Revisiting Balanced Scorecard Note 6 - 3 Strategic Directions

Earlier Note : https://www.dhirubhai.net/pulse/revisiting-balanced-scorecard-note-5-manoj-onkar

Dr. Robert Kaplan and Dr/ David Norton. the co-creators of the Balanced Scorecard (BSC), identified three key strategy options in the customer perspective of the BSC's strategy map.

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These three strategy options are:

1. Customer intimacy strategy: This strategy involves building close relationships with customers to better understand their needs and provide personalized solutions. The goal is to create a loyal customer base that is highly satisfied with the company's products or services. Key performance indicators (KPIs) for this strategy might include measures of customer satisfaction, customer retention rates, and the percentage of revenue from repeat customers.
2. Operational excellence strategy: This strategy involves delivering high- quality products or services at a low cost. The goal is to create a competitive advantage by being more efficient than competitors. KPIs for this strategy might include measures of operational efficiency, such as cycle time, defect rates, and cost per unit.
3. Product leadership strategy: This strategy involves developing innovative products or services that differentiate the company from its competitors. The goal is to create a reputation for being a thought leader in the industry, and to establish a premium price for the company's offerings. KPIs for this strategy might include measures of product innovation, such as the percentage of revenue from new products, the number of patents filed, and customer perception of the company's innovation.

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Each of these three strategy options requires a different focus and set of KPIs. By identifying which strategy option is most appropriate for their business, companies can create a focused and effective customer perspective for their BSC strategy map.

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Here are a few examples of companies that have successfully implemented the three strategy options in the customer perspective of their Balanced Scorecard:

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1. Customer intimacy strategy: Amazon is a great example of a company that has successfully implemented a customer intimacy strategy. By collecting data on its customers' browsing and purchasing habits, Amazon is able to provide personalized product recommendations, targeted advertising, and customized shopping experiences. This has helped the company build a loyal customer base, with a high percentage of revenue coming from repeat customers.
2. Operational excellence strategy: Walmart is a company that has successfully implemented an operational excellence strategy. By focusing on efficiency and cost control, Walmart is able to offer low prices to customers while still maintaining quality. The company has implemented lean manufacturing and Six Sigma methodologies to improve operational efficiency, and has invested in technology to streamline its supply chain and inventory management processes.
3. ?Product leadership strategy: Apple is a company that has successfully implemented a product leadership strategy. By investing heavily in research and development, and creating innovative products like the iPhone, iPad, and MacBook, Apple has established itself as a thought leader in the technology industry. The company's products are known for their sleek design, user-friendly interface, and cutting-edge features, which has helped Apple command a premium price for its offerings.

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Of course, many other companies have implemented these strategies successfully as well.

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The key is to identify which strategy option is most appropriate for your business, and then to develop a set of KPIs that will help you measure your progress and achieve your objectives in the customer perspective of your Balanced Scorecard.

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Determining which strategy option is most appropriate for your business requires careful analysis and consideration of your business goals, strengths, weaknesses, and competitive landscape.

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Here are a few steps you can take to help determine which strategy option is right for your business:

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1. Conduct a SWOT analysis: A SWOT analysis can help you identify your business's strengths, weaknesses, opportunities, and threats. This analysis can provide insight into which strategy option might be most appropriate for your business, based on your current capabilities and the competitive landscape.
2. Analyze your customer base: Understanding your customers' needs, preferences, and behaviors can help you identify which strategy option will resonate most with them. Consider conducting customer surveys or focus groups to gather feedback on what your customers value most.
3. Evaluate your competition: Understanding your competitors' strengths and weaknesses can help you identify which strategy option will give you a competitive advantage. Consider conducting a competitive analysis to identify areas where you can differentiate yourself from your competition.
4. Consider your resources: Each of the three strategy options requires different resources and capabilities. For example, a customer intimacy strategy may require more resources for customer service and data analysis, while a product leadership strategy may require more resources for research and development. Consider your current resources and capabilities when determining which strategy option is most appropriate for your business.
5. Seek expert advice: Consider seeking advice from industry experts or business consultants who can provide objective insight into which strategy option might be most appropriate for your business.

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Once you have determined which strategy option is most appropriate for your business, you can develop a set of KPIs that will help you measure your progress and achieve your objectives in the customer perspective of your Balanced Scorecard.

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To ensure that your chosen strategy option aligns with your business goals, it is important to have a clear understanding of your business goals and objectives, and to develop a set of KPIs that will help you measure progress towards those goals.

Here are some steps you can take to ensure that your chosen strategy option aligns with your business goals:

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1. Define your business goals and objectives: Clearly define your business goals and objectives, and ensure that they are aligned with your overall mission and vision. This will help to guide your strategic decision-making and ensure that your chosen strategy option supports your overall business strategy.
2. Identify KPIs that align with your strategy option: Once you have identified your strategy option, identify a set of KPIs that align with that strategy option and will help you measure progress towards your business goals. For example, if you have chosen a customer intimacy strategy, KPIs might include customer satisfaction, customer retention rates, and the percentage of revenue from repeat customers.
3. Monitor progress regularly: Regularly monitor progress towards your KPIs, and use that information to make informed decisions about your strategy. If your KPIs are not moving in the right direction, you may need to adjust your strategy or tactics to better align with your business goals.
4. Communicate your strategy and goals: Ensure that your employees understand your chosen strategy option and how it aligns with your business goals. This will help to ensure that everyone is working towards the same objectives and will help to build alignment across the organization.

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By following these steps, you can ensure that your chosen strategy option aligns with your business goals and that you are making progress towards achieving those goals.