What does the Elephant really look like? Well if you let the six blind men describe the elephant then each one of them with their limited range of vision would describe the beast as a WALL, SPEAR, SNAKE, TREE, and FAN AND A ROPE.
That used to hold true for all Organizations – Organizations are beasts too and just as the elephant quite lovable.
In the 19th century to the first quarter of the 20century there was darkness. We went to work, did our job (well or otherwise) and went home – day in and day out. We did not have to worry about targets, annual assessments, metric-driven incentives, etc. Aahh… life was simple back then.
Then there came light. Bosses everywhere became demanding and they had a singular ambition to increase production and efficiency year-by-year. They started seeing and measuring the Elephant in two dimensions.
Early Metric-Driven Incentives – MDIs – were (generally) focused on the financial aspects of an organization by either claiming to increase profit margins or reduce costs. They were not always successful, for instance driving down costs could sometimes be at the expense of quality, staff (lost expertise) or even losing some of your customer base.
Two eminent doctors (Robert S Kaplan and David P Norton) evolved their Balanced Scorecard system from early MDIs and jointly produced their (apparently) ground-breaking book in 1996.
What exactly is a Balanced Scorecard? A definition often quoted is: ‘A strategic planning and management system used to align business activities to the vision statement of an organization’. More cynically, and in some cases realistically, a Balanced Scorecard attempts to translate the sometimes vague, pious hopes of a company’s vision/mission statement into the practicalities of managing the business better at every level.
A Balanced Scorecard approach is to take a holistic view of an organization and co-ordinate MDIs so that efficiencies are experienced by all departments and in a joined-up fashion.
To embark on the Balanced Scorecard path an organization first must know (and understand) the following:
- The company’s mission statement
- The company’s strategic plan/vision
- The financial status of the organization
- How the organization is currently structured and operating
- The level of expertise of their employees
- Customer satisfaction level
Once an organization has analysed the specific and quantifiable results of the above, they should be ready to utilise the Balanced Scorecard approach to improve the areas where they are deficient.
The metrics set up also must be SMART (commonly, Specific, Measurable, Achievable, Realistic and Timely) – you cannot improve on what you can’t measure! Metrics must also be aligned with the company’s strategic plan.
A Balanced Scorecard approach generally has four perspectives:
- Internal business processes
- Learning & Growth (human focus, or learning and development)
Each of the four perspectives is inter-dependent – improvement in just one area is not necessarily a recipe for success in the other areas.
The whole Elephant is now seen and defined (arguably) in a perspective and vision that encompasses everything that is too be defined.
Balance scorecard implementation
Implementing the Balanced Scorecard system company-wide should be the key to the successful realisation of the strategic plan/vision.
- A Balanced Scorecard should result in:
- Improved processes
- Motivated/educated employees
- Enhanced information systems
- Monitored progress
- Greater customer satisfaction
- Increased financial usage
The Idea Smith is a specialist in defining the unique intricacies and requirements of YOUR organization. While business principles are generic in nature, every beast has a unique personality, character and DNA.
We understand that aspect and tailor make the Score Card to suit your requirements.
For any system or Balance Score card programme to work effectively it should be:
Compliant with your current technology platform
Always accessible to everyone – everywhere
Easy to understand/update/communicate
It is of no use to anyone if only the top management keep the objectives in their drawers/cupboards and guard them like the Holy Grail.
Feedback is essential and should be on-going and contributed to by everyone within the organization.
The process of setting organization wide objectives, targets, and continuously tracking organizational performances has been a big challenge for many organizations. Financial reporting alone is a complex issue.
The real challenge with developing organizational strategy and balanced scorecard methodology begins when you add the non-financial measures and you start working between departments. How do you incorporate all these metrics? What kind of reports you need? How many? The overall goal of our approach to Balanced Scorecard reporting is to develop simple and effective reporting system and help clients focus on their business.
The Idea Smith has the required competence and expertise in developing a reporting system which integrates different perspectives, incorporates the metrics, and gives a powerful insight to overall organizational performances.
To know more about how The Idea Smith lean principles and PDCA methodology can help your company improve profitability by reducing lead times, costs and wastes while increasing throughput and customer satisfaction , get in touch .