TRANSFORMING THE BALANCED SCORECARD FROM PERFORMANCE MEASUREMENT TO…
TRANSFORMING THE BALANCED SCORECARD FROM PERFORMANCE MEASUREMENT TO STRATEGIC MANAGEMENT: PART1
Strategies for creating value shifted from managing tangible assets to knowledge-based strategies that create and deploy an organization's intangible assets.
Includes customer relationships, innovate products and services high-quality and responsig operating process, skills and knowledge of the workforce.
The information technology supprts the workforce and links the firm to its customers and suppliers, and the organizational climate that encourages innovation, problem -solving, and improvement.
The value from intangible assets is direct. Assets such as knowledge and technology seldom have a direct impact on revenue and profit.
Improvements in intangible assets affect financial outcomes throgh chains of cause and effect relatioships involving two or three intermediate stages.
The value of an intangible asset depends critically on the context in which the intangible asset is deployed.
Intangible assets can create value for organizations, but that does not imply that they have separable market values. Many internal and linked organizational process, such design delivery and service are required to transform the potential value of intangible assets into products and services that have tangible value.
The scorecard does not attempt to value an organization's intagible assets into products but it does measure these assets in units other that currency.
The score card povide a frame work for organizing strategic objectives into the four perspectives.
Financial.- the strategy growth, profitability and risk viewed from the perspective of the shareholder.
Customer.- The strategy for creating value and differentation from the perspective of the customer.
Internal Bussiness Plan.- The strategic priorities for various business process that create customer and shareholder satisfaction.
Learning and Grouth.- The priorities to create a climate that supports organizational change innovation and growth.
The balanced secorecard describes how intangible assets get mobilized and combined with intangible and tangible assets to create a different iating customer value propositinos and superior financial outcomes.
Strategy Map, is a logical and comprehensive architecture for describing strategy.
Objectives for growth and productivity to enhance shareholder value.
Innovation and excellence in products, services, and process that deliver the value proposition to targeted customer segments, promote operational improvements and meet community expectations and regulatory requirements.
Market and acount share, acquisition, and retention of tergeted customers where profitable growth will occur.
Investments required in people and systems to generate and sustein growth.
Value propositions that would lead customers to do more higher margin bussiness with the company.
As a simple KPI scorecad, a financial service organization articulated the 4Ps for its "balanced socorecard".
Process (percent process ISO certified)
Portfolio (size of loan volume)
People (meeting diversity goals in hiring)
KPI scorecards are the most helpul for departments and teams when a strategic program already exists at a higher level. In this way, the diverse indicators enable individuals and teams to define what way mos do well to contribute to higher level goals.
Unless, however, the link to strategy is clearly established, the KPI scorecard will lead to local but not global or strategic improvements.
Strategy scorecards along with their graphical representations on strategy maps provide a logical and comprehensive way to describe strategy.
The companies new strategies and the balaced scorecard unleash the capabilities and assets previously hidden within the old organization. in effect the balanced scorecard provides the recipe that enables ingredients already existing in the organization to be combined for long term value.