Help through Balanced Score Card and KPI improvements.
The Balanced Scorecard hit business in the 1990’s to create a strategic planning and management system . The birth of the system is often credited to Dr Robert Kaplin and David Norton. Dr Kaplin’s links to Harvard Business School has attributed to their close association with the tool. The purpose of the Balanced Score Card (BSC) has been to bring some none traditional metrics and inputs to the business performance system, linking its vision to the detail metrics.
Although the BSC is in the top 10 business tools it still has a long tail of adoptors waiting to make use of its benefits, this can still be seen in small business shops through to SME and large organizations.
A key point to recall in it’s design, the BSC is a management system and not a specific metric system.
BSC deals with:
- Vision and Strategy
- Financial Performance
- Customer delight
- Organizational development
The elements produce the guides for a business strategic objectives, strategy maps, performance metrics and targets and functional strategic initiatives.
Through Financial planning a business may focus on lower costs. These cost reductions link to Efficiency and organizational development.
An improvement in an organizations skills may lead to improved efficiency and reduced lead time for customers which then generates more income and repeat revenue for a company.
To improve/review or implement the BSC system take a review of the below questions:
- How does the business consistently lead by example?
- How does the business set meaningful and relevant targets?
- What is the oen communication management style?
- How are connections made to planning both tactical, strategic and contingency wise to the overall business vision?
KPIs are (key performance indicators) and metrics are a good way on seeing how your business is doing thus giving you chance to see what progress is being made and whether you are achieving you goals and objectives. Metrics are the measurement of various specific parts of your business operation. Not all metrics are priority relevant across each department, therefore from the BSC it becomes ensure for management to identify the top 5-8 metrics as Key Performance Indicators.
Below are initial areas I review when looking at a business and how they are measuring performance:
- Financial Objectives
- Performance monitoring methods
- Strategic plans (internal+external)
See my prior articles on :
· A check list on 8 key elements to create great KPI’s
· How to invent your own measurement system for success
· Why buying shoes is like deciding the correct KPI.
It is clear that the above steps help a business gain clarity to it’s purpose, an oversight of its operations and a structure to improve whilst defining key decision and resource points for a long term objective. The system is set but how can these be rolled out into any organization with success and improved performance results?
Causation and Correlation
In the same way that a ISO Quality Assured business is still capable of delivering poor quality products on a regular basis, the same applies to KPI’s and metrics. It is the actions and decisions made from the information provided by the metric that is most important, not simply recording the metric data. In addition measuring the wrong route elements may not provide the best and efficient information to a business to make changes for maximal results and output.
The above quote is often used and implemented. However if this takes too much time or has no value to a business then reduce this waste and concentrate on the elements that have meaning and purpose.
The most frequent challenge faced by data scientists is the quality of data they work on. Be clear that the quality of steps taken in your BSC and KPI implementation has known tolerance levels. This information can then be used to identify data quality improvement steps or understand the greater tolerance bands that may be required in strategic risk management and forecasting.
2D bar charts have become too familiar to many managers and workers and leaders. This fact has created an opportunity in the development and trend of Data Vizualisation software, techniques. However the same discipline to #dataviz needs to apply to reporting tools and methods as to the desire to record everything. If the cost benefit is not present, then simply do not invest the time and resources to produce expensive time consuming images when a trusty bar chart will tell the story of your KPI.
The opportunity still remains for the implementation and improvement of BSC’s. According to the Balanced ScoreCard Collabrative 95% of a typical workforce does not understand it’s organizations strategy , 90% of companies fail to execute their strategies successfully and just under 50% of large enterprises still are yet to implement the balanced score card system. This is very significant when compounded with the challenge of creating robust yet adaptable KPI’s at a time when the speed of industry change has never been greater. The adoption period for electric was about 100 years, radio 30 years, video recorders 10 years, cellphones 8 years. Consider in addition the changes in the meantime to global logistics and business services through the internet. Now is your time to improve and implement positive changes to survive and thrive with trusted and delighted customers. Subscribe to our weekly posts now below.
CFO Talk Radio – The balanced scorecard
Introduction and Overview of the BSC
What is a Key Performance Indicator – with Bernard Marr
JAMSO helps business leaders implement great solutions in business intelligence and offer you additional expertise with training in goal setting and KPI management for your success. Join and follow us on Pinterest with over 45 boards covering areas such as goals, #BI, #DataViz, project management, #Fintech, #Manufacturing, #design and #KPI specialist areas. You can chat with us and join thousands of our followers on Twitter to gain daily tips, white papers and insights.