Get yourself swot analysis guide

Nowadays there exist a great variety of strategic management tools.  Some of them have rather theoretical nature while others urge companies’ top management for action.  The well-known Balanced Scorecard System has proved to be one of the most effective strategic management tools, but at the same time can be used in combination with other methodologies of strategic management.  SWOT analysis is a popular method of defining strategic goals through evaluation of current condition of the company.  SWOT stands for strengths, weaknesses, opportunities and threats.  These are the most important aspects for the company.

AKS-LABS has released a new product – SWOT analysis guide which will be helpful learning material for top managers, strategic planners and all those who are interested in the issue of strategic management and SWOT analysis in particular.  This package includes templates on SWOT analysis and balanced scorecard.  You will learn that these two strategic management tools can and should be used in combination.  Besides there is a comprehensive SWOT analysis guide which offers much valuable information on this methodology of locating company strong and weak points.  You’ll also find answers to the most acute and burning questions about SWOT analysis.

SWOT analysis guide is available in free and paid versions.  Get the free version from this page or purchase the full version here.

That’s why, strategic goals and future vision are very important for any company operating in a highly competitive environment.  Strategic vision is about forecasting and predicting possible problems and obstacles.  Future vision is about outwitting of competitors.  It is a real art to solve problems even before they occurred.

Any organization faces two challenges: evaluation of current performance and communication of strategic management with operations.  It is very important to know that the company is doing the right things to reach strategic goals.  Moreover timely introduction of changes to the strategy, goals and measures will make it possible to correct mistakes before the lead to negative consequences.

BSC implementation stages

Balanced scorecard is a must have tool for any organization pursuing strategic goals.  Through evaluation of key performance indicators balance scorecard will tell much about past and future events for the company.  Financial indicators characterize something that has been already done, while nonfinancial ones will tell pretty much about what will happen in future.  Evaluation of intangible assets and nonfinancial indicators is the greatest advantage of balanced scorecard.

Major BSC mistakes

Key performance indicators are grouped in four categories: financial, customer, internal business processes, learning and growth.  Every category characterizes key success factors in the internal and external environment.  Customer category includes goals and measures related markets and relations with customers, while internal business processes category answers the question “how will keep our customer satisfied?”

Balanced scorecard can be used in two ways: as a performance management tool and as a system of strategic planning.  In its first function it will easily measure business and its product in a tea, locate problematic areas and weaknesses etc.  In the function of the strategic management tool balanced scorecard has no competitors.  This tool if you buy the most successful world companies.

The process fo BSC implementation

What are advantages of balanced scorecard?  They go as follows:

1. Balanced scorecard communicates operational and strategic management.  It often happens that company’s decisions, actions and measures have nothing to do with the strategy.  Company management thinks that they are approaching strategic goals, but in fact the company is sinking.  Balanced scorecard provides a clear strategic map with clear cause and effect ties and relations between goals and measures.  Such strategic maps are understood even for ordinary employees with little experience in strategic planning.
2. With the help of balanced scorecard it is possible to educate personnel.  Statistics show that more than 80% of managers do not participate in strategic planning or have wrong concepts and interpretations of company strategy, say apart of ordinary employees.  With the help of strategic maps company strategy will be understood at all company levels.  If every employee in the company understands his own contribution to implementation of strategic goals the company has all chances to succeed.
3. Balanced scorecard makes it possible to introduce amendments in changes to measures and goals which makes this system rather flexible and mobile.  As markets are very changeable these days, external changes should lead to changes inside the company.  Having balanced scorecard implemented in the company, it is possible to correct measures and objectives in order to implement strategic goals.

Advantages of BSC

At the same time, balanced scorecard has certain requirements and rules which need to be observed.  Various mistakes made by top managers lead to failure to successfully implement balanced scorecard.  This explains huge portion of criticism in regard to balanced scorecard.  Remember, that balanced scorecard it just a tool in hands of top managers and business owners.

