A Balanced Scorecard (BSC) looks different from a conventional plan. It's brief, and this puzzles many people. Each BSC Strategy Map covers one page and the supporting BSC, two to three pages. The BSC provides a comprehensive and thorough approach for dealing with strategy and for using it on a daily, weekly and monthly basis. Established businesses which are serious about fast growth, use it. With it they focus on the strategic 20% major objectives which will make a 80% difference in the performance of the company, if executed and achieved.
The aim of this website page is to provide a brief overview of the Balanced Scorecard and its four perspectives.
Traditional business plans are mainly used to market a business to, for instance, a bank or loan institution or when seeking an equity partner. While business plans have great value they are not useful for doing and revising monthly and weekly planning. (Most business plans are developed and shelved until the next annual planning session.)
All of my clients have converted from traditional business plans to Balanced Scorecards. ABPLAN rarely facilitates the development of a conventional business plan.
Strategy level and operational level Balanced Scorecards
- Strategic level: A Corporate Balanced Scorecard covers 12 months and shows three strategic themes and their Wildly Important Goals (WIGs) for the year.
"BSC Light": ABPLAN believes that the key to using the Balanced Scorecard effectively lies in ensuring that a BSC is kept lean. Only insert objectives in the monthly BSC which "will build the business". Do not start to load your BSC with urgent operational stuff as it will become unwieldy and a chore to update. It will not be used.
ABPLAN is also influenced by the 4DX approach (The 4 Disciplines of Execution) which, when it comes to execution, propagates a focus on even fewer Wildly Important Goals (WIGs).
A BSC Light is a pleasure to use.
Components of a Balanced Scorecard (BSC)
The Strategic Plan (the top block with Mission, Vision and WIGs, and Core Values) leads to the development of two different-looking but complementary Strategy Maps. These maps are expanded into a Balanced Scorecard in table format, containing details in the vertical columns which stand for objectives, measures, start date, end date, person responsible and tasks/initiatives. Important areas of focus (e.g. marketing) would become strategies or plans. Important objectives could become separate projects.
Human capital and intangibles - the crucial role of people
The Learning and Growth Perspective is the most important perspective of the four as it highlights the people of an organisation. The entire Balanced Scorecard should be understood with the crucial role of people and intangibles in mind. Remove people and what is left?
The Balanced Scorecard has four perspectives each containing targets or objectives aimed at setting out what has to be achieved in manifesting your vision:
Many companies neglect their intangibles
Companies neglecting the Learning and Growth Perspective and its intangibles, ensure that they are doomed to remaining average. The growth required to move a company from being average to great is contained in its human potential, in the growth potential of a company's human capital. Neglect culture and climate, in creating optimal conditions for accelerated personal human learning and growth and it is unlikely that your company will reach commanding heights.
Accelerated organisational growth (and profits) is totally depended on accelerated human growth. Start by appointing the right people. To paraphrase Jim Collins, the acclaimed author of Good to Great, "start by getting the right people on the bus, get them in the right seats, and get the wrong people (without valued character traits and innate abilities) off the bus."
You cannot determine where to drive to if you do not have the right people on the bus. Collins observes: "People are not your most important asset. The right people are." In other words, only people with strategic strengths who are deployed in roles which require their specific strengths become real assets. Your strategic plan and Balanced Scorecard have to be executed by people and if the right human capital is not in place you will experience difficulty in execution.
Focus on building your human capital
Every organisation needs a culture and climate which:
- nurture the growth in each individual of a resonant emotional engagement
- encourage teamwork between individuals and departments
- foster open, robust communication based on trust and active support of each other
Also visit strategy workshops and meetings, as meetings are a means for getting things going.
For information about the types of companies that favour the Balanced Scorecard see scorecard users.
The Good to Great framework developed by Jim Collins is remarkable. For more information about the six steps, go to good to great.
For information about the two publications Strategy Maps, and Good to Great, please go to worth reading.
Last modified: 12-11-2012