You’ll never meet your goals if you don’t know what they are or how close you are to reaching them. For many organizations, this is where a balanced scorecard comes in. What is a balanced scorecard, you may ask? The concept was first introduced by Robert Kaplan and David Norton in 1992 in a Harvard Business Review article. Since then, it has been heralded as “one of the most significant management ideas of the past 75 years,” inspired countless variations, and brought clarity to businesses in every sector. Generally speaking, it is an organized set of business intelligence (BI) metrics that outline, communicate, and measure the goals of an organization.
Originally, scorecards were largely used by the accounting industry. Today, they’ve been redefined as a valuable asset for any organization interested in business performance management. The goal? To evaluate the performance of an organization’s goals holistically, especially when organizations are experiencing change, growth, or simply want to strategically plan their success. Even better, a dynamic balanced scorecard that keeps all stakeholders informed in real-time can
The Four Corners of Your Balanced Scorecard
Many organizations make the mistake of measuring their success with little more than the bottom line. When it comes to creating your balanced scorecard, think of the financial perspective as one several lenses you can use to view the organization’s progress. More specifically, it approaches strategic business management from four angles: the financial, internal, customer, and learning / growth perspective. Each of these angles work together toward the same purpose: providing a well-rounded view of your organization’s short- and long-term priorities.
- Financial Perspective – For most organizations, the financial perspective is the most obvious of the four perspectives in your balanced scorecard. This perspective should include your financial objectives, such as revenue, productivity, and growth. This might include goals like decreasing spend in a specific department while raising the overall bottom line.
- Internal Perspective – Internal business process is one of the most important elements of a successful business strategy. The indicators you focus on here should be specific, such as quality control guidelines, streamlining your supply chain, and innovating ways to improve your product or service by perfecting your internal processes.
- Customer Perspective – The customer perspective seeks to evaluate your business from the outside in. How do your customers perceive your product and your company as a whole? What customer experience does your organization provide? Factors like churn rate and the percentage of returning customers are potential metrics you can use to evaluate this perspective.
- Learning & Growth Perspective – This perspective involves the assets in your company that aren’t In other words, it focuses on the intangible value within your organization. This might include the skills, knowledge, and abilities the teams and members of your organization possess. When viewed from the learning and grown perspective, these skills should be measured by their overall contribution to your organization’s larger goals.
Finding the Right Balance: Defining Metrics and Goals for your Balanced Scorecard
As the name implies, a balanced scorecard aims to find symmetry between the financial, internal, customer, and growth perspectives. To do this, you’ll need to define specific goals for each perspective – or, define your intent. On the one hand, these goals do not need to be granular; broad ideas like “developing new products” or “improving employee morale” are excellent places to start. On the other hand, they do need to be specific and measurable, otherwise you’ll have some trouble knowing exactly how close you are to meeting them. The goals for each perspective should serve as guideposts along the path to success: easy to identify and designed to keep you moving toward your objective. Focus on starting with a simple, solid foundation. That way, you can easily incorporate more detailed metrics based on the success of your initial, simpler data points.Goals should be guideposts on the path to success: easy to identify and designed to keep you moving. Click To Tweet
Once you’ve brainstormed your goals and the metrics you’ll use to measure your progress, it’s time to get your ideas on paper – literally. Storyboarding (getting a loose visual framework of your scorecard) provides an opportunity for you realize the visual aspect of your scorecard so you can see how it will work and what it will look like. Each of your goals and data points should relate to each other in some way; by storyboarding your scorecard, you can help users understand these connections using proximity and visualization.
Sourcing your data is critical to the efficacy of your balanced scorecard. You will need to determine what the key performance indicators of success are composed of. Does the data already exist? Where is it housed? Who currently has access to that data, and who needs access to make your initiative work? Do you have a data governance strategy, or do you need to develop one? By bringing all your relevant data points together and maintaining data integrity, you’ll be able to build a cohesive view of your organization.
What Type of Balanced Scorecard Does Your Organization Need?
Depending on your overarching goals, you can use balanced scorecards on virtually every level of your organization. A high-level scorecard could be used to track the overall success of a business or company, while a departmental or individual scorecard could help the teams and specific employees within your organization meet their objectives. Making your balanced scorecard available to all your stakeholders doesn’t have to be complex, either. Secure, online dashboard software can allow you to create dynamic scorecards with data safe behind your own firewall, but the dashboards are viewable in the cloud by anyone with the proper credentials. Thus, performance management no long falls solely to one or two people in an organization – the success of the organization is the responsibility of each individual that contributes towards the goals.
Creating a single location where all of your KPIs and goals live, and where all stakeholders can keep an eye on them in real time, infuses any organization with a culture of strategic performance management. At iDashboards, our data visualization software enables organizations like yours to create dynamic, real-time dashboards. You can filter and drill down into live data for multiple scorecards, building a dashboard that has gives of the four perspectives the equal attention they deserve. Dashboards are fully customizable, so the design and structure can look exactly the way you need. You can also easily click through the top-level and more detailed scorecards to understand where each level and department of your organization stands.
To learn more about your options with iDashboards, see what data visualization can do by scheduling a personalized demo with our team!
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