Master a Balanced Scorecard in 5 Minutes
Some salespeople have mastered the usage of the Balanced Scorecard. They experience a better understanding of their own business, e.g. who their customers are, what they need to do to approach this client, what's needed to improve their skills, and what technologies they have to implement to work faster. Balanced Scorecards enable salespeople to explain their product benefits to a customer.
The Balanced Scorecard is not a magic pill for sales explosion, but it helps develop a strategic vision for you and your customer. As a result, you'll start addressing problems that matter and show better performance.
I'm going to take five minutes to explain the details of this business concept to help you develop a Balanced Scorecard that is focused and successful.
What is the Balanced Scorecard?
It is a business performance management concept. Note that it is management, not just a measurement framework. The BSC is the result of the research by two Harvard professors Kaplan and Norton published in the Harvard Business Review back in 1990s.
What are some challenges associated with a Balanced Scorecard?
Some facts say that 95% of typical employees do not understand the company’s strategy and as a result, 90% of companies fail to execute their strategy successfully. BSC helps:
- 42% of interviewed companies reported the BSC to be very helpful. Moreover, about 80% report tangible improvement in operating performance
- 50% of Fortune 1000 companies use this business framework and about 70% have implemented it
What is the goal and focus of the Balanced Scorecard?
- To get a balanced view of the business focusing not only on finance, but on education and growth, internal business processes, and customers
- The goal of the Balanced Scorecard is to link strategy to action
How do I implement a Balanced Scorecard?
- Start with strategic objectives, including goals and priorities. Group and link objectives on a single page. Now you have a strategy map. Make sure you have a strategic objective for each of the perspectives mentioned above
- Link all of your strategic objectives to your action plan and assign a measure, called Key Performance Indicator (KPI)
- Once you have BSC for top management, you need to delegate it down to departments. In BSC this process is called "cascading"
What are the key success factors?
Follow these simple rules to make sure you have a business management system that improves performance.
- Involve your employees during each of the stages, especially for action plans and KPIs. If the BSC is introduced by top management only, then it won't help much in translating strategy into action
- Test your BSC. Regularly review your BSC, remove KPIs that no one uses, and add more KPIs or objectives where you face complexity. Check if people use the BSC in their daily job
Once the Balanced Scorecard is implemented, ask your employees a magic question: "Why are you doing what you are doing right now?" If an employee starts explaining his or her understanding of the company's strategy, then you are on the right track.
Aleksey Savkin is a founder of AKS-Labs, vendor of BSC Designer software and tools for software engineers. His areas of expertise are remote team management, Balanced Scorecard, KPIs, business performance management, general info-business development and marketing. Aleksey is the author of a number of articles and books on Balanced Scorecard. He runs Balanced Scorecard seminars in the Moscow Business School (MBS).
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