The “Balanced Scorecard” is a tool developed by Kaplan and Norton, which is used to evaluate the effectiveness of strategic performance management. It basically is an addition to traditional financial measures to the strategic measures to get a more balanced view of the performance. It gives the organisations a direction to “connect the dots” between the various components of strategic management and planning. It gives them a link and a visible connect between the projects and programs people are working on, helping them to measure and track the success of Key Performance Indicators (KPIs), along with the strategic objectives, the mission, vision the organisation is trying to accomplish.

Uses of Balanced Score Card:

• Helps to communicate what the organisation is trying to accomplish.
• Align the day-to-day activities performed along with the strategy planned.
• Prioritize projects, product, and services.
• Monitor and measure progress towards the strategic targets.

Four Perspectives of Balanced Scorecard:

The four perspectives are critical for an organization’s success. These perspectives can always be tweaked and tailored as per your organization’s needs.

1. Financial
2. Customer
3. Internal Processes
4. Learning and Growth

1. Financial:
Financial perspective is the major focus of Balanced Scorecard. We must look at the traditional financial measures such as Return on Investment (ROI), growth, fixed costs, profits and so on.

2. Customer:
It is always fruitful to examine the organization’s activities from the point-of-view of your customers’ and stakeholders’ perspective. It is always good to know how your customers’ view your activities, get some reviews and feedback by performing some surveys for the same.

3. Internal Processes:
It is always necessary to examine the company’s internal processes to look for areas of improvement like

• Process improvements
• Quality optimisation
• Capital utilization.

This will help removing the inefficiencies and identifying the errors.

4. Learning and growth:
This perspective helps in examining the overall health of the company in terms of the junior employees regarding their growth and contribution to the organization, training employees for helping them compatible with the ever-changing technologies, using the latest tools and systems to foster innovation in the organization.

How to draw a balanced Scorecard?

Balanced scorecards are the easiest to create for your organization by adding the for perspectives that apply and are relevant to the organization.

1. Determine the vision – The company’s main vision is placed in the centre of the balanced scorecard. We should always keep the vision / goal in mind. 

2. Add perspectives – place the four perspectives in a circle, around the vision.

3. Add objectives and measures – in each perspective you need to define the specific objectives, measures, targets, and initiatives.

4. Connect each piece – link each of the perspectives to others using the arrows to indicate they are interconnected for achieving the company vision.

5. Share and communicate- here you can use the balanced scorecard to demonstrate how the initiatives and short – term actions are supporting to achieve the long-term objectives of the company.

Benefits of Balanced Scorecard:

1. Better Strategic Planning:

You can build a powerful framework and communication strategy with the help of Balanced Scorecard. Strategy map is used to help managers for understanding the different strategic objectives and their relationships, which is visualised in a business model. Key enablers /drivers are identified for knowing the future performance, and the complete outcome of the strategy is known. 

2. Improved strategy Execution

We know “Communication is the key”. Understanding a strategy will help people execute it properly. One-page picture of the strategy allows the companies to easily communicate the strategy. This helps to engage the employees and the external stakeholders deliver and review the strategy. Also, it facilitates the communication of the strategy internally and externally. 

3. Improved Alignment of Projects:

The Balanced Scorecard helps mapping the projects and the initiatives to the strategic objectives, ensuring the initiatives and the projects deliver the strategic objectives as per the desired results.

4. Improved decision making:

Designing Key Performance Indicators (KPIs) for various strategic objectives is performed using the Balanced Scorecard Approach. This approach ensures that the companies can measure what needs to be. BSC approach helps the companies to gather higher quality information for the management, which helps in better decision-making. 

5. Quality Performance Reports:

With the help of Balanced Scorecard, management reporting becomes more accurate. It helps to focus on the important strategic issues, by designing the performance reports using the Balanced Scorecard Approach for dashboards. This in turn helps the companies better monitor and execute their plans to achieve the strategic objectives. This also helps managers know which areas need improvement.

6. Improved Organisation Structure:

To execute the plan, organisations must ensure that all the support functions and their business units are aligned to achieving the same goals. The Balanced Scorecard enables the companies to align their organisational goals along with the strategic objectives, helping to link strategy to operations.

7. Improved Organisational Processes:

Proper implementation of Balanced Scorecard ensures proper alignment of organisational processes including risk management, budgeting, and analytics. This will ensure the organisation functions as per the strategy implemented.

How to Implement BSC (Balanced Scorecard)

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Contact us to discover more!

