scorecard in 2 Minutes

Summary

The Balanced Scorecard is a strategic planning tool that transforms a broad organizational vision into measurable objectives. It evaluates an organization from four perspectives: learning and growth, internal processes, customer, and financial. These perspectives are interconnected, with each influencing the others in a cause-and-effect manner. The strategy map highlights how these objectives link together, and performance is tracked using color-coded measures—green, yellow, and red. By focusing on objectives before choosing measures, organizations can ensure effective strategy execution, turning vision into actionable results.

Takeaways

• 😀 The balanced scorecard helps translate a big-picture strategy into actionable, measurable steps.
• 😀 It looks at an organization from four perspectives: learning and growth, internal processes, customer, and financial.
• 😀 These four perspectives are interconnected, creating a cause-and-effect relationship.
• 😀 The learning and growth perspective focuses on training employees and sharing knowledge.
• 😀 Effective internal processes improve customer care, which positively impacts financial performance.
• 😀 Strategic objectives should be actionable, measurable, and start with a verb.
• 😀 A strategy map is created by drawing arrows between objectives to show their cause-and-effect relationships.
• 😀 Success is tracked using color-coded measures: green for exceeded goals, yellow for missed goals, and red for problems.
• 😀 The order of selecting measures is crucial: define the strategy first, then determine how to measure success.
• 😀 The balanced scorecard provides a clear framework for aligning an organization’s efforts and tracking progress.
• 😀 Using the balanced scorecard ensures strategic actions are aligned with the organization’s goals and objectives.

Q & A

What is the main purpose of the balanced scorecard?

The balanced scorecard helps turn an organization's strategy into actionable goals by breaking down a high-level vision into measurable pieces. It provides a framework for strategic planning and performance management.

How does the balanced scorecard approach strategic planning?

The balanced scorecard looks at the organization from four perspectives: learning and growth, internal processes, customer, and financial. Each of these perspectives affects the others, creating a cause-and-effect relationship that helps shape strategy.

What are the four perspectives in the balanced scorecard?

The four perspectives in the balanced scorecard are: 1) Learning and growth, 2) Internal processes, 3) Customer, and 4) Financial.

Why is the 'learning and growth' perspective important?

The 'learning and growth' perspective focuses on training employees and sharing information. This is important because it leads to improved internal processes, which in turn enhance customer satisfaction and drive financial success.

How does the balanced scorecard connect different organizational areas?

The balanced scorecard connects different areas of the organization through a cause-and-effect relationship. For example, effective learning and growth lead to better internal processes, which then result in improved customer satisfaction and, ultimately, better financial outcomes.

What are 'strategic objectives' in the balanced scorecard?

Strategic objectives are specific, measurable goals that translate broad concepts into concrete actions. They are an essential part of the strategy map and help organizations stay focused on key areas of improvement.

What role do arrows play in the balanced scorecard?

Arrows in the balanced scorecard represent the cause-and-effect relationships between strategic objectives. They visually show how improvements in one area can impact others, creating a flow of strategy.

What is a strategy map in the context of the balanced scorecard?

A strategy map is a visual representation of how an organization's strategic objectives are connected, showing the flow from bottom to top, based on cause-and-effect relationships. It helps guide the execution of strategy.

How do you measure the success of the strategic objectives?

Success is measured by setting specific goals for each objective. A traffic light system is used: green indicates exceeded goals, yellow means goals were almost reached, and red signifies a significant issue that needs attention.

Why is it important to establish overall strategy before choosing measures in the balanced scorecard?

It's crucial to first define the overall strategy to ensure that the measures chosen are aligned with the organization's goals. Without a clear strategy, the measures might not accurately reflect or support the desired outcomes.