Management Consulting and Training - International Management Technologies, Inc.
|
Balanced Scorecard
-- Background --
What is the Balanced Scorecard?
Drs. Robert Kaplan and David Norton developed a strategic management system in the early 1990’s they called “the balanced scorecard”. Its purpose was to enable an enterprise to clarify its strategy, translate it into action and measure more than simply financial results. The scorecard provides feedback regarding both the internal business processes and external outcomes.
Kaplan and Norton describe their balanced scorecard as follows:
"The balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation."
LINKS TO MORE INFORMATION AND ACTION YOU CAN TAKE:
- Training The Customer-Balanced Scorecard Using the 8 Dimensions of Excellence Framework Workshop
- Facilitated Session(s)/Consultation: Please call us at 941-907-0666 to discuss.
- Articles Article 3 - "Balance Your Balanced Scorecard"
- Teaching Tools - Card Game/Workshop "Measure Up with Customers"
- Example of Balanced Scorecard in a Strategic Plan #5 - Strategic Plan Abstract
- Assessment Questions #6 - 8 Dimensions of Excellence Assessment
-- With C3 Inside --
Updated 4-25-07
There is the traditional scorecard, then there is the truly balanced scorecard with C3 inside. The promise of a strategic management system that balances operational and financial measures of success has only been partly realized by standard approaches. Such scorecards generally do a good job of balancing dimensions 5 thru 8 of the 8 Dimensions of Excellence. These four areas are of high priority to the producer-centered culture.
Our observation is that the balanced scorecard concept, both as initially conceived and as most often practiced, fails to balance customer interests with internal producer concerns.
A balanced scorecard with C3 inside fully integrates all 8 Dimensions of performance. For example, dimensions #1 and 2 address customer desired and undesired outcomes, respectively. Every strategic plan and balanced scorecard created for IMT clients includes:
- Customer-articulated priorities regarding outcomes, key products/services and process
- Easy-to-understand measures of success for each outcome
- Aggressive goals that promote innovation, integration and teamwork
- Accountability assigned to specific individuals for outcome success
- A deployment “roll-down” (vs. report roll up) of these outcomes to the department, function or even individual level.
In contrast, the traditional balanced scorecard used by enterprise leadership today is largely silent on customer desired outcomes. How important is this omission? Consider just a couple examples:
- As a healthcare enterprise, this means the customer-desired outcome of “good health” is not well-defined or measured. On the other hand, the worst case undesired outcome of death is much better defined and measured. But the absence of death is not good health.
- As a financial services enterprise, this means the customer-desired outcomes of “wealth” or “financial security” are not well-defined or measured.
In a business-to-business relationship, your customers’ desired outcomes may include increased profitability, growth in market share, improved customer satisfaction and other results. Their success in any of these areas that can be attributed to your contributions makes you a valuable strategic partner.
In a business-to-consumer relationship, your customers’ desired outcomes may include increased personal time, enjoyment, safety, security, good health, more discretionary funds or improved quality of life. Customer loyalty, sustainable enterprise success and other benefits flow to the customer-centered enterprise that addresses customer outcomes in its balanced scorecard.
These customer desired outcomes may seem like things you can’t measure, however, everything is measurable. We recommend that you read Chapter 4 in “Creating a Customer-Centered Culture: Leadership in Quality, Innovation and Speed” by Robin Lawton or call 941-907-0666 and speak to Rob himself.
TAKING ACTION
There are many other virtues of the customer-centered balanced scorecard. The 8 Dimensions of Excellence framework is used to create strategic direction linked to daily work. This is accomplished through facilitated planning sessions and/or in-house workshops, customized for your unique situation. The article of the same name, Article #3, “Balance Your Balanced Scorecard”, outlines some of the key 8 Dimensions concepts.
Please call us at 941-907-0666 or email our president directly, at rob@imtC3.com , with your objectives and questions. We’ll be happy to share ways your scorecard with C3 inside can accelerate your success in areas such as these:
- Innovation
- Knowledge work management
- Measuring the Seemingly Immeasurable
- Capturing and deploying the voice of the customer
- Rapid response to customers
- Product design in a service and knowledge environment
- Differentiation and customer focus
If you already have a balanced scorecard, check out the self-assessment at the end of the Article #3, “Balance Your Balanced Scorecard”.
LINKS TO MORE INFORMATION AND ACTION YOU CAN TAKE:
- Training The Customer-Balanced Scorecard Using the 8 Dimensions of Excellence Framework Workshop
- Facilitated Session(s)/Consultation: Please call us at 941-907-0666 to discuss.
- Teaching Tools - Card Game/Workshop "Measure Up with Customers"
- Example of Balanced Scorecard in a Strategic Plan #5 - Strategic Plan Abstract
- Assessment Questions #6 - 8 Dimensions of Excellence Assessment
terms of use privacy refer a colleague site map contact login
"Creating a Customer-Centered Culture", the Customer-Centered Culture (C3) Model, the C3 logo and the 8 Dimensions Model are service marks or registered trademarks of International Management Technologies, Inc.
©2008 Management Consulting and Training - International Management Technologies. All rights reserved.