The so-called Command Board or Balanced Scorecard or Balanced Scorecard in the original name in English given by its authors: Robert Kaplan and David Norton in 1996 (1), is especially indicated for the application of business strategies by acting as an impersonal control system, detaching managers from this task that so many controversies and conflicts have brought.
But let us begin by defining the strategy knowing that there are many approaches in dance, although the majority lacks a scientific and, above all conceptual, foundation. In this sense, we will propose one that has been validated after more than twenty years of application in our environment and in the markets of the most important countries in the world. It is the one proposed by Peter Belohlavek (2) who inspired and illustrated us clearly on this important topic, we can then say what strategy:
"It is the set of actions to achieve adaptation to the environment- in the market segment where the company operates - in such a way that it allows achieving its own objectives and those of the community, integrating maximum actions that are born from market opportunities, with the minimum ones that basically depend on the organization itself ”(3)
If we decompose this definition we have that it is essential in any strategy:
1. Be fully aware of what is being done.
2. Define the objective or objectives to be achieved.
3. Develop an action plan that integrates maximum and minimum actions.
The purpose of the strategy is to achieve that a company achieves its objectives with a minimum cost both in effort of its people and in money.
But above all, it is important to make clear that developing strategies is teamwork, a subject that is not always adequately considered in our environment, and in Latin America according to my experience in several countries and that which colleagues have provided me on this aspect, since this it implies a finished work in the relations between its members.
When this does not happen, the team produces actions in a dysfunctional way and the company becomes in danger, the scholar Belohlavek correctly points out.
As much as the final decision proposed by the team that develops the strategy is in the hands of the leader who has the veto over the proposal, the operation of the team is what largely establishes the quality of the proposed decisions.
When a team is formed to run a company, it needs to be in solidarity with each other and seek to subordinate its personal interests to those of the Institution. That is why it is important to also seek to satisfy the personal interests, those of the team and those of the Institution since, the more disconcentric they are, the lower the degree of complementarity among its members.
The team, then, is an intermediate institution that takes the Company to its destination.
But this team must be a team of strategists with the ability to produce strategies. There is no strategy without strategists who conceive it.
In addition to having a broad conceptual management to integrate a team of strategists, it is necessary to have a great capacity to share and know how to build bridges of reparative apologies, especially when the internal conflicts of the group exceed the capacity of operational operation. "The team that does not settle for members who make humility a cult will not be a 'staff' group and can only be a reality analysis team," Belohlavek aptly points out once again.
When the search for reality and alternative actions on it become complex, the ability to look and observe through the eyes of others - empathically - will lead to the solutions sought. For this reason, sharing without selfishness is the basis of teamwork for any strategy and that allows achieving a common frame of reference on it.
Let's look at an illustrative table of the formulation process:
The Balance Scorecard- BSC– allows transferring this strategy to operational terms
And it does so by ensuring that it is understood by all members of the organization by making a strategic cause-effect relationship map that allows perceiving how the objectives are achieved through perspectives that the company management, through the teamwork carried out, Consider them important to ensure the success of your business.
Kaplan and Norton, in their beginnings, used these four perspectives:
1. Financial perspective.
2. “of the client.
3. “of growth and learning.
4. “of the internal processes.
Our experience as consultants leads us to include these other two:
5. Suppliers perspective.
6. Perspectives of people's behavior and actions towards the community.
On what basis do we base this aggregate?
In which it shows us the supplier as the beginning of the chain that will allow us to satisfy the client, that is, the one that presents the inputs or raw material. As an example we have the automotive companies that had to require their suppliers to certify an ISO 9001 / version 2000 standard so that they could appear on their list of suppliers, as they had established in their Headquarters.