The four BSC perspectives

But it is not reasonable to evaluate performance of a company apart from its strategic goals.  In other words the company may do certain things that have nothing to do with its strategic vision.  So, why evaluate such performance?  There is no sense in it.  But with appearance of Balanced Scorecard System this problem has been solved.  BSC is not only an extremely effective tool to evaluate current, past and future performance of the company, but also an excellent way to communicate strategic and operational management.

It has been estimated that about 80% of managers do not directly participate in strategic planning.  Moreover, some of them do not understand the concept of the strategy on may have own interpretation of strategic vision which may not coincide with a genuine strategy of the company.  This is where Balanced Scorecard helps.  It visualizes the strategy and makes it clear even to the lowest level of company management.

What the choice of wrong goals results in

Balanced Scorecard consists of four categories of indicators called perspectives: financial, customer, internal processes, of learning and growth.  These perspectives consist of indicators that represent most important key success factors for the company.  Moreover, every indicator has a direct impact on the company total performance evaluation.  Thus, by looking at the scorecard a top manager can see what prevents the company from implementation of strategic goals.  Balanced Scorecard is a great tool to find weak points.

However, very often companies failed to implement Balanced Scorecard, and one of the most common reasons for that is lack of comprehensive strategy.  It’s impossible to drive to the right destination if the wrong goals were set.  Also, it is unacceptable to confuse Balanced Scorecard and the strategy, since BSC does not substitute the strategy.  That means that strategy development must be still performed by people.

There are two options:

• Take expensive or inexpensive Balanced Scorecard training;
• Invest some time in self-education;

We think that you should choose both! As for self-education there is a great library of Balanced Scorecard articles that is now available online.

So, what can you find there and what is the best way to start your self-education about Balanced Scorecard:

1. Need some inspiration to get started? Check Balanced Scorecard success stories and BSC examples.
2. Need guide? Check guides section.
3. You need to create the best KPIs? Check BSC and KPI section.
4. Need some real-life examples – learn about BSC for Sales and BSC for Finance.
5. If you already have some questions about Balanced Scorecard then start with FAQ section.
6. Setting up company goals? Consider using SWOT analysis, also learn more about strategy maps – you will need them!
7. You have one scorecard and now want implement it company wide? Learn more about cascading and testing scorecard!
8. Have everything on paper and now you are looking for some automation means? Check articles about Balanced Scorecard software or BSC in Excel.
9. Ready to present your Balanced Scorecard ideas? Check these articles for ideas for templates, and BSC presentation.
10. Building your Balanced Scorecard dashboard? Check related articles.

BSC implementation success factors

Some business owners pay very little attention two goals setting.  They focus on innovation, human resource management, internal processes, relations with customers etc.  But all this will be in vain if the company set unachievable or unrealistic goals.  Of course, financial goals are most important.  But in order to achieve financial results much needs to be done with intangible assets.  One should answer one question: “How will I earn  $10 million?” The answer should be quite clear.  If it turns out that annual profit of 10,000,000 will mean increasing of market share up to 30% while a company occupies only 3% now, such a goal cannot be achieved.  This is just a hypothetical example to illustrate importance of correct goal setting.

What are strategic goals?

It is especially important to set the right strategic goals when using balanced scorecard as BSC is a strategic management tool.  If there is no strategy there will be no action.  Of course the company will move forward but that maybe not the right direction for it.

As known, balanced scorecard uses evaluation of key performance indicators which are chosen based on the company strategy.  So, the run strategy will result in the wrong choice of key performance indicators.  In such a way the company will waste much time and money without having any positive results.

Strategic goals should answer the questions about possible problems and obstacles on the company way to implement them.  Strategy is partially the vision of the future.  The wrong vision will result in massive losses.

Measurement of business is important as in such a way the company may measure progress on its way to strategic goals.  If you make the wrong first step the entire way will be wrong.

Goal setting is a real art, of so make sure you choose the right strategic goals for your business to achieve success.

More on goal setting here

What is HR about?

