Balance Scorecard & Digitalization

A company is doing financially great for last couple of years and suddenly stock price starts going south day by day and then fraud or bankruptcy or no market share at all and so on.........................

Sounds familiar incidences from past or recent past?

Have you ever thought of, why so???

Since the role of finance has taken precedence over Customer, Employee & Business Processes, organizations though run by CEO but seems to be pleasing CFOs.

And why not, purpose of the organization is wealth maximization of stake holders. But is it stake holders or shareholders? Because stake holders involves suppliers, employees, customers and now a days society as well.

So by achieving financial goals Y.O.Y., will any organization be able to sustain growth or for that matter sustain existence.

Perils of being only financial goal focused are plenty, some are:

• Incentive system linked to financial results, which causes short term revenue target achievement on the cost of profit margins or long term growth
• Accounting manipulations
• Risk appetite beyond warranted
• Exploitation of stake holders other than share holders
• And the list continues............................

So balance cards which gives equal importance to:

• Financial Goals 
• Customers,
• Employees (Learning and Growth)
• Internal Business Processes

And provides a framework, which says if Employee are given attention aligned with Organization’s vision, will in turn improve internal business processes in line of same vision will in turn cause customer delight and improved customer loyalty for those customer only, which are from the target segment as per company vision, and obviously financial achievement will be the by product.

But my title says “Balance score card & Digitalization”. How come both are relevant?

Digitalization can actually work as a catalyst for balance score card. As due to advancement of digital tools, organization can expedite Employees’ learning curve and enhance their personal growth potential.

Such amplified technology enabled employees will further increase the use of upcoming technology to optimize internal business processes, and hence the virtuous cycle begins.

Now this newly formed digital organization brings to the customer plethora of positive experience which may or may not be digital, but definitely will persuade customer to give positive feedback on any of the digital social media about this reverberating experience.

And then a bigger virtuous cycle of increase in demand for organization’s product or service will cause a spur in financial results, which due to data mining & analytics would be able to directly depict the cause & effect and also digital graphical picture of Balance Scorecard.

And as the analytics will showcase the direct link between financial achievements and Employees’ use of digital technology, digital Internal Business processes, & customer experience enhancement.

So what behavior is awarded the same is repeated, thus the biggest ever virtuous cycle of prosperity for Stake Holders (this time it is Stake Holders). And this virtuous cycle is digital.

Hence concluded, Digitalization can change the way organizations are implementing Balance Scorecard.

This is how I think, you may share your way of thinking.

#BalanceScorecard, #Digitalization