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• Reasonably lower operating costs, higher profitability
• Faster response to customers and markets need
• Appropriate structures, incentives, and controls: Focusing attention on the right strategic and operating issues
• More effective and efficient coordination and communication
• Clear responsibility and accountability
• Effective management of human resources
• Increased internal capability to manage execution and change

Organizational structure and incentives support a chosen strategy, and effective controls provide feedback about performance, allowing the organization to adapt and retain its market or customer focus. The process is ongoing, allowing the organization to focus on learning in a continuous cycle of performance, evaluation, learning, and adaptation.

Inability to manage change effectively, for example, can prove to be the largest obstacle to the effective execution of strategy. But logically something must precede change attempts. Decisions and actions must have been taken and new factors introduced before change can occur. In effect, there must be something to change before change can occur.

The areas relating to successful strategy execution are as follows:

• Developing a model to guide execution decisions and actions
• Understanding how the creation of strategy affects the execution of strategy
• Developing organizational structures that support strategic objectives and foster information sharing, coordination, and clear accountability
• Creating and using incentives to support strategy execution processes and decisions
• Developing effective controls and feedback mechanisms to enable the organization to assess performance and adapt to changing conditions
• Understanding an organization’s power or influence structure and using it for execution success
• Knowing how to create an execution-supportive culture
• Exercising execution- biased leadership
• Managing risk and change effectively, including culture change

In the efforts of raising awareness and closing competency gaps on strategy management, Said Al Harthy, the Executive Director of Tanfidh Training & Consulting and in partnership with world renowned firms in strategy, are committed to delivering highly comprehensive consulting advisory and training programs on strategy execution with a balanced scorecard tool around the Globe.

The post Benefits of a Sound Strategy Execution: Possible Contributions to Competitive Advantage appeared first on Management Consultants Oman.

Several obstacles have been identified by leaders worldwide but the following few samples have been suggested by best practice:

1. Inability to manage change effectively and overcome resistance to change
2. A poor or vague strategy
3. Not having guidelines or a model to guide strategy-execution efforts
4. Trying to execute a strategy that conflicts with the existing power structure
5. Lack of alignment. Poor or inadequate information sharing between individuals or business units responsible for strategy execution
6. Unclear communication of responsibility or accountability for execution decisions or actions
7. Lack of feelings of ownership of a strategy or of execution steps or plans among key employees
8. Lack of understanding of the role of organizational structure and design in the execution process

In the efforts of raising awareness and closing competency gaps on strategy management, Said Al Harthy, the Executive Director of Tanfidh Training & Consulting and in partnership with world renowned firms in strategy, are committed to delivering highly comprehensive consulting advisory and training programs on strategy execution with a balanced scorecard tool around the Globe.

The post The Obstacles Which Can Hinder Strategy Execution appeared first on Management Consultants Oman.

The strategy execution problems faced by many organizations are remarkably similar to those viewed by many Leaders in the world. The obstacles to effective strategy execution are still real and formidable. While strategy planning is difficult and challenging, as always, it’s still obvious that leaders feel more than ever that the successful execution of strategy is more problematic than the formulation of a chosen strategy and even more important for organizational performance. It is still clear that making strategy work is more difficult and challenging than formulating strategy.

Strategy execution represents a disciplined process and a logical set of connected activities that enables an organization to take a strategy and make it work. Without a careful, planned approach to execution, strategic plans and objectives cannot be attained. Developing such a logical approach, however, represents a formidable challenge to management.

It is still obvious that the execution of strategy is not nearly as clear and understood as the formulation of strategy and other management issues like change and risk. Much more is known about formulation than making strategy work.

Is execution of strategy truly worth leader’s time, efforts and attention?

The answer is clearly yes. Factors such as strategic change management, risk management, building internal capabilities, local culture, organizational structure, and aspects of operational execution are vital to organization success. With success measured by total return to shareholders, focusing on execution is definitely worthwhile, leading to increased profitability. Certainly, these outcomes can only be sponsored and supported by leaders.

An executive whose relentless focus is on execution and the building of internal capabilities it is the man of the hour. Making strategy work and achieving desired results are the mark of the successful leader.

Every organization, of course, has some separation of planning and doing, of formulation and execution. However, when such a separation becomes dysfunctional when planners see themselves as the smart people and treat the doers as “grunts” there clearly will be execution problems. When the “elite” plan and see execution as something below them, detracting from their dignity as top leaders, the successful implementation of strategy obviously is in jeopardy.

Ownership of execution and the change processes are vital to execution and necessary for success. Change is impossible without commitment to the decisions and actions that define strategy execution.

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