Steps for building a balanced scorecard
People used to compare management to various things. In case of dashboards,
the comparison was driving a car. In case of building a balanced scorecard,
though, it will be planning a journey. Why a journey? Is there anything
what journeys and balanced scorecards have in common? More than it seems, in fact...
Preparing a trip
The point of balanced scorecards might be boiled down to managing the strategy,
in a word. Thereupon, while thinking of building a scorecard, we should
gather it "preparing a strategy".
Then, what's the connection
between strategies and journeys?
Both require a lot of collateral things
to do. The problem is that, even though those things seem collateral,
all are indispensable. When we're preparing a journey, the first what
we need to state is our trip's destination.
Then, there's a need to
decide what kind of trip we're most likely to choose, and determine
the route. Once there's a route chosen and mapped, we need to plan trip's
time and required resources. The last points, in case of the trip at
least, seem obvious. What we have to do when everything is prepared
is travel, and - during the travelling - stay on appropriate, predefined
track. In case of balanced scorecards and company's strategy, things
are similar.
Building a scorecard
- As for the beginning, instead
of "geographical" destination, we should determine
the general goal which our company will be going to achieve.
Strategy always considers predefined period of time. Due to that, at
the beginning we need to - in a word - decide what we want our company
to look like in the end of the period, and decide what goals we want
to have achieved after all.
- Knowing what we want to achieve,
we should consider how to do it. There are numerous differentiated
strategies, and multiplied combinations, nonetheless - in the beginning
- agreeing on one of them is required. We might invest more to achieve
the goals faster. On the other hand, we can resign from speed,
and choose the lowest cost possible instead. This choice is crucial
as it distinguishes us from other companies in the market.
- Once we know the goals and
how to achieve them, we need to align roles to executives. Ensuring
that all managers turn to the same direction is indispensable, there.
- Then, instead of mapping the route, we need to map the strategy. Thereupon, we create, so called,
Strategy Map and identify what is needed during the strategy proceeding.
- Having all previous point accomplished, we might think of creating twofold - Tactical Action,
and Implementation - plans. Their role is to collect all metrics, measures,
and initiatives needed for further operating.
- Once everything is prepared, we can turn to executing the strategy.
- After all, comes the time for controlling. With balanced scorecards, we can monitor what exactly
is going on with the company, and check whether it looks like we wanted it to look.
The process if building a scorecard shown above looks rather simple and straightforward. Nonetheless, none of the steps could be disregarded. Each of them
plays extremely important role, and - therefore - require to be truly well-thought-out.