With respect to behavior, it is because it is what we carry with, what I share and, each of us, in every relationship, in every interhuman bond and is the first thing the internal client perceives, first as the next step in the process in the one that is inserted and, then the final client or user of our products / services and, of course, the community where our Company is inserted. In other words, it takes into account the essential principles of Comprehensive Quality Management. If the organization is a
services this naturally is accentuated since the treatment with the client will be the key to a good relationship to satisfy their needs. If this is not understood from the beginning, any subsequent strategic action will be compromised, including the same Dashboard to be implemented.
Why a Balanced Scorecard?
For the reason that the balanced scorecard BSC is an instrument that facilitates the strategic planning of the organization, transforming the vision, mission, values, strategies and strategic purpose, through a computerized system into:
- Precise objectives to be achieved.
- Indicators to measure the objectives step by step.
- Goals to be reached in different terms.
- Results as a function of time.
- Alternative strategies to achieve the established goals.
- Appreciation of the situation in the achievement or not of the goals.
- Strategic adjustments to design and carry out, to adjust the course and the march, and in this way, ensure the comprehensive achievement of the goals.
The conceptual balanced scorecard is a chain of objectives in the form of a network that measures respectively the following six perspectives:
1. Financial: (Shareholders / owners: objectives of satisfaction of the shareholders or owners of the organization. It serves as a focus for all the objectives and indicators of all other perspectives.
2. Clients: objective of satisfaction of internal and external clients in relation to the products, services and attention of the organization.
3. Processes: objectives of excellence in internal business processes by seeking the least possible deviation, from the executives and personnel involved in the organization, to fully satisfy shareholders, internal and external customers and suppliers.
4. Personnel: organizational learning objectives regarding the improvement and innovation of human and technological enabling competencies, in a motivating, proactive, well-being and safety work environment.
5. Suppliers: satisfaction objectives of the internal suppliers of the organization, of each unit and of the external suppliers that provide the inputs.
6. Behavior and Community: objectives that affect customer satisfaction and those of the community where the organization operates by adding value through specific behavior that is perceived by current customers, potential customers and the community.
the need to highlight the balanced scorecard as the center of a strategic management process and how it becomes an obligatory and permanent reference point for the Company's management to monitor every situation that comes up on the PC and thus be able to link the budget with the strategic plan.
In addition, special care must be taken not to limit yourself to financial indicators as has been traditional in our environment and operating as if the scenarios had not changed, since if this persists, failure will be assured, as its creators correctly point out.
Strategic foresight will be the decisive next step to establish the possible scenarios for each objective of the Organization.
But at this point you will ask yourself, how is this done? Let's look at:
- Orienting the resources, the budget, the different areas of the company and the business units towards the achievement of the objectives established in the strategy.
- Stimulating, with an active example, the motivation of the Staff towards the achievement of the strategic objectives as a team. Without motivation all this effort would tend to failure.
- Seeking that the strategy is everyone's task, every day, all the time.
- Clearly communicating the Vision, the Mission and the values that support the strategy to all the Personnel without exception.
- Verifying that everyone has understood the Vision, the Mission and the values and have been able to contribute in order to identify with it.
- Helping each area and business unit to define their objectives aligned with the business strategy and following a cause-effect diagram. For example: If the Personnel is trained and motivated then they will be able to develop quality products / services that satisfy our internal customers. If they design quality products / services then our external customers will be satisfied. And so on.
- Assisting each manager to achieve the objectives outlined in teamwork.
- Preparing each manager so that, in turn, they assist their people in learning - through coaching - so that it is effective and turns to the task.
- Assist each collaborator to define their personal objectives and align them with those of the area or business unit where they work.
- Recognize and financially encourage the achievement of strategic objectives.
Once we have complied with the previous steps, we will have to make sure that the strategy becomes a continuous process for everyone and, through effective teamwork, that seeks not only continuous improvement throughout the Company, but also essentially, strategic innovation (6)
The way to carry out this stage is the one recommended by Kaplan and Norton (7), that is, by performing a double-entry round-trip feedback that allows validating the strategy and promoting continuous learning and actively relating the budget to the strategy.
