Measuring and Aligning Leadership and All Other Systems
Comprehensively manage your strategy so that all functions are pulling toward the same set of objectives. This is more than a set of performance measures. A Balanced Scorecard is a structured framework for aligning all functions with strategy, mission, and vision. As a result high level strategy is linked with daily operations, which is where most strategic plans fail.
A balanced scorecard has strategic objectives and measures structured around four “perspectives”. Each perspective seeks to answer a question.
Perspectives:
- Customer perspective.
To achieve our vision, how must we look to our customer? - Internal process perspective.
To serve our customer, what business processes must we excel at? - Learning and growth.
What skills, leadership, culture, and information must we have in place to excel at the processes required to service our customers? - Financial.
What financial resources will be required to acquire the assets we need to be successful (for commercial firms, this becomes #1).
History of the Balanced Scorecard
Robert Kaplan and David Norton, of the Harvard School of Business, built upon previous research that showed that there are four primary perspectives to every organization. To be successful, each perspective must be balanced. The needs of shareholders who want a high return must be balanced with customers who want low cost and fast delivery. In the public sector, the need for safe communities must be balanced with the economic reality of low taxes. These are often competing forces.
The brilliance of Balanced Scorecard is that it creates the cause and effect relationships that must be in place to make strategy work. When integrated with organizational objectives and measures of results the impact can be significant. Staff who had no idea how they impacted strategy find new value in their work. Projects that seem like great ideas at the time are dropped because they are not aligned with mission and vision. There is context and structure for growth.