Successful businesses leverage evidenced-based information. They link key performance measures and action to strategy. Team members see how their actions drive long-term performance, beyond short-term financial results. The outcome: Higher-levels of employee engagement, motivation, and performance. Your team has insight into which non-financial performance measures such as customer satisfaction and net promoter score drive financial performance.
What resources exist?
Strategy Pyramid, Balanced Scorecard, and Strategy Map
What is a Strategy Pyramid?
A strategy pyramid helps you illustrate vision and mission together with your team. Successful organizations vertically align business units with organization-wide strategies and goals. The pyramid provides visual direction.
Long-term vision and mission appear at the top. At the foundation, action plans, tactics, and initiatives support.
The Balanced Scorecard
The Balanced Scorecard is a performance management tool monitoring key (1) financial and non-financial measures relating to (2) customers or clients, (3) internal processes (operations), and (4) organization learning and growth needs (people). It turns the strategy pyramid and strategic vision into actionable steps driving success. It places strategy at the core of management.
Benefits of the Balanced Scorecard
Leveraging key measures and ratios in a dashboard “scorecard” format, the balanced scorecard provides a concise yet thorough business overview to monitor performance. Flexible, it is a widely implemented strategic management tool. Many companies implement a variation aligning with their strategic needs.
The Balanced Scorecard creates win-win aligning key performance measures, actions, and rewards. A goal: To execute on strategic initiatives and objectives. It helps articulate, communicate, and clarify organization-wide strategy.
Incorporating both financial and non-financial metrics, the balanced scorecard motivates employees.
It’s important to have a participatory culture and climate. Experts from various business units collaborate to identify which activities and outcomes to monitor.
Top management buy-in, leadership, and support are critical to implementing successfully. Their support is also important for longevity.
You need to ask and consider whether your team and culture is open to change and adaptation.
What information do your teams and management information systems currently provide? Can and should these be adopted?
The Strategy Map
Think of the Strategy Map as Balanced Scorecard 2.0. Through the use of a visual diagram, it illustrates interconnectedness and flow. It helps articulate outcomes (financial and customer) – “What we want to accomplish” as well as inputs (internal and learning/growth) – “how we plan to accomplish it.” Strategy maps link outcomes to inputs.
Strategy through the Lens of Objective-Based Information
Strategy pyramids, balanced scorecards, and strategy maps equip your team with holistic information to make informed business decisions. Rather than relying solely on your annual budget and cash forecasting, your leadership and management teams can execute strategy through the lens of objective-based evidence.
Actions to Implement
Involve cross-functional leadership teams, a broad representation of senior management
Engage all team members in the process
Seek management buy-in
Incorporate strategic initiatives and planning as part of your culture; continuous improvement
Identify four or five Key Performance Indicators (KPIs); these vary for each business and industry
Identify measures aligning strategy and long-term success with actionable processes
Actions to Avoid
Too many KPIs
Failure identifying casual links between inputs and outcomes
Withdrawing support when measures do not meet initial expectations – use as a continuous learning process