Map Strategy with Balanced Scorecard
Effectively developing and communicating high-level business strategy is essential for organizations looking to achieve market leadership. Additionally, creating a results-oriented culture requires a comprehensive management system. Use Demand Metric's downloadable Balanced Scorecard Strategy Map tool as a basis for implementing a proven business performance management methodology.
What is the Balanced Scorecard Approach?
Developed in 1992 by Kaplan & Norton, the balanced scorecard provides: a method for aligning business strategy with vision & mission; a system for developing key performance indicators that drive success; and the ability to measure performance across the four key perspectives:
- Business Process
- Learning & Growth
Strategy Map Components:
- Mission- this is the purpose of the business used to guide internal staff.
- Vision- includes long-term goals that are external and market focused.
- Financial Perspective- measures that reflect financial performance such as return on assets, liquidity ratios, or return on investment/payback period hurdle rates.
- Customer Perspective- measures that have a direct impact on customers such as segment growth, acquisition & retention rates, satisfaction, or competitive rankings.
- Business Process Perspective- these metrics are key performance indicators of key business processes related to sustaining supplier relationships, producing products/services, distribution to customers, and other business operations.
- Learning & Growth Perspective- measurements associated with the ability to develop human, information, and organization capital.
Discuss Strategy Mapping with Senior Management- communicate the value of strategy mapping with the Balanced Scorecard approach. Get commitment for formal business planning & performance measurement.
Document Vision & Mission- if not done already, update your corporate vision and mission statements. It is critical that your internal staff understand their purpose and stakeholders have an accurate perception.
Build a Balanced Scorecard- use Demand Metric's downloadable Balanced Scorecard Strategy Map tool to build a customized scorecard for your organization to work from.
Develop Strategic Objectives- analyze each perspective to identify high-level strategic objectives. Determine which departments or cross-functional teams will be responsible for each objective.
Establish Measures & KPIs- for each objective, identify key performance indicators (KPI) and establish metrics to gauge business performance.
Create Attainable Targets- set attainable goals for metric improvement across each KPI. For example, 'improve client retention from 65% to 70%'.
Conduct Business Planning- work with senior management to plan key initiatives for each perspective. Be sure not to take on too much at once.
Adjust Strategy with Results- as results from measured activities come in, adjust your strategic objectives, metrics, targets, and initiatives accordingly. The balanced scorecard was designed to incorporate feedback.
Using Strategy Maps such as a Balanced Scorecard facilitates business planning & prioritization, setting goals and objectives, establishing KPIs & metrics, and selecting initiatives that deliver the most value. A holistic approach to strategy and performance measurement makes it much easier to translate vision into individual tasks and activities.