The strategy-focused organization

TLDR: The Balanced Scorecard as discussed by the authors is a performance measurement method that includes not only traditional financial measures but also qualitative measures such as employee satisfaction, corporate mission, and customer loyalty, and it can be used to align the organization to the strategy.

Abstract: In 1996, Robert Kaplan and David Norton introduced the Balanced Scorecard performance measurement method, which included not only traditional financial measures but also such qualitative measures as employee satisfaction, corporate mission and customer loyalty. In The Strategy-Focused Organization, they show how the following five principles transform the Balanced Scorecard from a tool for performance measurement to a tool for creating a strategy-driven performance management company: 1. Translate the strategy into operational terms. Use the Balanced Scorecard to describe and communicate strategy in consistent, insightful, operational terms. 2. Align the organization to the strategy. For organizational strategies to work, they must be linked and integrated across many functions — finance, manufacturing, sales, marketing and so forth. The Balanced Scorecard can link these disparate and dispersed functions. 3. Make strategy everyone’s everyday job. Use the Balanced Scorecard to educate the organization about strategy, help employees develop personal objectives, then compensate them based on their adherence to and implementation of the business’ strategies. 4. Make strategy a continual process. Use the Balanced Scorecard to link strategy to the budget process; review strategy regularly in management meetings; and develop a process for learning and adapting strategy. 5. Mobilize change through executive leadership. Through a method of mobilization, governance and strategic management, executives can embed new strategy and new culture into their management systems, creating a continual process to meet the strategic needs of today and tomorrow. Formulating strategy is one endeavor. In this summary, you will learn how to make strategy work. Concentrated KnowledgeTM for the Busy Executive • www.summary.com Vol. 23, No. 1 (3 parts) Part 1, January 2001 • Order # 23-01