Operationalizing Your Balanced Scorecard Methodology

Putting Your Strategy to Work Throughout Your Organization

While developing a winning strategy is certainly not easy, executing that strategy is even more challenging. According to a Fortune Magazine study, 70% of CEO failures were due to poor execution of good strategies. An Ernst & Young study found that financial analysts consider "execution of corporate strategy" to be even more important than "quality of corporate strategy" when evaluating companies for investment.

The key to achieving your objectives lies in not shelving your strategy maps after a one-time Balanced Scorecard exercise, but engraining the strategy, as a living plan, in the core of your company's operations. By taking several critical steps - cascading the Balanced Scorecard to every individual in the company, linking employee performance measures and rewards to execution of strategy, and making operational decisions through proactive visibility - your company can reach unprecedented success by actualizing your business strategy.

Cascading Your Strategy Throughout Your Company

Cascading your corporate goals throughout the organization lets you align your entire workforce to the overall strategy. This ensures that everyone is focused on your key business objectives. Translating high-level strategic goals into clear objectives for every business unit and every employee creates a clear line-of-sight - from top down and bottom up - so that each individual understands how their day-to-day actions are contributing to overall company success.

This also allows employees to develop goals that link to the organization's objectives, driving understanding of strategy, generating commitment, and instilling personal accountability.

Linking Measures and Rewards to Strategy

Directly linking every employee’s performance measures and rewards to their execution of corporate strategy is considered by senior executives to be an invaluable tool for achieving better financial results. And for good reason: tying compensation to strategically aligned performance metrics helps employees to be more engaged and increases productivity.

But simply motivating your workforce is not enough. Energy spent on misaligned projects is not only wasted, it devours valuable resources that could be contributing to real business goals. Linking employee metrics and rewards to strategy ensures that their efforts are focused on what is truly critical to the success of the business.

Steering to Future Success Through Proactive Visibility

Having visibility throughout the organization to proactively assess progress and reallocate resources is crucial to driving results. Defining strategically aligned objectives provides each employee with incremental measures of their own performance, gives managers the ability to track employees’ progress, and affords executives the visibility they need to ensure that strategic initiatives are receiving sufficient coverage.

Unlike traditional lagging indicators that only provide a rear-ward view, this kind of forward-looking visibility offers opportunities for executives to make immediate course adjustments to keep performance on track.

Visibility enables insight. Insight enables proactivity. Proactivity enables success.

Conclusion

While defining a business strategy is extremely important, executing strategy is even more critical to a company's success. By providing each individual with the line-of-sight, accountability, and rewards to contribute to the overall strategy, you’re motivating employees to be not only more productive, but more strategically productive.

Executives are further empowered to drive results through proactive visibility. Armed with leading indicators of performance drivers - in addition to lagging indicators of financial data - problems can be identified early and changes implemented to achieve intended strategic objectives.

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