Balanced Scoreboard Can Be Applied As Strategic Management Tool For Long Term Success
A business in reality needs a strategy management plan for attaining future goals. Future does not just happen, but needs decision making-now, impose risk-now, work now, allocate resources-now, and act accordingly-now.
In strategic management process, SWOT analysis the internal and external business environment. You get an idea about the internal strengths and weaknesses as well as about the external threats and opportunities. For the success of any business, it is essential to develop strategies that determine the direction a business will take as it progresses.
Concept of balanced scorecard in brief
Long term success for any business is determined on its developed capabilities and competence. Robert and Norton developed Balanced Scorecard tool to measure and manage performance.
Framework of balanced scorecard tool considers four perspectives to attain answers.
- Financial perspective
- Customer perspective
- Business process perspective
- Learning & growth perspective
Cause & effect relationship of the 4 perspectives
These four perspectives are connected logically. If a company concentrates on learning & growth then it will certainly show the way to better processes, which in turn will produce better products thus increasing customer value. Ultimately, this will give the organization an enhanced financial performance.
Key performance indicators allow managers to plan long term strategies from short term actions. They take the vital steps given below.
Translate the vision
Before strategic implementation process, it is necessary to clearly understand the purpose of existence (vision). The strategies need to follow the company’s vision and mission.
Communicating & linking
Long term strategies between individual and departmental goals need to be defined. These goals need to align with one another to achieve an overall corporate goal. Maintain a policy to educate employees about the strategies.
A low level employees needs to communicate with management about the practicality of strategies from operational and competitive perception. Setting goals is not enough to change your employee’s approach but linking rewards to achievements to those who make an effort to attain your business goal is also essential. Therefore make sure to apply the right indicators to evaluate good performance and reward.
It allows resource allocation process or budgeting of different departments, processes, and activities. If allocation is not appropriate then no strategy will bring good results. Budget is determined on the said objectives. First the short term milestones are figured out to connect a bridge between strategic goals and budget.
Feedback & learning
Feedback and learning allows identifying whether the strategic goals positioned are on right track. Learning includes knowledge about which way business moves, test the considered relationship between different perspectives hold true and ultimately make necessary adjustments, wherever necessary to help the organization move on the right track.
Balanced scorecard supplies 3 key things to strategic learning.
- Holistic vision
- Strategic feedback
- Strategy review
Balanced scorecard software empowers the users to get an accurate performance report and export it to right members or staff at the same/right time. Communicating performance information allows executives to actually identify the steps to be taken for attaining long term goals.
Balance scorecard framework brings a balanced relationship between financial & non-financial indicators, internal & external aspects, tangible & intangible measures, and leading & lagging indicators.