How do managers plan for the long run and create sustainable businesses that succeed over time? One answer to that question involves using a system called The Balanced Scorecard (BSC). Many large and medium-sized organizations today use this tool to manage effectively. They use it to plan, organize, lead, and control. BSC is a practical and flexible tool. It’s no wonder that it’s commonly used in many Nova Scotia businesses today.
An outcome of the BSC system is the scorecard itself. Typically it’s a one-page graphical representation of what the company is all about including critical information such as vision, mission, strategic priorities and results, objectives and a strategy map, key measures, targets, and initiatives. That’s a lot to put on one page. The power of the BSC is in part based on how it requires leaders to distill information and summarize. It’s also powerful because it helps organizations to focus on all of what’s important, not just financial information and that it considers the future not just the next quarter. It’s balanced!
Below is an example of a Balanced Scorecard developed for a large telecommunications firm in the UK. Notice all the components of the scorecard in blue and the inclusion of the company values at the bottom of the page. Notice how the company goals (targets) are SMART (simple, measurable, attainable, realistic, and time-bound). Imagine how powerful this would be for you as an employee (not just an executive but anyone) in the organization as a way to help you understand the big picture of what’s important for the company! Using the BSC, departments and individuals can see how their actions influence and fit in the organization’s big picture.
The Balanced Scorecard was created by a scholar from Harvard Business School and a business consultant. Robert Kaplan and David Norton are considered some of the greatest management scientists of the modern era. The Balanced Scorecard has been applied in many organizations around the world and has evolved to suit a broad range of needs including application in the not-for-profit sector.
To learn more about the Balanced Scorecard watch the video from IntraFocus which explains the framework in three minutes!