A leader of a strategic initiatives needs to have a working knowledge of balanced score cards (BSC). Academic research suggests that about half of all organizations are using BSC in some form, so it is now mainstream in strategic management.
Balancing Financial Metrics With Leading Indicators
Historically, bottom line financial measures have been the metrics of choice for organizations, large and small. Although these measures are important, they can contribute to shortsighted managerial decisions. For example, a company could cut its R&D budget to boost profitability, but that may deny its new product development pipeline innovative new ideas that will be the source of future profits.
The BSC concept is that while organizations should have finance measures, they need to balance them with non-financial benefits.
Financial measures are lagging indicators. We have to ask, what causes good financial outcomes?
Besides financial measures, the most-common BSC areas of interest are:
- Customer value-add measures
- Process improvement measures
- Learning and innovation measures
In addition to the balance of finance and non finance, the score card enhances the balance of internal and external perspectives and the balance of past performance with the future.
The Right Questions for a Strategic Perspective
The balance of financial and non-financial concerns encourages consideration of four interrelated strategic performance questions:
- If we are successful, how do we appear to our investors/owners?
- To achieve our vision, how must we appear to customers?
- To satisfy our customers, at which processes must we excel?
- To achieve our vision, how must our organization learn and improve?
Notice that investors, owners, and customers are stakeholders – one of the important concerns of competent program management. Too, notice that vision and success criteria are also essential. Thus, make sure that you can answer these questions for your strategic initiative.
Where do Strategic Initiatives Fit?
There are several general approaches:
- Take each BSC perspective and develop strategic initiatives that help achieve the vision
- Use the vision and BSC to validate the selection of a strategic initiative and otherwise validate/develop the portfolio
- Use the BSC to edit the scope of a strategic initiative
- Vice President, Director, Manager of Strategic Initiatives: Position Description Best Practices (leadingstrategicinitiatives.wordpress.com)
- Three Templates: Strategic Initiative Benefit Propositions (Part 2) (leadingstrategicinitiatives.wordpress.com)