Strategic planning is a crucial aspect of a business' success. That is why Apple, Volkswagen, UPS, Citibank and many other Fortune 500 companies, and even U.S. Army Medical Department, use Balanced Scorecard (BSC) and remain extremely productive and enviably profitable. Our Balanced Scorecard template allows you to use the BSC approach to improve strategic communication and execution, process alignment and performance reporting within your company (among other things), and thrive.
The nine steps to BSC implementation are Assessment, Strategy, Strategy Mapping, Performance Measures, Strategic Initiatives, Performance Analysis, Evaluation. You can use this slide to walk your audience through each of them.
The BSC suggests that an organization should be examined from four different perspectives for the leaders to develop objectives, KPIs, targets, as well as initiatives and campaigns in relation to these perspectives. We discuss below.
There are three types of companies that can benefit from creating and managing their Balanced Scorecard in Excel: small firms, pilot projects and companies in transition. Creating BSC in Excel is by far the most cost-saving option.
According to the Balanced Scorecard Institute, the BSC is a strategic planning and management system that organizations utilize to:
- Communicate what is to be accomplished
- Align the day-to-day tasks with overall strategy
- Prioritize projects, products and services
- Measure and control progress to reach strategic targets
Balanced Scorecard Usage 2019 Survey from 2GC Active Management showed that:
- There was a significant move towards quarterly reporting in 2019 – up to an average of 56% of organizations, compared to 38% in the previous year. This may be linked to a fall in six-monthly reports. The reporting frequency changes were mirrored in the data on how often Balanced Scorecards are reviewed: with a similarly significant increase to 58%, compared to 40% in 2018.
- 3rd Generation Balanced Scorecard designs continued to be the most popular design format. They were also the design giving the highest scores for value – 89% of organizations that used them were "Extremely Satisfied" with their Balanced Scorecard.
- Almost two-thirds of the organizations in the survey reported having multiple Balanced Scorecards, which marked a big increase over 2018 (64% vs. 48%).
- The number of respondents who said that their Balanced Scorecard was extremely or very useful increased by 88% in 2019, compared to 75% in 2018.
There are four main perspectives of BSC:
- Financial (aka Stewardship) – this perspective analyzes an organization's financial performance and financial resources utilization.
- Customer/Stakeholder – this perspective analyzes organizational performance from the customer or key stakeholders point of view.
- Internal Process – this perspective analyzes an organization's performance in relation to the product/ service quality and efficiency.
- Organizational Capacity (aka Learning and Growth) – this perspective analyzes key aspects of progress performance, such as human resources, infrastructure, technology, culture, etc.
- Focus Areas – This method involves building your entire strategic plan around the BSC. To implement this method, each of the four perspectives (Financial, Customer/Stakeholder, Internal Process and Organizational Capacity) are set as one of the strategic Focus Areas. Objectives, Projects and KPIs are then listed directly underneath each main perspective.
- Goal Types – This method involves establishing your own Focus Areas separately from the BSC. Then a custom field for each Objective, Project and KPI needs to be created with specific categorized activities.
U.S. Army medical department (AMEDDC&S)
When the AMEDDC&S reached out to the Balanced Scorecard Institute, it did not have an integrated, institutional strategy that provided strategic priorities and guidance to AMEDDC&S major business units.
It faced several major issues:
- The organization's BSC focused more on current than future capabilities. In addition, the operational impacts of realignment and change were unrealized by the institution /workforce.
- Communication and internal processes within the organization were unremarkable and poorly documented.
- Diminishing resources (people and finances) were a barrier to meaningful and effective change.
- Leader turnover negatively impacted the focus, sustainment and resourcing of institutional priorities and investments.
The execution of improved BSC process led to the birth of a new office (crafted from existing staff structure), called Office of Strategy and Innovation (OSI). The office now serves as an integrated, enterprise-wide organization and provides:
- Strategic priorities and guidance to major business units and transformation
- Performance tracking and reporting
- Discovery of performance improvement opportunities
- Execution of strategically linked improvement projects
- Allocation and prioritization of project resources
- Facilitation of organizational strategic communications
- Identification of barriers to excellence
- The management of the human aspect of change