Balanced Scorecard: Part of a system that translates strategy into action. Also, gives a balanced view in four perspectives of how well an organization is driving execution and how successful the results are. The four perspectives in the balanced scorecard and strategy map give executives a more balanced view of their organization.
Strategy Map: Represents how an organization will execute its strategy. The Strategy Map shows the objectives needed to execute the strategy and casual links between objectives. It can also be a tool for clear communication and help identify the “critical few” metrics to monitor strategic execution.
The first of the four aspects contained in the Balanced Scorecard is the Customers. Finding ways to appeal to your customers can be a tough task, but it is one that has to be assessed. For my company, we will have to differentiate between trying to be the broad differentiator or trying to be the low-cost leader. Customer complaints and concerns can also be an issue, so we will want to monitor and record all of those statements to ensure customer satisfaction.
In order for us to succeed financially, we have to make sure that we are presenting ourselves well to our shareholders. Do we want to achieve a certain earnings per share or a certain income figure? Our goal this year may be to break even or reach a certain revenue level. Whichever the case may be, we will have to be firm in what we are trying to accomplish. The financial section of the scorecard looks at the company’s financial goals and how they are meeting the goals both currently and in the future.
For my company, it will be the most important metric because we want to show our shareholders the exact progress and growth of the company accurately.
Our company will want to continue to grow and have the ability to adapt and improve. In order to do so, we will have to provide detail metrics to track our growth and expansion if there is any. Metrics may include employee retention rates or even the number of training hours for full-time employees. As an organization, it is necessary to adapt to a changing landscape through employee training, learning, and development. With these metrics we can look into the future of the organization, instead of taking a snapshot of how the organization is performing right now.
To satisfy our shareholders and customers, we can either sell a large quantity of items at a low price or focus completely on a high quality product that comes at a premium price. Both strategies could be effective, but we will only be able to choose one to fulfill the vision of what we want the company to be in the future.
The Strategy Map and Balanced Scorecard go hand in hand and are vital platforms that all companies need to be successful. I like to compare it to the checks and balances system that our government has had in place since its birth. The balanced scorecard monitors finances, performance, growth, and vision while the strategy map makes sure that all of these metrics are organized and focused towards achieving our companies’ goals.