Strategic vision and the balanced scorecard

2010

We all know the importance of context when making choices and determining priorities. The decisions that we make can be polar opposites depending on the circumstances in which alternatives are weighed. But organizations seldom consider setting a context when instituting business measurement and monitoring apparatus.

The Balanced Scorecard (BSC) is a well known and often misused management tool because it is regularly implemented without the benefit of a well articulated strategic vision in place. Without sufficient context, the archetypal BSC overstresses operational control at the cost of proficient strategy implementation.

On the other hand, a strategic vision, if developed in a story form complete with vivid details describing target markets, distribution channels and enterprise-wide transformative elements, can provide the necessary context for BSC work to flourish.

It's fascinating to observe well intending management teams struggle to institutionalize a BSC program only to discover that it provides little value without the presence of a clear strategic vision to give it context and meaning.

Certainly, measurements can be defined across all of the BSC dimensions (i.e., Financial, Customer, Operational, and Learning). However, these measurements can be impossible to cascade down and throughout the business without a strategic framework from which to weigh the choices that are made every day in the course of doing business.

Stated another way, "Without the necessary context to set direction and to guide decision-making, how can we be sure that what we're doing (and for that matter, measuring) are the 'right' things for our business?"

At the risk of stating the obvious, with a Vision Story in place at the beginning of the BSC design process, it is much easier to select strategic actions and objectives to support the achievement of the Vision.

Similarly, associated measures and targets can then be selected to track the achievement of these strategic objectives. Further, by working from a Vision Story, BSC consensus (among the management team) can be achieved more quickly than without one (i.e., because consensus on the vision already exists).

So, a vision story should be considered a vital building block of any BSC program.

Constructing a Spellbinding Vision
In some of my previous articles, published here, I proffered that a rock-solid Strategic Vision is not a simple slogan that can be printed on a business card (as so many are these days), but, rather it should be developed as story framed by the long-term financial goals and containing adequate coverage of such organizational characteristics as target:

Management Style
Customer Demographics
Growth Strategies
Service Delivery
Brand Value
Operating Model
Flexible Workforce
Communication Infrastructure (Internal / External)
Diversity & Inclusion

Leadership Models
Product/Service Sets
Product Distribution
New Business Partnerships
Organizational Structure
Process Transformation
Performance Metrics
Project Portfolios (Work Management Structures)
Governance Frameworks

Once the vision is defined, time must be dedicated to raising awareness of its content among staff and management, alike. An entire employee engagement and Vision Socialization effort should quickly follow the publication of the story. Town hall meetings, company pep rallies and all hands strategy offsite sessions are part of the socialization effort.

Building a Vision-Driven Balanced Scorecard
With the vision story published and appropriately socialized, it is time to do the work to define (or recast) the BSC so that it accurately reflects the organization's strategic direction.

The first task needed to do this involves culling the basic business strategies from the Vision Story. This is done by identifying the core strategic elements that underpin the target organizational characteristics presented in the Vision Story. Each element identified is then shaped (and coupled as appropriate) into a set strategies that underlie the organization's vision.

The next step is to formally document each strategy identified so to delineate the activities and results needed to achieve them. Once documented, each strategy is assigned 'owners' from within the senior leadership team. The strategy owners subsequently define the associated objectives, measures and targets for their assigned strategy / strategies. It is these measurements that need to find their way into the BSC.

For example, measurements related to direction-setting, vision understanding, employee engagement, workforce empowerment and worker trust would become important BSC measures. With the right measurements in tow, a Vision-driven BSC results that more adequately supports management's ability to monitor the organization's progress towards the achievement of its key strategies.

Likewise, any related initiatives needed to realize these key business strategies can more readily be identified and folded into a strategic plan for the enterprise. In this way, the importance of projects aimed at vision socialization, empowerment, engagement and trust, for example, will be easily recognized for their strategic significance (and, therefore, better understood and accepted by the management team when being contemplated for inclusion in the strategic plan).

To Sum
The typical BSC overemphasizes operational control at the expense of efficient strategy execution. This needs to shift. Measurements related to key vision elements must be introduced and some of the operational measures (traditionally found in the BSC) must be retired. Do measures like "average time spent answering emails" mean much if employee engagement and worker trust are low?

Remember, an organization needs both vision and balance. The vision defines where we are going. The scorecard keeps everyone honest. The challenge lies in a management team's ability to learn from the feedback that the scorecard provides and to change business strategy accordingly.

By striking a healthy equilibrium, successful enterprises emerge – one's that can be characterized by optimized organizational structures, enhanced product and service delivery models and unmatched market reach.

To close, the amalgamation of Strategic Vision and Balance Scorecard programs will heighten new ways of thinking and doing. Together, the two can provide a strategic platform from which to introduce new, and extend existing business programs, that better position firms to be more responsive and broader-reaching enterprises.

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About The Author

James M. Kerr
James M. Kerr

James M. Kerr is the Global Chair of the Culture Transformation Practice at N2Growth and the author of The Executive Checklist. A specialist in organizational design and cultural transformation, he has been helping clients re-imagine the way work is organized and performed for more than 25 years. Kerr’s next book is due out later in 2016 and focuses on leadership and strategy-setting.