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The Kaleidoscope team uses the Balanced Scorecard approach in developing strategic plans for our clients. The Balanced Scorecard approach is a methodology designed in the early 1990s to ensure that the long-term strategy of a company is incorporated into all initiatives at a management level. It translates the vision and goal into a tool that effectively communicates the strategic initiatives and tactics. It applies measurable results to these initiatives that are then effectively tracked. The Balanced Scorecard approach is not only a measurement tool, but a fundamental management tool. All initiatives must support the corporate goal; if they do not, they are considered off strategy and resources should not be allocated against the project. The Balanced Scorecard methodology is more than a set of metrics; it is a system of linked objectives, measurements, targets, and initiatives that collectively communicate and measure an organization’s business strategy.
The vision should be the high level, long reaching goal of any organization. The strategy is a plan of how that goal will be reached and the metrics measure the success of the plan. Where most plans are solely financial-based, the Balanced Scorecard, by its very name, is a balanced plan and includes the four key areas that are the drivers of an organization:
Learning and Growth:
This is the area that focuses on the company’s future success – its people, infrastructure and corporate culture. In a knowledge-based organization, the people are the primary resource and are fundamental to growth. This perspective measures the specific initiatives in place to ensure that there is adequate investment today to promote tomorrow’s success.
Internal Business Process:
This perspective deals with process and procedures that are
currently in place or need to be instituted. Key internal processes are integral to driving the business forward in an efficient manner. Typically, improvement in process will drive financial success in the future.
Customer:
The customer, of course, should always be
the centre of any organization. Without
satisfied customers, an organization is
doomed to fail. This area focuses on seeing
your product or service and organization
through the eyes of your customer, so that
the customer is never taken for granted as
the business grows. Customer service and
satisfaction are critical to measuring the success of the organization.
Financial:
This perspective measures the financial proof that the business provides value to its customers, employees and other stakeholders. This typically is an indicator of an organization's past success and is not necessarily a clear predictor of future success.
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Together, these four perspectives provide a well-rounded and balanced look at an organization’s strategy. This will ensure smooth running in the present and a clear path to success in the future. The measurable results are a tangible way of knowing if the organization and each department within the organization are on track for success.
Metrics:
In order to improve a process or a relationship, you need to understand what the challenges are – you can’t improve what you can’t measure. For each area of the Balanced Scorecard, objectives are developed that can be measured. This numeric value is used to compare past or projected targets to determine if the organization’s goals will be met. The combined values are compared to the corporate target to see if the corporate goal has been achieved. This provides a quantitative way of assessing and projecting trends and challenges.
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