Balanced Scorecard: What is it for?

A BSC or Balanced Scorecard is a real-time strategy performance management tool. It displays information in a succinct summarized way. But it also allows to identify deviations and to apply corrections. Kaplan and Norton created it in 1990. The idea was to enable organizations to clarify their vision and strategy to translate them into actions. A BSC resembles the flight instruments in a cockpit. By this, it allows the pilot to know the flight situation all the time even when there’s no visual reference outside the aircraft.

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Follow these steps to construct a BSC

Step 1: Vision, Mission, Strategy

Define the company’s vision, mission, and strategy. Let’s see what they are by answering these questions:

  • Vision: Where is the company heading towards? Where would it be in 10 years?
  • Mission: What is the company here for? What makes it what it is?
  • Strategy: How is the company going to reach its vision? How and where will it compete to become different from others and valuable for clients?
Step 2: Strategy Map

Translate vision and strategy into a strategy map. Do this by finding the cause-effect relationships implied. Keep in mind these perspectives while doing so:

  • Financial: it’s the stakeholder’s point of view. It includes indicators of operational behavior, growth, and sustainability of the company.
  • Client: it answers the question: ”To fulfill our vision, how should we appear to customers?”. Indicators reflect how we draw new customers and how we keep the existing. It generates the income that feeds the financial perspective.
  • Internal Process: it includes indicators related to key processes of the organization. These indicators answer the question “to satisfy stakeholders and customers, what internal business processes must we excel at?”. Usually, we identified these indicators after those of the financial and customer perspective.
  • Learning and Growth: these indicators are related to the ability to adapt and improve. They can refer to human talent (knowledge within work teams), infrastructure and technology (information systems, technological support), and organizational climate (recurring patterns of behavior, attitudes, and feelings that characterize life in the organization).

At the end of this process, every goal found should belong to one of the previous perspectives. They should either cause or be caused by another. Find a couple of objectives per perspective, not more.

Step 3: Measurable KPIs

Translate each goal from the strategy map into a measurable Key Performance Indicator. Add the corresponding thresholds.

Result: Balanced Scorecard

If a strategic goal is not measurable or if an indicator is not cause-effect related to others, remove it from the BSC.

As a result of this process, you should get a report with no more than 10 to 15 indicators. The amount of indicators is important since at a glance you should tell how well is your strategy performing and take corrective measures if needed.

At Intraway we all work towards our shared vision. “We evolve telecom operations to improve the communications experience for millions around the world”. We periodically define our goals in an OPSP (One Page Strategy Plan). And by using a BSC, we could monitor them closely.

We know where we are heading. Come work with us and help us build the best team ever!

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