STRATEGIC PLAN PART III BALANCED SCORECARD
In the latter part of the twentieth century, Harvard Business School’s Robert Kaplan and David Norton established that almost all of their clients in the private industries were incapable of strategically planning their daily operations based on the company’s strategic objectives. Based on their researches, the reasons why companies fail to attain their objectives are the following: undefined work priorities, lack of funding, amount of work are not commensurate to number of staff, inflation, and inefficient approach in the design and implementation of strategic objectives.
Whatever the classification of an organization, whether people-driven as NGO or profit-driven as commercial companies, the balance scorecard offers a realistic model to base the company’s strategic objectives, to put into practice the strategies, and to evaluate and assess performance based on the set objectives.
There are four clear-cut standpoints from where the vision and mission statements are developed. These are the internal processes, financial, learning and growth, and customers.
Internal processes correspond to the effect the quality of products and services brings to the consumers. It also aids in identifying business processes that should be operated on a continuously high standard of operation to satiate customers.
Whether the organization is profit-driven or nonprofit-driven, expenses, funds, and budgets of the organization still requires monitoring. The financial viewpoint gives confirmation of whether the financial strategy of the organization is producing profits and reducing expenses.
Learning and growth identifies staff characteristics and information technology the company should employ and acquire to attain the mission and provide satisfaction to the customers.
Customers in the profit-driven organizations sustain the financial standpoint. Customers in the nonprofit-driven organizations are the dominant factor because their prime objective is to provide satisfaction to the targeted constituents.
Bullard recommended that to effectively implement and measure strategic objectives, a three to five year period is required contrary to the annual planning conducted by majority of the organizations that designs goals on a one to two year period only. .Mainly because of the volume of information to be processed in a balance scorecard, the three to five year lead time is to give adequate and realistic measurement to evaluate the effort brought about by the scorecard.
There are steps required to implement the balanced scorecard: Create the mission statement, identify the vision, perform SWOT analysis, construct a map about the strategy, identify the theme/s of the strategy, and define objectives of the strategy and performance indicators.
The mission statement should state why it exists in as brief and to the point as possible. It should also state how it can provide the most influence and impression on its stakeholders. For example, the mission statement of a restaurant can be “to provide quality and delicious foods in affordable prices served in an ambient surrounding”.
The vision statement states what the organization intends to be in the future. In the restaurant example above, the vision statement can be “to be the leader in the restaurant business locally and internationally”.
SWOT pertains to strengths, weaknesses, opportunities, and threats in the market. It helps identify the advantages as well as the stumbling blocks present in the organization that helps or prevents objectives from being actualized.
The strategy map has ideas that are called the strategic themes, which are created to serve as identifiers of performance indicators. Two questions that need to be asked before the strategic planning process are: “What is it?” and “Why is it important to the organization?”
Strategic themes distinguish very detailed things the organization must perform, conduct or implement to attain its mission statement. To obtain the success ratio, there is a need for performance indicators to be developed and applied. These indicators do not pertain to targets, quotas or any metrics. Rather, these indicators track whether a strategic objective is trending toward the positive or the negative. If trend is towards the negative, the root cause of the negative trend should be determined. If trend is towards the positive, how to sustain the positive trend should also be identified.
Credit:ivythesis.typepad.com
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