Publication number: ELQ-64980-1
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How to Create a Balanced Scorecard
A short and easy-to-understand guide on how to create a balanced scorecard.
Introduction
Think back to your last strategic planning offsite. (Or think about that big dusty binder on your bookshelf that those crazy expensive strategy consultants “delivered” at the end of their last 8-month strategy consulting engagement.)
What did you decide? Where should you be now? What are your strengths, weaknesses, opportunities, and threats? What areas did you focus on? Don’t remember? Don’t worry. You’re not alone. Combine the daily firefighting and operational tasks, it’s easy to let strategy slide.
But strategy is critical, and executing that strategy is even more critical. As Harvard Business Review puts it in their article “The Execution Trap,” “A mediocre strategy well executed is better than a great strategy poorly executed.”
That’s where the Balanced Scorecard comes in.
The Balanced Scorecard: A Quick Summary
If you’re wondering how to create a Balanced Scorecard, then you probably already know the idea behind it, so we’ll keep this section brief.
The Balanced Scorecard (BSC) is a strategic planning and management system that is used extensively in business and industry, government, and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals.
The Balanced Scorecard was developed by Drs. Kaplan and Norton as a performance measurement framework that added non-financial performance measures to traditional financial metrics to give managers and executives a more ‘balanced’ view of organization. Today, companies have moved beyond simply using a balanced scorecard for measuring company performance. It’s a full strategic planning and management system. The “new” balanced scorecard transforms an organization’s strategic plan from a passive document into the “marching orders” for the organization on a daily basis.
Now to the good part…
- Step n°1 |
Build Your Purpose Statement.
A purpose statement clearly communicates how you’ll be different than your competitors, and it should include three different aspects: Objective + Advantage + Scope. Put simply, your purpose statement tells the world what you’re going to do (your objective), how you’re going to win (your advantage), and where you’re going to do it (your scope).
- Step n°2 |
Design Your Change Agenda.
If the purpose statement looks outward, the change agenda looks inward. What do you need to make better in your organization to achieve your purpose statement? What levers can you pull to drive change? Your change agenda is a simple graphical representation of the changes that will occur in your organization as you execute strategy.
