The Balanced Scorecard concept has been around for many years as a way to help turn strategy into measurable action. The Balanced Scorecard starts from the company’s overall vision and then breaks down and defines the critical success factors that attribute to that vision. These are typically broken into four perspectives: customer, financial, processes and innovation.

Scorecards are a tool that allow you to create milestones that can be used to track progress toward your organizational goals—but only when there’s a process for it

The Balanced Scorecard concept has been around for many years as a way to help turn strategy into measurable action. The Balanced Scorecard starts from the company’s overall vision and then breaks down and defines the critical success factors that attribute to that vision. These are typically broken into four perspectives: customer, financial, processes and innovation.

Creating scorecards

Balanced Scorecard are generally created at the corporate level and then communicated and improved upon by lower level employees. To effectively utilize the balanced scorecard concept, you must first create a vision – Where is the organization going?

Next, you identify which strategies will get you there and then define the four perspectives. You will then identify the critical success factors. Finally, you determine how you will measure these strategies.

Based on answering these questions, you will create action plans and frequent reporting (and sharing) of the Scorecard. You will also need to determine how the Balanced Scored will be managed and who should be responsible for creating reports.

Apple uses scorecards

If you still can’t envision this, we’ll look to Apple for the perfect example. Apple developed a Balanced Scorecard to get management focused on a strategy that would expand beyond bottom lines and return on equity.

A small committee was formed to spearhead the concept and choose strategies within each perspective. For the financial perspective, Apple wanted to emphasize shareholder value; for the customer perspective, it was customer satisfaction; for the process perspective, core competencies was the focus; and, finally, for the innovation perfective the committee wanted to improve employee morale.

• Shareholder Value: The shareholder value measurement quantified the impact of investments on Apple’s new business creation and development. This could be calculated for the entire company, rather than at departmental levels, which helped senior managers assess the impact of their respective silos on the entire company’s valuation to best evaluate new business and development.
• Customer Satisfaction: Apple felt it had to go beyond homogenous customer-surveys developed by survey companies. Thus, they developed their own in order to track key market segments directly related to their business.
• Core Competencies: The committee spearheading the scorecard found that measuring core competencies, such as effective distribution systems and user-friendly interfaces, would be somewhat difficult. Instead of giving up, the company is still experimenting with the best way to quantify these measures to better track their competencies.
• Employee Morale: While creating unique customer surveys to measure customer satisfaction, Apple took it one step further to develop employee surveys as well. These surveys are still implemented on a consistent basis with questions regarding how well employees understand the company’s vision as well as their own drive towards that vision. The results are displayed both individually and on an average.

While each company’s needs are different – Apple’s was to use the Scorecard as a device to plan long-term performance rather than incremental changes. They dissected what they wanted to measure and improve upon in relation to each of the perspectives and found measurable ways to do so.

You have to find what works for you

The Balanced Scorecard is not a one-size-fits-all template that can be applied to all businesses or industries. Different market situations, competitive environments and products require different scorecards and measurements. In order to implement the Business Scorecard into your business, you must customize the scorecards to fit your mission, strategy and culture.

Most importantly, a scorecard’s success depends on how it is communicated throughout your organization. The how and why of it should be clear to everyone. Each employee should be able to track and measure their progress as an individual and as part of a larger team.

But if you can’t, All Systems Grow can help

We strongly believe that people don’t fail, processes do – and we are here to assist you with creating Balanced Scorecards that will help your team and your business succeed. Ask us how.