How do you measure strategic performance with the balanced scorecard?

1 What is the balanced scorecard?

The BSC is a framework that translates your strategy into a set of objectives, measures, targets, and initiatives for each of the four perspectives. The BSC assumes that your strategy is based on a clear cause-and-effect logic that links your desired outcomes (financial and customer) with the drivers of those outcomes (internal processes and learning and growth). The BSC helps you communicate your strategy to your stakeholders, align your resources and actions with your goals, and track your progress and results.

2 How do you design a balanced scorecard?

Designing a Balanced Scorecard (BSC) requires four steps: defining your vision and mission, identifying strategic themes and objectives, selecting measures and targets, and developing initiatives and action plans. A strategy map can be used to visualize the BSC and demonstrate how objectives, measures, targets, and initiatives are related. Your purpose and aspiration as an organization should be defined first, followed by key areas of focus and desired outcomes for each perspective. Afterwards, you must measure performance and success for each objective before finally creating specific projects and activities that will help you reach your targets.

3 How do you implement a balanced scorecard?

To implement a BSC, you need to communicate and cascade your strategy to employees, customers, partners, and other stakeholders. Additionally, you should allocate your budget, time, and talent to support your strategic initiatives and objectives. Aligning your internal processes with your BSC is also important. Finally, monitoring and reporting performance regularly is essential, as well as periodically reviewing and updating your scorecard based on feedback, learning, and changes in the environment.

4 How do you measure strategic performance with the balanced scorecard?

To measure your strategic performance with the BSC, you need to analyze your results, evaluate your strategy, and improve your performance. Comparing your actual performance with your targets and benchmarks can help identify any gaps and variances. You should also use the cause-and-effect logic of your BSC to determine the root causes of your performance. Additionally, assess the validity and relevance of your strategy based on the results and feedback. Ask yourself if your objectives are still achievable, if your measures are still reliable, and if your initiatives are still effective. Based on the analysis and evaluation, take action to improve your performance and close any gaps. This may involve adjusting targets, measures, objectives, or initiatives, or revising the strategy altogether.

5 What are the benefits and challenges of the balanced scorecard?

The BSC can offer you several benefits, such as clarifying and communicating your strategy and goals to stakeholders, aligning actions and resources with strategy and goals, monitoring and improving performance across multiple dimensions, and fostering a culture of learning and innovation. However, the BSC also poses some challenges. It requires a clear and coherent strategy, a strong commitment from leadership and staff, a balanced and integrated set of measures and targets that reflect strategy and goals, a reliable data collection and reporting system, as well as a continuous process of review and improvement that responds to changing environments.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?