BSC Step by Step: What to Consider? (By Luthando)

Perhaps, you have heard much about the Balanced Scorecard. Top managers, consultants and experts in strategic planning are in a constant search for tools, systems and frameworks that help them in everyday work. The BSC is one of such systems which was initially developed in the early 1990s by genius business experts Norton and Kaplan. Although the Balanced Scorecard is a simple system, the implementation process is not a piece of cake. Each implementation stage requires certain knowledge and skills. Naturally, there are common mistakes and flaws that must be avoided. This article focuses on implementation stages of BSC.

Implementation of any strategic management and performance evaluation system begins with strategy development. It is obvious that in order to evaluate strategy execution there should be a comprehensive strategy in the first place. Often, managers have the wrong concept of strategy. There is much confusion when it comes to strategic goals. Earning much money is a good goal, however, strategy implies future vision. It means that strategy should not only define goals, but also forecast potential problems. Of course, it is impossible to foresee all difficulties and changes of volatile markets. Yet, strategic vision helps better prepare for such problems. A strategy should answer one simple question “Where will the company be in 5 or more years and what will it look like?”

Once the strategy is developed and discussed on the top level, it is time to introduce strategic goals to ordinary employees who should be aware of the adopted strategy and their roles in the implementation process. BSC is a helpful tool only when used by as many employees and managers as possible. Even front line managers who regularly contact customers may have valuable suggestions on how to improve performance or reach certain goals. The Balanced Scorecard should become an instrument that is used on a daily basis.

Without any doubts, choosing easy to use and powerful software is important. The software is used to collect and enter data, evaluate and manage indicators, build graphs and charts, generate reports, share info online etc. Actually, the right choice of software influences success of the scorecard implementation. Make sure you consider several options and evaluate trials that are usually offered by the majority of respectable companies. By the way, web based software is picking up steam these days. So, this can be a good choice for a small company where several employees working with the scorecard. Prices for such apps start with $500, although many companies offer free solutions that will certainly help you learn the ropes of the scorecard and get started with creation of a sample BSC.

Designing of the scorecard begins with choosing key performance indicators (KPIs). There are 4 categories where KPIs should be spread: financial, customer, business processes, education. It is very important to choose measurable and informative KPIs that really represent critical success factors.

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