Friday, May 2, 2008

Building Balanced Scorecard

A management system must be handled carefully. Kaplan and Norton warn about risks right at the beginning, with companies formulating grand strategies that they then fail to translate into goals and targets that their middle and lower managers understand and strive to achieve. You should understand that

Building a Balanced Scorecard is a great test of project management

It all starts with well understood reason for starting the project – a reason for building, having and using the Balanced Scorecard. And as you are building a management system, you need 100% management support. Otherwise you should not even start the project. Paul R. Niven gives a checklist for the essentials of a successful Balanced Scorecard. My advice is that you buy his book and follow his step by step guide.

For the Manager’s Toolbox I can, as always, simplify things a little bit. I already have the reasons and management support in place as I am my own manager and a true believer in Balanced Scorecard as my management system. I am also the whole project team and have received enough training and communication.

So let’s continue to Strategy map development. The strategy map explains my strategy in one page by connecting the strategic objectives. It also enables easy strategic communication. As you remember, I turned the perspectives upside down, so everything starts from Learning and floats downwards effortlessly.

But beware or you might end up with something like this and fail to communicate the strategy!

One thing worth mentioning on Manager’s Toolbox strategy map is the customer perspective. You might remember that I am my only customer. Nevertheless my strategic objective is Customer satisfaction. And this leads us to the next step, selecting the measures.

To ensure customer satisfaction I need to be able to communicate my ideas to others. This is where this blog plays an important role. This blog enables me to communicate and test my ideas. Thus customer satisfaction can be measured by Number of visitors to Manager’s Toolbox – the greater the number of visitors, the better my ideas are, and the more satisfied I will be.

All the other measures as well as the link to management process is shown on the picture below. Everything
  • starts with Mission, Vision and Strategy, which are
  • summarized in the Strategy map and
  • monitored by selected measures and finally
  • controlled by follow-up, target setting and continuous improvement actions
and the Balanced Scorecard becomes a real management system.

Send me an email and I'll send you the template in Excel.

Does your organization use Balanced Scorecard or other management system?

Has it been successfully built and used?

Does your strategy map explain and communicate your strategy in one page?

Is it a real management system with follow-up, target setting and continuous improvement actions?

Or is your Balanced Scorecard just a collection of measures?

Do you have a balance between the perspectives, or do you have more financial measures than all the others together?


belle.me09 said...

This is an informative blog. Thanks for sharing. Here's an article I also just read on the topic:

Samurai said...

Dear Belle,

your link is strange. What would anybody learn by copying ready made course assignment!?!?

As a source article it might be OK, but you really need to read a lot and combine several sources to learn something. After taht learning by doing is most effectivefor me.