Make a coffee, turn on attention mode and let’s have a long talk about a methodology that deserves our attention and that can generate good results for your projects and your customers,
Assessing the movements and performances of your business is essential to designing effective management and development strategies. Thinking about it, in 1990, the result of a study involving several companies sponsored by the Nolan and Norton institute, the Balanced Scorecard (BSC). Its main motivation was a reality very close to us, but it has other reasons today, the lack of efficient methodologies in performance measurement.
Shortening the story, the teachers Robert S. KAPLAN and David P. NORTON – Havard Business School teachers – presented this model that basically functions as an auxiliary system for decision making and strategic management. Did it get complicated to understand? Calm down, let’s understand better.
To simplify BSC – translated to the letter – means “Balanced performance indicators” means As such, I have put together several important aspects to facilitate and follow the steps of your strategy. In addition, it provides the ability to measure performance at all levels, providing team-wide integration with the quality of all processes.
Now yes! It has become clearer to understand why it is widely accepted and used but to be even clearer and possible to apply to you, you must understand that the BSC its main purpose is the alignment between the Planning and the Execution turning the Mission and Strategy in Objectives and Measures, making it possible – unlike other methodologies – to plan, manage and achieve long-term goals. For this, we have the following objectives:
- Clarify and translate vision and strategy: Most companies map their Vision and Mission, but it is only on paper. Not being reflected in planning and decision making. Translating this is essential to setting objectives and indicators on the Strategic Map, generating healthy management and operational relationship.
- Plan, set goals and align initiatives: Efficiency in decision making and planning is a reflection of a clear understanding of your team’s ability to meet execution and growth goals;
- Improve Feedback and Use: Reviewing the strategy adopted is critical to success. In this respect, feedback is an effective tool for these analyzes of both the process itself and how the team can absorb and practice the necessary changes;
- Communicate / associate objectives and measures: Overall goals aligned with the specific goals of each part of your organization, ensures a tune at all levels.
Balanced Scorecard Perspectives (BSC)
To apply BSC you need to understand its structure and this is the key to good use and optimization of results.
Going beyond short-term measures, BSC offers the possibility of generating a wider picture and comprises 4 main aspects/perspectives:
- CUSTOMER PERSPECTIVE – We’re talking about the company’s vision. Therefore, the definitions of market, target audience as well as the value being delivered. Satisfaction indicators are created to measure assertiveness and, in relation to customer wishes, are divided into 4 categories: term, quality, performance and services besides the cost.
- PERSPECTIVE ON INTERNAL PROCESSES: Here you will list the critical processes to carry out the actions developed and create conditions for the organization to generate value for its client, being able to attract, retain in its segments, while generating value for its stakeholders.
- LEARNING AND GROWTH PERSPECTIVE: It is related to the development of objectives and measures aimed at continuous learning and organizational growth. Here the structure needed for long term growth must be identified. Empowerment, research and development are its main focus.
- FINANCIAL PERSPECTIVE – Revenue and productivity are the main points, aiming to present the economic result that the actions performed generated. In line with company strategy, reports on how implementations and execution contribute to the outcome (or not). This perspective is also known as the “shareholder perspective” because they are the main stakeholders in the best return on invested capital.
So far I have shown the concept and what makes up the BSC. It is extremely important that the concepts and their relationships are clear so that you can develop in a practical way.
So it’s time to further simplify and take advantage of three Balanced Scorecard application examples.
- Clearly set the vision for the future
- Define strategic objectives
- Determine critical success factors
- Choose indicators to measure and track performance
- Set goals, action plans and initiatives
All of this in relation to each of the 4 perspectives.
Let’s go to practice? Clicking here, you have access to three examples of BCS application for different areas.
Have questions about the application of this methodology? Leave it in the comments.