BSC as performance evaluation tool and a system for strategic management

Measurement of business seems rather easy to first glance.  Indeed it seems like all you have to do is to evaluate financial indicators and perform simple mathematical operations.  The company may be earning good money, hire new employees and even develop and introduce new products.  But what about the strategy?  Is the company doing OK in terms of implementation of strategic goals?  As the company strong enough to withstand tough competition?  Is the company ready for challenges?  Of these a very important questions which may be not acute for a company at a present time but they will become extremely important in future.

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

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

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.