Put it-all-together: Business or Balanced Scorecard, KPIs, Strategy Map

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Any professional involved in the Balanced Scorecard drew a well-known 4 sector diagrams on the flip chart. Popular 4 perspectives of the Balanced Scorecard seem to be everywhere, but are they the most important part? What is the best way to explain to someone about a Balanced Scorecard concept?

For my opinion, instead of talking about 4 perspectives it makes much more sense to focus on strategies (including generic ones) and the cause-and-effect connection between business objectives.

What do you think? How do you explain the basics of the Balanced Scorecard if someone asks you?

Published in: Business, Technology

Put it-all-together: Business or Balanced Scorecard, KPIs, Strategy Map

  1. 1. PUTTING IT ALL TOGETHER: A CLEAR VIEW OF THE BALANCED SCORECARD FRAMEWORK Based on http://www.bscdesigner.com/put-it-all-together.htm By Aleksey Savkin
  2. 2. BSC DESIGNER Source: www.bscdesigner.com "I'd like to learn about the BSC and I want to know where to begin to put it all together." A CLEAR VIEW OF THE BALANCED SCORECARD FRAMEWORK
  3. 3. BSC DESIGNER "I'm not able to use a Business Scorecard properly. I'm getting lost in the volume of information." Source: www.bscdesigner.com "I'd like to learn about the BSC and I want to know where to begin to put it all together." A CLEAR VIEW OF THE BALANCED SCORECARD FRAMEWORK
  4. 4. BSC DESIGNER "I'm not able to use a Business Scorecard properly. I'm getting lost in the volume of information." "I want to understand the concept itself! " Source: www.bscdesigner.com "I'd like to learn about the BSC and I want to know where to begin to put it all together." A CLEAR VIEW OF THE BALANCED SCORECARD FRAMEWORK
  5. 5. BSC DESIGNER "I'm not able to use a Business Scorecard properly. I'm getting lost in the volume of information." "I want to understand the concept itself! " Source: www.bscdesigner.com "I'd like to learn about the BSC and I want to know where to begin to put it all together." "I want to have a clear view of the whole framework, starting from scratch till having an effective strategy map." A CLEAR VIEW OF THE BALANCED SCORECARD FRAMEWORK
  6. 6. BSC DESIGNER A CLEAR VIEW OF THE BALANCED SCORECARD FRAMEWORK • These questions are not a surprise.
  7. 7. BSC DESIGNER A CLEAR VIEW OF THE BALANCED SCORECARD FRAMEWORK • These questions are not a surprise. • Any strategy management concept is quite complex,
  8. 8. BSC DESIGNER A CLEAR VIEW OF THE BALANCED SCORECARD FRAMEWORK • These questions are not a surprise. • Any strategy management concept is quite complex, • And without seeing a big picture, the design and later implementation cannot be a success.
  9. 9. WHAT IS BALANCED/BUSINESS SCORECARD ALL ABOUT?
  10. 10. BSC DESIGNER IT IS ALL ABOUT STRATEGY • When you have a problem, your resources are unlimited and there is no competition, then you can solve it.
  11. 11. BSC DESIGNER IT IS ALL ABOUT STRATEGY • When you have a problem, your resources are unlimited and there is no competition, then you can solve it. • When you have a set of interconnected and your resources are limited, then solving the problem is not that easy.
  12. 12. BSC DESIGNER The strategy is an answer to "why?" (the reason of the problem) and "how?" (the solution to the problem) question. IT IS ALL ABOUT STRATEGY Source: www.bscdesigner.com
  13. 13. BSC DESIGNER Come up with ideas that could possibly work out and solve the problem Strategy Formulation The strategy is an answer to "why?" (the reason of the problem) and "how?" (the solution to the problem) question. IT IS ALL ABOUT STRATEGY Source: www.bscdesigner.com
  14. 14. BSC DESIGNER Describe these ideas in an easy to understand, and to communicate way Come up with ideas that could possibly work out and solve the problem Strategy Formulation Strategy Description The strategy is an answer to "why?" (the reason of the problem) and "how?" (the solution to the problem) question. IT IS ALL ABOUT STRATEGY Source: www.bscdesigner.com
  15. 15. BSC DESIGNER Follow the developed plan and see if it works Describe these ideas in an easy to understand, and to communicate way Come up with ideas that could possibly work out and solve the problem Strategy Formulation Strategy Description Strategy Execution The strategy is an answer to "why?" (the reason of the problem) and "how?" (the solution to the problem) question. IT IS ALL ABOUT STRATEGY Source: www.bscdesigner.com
