Companies with formal strategy execution process in place dramatically outperform companies without it.Â You may consider this statement as common sense, but the fact is that most companies do not have a documented strategy with metrics to measure success.Â If you canâ€™t describe your strategy, how are you ever going to achieve it?Â You canâ€™t measure what you canâ€™t describe and you certainly canâ€™t manage what you canâ€™t measure.Â
As an entrepreneur at heart, I have always been a doer who used to never spend enough time planning.Â Planning would slow me down, primarily because I wasnâ€™t good at it.Â That is, until I came across the Balanced Scorecard methodology which gave me a blueprint for planning and execution.Â Â
Devised in the 1990s by Dr. Robert Kaplan of the Harvard Business School and Dr. David Norton, the Balanced Scorecard (BSC) is a strategic planning and management systemÂ used to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organizational performance against strategic goals.Â
While this may sound like academic hyperbole, the BSC is actually a very practical tool that balances vision with execution and objectives with metrics, transforming a lifeless strategic planning document into a living, breathing corporate initiative.Â Â
The foundation of the BSC lies in a four-fold perspective, with one perspective driving the next.Â It is essential for a company to create metrics and analysis around these perspectives from the top down:Â
Â·Â Â Â Â Â The Financial Perspective â€“ How do you define financial success to your shareholders?Â Companies in a high growth stage tend to focus on revenue rather than net income.Â Companies in a later stage tend to focus on productivity and profits.Â
Â·Â Â Â Â Â The Customer Perspective â€“ To attain financial success, what value proposition are you going to offer your customers?Â This perspective includes the metrics and key drivers to measure not only customer satisfaction, but also customer value. Customer satisfaction ratings, lifetime value analysis, and closed loop customer feedback systems (driving product strategies) all contribute to this important perspective.
Â·Â Â Â Â Â The Internal Process Perspective â€“ To deliver your customer value proposition and attain financial success, what internal business processes are critical?Â This perspective covers everything from product development and sales to product delivery and accounting.Â
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Â·Â Â Â Â Â The Learning & Growth Perspective â€“ To achieve our vision, what people, tools and culture must be provided?Â You need the right people with the right tools working in the right environment.Â This involves viewing the company as a continuous learning organization and its people as the primary resources assets.
During my years in the recruiting industry, I have been amazed at how important the right â€œperspectivesâ€ are in defining the success or failure of business strategies. Recruiters by nature are aggressive, sales-oriented, people persons who become successful through their network of contacts. What transforms a â€œrecruiter/ownerâ€ into an â€œentrepreneur/ownerâ€ is his or her ability to drive a multi-faceted team on different initiatives, yet convergent goals. The BSC provides an owner the methodology to define, communicate, measure and manage their business strategy to achieve their ultimate financial goals.Â
So if you are a do-it-yourself entrepreneur, donâ€™t view strategic planning as a roadblock to getting things done. With the Balanced Scorecard methodology, and the right perspectives, you can be both a â€œdoerâ€ and a â€œplannerâ€.
Don Breckenridg is CEO and founder of “Sendouts, a leading Web-based software company that provides complete solutions to the recruiting and staffing industry. Don has also spoken at conferences and trade shows about the Balanced Scorecard and other organization management strategies for recruiting firms.