That’s why in measuring business evaluation of HR performance is a must.  Even if the company allocates sufficient funds to human resource management it does not mean that HR campaigns and actions are effective.  The problem is that human resource department can not earn money.  Just to the contrary it spends money the company earns.  If the money spent in an inefficient way such money is wasted.  Evaluation of human resource department will make it possible to find strong and weak points in HR policy of the company.  Besides, it often happens that human resource management conflicts with the company strategy.  For example, the company needs experienced personnel while human resource department hires college graduates, and the company needs to spend huge money to educate them and make them stay in the company.

HR evaluation process

Balanced Scorecard System will surely be helpful for those who want to evaluate HR performance in the company and align HR goals with company strategy.  This is a very efficient way to find rooms of the problems by establishing cause and effect ties.  For example, employee lateness may be the cause of poor job performance, or the company may simply spend too much to provide personnel with transportation means.  There may be negative organization climate or employees may be not satisfied with the working conditions or a compensation system.  All this will negatively influence employee performance which results in failure to achieve strategic goals and follow company mission and values.  BSC will visualize HR strategy and helped everybody in the company understand what needs to be done to improve HR performance in order to achieve strategic goals.

Major characteristics of winning KPIs

The greatest advantage of balanced scorecard is its ability to connect strategic management and operational management.  In other words, balanced scorecard puts strategy into action.  Strategic plans are intentions and expectations of the company.  But in order to achieve goals certain actions need to be taken.  Balanced Scorecard is the kind of system that makes it possible to measure progress of the company on its way to implementation of strategic goals.  This is possible you evaluation of key performance indicators.  KPIs are those indicators that are most important for a company and that make key success factors.

The right choice of key performance indicators predetermines success in implementation of BSC.  This is like building a house with a poorly built basement and foundation.  Sooner or later, such house will collapse.  The same implies to Balanced Scorecard.  The wrong choice of indicators would lead to wrong conclusions and decisions.  Besides, the wrong indicators would make balanced scorecard very difficult to use.

How BSC works

What a general tips to choosing indicators?  Of course, every company every business has and individuals set of key performance indicators.  The choice of KPIs primarily depends on company strategy and company success factors in particular business area.  However, the wrong some universal tips for creation of key performance indicators applicable in many business areas.

1. Key performance indicators should be not great in number.  Up to a dozen of indicators each level will be enough.
2. Key performance indicators should be measurable.  One should clearly understand how to evaluate indicator or change its value.
3. KPIs should be clear and comprehensive for the personnel.  Complex system requires more time and effort and money.
4. Key performance indicators should be up to date.  It is necessary to review some indicators from time to time as business environment and internal processes may change.

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You will have no problems in persuading potential customers of efficiency of this system and BSC Designer in particular. Target customers are the people who are already looking for a breakthrough strategic management tool.

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What is strategy?

Strategic vision of the company is often confused with some short-term financial goals.  Of course, the ultimate goal of gaining commercial business is making money.  But this is achieved through improvements in internal and external environment.  That’s why balanced scorecard became so popular because it combined indicators representing financial and nonfinancial aspects of running business.

It is equally important to choose the right measures, i.e. indicators that represent co performance as well as aspects influencing it.  In other words it is imperative to find the right things to measure.  If the company management evaluates secondary indicators they lose focus of major things.  For instance, company management can concentrate on customer relationships totally forget and about innovation, learning and education of personnel.  So, company employees we’ll be actively working with existing and potential customers without having relevant offers and necessary skills to turn customers into regular ones.

Key BSC mistakes

In large companies different departments may have different goals.  One of the most common mistakes is strategic goals of departments conflict with the company strategic goals.  Balanced Scorecard makes it possible to build strategy tree or strategy maps with cause and effect relationships between different perspectives and different goals.  Visual representation of strategic goals contributes to understanding of company strategic vision for employees at all levels.  It is equally important for top manager and a front line manager to understand what company strategic goals are.  For example, top management may have one concept of strategic vision, head of department has his own opinion, while ordinary managers interpret strategic goals in their own way.

Thus, before making a decision to implement balanced scorecard company management should consider all pros and cons, and find out whether or not the company is ready to use this system.