  16. 16. BSC DESIGNER Follow the developed plan and see if it works Describe these ideas in an easy to understand, and to communicate way Come up with ideas that could possibly work out and solve the problem Strategy Formulation Strategy Description Strategy Execution Business Scorecard helps to describe the strategy Source: www.bscdesigner.com The strategy is an answer to "why?" (the reason of the problem) and "how?" (the solution to the problem) question. IT IS ALL ABOUT STRATEGY
  17. 17. BSC DESIGNER Follow the developed plan and see if it works Describe these ideas in an easy to understand, and to communicate way Come up with ideas that could possibly work out and solve the problem Strategy Formulation Strategy Description Strategy Execution Business Scorecard helps to describe the strategy Generic strategies can help you to come up with some insights Source: www.bscdesigner.com The strategy is an answer to "why?" (the reason of the problem) and "how?" (the solution to the problem) question. IT IS ALL ABOUT STRATEGY
  18. 18. BSC DESIGNER Follow the developed plan and see if it works Describe these ideas in an easy to understand, and to communicate way Come up with ideas that could possibly work out and solve the problem Strategy Formulation Strategy Description Strategy Execution Business Scorecard helps to describe the strategy Generic strategies can help you to come up with some insights A well described strategy is much easier to execute Source: www.bscdesigner.com The strategy is an answer to "why?" (the reason of the problem) and "how?" (the solution to the problem) question. IT IS ALL ABOUT STRATEGY
  19. 19. WHERE TO BEGIN THE BUSINESS SCORECARD PROJECT?
  20. 20. BSC DESIGNER WHERE TO BEGIN THE BUSINESS SCORECARD PROJECT? • The biggest problem with all failed scorecard projects is that they are focusing too much on KPIs.
  21. 21. BSC DESIGNER WHERE TO BEGIN THE BUSINESS SCORECARD PROJECT? • The biggest problem with all failed scorecard projects is that they are focusing too much on KPIs. • Once a tremendous amount of time was spend on obtaining required information, and companies failed to make any business use of the scorecard.
  22. 22. BSC DESIGNER WHERE TO BEGIN THE BUSINESS SCORECARD PROJECT? • The biggest problem with all failed scorecard projects is that they are focusing too much on KPIs. • Once a tremendous amount of time was spend on obtaining required information, and companies failed to make any business use of the scorecard. • The answer to the question: “Where to begin the business scorecard project” is “Start with business context!”
  23. 23. BSC DESIGNER Source: www.bscdesigner.com Financial Objectives Customer Value A simple cause-and-effect chain to describe the strategy A SIMPLE DESCRIPTION OF THE STRATEGY Understand how your top level objectives are linked down to the increase of the customer value.
  24. 24. BSC DESIGNER Source: www.bscdesigner.com Financial Objectives Customer Value Business Systems Understand how your top level objectives are linked down to the increase of the customer value. In its turn, how you are going to provide this customer value using your business systems. A SIMPLE DESCRIPTION OF THE STRATEGY A simple cause-and-effect chain to describe the strategy
  25. 25. BSC DESIGNER Source: www.bscdesigner.com Financial Objectives Customer Value Business Systems Learning & Growth Understand how your top level objectives are linked down to the increase of the customer value. In its turn, how you are going to provide this customer value using your business systems. What information you need to learn before you are ready to act. A SIMPLE DESCRIPTION OF THE STRATEGY A simple cause-and-effect chain to describe the strategy
  26. 26. THE STRATEGY MAP IS NOT THE END OF THE STRATEGY DESCRIPTION PROCESS. ADD SOME KPIS.
  27. 27. BSC DESIGNER THE SUGGESTED STRATEGY WORKS? • Having the strategy map is not the end of the process, it’s just the beginning.
  28. 28. BSC DESIGNER THE SUGGESTED STRATEGY WORKS? • Having the strategy map is not the end of the process, it’s just the beginning. • One more thing that we need is to find out in some way if we are on the right track with this strategy or not.
