Strategic planning is a vital aspect of your company’s success—but when it comes to actually executing on that strategy, you might feel completely lost. If your current management system just isn’t getting you to where you need to go, it’s time for a better solution.
Enter the Balanced Scorecard.
Introduced in the early 1990s, the Balanced Scorecard (BSC) is one of the world’s top strategic management frameworks. It combines four different business perspectives—financial, customer, internal processes, and people—to help companies understand and achieve their organizational objectives. The Balanced Scorecard does not create strategy; rather, it organizes it in a visually-friendly format.
2CG, a strategic execution consultancy firm, has been conducting yearly surveys about the Balanced Scorecard since 2009 in an effort to better understand why and how it’s used. (You can find results from all nine of 2CG’s studies here.) Of the organizations that participated in the 2017 survey:
- 77% report that their Balanced Scorecard is extremely or very useful.
- 75% use the Balanced Scorecard to influence business actions.
- Of the 64% of organizations that have refreshed their Balanced Scorecard, the majority—71%—did so during the previous 12 months.
- The Balanced Scorecard is used by both small and large organizations: 61% of respondents had less than 500 employees, and 9% had over 10,000 employees.
These survey results show that companies using the Balanced Scorecard are consistently benefitting from it. In fact, I bet you’ll recognize many of the companies below that have integrated the Balanced Scorecard in their organization. If you click each link, you’ll be able to read some Balanced Scorecard case studies and learn how the BSC has helped each of these organizations. Below this list, we also describe the benefits you will get from implementing a scorecard in your organization.
20 Companies Using The Balanced Scorecard
- Sunnybrook Health Sciences Centre at the University of Toronto Hospital
- Local Government:
- U.S. Government:
- Higher Education:
5 Ways The Balanced Scorecard Can Help Your Company
1. You’ll gain transparency throughout your organization.
If you were to ask team members whether they could properly describe your department’s operational strategy, chances are you’d be met with a few blank stares. Creating and implementing a Balanced Scorecard will help remedy this issue, as it provides direction on how employees can affect change and create value within their roles.
For example, envision your company’s operations as a map. The cardinal directions are the objectives, measurements, and initiatives. Without these tools, getting to your destination is going to be much trickier. With them, your team members can have better conversations about the strategic direction your company is headed, and how they’re involved.
2. You’ll grow your bottom line by looking at other perspectives.
Traditional reporting only considers the financial perspective; it fails to consider how organizational performance is also impacted by your customers, internal processes, and people (also called “learning & growth”). Analysis of these four perspectives together will help ensure you don’t neglect areas of your company that need attention.
3. Your operations will align with your mission.
Companies using the Balanced Scorecard are able to identify the factors that are hurting their business and outline a strategic change that will bring them better results. By clarifying what you’re doing now and how those activities will differ in the future, you will have a better chance at redirecting your company toward success.
4. Your high-level goals become tangible actions.
It can be difficult to think about how you’ll actually achieve high-level objectives unless they’re broken down. The Balanced Scorecard enables you to break those goals into measures, the measures into projects, and the projects into action items. For example, if one of the objectives in your people perspective (sometimes called the “learning & growth” perspective) is to have effective managers, you might measure the percentage of key managerial goals met.
5. You’ll be able to consolidate your strategic plan.
Companies using the Balanced Scorecard are usually tracking a wide variety of measures and other information. With many divisions, partners, and resellers, it can become confusing to decipher how the company is doing overall. A BSC brings all the important data together for the leadership team to view in a centralized location, giving them a birds’ eye view of how the company is running. You can then drill down from a high level into your divisions and departments using a consistent framework.
For More Information
If you want to learn more about the Balanced Scorecard (or are ready to create your own), we suggest:
- This Harvard Business Review article, authored by Balanced Scorecard creators Kaplan and Norton.
- This exhaustive Balanced Scorecard example, complete with how to read a strategy map.
- This list of 10 signs that your Balanced Scorecard strategy isn’t working, and how you can fix it.
- This detailed explanation of who should manage your organization’s BSC.
Enjoy the reading, and happy scorecarding!