‘Business Improvement’ – it’s a catch-all term that encapsulates a lot of different disciplines, approaches, and overall actions. But to know that your improvement programme has been a success, you must ‘measure’ progress. How do you assess what areas of your business aren’t operating at optimum efficiency? How best can you regularly assess the performance of different areas of your business, in a way that is effective and time efficient? At Lion & Gazelle, we work with a variety of methodologies, but one that helps us examine cross-departmental performance (and the success of continuous improvement work) is the Balance Scorecard (BSC). And here’s why it’s effective.
Balanced Scorecard is a Strategy Performance Management Tool
As the title suggests, a ‘corporate scorecard’ which assesses capability across four key areas:
Financial: Financial performance and the use of financial resources.
Customer: Organisational performance from the perspective of the customer or other stakeholders serviced by the business.
Internal (process): Organisational performance thorough quality and efficiency related to the product or services.
Learning & Growth: The performance of the business’ people, infrastructure, technology, and culture.
It’s an approach that was designed in the 1990s, and it can be adapted to work across different industries and sizes of business. In simplified terms, BSC is a system which helps organisations to:
Communicate what they are trying to accomplish.
Align the day-to-day work that everyone is doing, with a strategy.
Prioritise projects, producers, and services.
Monitor and measure progress to strategic targets.
Delivering ‘strategy’
Delivering its strategy is surely a key goal for any business. But the vast majority of businesses, actually fail to execute their strategy in full. BSC identifies four key obstacles to execution:
The Vision Challenge: only 5% of staff understands the agreed strategy.
The Management Challenge: 85% of senior teams spend less than an hour each month, discussing strategy.
The Resource Challenge: 60% of companies don’t link budgets to strategy.
The People Challenge: Only 25% of managers have incentives linked to business strategy.
To tackle these challenges, one of the tools that BSC uses, is strategy maps; an underlying framework of interlinked objectives which are plotted against the four aforementioned key areas. A strategy map might look like this:
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These maps help all stakeholders to fully understand the dependencies between each objective. It also clarifies how change can be effectively delivered by ensuring all objectives are met.
Tying strategy to operational delivery
Part of the difficulty many businesses have with delivering strategy link back to ‘big picture’ strategy and vision being sacrificed for more pressing, day to day challenges. And so, BSC sets out to tie the two together.
Across the four key areas, BSC develops objectives, measures, targets, and initiatives, all of which tie back to key parts of the overarching strategy.
The benefits for business
As an approach to business improvement, what benefits can be gained by implementing a Balanced Scorecard?
Well, the first and most obvious benefit is that you’ll have a tangible methodology to not only outline your strategy, but how to implement it through and into every part of your business. And on top of that, you’ll be able to measure the success of each initiative against key objectives within your overarching business improvement programme. But beyond this, you’ll also benefit from a renewed focus on lead and lag indicators, the ability to translate strategy into tangible actions, a useful communication tool for all levels of your organisation, and a way to tie the priorities of the day-to-day, with the overarching vision.
Implementing a Balanced Scorecard is a bit of an art; the success of the project will likely depend on the appointment of a capable and specialised partner like Lion & Gazelle. We’re well versed in this approach and have used it in our work with some of the UK’s leading organisations, such as Heathrow Airport, HSBC, and Scottish Water.
Whilst we have abundant experience in a variety of continuous improvement and business innovation programmes, if you’re looking to implement a Balanced Scorecard into your business, we can support by:
Drilling down your strategy into measurable objectives.
Setting up an effective Scorecard that works for your business.
Setting up the associated Governance process.
Training your management team in the mechanics and use of the Scorecard.
Setting up the appropriate data flows to ensure the Scorecard creation is a seamless process each month.
Helping your organisation to install the right initiatives to meet your strategic objectives.
Integrating the Scorecard into your Business Planning and Performance Management practices.
To find out more about our work in continuous improvement, take a look at our Case Studies many of which have used the Balanced Scorecard to inform and measure the success of projects.
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