  29. 29. BSC DESIGNER THE SUGGESTED STRATEGY WORKS? • How do you know that the suggested strategy works?
  30. 30. BSC DESIGNER THE SUGGESTED STRATEGY WORKS? • How do you know that the suggested strategy works? • The simplest way is to say: if I see growth in my profits, then it works.
  31. 31. BSC DESIGNER THE SUGGESTED STRATEGY WORKS? • How do you know that the suggested strategy works? • The simplest way is to say: if I see growth in my profits, then it works. • It’s true, but things are not that simple.
  32. 32. BSC DESIGNER THE GROWTH OF THE PROFITS DEPENDS ON VARIOUS ASPECTS OF THE STRATEGY. • You might have an excellent idea about increasing customer value,
  33. 33. BSC DESIGNER THE GROWTH OF THE PROFITS DEPENDS ON VARIOUS ASPECTS OF THE STRATEGY. • You might have an excellent idea about increasing customer value, • But one of your business systems was not prepared well for this idea.
  34. 34. BSC DESIGNER THE GROWTH OF THE PROFITS DEPENDS ON VARIOUS ASPECTS OF THE STRATEGY. • You might have an excellent idea about increasing customer value, • But one of your business systems was not prepared well for this idea. • As result, the strategy failed.
  35. 35. BSC DESIGNER WHAT WAS THE REASON FOR THE PROBLEM? • Was the problem with the specific business system that it failed to deliver expected results,
  36. 36. BSC DESIGNER WHAT WAS THE REASON FOR THE PROBLEM? • Was the problem with the specific business system that it failed to deliver expected results, • Or was the problem with incorrect information that was learned about customers’ buying priorities,
  37. 37. BSC DESIGNER WHAT WAS THE REASON FOR THE PROBLEM? • Was the problem with the specific business system that it failed to deliver expected results, • Or was the problem with incorrect information that was learned about customers’ buying priorities, • Or was there any other reason?
  38. 38. BSC DESIGNER Source: www.bscdesigner.com Financial Objectives We cannot use financial indicators only, as they don’t tell the whole story of what happened and why. Are we on the right track with the strategy? Use KPIs! REASON AND SOLUTION?
  39. 39. BSC DESIGNER Source: www.bscdesigner.com Financial Objectives Customer Value Business Systems Learning & Growth We cannot use financial indicators only, as they don’t tell the whole story of what happened and why. Are we on the right track with the strategy? Use KPIs! Have proper indicators on each level of the strategy. REASON AND SOLUTION?
  40. 40. ACTION IS THE MOST IMPORTANT
  41. 41. BSC DESIGNER ACTION IS THE MOST IMPORTANT • Don’t forget that by just describing your intentions in a form of strategy nothing will happen.
  42. 42. BSC DESIGNER ACTION IS THE MOST IMPORTANT • Don’t forget that by just describing your intentions in a form of strategy nothing will happen. • You need to follow the strategy map and KPIs with an action plan.
  43. 43. BSC DESIGNER ACTION IS THE MOST IMPORTANT • Don’t forget that by just describing your intentions in a form of strategy nothing will happen. • You need to follow the strategy map and KPIs with an action plan. • When developing this plan make sure that it is aligned with business objectives and measures that you have found.
  44. 44. FINISHING AN OVERVIEW WITH A GOOD EXAMPLE
  45. 45. BSC DESIGNER FINISHING AN OVERVIEW WITH A GOOD EXAMPLE • Let’s take this article and its role in content strategy as an example.
  46. 46. BSC DESIGNER FINANCIAL PERSPECTIVE
  47. 47. BSC DESIGNER FINANCIAL PERSPECTIVE • On the top level there is a typical financial goal to increase profits.
  48. 48. BSC DESIGNER FINANCIAL PERSPECTIVE • On the top level there is a typical financial goal to increase profits. • We can possibly do this in several ways: increase revenue and cut the costs.
  49. 49. BSC DESIGNER CUSTOMERS PERSPECTIVE
  50. 50. BSC DESIGNER CUSTOMERS PERSPECTIVE • What’s the value of this article for customers?
  51. 51. BSC DESIGNER CUSTOMERS PERSPECTIVE • What’s the value of this article for customers? • On one hand the article answered some typical questions that we have every day in our ticket system,
