By Howard Rohm
President and CEO Balanced Scorecard Institute
“Balanced scorecard” means different things to different people. At & one extreme, measurement-based balanced scorecards are simple Mark Malinoski dashboards of performance measures grouped into categories that Founder, RKS Innovations are of interest primarily to an organization’s managers and executives. Typical categories include financial measures, and customer, process, and organization capacity measures. Measurement-based scorecards almost always report on operational performance measures, and offer little strategic insight into the way an organization creates value for its customers and other stakeholders. At the other extreme, a strategic performance scorecard system is an organization-wide integrated strategic planning, management and measurement system. Strategy-based scorecards align the work people do with corporate vision and strategy, and communicate strategic intent throughout the organization. In other words, these systems incorporate the culture of the organization into the management system. In strategy-based scorecards, performance measures are only one of several important components, and the measures are used to better inform decision making at all levels in the organization. In strategy-based balanced scorecard systems, performance measures are the result of thinking about business strategy first, to measure progress toward goals. In strategy-based systems, the first question to answer is the strategic question: “Are we doing the right things?” The operations, process, and tactical questions come later: “Are we doing things right”. Over the past decade balanced scorecards have evolved from systems that simply measure performance to holistic strategic planning and management systems that help manage and track strategy execution. Despite this evolution, the majority of balanced scorecards that we have seen over the past 10 years use a “just give me the measures” philosophy. These measure-centric dashboard scorecards are interesting, but not very robust and not
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Strategy-Based Balanced Scorecards for Technology Companies – Page 2 of 14 nearly as helpful as they could be. These scorecards remind me of the old Wendy’s commercial: “Where’s the beef?” Strategy-based scorecard systems, on the other hand, create a “strategic thinking” mentality in an organization, and can help lift the organization and its workforce to a higher, more performance-oriented way to think and work. Each organization is unique, and there is no “one scorecard fits all” solution. This article describes how to develop a strategy-based balanced scorecard system for technology companies. We’ll share some lessons learned from developing strategic performance scorecard systems in dozens of businesses and industries over the past 10 years.
The Balanced Scorecard as a Technology Company’s Strategic Planning and Management System Technology company management teams are challenged by:
Rapidly shrinking product cycles Recruiting, retaining and rewarding technology talent Making and communicating critical product development decisions Tracking the evolution of customer feature demands and use models Disruptive,...