The balanced scorecard must also, according to our experience, be led from the highest level. How?
- Participating in the presentation of the management tool to the managers of your Company.
- Participating and helping in the awareness details of the balanced scorecard (counseling).
- Writing notes or articles in your Company magazine.
- Supporting managers in their learning of this important management tool (coaching) so that they in turn do it with their collaborators.
- Assisting the collaborators of their managers (mentoring) so that teamwork becomes a strategic reality of the organization.
The balanced scorecard complements traditional financial measures with criteria that measure performance based on the additional perspectives that we highlight on page 3. This is the best advertisement because it achieves the loyalty of the Staff -internal customers- towards the organization and customers external to the products and services of the Company, while achieving the satisfaction of the shareholders.
The balanced scorecard is mainly directed towards a major deficiency of traditional methods, the ability to link the Company's long-term strategy with short-term actions through agreed indicators in each area or business unit.
The balanced scorecard provides a structure to focus on the indicators of each critical process such as business plan, distribution of resources, strategies and feedback, learning, behavior towards clients - internal and external - and towards community actions, not so frequent in our country. country for not having enough resources but that the use of the balanced scorecard effectively will allow.
In this way, the balanced scorecard allows the Company to combine its financial budgets with strategies.
Likewise, in an economy where competition is aggressive and in which companies must obtain competitive advantages to survive, this tool enables organizations to successfully use two of the most valuable attributes: communication and information. That is, greater profit and savings of up to 25% of the costs of non-compliance with the needs and expectations of users.
With the contribution of the systems, it is possible to develop simple software such as Windows Excel in SMEs, as Professor Mario H. Vogel, president of the Dashboard Club in his courses, seminars, Workshops, frequently and rightly advises. and Congresses with the purpose of achieving an accurate, up-to-date measurement of each of the indicators established by each perspective contemplated in the balanced scorecard. In this way, it is possible to establish a computerized control system that is extremely simple to manage in the face of strategy, depersonalizing traditional management control that, in general, has brought more problems than solutions, more costs than benefits.
Why the balanced scorecard is not only a measurement system but a system of management practice to achieve a high degree of motivation in each area and a competitive executory unparalleled.
With the help of the balanced scorecard, it is easier for senior executives to communicate throughout the organization the goals and strategies of the company and in which way each employee is involved in this regard.
This tool by itself allows each of the collaborators to be involved and communicate to them that the role that each of them plays in the Company is extremely important to fulfill the goals and objectives of the organization, those of their area of work and their own.
If after this reading you believed that the balanced scorecard is a panacea, I would clarify that this does not exist in the brain of human beings, in your conceptual and mental Frame of Reference (4), but that it is an extremely useful tool this is demonstrated by the growing success achieved worldwide. However, as we are passing through the Age of Knowledge and beginning to operate with complex thinking in all orders, it will achieve modifications to adapt it to reality in permanent and discontinuous change.
(1) KAPLAN, Robert & NORTON, David: Balanced Scorecard- The Balance Score Card-1997, Ed. Gestión 2000.
(2) BELOHLAVEK, Peter: Creator of Unicism, discovered the structure of the concept, the knowledge learning machine and creator of the Unicist Reserch Institute. www.unicist.org. I suggest visiting this page to learn about Ontologies and ontogenetic maps.
(3) BELOHLAVEK, Peter: Logic of the Markets, 1999, Back to Basics Collection, Author's Ed.
(4) BELTRÁN COSTA, Ramón and others: Create health or cure disease ?, Ed Holos, Buenos Aires, 1993, Chapter: Labor counseling.
(5) BALLVÉ, Alberto M: Control Board. Organizing information to create value. Macchi Editions, Buenos Aires, 9/2000.
(6) VÁZQUEZ, Alfonso: The strategic imagination, 2000, Ed. Granica.
(7) KAPLAN, R. & NORTON, D.: How to use the Balanced Scorecard 2000, Ed. Gestión 2000.