  52. 52. BSC DESIGNER CUSTOMERS PERSPECTIVE • What’s the value of this article for customers? • On one hand the article answered some typical questions that we have every day in our ticket system, • On other hand, it educates our prospects about what can be done about the Balanced Scorecard.
  53. 53. BSC DESIGNER CUSTOMERS PERSPECTIVE • In the customers perspective we have these two objectives:
  54. 54. BSC DESIGNER CUSTOMERS PERSPECTIVE • In the customers perspective we have these two objectives: • Attract more prospects interested in the business scorecards
  55. 55. BSC DESIGNER CUSTOMERS PERSPECTIVE • In the customers perspective we have these two objectives: • Attract more prospects interested in the business scorecards • Cut the costs of providing support by educating existent customers via articles
  56. 56. BSC DESIGNER HOW ARE WE GOING TO KNOW THAT THIS APPROACH IS WORKING?
  57. 57. BSC DESIGNER HOW ARE WE GOING TO KNOW THAT THIS APPROACH IS WORKING? • KPI 1 : The number of sales referred by the article;
  58. 58. BSC DESIGNER HOW ARE WE GOING TO KNOW THAT THIS APPROACH IS WORKING? • KPI 1 : The number of sales referred by the article; • KPI 2: The number of support tickets of a specific type;
  59. 59. BSC DESIGNER INTERNAL PROCESS PERSPECTIVE
  60. 60. BSC DESIGNER INTERNAL PROCESS PERSPECTIVE • What business systems do we need to do this?
  61. 61. BSC DESIGNER INTERNAL PROCESS PERSPECTIVE • What business systems do we need to do this? • There should be some writing skills and experience that we can share.
  62. 62. BSC DESIGNER INTERNAL PROCESS PERSPECTIVE • What business systems do we need to do this? • There should be some writing skills and experience that we can share. • It is also important to have a business system that can track back certain orders and find the original referrer of the customer so that we can find the value of KPI 1.
  63. 63. BSC DESIGNER INTERNAL PROCESS PERSPECTIVE • It is important to have a support system where questions are not just answered, but are categorized accordingly to some rules so that we could find out the value of KPI 2.
  64. 64. BSC DESIGNER INTERNAL PROCESS PERSPECTIVE • It is important to have a support system where questions are not just answered, but are categorized accordingly to some rules so that we could find out the value of KPI 2. • And the most important business system is one that will promote a new article to the prospects.
  65. 65. BSC DESIGNER LEARNING & GROWTH PERSPECTIVE
  66. 66. BSC DESIGNER LEARNING & GROWTH PERSPECTIVE • What information do we need to have about the customers?
  67. 67. BSC DESIGNER LEARNING & GROWTH PERSPECTIVE • What information do we need to have about the customers? • We need to understand what their problems are, because it makes sense writing about the real world problems, not about invented ones.
  68. 68. BSC DESIGNER LEARNING & GROWTH PERSPECTIVE • What information do we need to have about the customers? • We need to understand what their problems are, because it makes sense writing about the real world problems, not about invented ones. • It means that we need to focus our learning systems on finding out what challenges our customers face.
  69. 69. BSC DESIGNER SCORECARD IS FINISHED • Once we know what customer’s main challenges are, one can write an article.
  70. 70. BSC DESIGNER SCORECARD IS FINISHED • Once we know what customer’s main challenges are, one can write an article. • We will see how many people can find this article with search engines and how many times it was recommended for reading by our support staff.
  71. 71. BSC DESIGNER SCORECARD IS FINISHED • In about 2-3 months we will be able to estimate the ultimate impact of this article on the sales and operational costs.
  72. 72. BSC DESIGNER SCORECARD IS FINISHED • In about 2-3 months we will be able to estimate the ultimate impact of this article on the sales and operational costs. • This information can be used then to correct the content strategy if needed.
  73. 73. BSC DESIGNER An example of the Balanced Scorecard for the Content Marketing Strategy
  74. 74. BSC DESIGNER MORE ABOUT THE BALANCED SCORECARD Find more insightful articles about the Balanced Scorecard in ”Articles” section at www.bscdesigner.com BSC DESIGNER
  75. 75. BSC DESIGNER THANK YOU! Feel free to send us your questions using the contact form at www.bscdesigner.com

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