Through various meetings, a series of authors has managed to bring together a series of successful experiences, creating a model that can serve as an example for many of them. These authors meet frequently to share what has been their learning, after several years in the implementation of the Balanced Scorecard.
Dr. David Norton 1, recommends that it is necessary to maximize the generation of value through the Balanced Scorecard. The generation of value is increasingly closely associated with the ability of an organization to execute its strategy. The organizations that lead the business world today are those that have been able to develop the competence of strategic management, aligning all their resources towards the achievement of their vision. Many leading organizations have successfully implemented the Balanced Scorecard to translate their strategy into operation, align their business units, link individual performance with strategy, and launch the strategic learning process.
For this, it is necessary to define a value proposition that makes your competition irrelevant, as Francis Gouillart 2 tells us. The lack of a truly differentiating value proposition has led hundreds of organizations to offer their customers the same attributes as their competitors, inevitably falling into a price struggle that sooner or later ended up destroying the profitability margins of their businesses. It is essential to innovate in the way of generating value for customers to create unexplored market spaces (“blue oceans”) and thus get out of the “head to head” struggle that makes competition irrelevant
It is necessary to prepare organizations to compete in the industry of the future, says CK Prahalad 3 and for this he asks us the following questions:
- Does your executive team have a clear understanding of what your industry will look like in 10 years? Is your executive team aware of the dangers of the entry of new unconventional competitors? (Hidden Competence) Does your executive team know what to do to maintain leadership in the future? Does your organization put the same effort in growth as it does in operational efficiency?
Says Prahald, if your answer to these questions is no, your organization could be putting too much energy in the past and too little creating the future. The key is to ensure that your executives do not focus exclusively on short-term internal urgencies, and that they begin to look abroad thinking about how to create the necessary conditions to compete in the industry of the future.
This implies the need to develop strategic management competence in your organization, as Norton 4 recommended. Most of the organizations do not have an area that supports Senior Management in coordinating the execution of the strategy. The absence of this competition is the main reason why 9 out of 10 organizations fail to implement their strategy successfully. An area in the organization must be formed that has the responsibility of supporting Senior Management in the translation of the strategy into operation and the continuous review and update of the strategy based on the results of the operation and changes in the environment
For Alejandro Toculescu 5 it is necessary to identify the key processes for his business and align them with the strategy. This alignment of business processes represents one of the key challenges for an organization to successfully implement its productivity and / or growth strategy. The Balanced Scorecard can help identify the 20% of the key processes that generate 80% of the value in your organization, analyze if these processes are adequately supporting the strategic objectives and establish the improvements that should be implemented so that the key processes can be aligned with business strategy
After aligning your processes with your strategy, you need to strategically align your business and service units according to Robert Kaplan 6. In general, business strategies are trapped in the field of senior executives and fail to permeate to the organizational levels that are directly responsible for the operation and for managing the relationship with customers and suppliers. The cascade effect of the strategy through the BSC makes it possible to overcome these barriers to understanding the strategy, allowing, on the one hand, that the key areas of the business align their efforts towards the achievement of the strategic destination, and on the other, that the areas of support identify the level of service they must provide to their internal customers to maximize their strategic contribution.
An example of successful implementation is presented by Mario Pacón 7 from Siemens, a leading organization that employs more than 430,000 people around the world, and which has been one of the first organizations to implement the Balanced Scorecard in Mexico, this has allowed it to face The successful entry of new competitors into the market has allowed them to improve customer satisfaction and leverage the creation of value for the organization.
Dr. Norton 8 says that the strategy maps are the starting point for the execution of the strategy and he asks, are you having problems with your strategy? Then map it! Strategy maps provide a logical architecture for describing strategy by transferring it to a linked set of cross-cutting objectives from all four perspectives. With the scorecard, you operationalize those objectives, translating them into measures, goals and initiatives with clear meaning.
Dr. Norton says that an organization's capital is typically based on four components: culture, leadership, alignment, and teamwork, which form the change agenda necessary for any new strategy. The key behavior changes necessary for that strategy to be implemented. Alignment of human resources with technology and company finances. Strategy maps allow companies to create integrated planning and management processes to achieve dramatic improvements in performance.
The strategy is formulated above, but is executed below. If the workforce does not understand the strategy and is not motivated and trained to execute it, the strategy will fail. Organizations must identify strategic leverage points focused on training and development programs. It is important to establish the best communication, goal setting, and rewards practices that are successful.
Traditional management systems need reengineering to align them with the organization's strategy, this includes:
- Create organizational alignment and manage it as a process Create personal alignment through education, training and incentives Create a new integrated planning and budgeting process Build and use reporting-analytical systems to improve managerial control
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- David p. Norton President & CEO Balanced Scorecard Collaborative, Inc. Francis Gouillart President of Value Innovation Partnership CK Prahalad - Harvey C. Fruehauf - Professor of Business Administration - University of Michigan Business School David Norton President & CEO Balanced Scorecard Collaborative, Inc. Alejandro Toculescu Managing Partner Symnetics LATAM Robert Kaplan Chairman Balanced Scorecard Collaborative, Inc. Mario Pacón Director of PTD Siemens David Norton President & CEO Balanced Scorecard Collaborative, Inc
