The Balanced Scorecard model (by Robert Kaplan and David Norton) is presented today as the tool that organizations have to guide their resources through strategy. In Latin America, does it take more than a BSC to achieve this targeting?
As we know, the Balanced Scorecard is the means and the tool to bring an organization to a situation desired by the management team, turning the vision and the strategy into operational objectives that direct behavior and performance.
If we want to implement the BSC to focus on the strategy, we must first do something fundamental: Define what the organization's strategy is.
This, for many Latin American organizations, is already a great challenge. The mere idea of working on hypotheses of medium and long-term horizons is new in some organizational structures.
Once the strategy is defined, it is essential to have the decision to direct all resources towards it. It is necessary, then, that the executives of the organization make the decision of wanting to focus on the strategy, demonstrating a strong commitment throughout the process.
With these premises, the Balanced Scorecard works as a powerful tool for organizational transformation.
- Once the organization manages to focus its resources with the strategy, how is the success and continuity of the model achieved over time?
The key is to make strategy become action. The success of the model is perceived once the strategic initiatives are implemented. Without action there is no continuity and it is represented by the development of initiatives that arise in the construction of the Balanced Scorecard.
Some experiences show us that even knowing successful cases from neighboring companies, our executives feel that the model is successful once they observe the initiatives "working" and impacting the achievement of the goals set in their own company.
Although all the elements of the SFO (Strategy Focuzed Organization) are the way to achieve the continuity of the Balanced Scorecard, the real scope of the process within organizations is achieved when typically operational management meetings are turned into strategic meetings, where They analyze the strategic hypotheses based on the feedback provided by the BSC, taking into account changes in the environment variables. These types of meetings are necessary to complete the cycle of use and learning of the strategy, a fundamental axis for the Balanced Scorecard to be perpetuated.
- What characteristics must organizations have to implement the Balanced Scorecard? Do you need a particular management profile?
Any organization that decides to transform its strategy into action, with a management willing to focus its organization on the strategy, can build and implement a BSC.
Although the complexities of companies that have successfully implemented it are varied, they all have a clear common denominator: the commitment of executives to the project and strong leadership from the CEO.
- Are Latin American companies ready to take on the demands of a correct implementation of the Balanced Scorecard?
We have no doubts, there are examples in several Latin American countries that demonstrate this, from local family businesses to giants like Petrobrás.
The reality of many of the Latin American companies in which we can work is that a correct implementation of the Balanced Scorecard is essential, since the lack of alignment of the strategy with scarce resources can mean, in many cases, the alternative of not surviving in the market.
- The most serious problem that Latin American organizations present is the lack of alignment of their areas with the strategy?
One of the problems is the lack of alignment, but this is a problem that organizations in different countries present, not only in Latin America.
One of the biggest challenges presented by companies in this region is the definition of clear strategies, which follow the strategic direction that the organization wants. In short, they exceed a good mission statement of the company.
This is so since our experience in implementing the Balanced Scorecard shows that in most cases it has been necessary to accompany the organization in a first strategic planning process and thereby lay the foundations to build the Balanced Scorecard model.
- What role do Software play in the implementation of the BSC?
BSC software does not escape the generals we all know. They are tools that allow a good implementation of the Balanced Scorecard to be exploited at its best, but without forgetting that no software will replace a bad construction of a BSC.
The Balanced Scorecard in its initial phase can begin to be implemented without computer support. But in a second moment, when the unfolds of the model extend to the entire organization, the process begins to demand a technological tool that facilitates its use. Of course, here the company must carry out a good analysis of its needs and select the software that best suits its reality, since the range of functionalities available on the market is vast.
The software packages complement an implementation of the model when the project is larger and manages to greatly boost the learning of the Balanced Scorecard.
- Many companies believe that the BSC is one more initiative, similar to the CRM, TQM, Six Sigma programs, etc. Is this true?
Quality programs like TQM or Six Sigma have been key to developing the success of many companies, especially in production areas. Initiatives such as CRM, thought of as a comprehensive model, have a high impact on business models based on customer relationships.
The advantage of the Balanced Scorecard is that it allows you to align and evaluate all these initiatives, identifying their impact and relationship with the company's strategy. For example, a TQM or Six Sigma program could be the initiatives chosen to achieve the strategic objectives of the internal processes dimension, just as a large CRM project could be the protagonist of achieving some objective of the market dimension, where For example, we could have a clear value proposition based on a better relationship with customers.
The Balanced Scorecard has the ability to focus on each of the aforementioned initiatives, defining which will have the greatest impact for achieving the strategy and thus closing the gap with the performance desired by the organization. Each of these programs constitutes the actions in which the strategy is transformed.
The Balanced Scorecard should not be seen as just another program, it is simply a model that allows you to align and evaluate all the programs and initiatives that an organization carries out. The BSC helps the management team to choose the programs and initiatives that will really allow achieving the objectives and making the business strategy come true.
- Many managers think that due to the current uncertainty in which their organizations must direct, an investment in a BSC project is not a number one priority. Which is the message?
Precisely, the first step of the Balanced Scorecard is the construction of the strategic map. As is characteristic of a good map, it should serve as a guide for direction in times of uncertainty. The hypothesis of the map is made based on what we think of the future today and even its graphic representation allows us to learn about the changes that are generated, especially in situations where we have no certainty.
A good BSC is a tool that allows you to quickly articulate in the face of changes in the environment, since through the continuous learning process, errors in the hypotheses can easily be corrected, with their consequences on the indicators, goals and proposed initiatives.
This is so because if an organization implements a BSC and manages to focus at all levels on the strategy, in the face of changes in the environment, the entire organization can react quickly to changes in the strategy, since there is a clear understanding of where the direction and what the new destiny required. An aligned and focused organization reacts faster than a company in which each area chooses a different direction.
Organizations that used the Balanced Scorecard as a means of continuous learning and training on the strategy obtained very high returns on the investment made, effectively allowing all resources to be focused on what has a positive impact on the company's business. In short, achieve the objective of investing where it really is necessary!
If all management processes are integrated into the BSC, we are guaranteeing that all actions are strategy-oriented. In this way, there will no longer be any efforts that do not impact what the company is looking for in its vision, nor resources that do not identify what its contribution is.
One of the greatest satisfactions when we see the BSC "work" in companies is the feeling that involves all the participants in the transformation and focus on our reason for existing as an organization.
Contributed by: Sixtina Consulting Group. Smart solutions for business management.
