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PUTTING IT ALL TOGETHER:

TOGETHER: A CLEAR VIEW OF THE
BALANCED SCORECARD FRAMEWORK
F
There are some typical questions that are asked by those who are investigating the Balanced or Business Scorecard
approach:
Id like to learn about the BSC and I want to know where to begin to put it all together
together.
Im not able to use a Business Scorecar
Scorecard properly. Im getting lost in the volume of information.
information
I want to understand the concept itself
itself. Could you please explain?
I want to have a clear view of the whole framework
framework,, starting from scratch till having an effective strategy
map.

These questions are not a surprise. Any strategy

management concept is quite complex, and without
seeing a big picture,
icture, the design and later implementation
cannot be a success. Im not pretending to be able to
answer these questions in detail and provide detailed
how-to
to information, but at least, my answers will point
them to the right direction and focus future research
res
job.
I was writing on the similar topic before,, but Id like to
return to the topic with more details and examples.
Those who have mastered
astered the scorecard skills will find
this article especially useful when it is necessary to share
the idea of a balanced/business scorecard with some new
member of the team.

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WHAT IS BALANCED/BUS
BALANCED/BUSINESS SCORECARD
ALL ABOUT?
Id say that it is all about stra
strategy. When you have a
problem, your resources are unlimited and there is no
competition, then you can solve it (at least try and get
some feedback about if your initial hypothesis worked or
not). When you have a set of interconnected problems (it
is a much larger scale than one single problem), and your
resources are limited, then solving the problem is not that
easy.
You need a strategy! The strategy is an answer to
why? (the reason of the problem) and how? (the
solution to the problem) question.
There are several problems with coming up with a
strategy:

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You need to come up with some ideas that could

possibly work out and solve the problem. Lets call it
strategy formulation.

You need to describe these ideas in some way

that is easy to understand, and to communicate. That is a
strategy description.

The primary goal of the Balanced Scorecard or any form

of the business scorecard is to help with the description of
a strategy. What about strategy formulation and
execution? Well, there is nothing new under the sun
There are some generic strategies (including ones
suggested in Porters works and by Kaplan and Norton,

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Finally, your company needs to follow the plan

and see if it works. Im sure you already guessed, it is a
strategy execution.

authors of The strategy focused organization. These

strategies can stimulate your business mind and help you
to come
me up with some insights, so business scorecards
can help with strategy formulation as well. On the other
hand, a well described strategy is much easier to execute,
but you will still need to test all business hypotheses and
most likely some of them will ffail, but having a good
framework certainly helps with strategy execution.

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WHERE TO BEGIN THE BUSINESS

USINESS SCORECARD
PROJECT?
As you have noticed I was not writing either about KPIs,
or about spreadsheets designed in Excel yet. I was writing
about the strategy. The biggest problem with all failed
scorecard projects is that they are focusing too much on
KPIs. Once a tremendous amount of time was spend on
obtaining required information, and companies failed to
make any business use of the scorecard.

Do you have this chain? We just provided a

simple description of the strategy. You can do this on the
paper, or use specialized software for strategy mapping
mapping.

THE STRATEGY MAP IS NOT THE END OF THE

STRATEGY DESCRIPTION PROCESS. ADD
SOME KPIS.
Having the strategy map is not the end of the process, its
just the beginning. We are about to finish the description
phase of the strategy. One more thing that we need is to

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The answer to the question: Where to begin the

business
scorecard
project is Start with
business
context!
The first thing you need to understand is how your top
level objectives (I assume those are some specific profit
growth goals) are linked down to the increase of the
customer value. In its turn, how you are going to provide
this customer value using your business systems and
finally, what information you need to learn before you are
ready to act.

find out in some way if we are on the right track with this
strategy or not. Ask yourself a question: how do you
know that the suggested strategy works? The simplest
way is to say: if I see growth in my profits, then it works.
Its true, but things are not that simple.
The growth of the profits depends on various aspects of
the strategy.
egy. For example, you might have an excellent
idea about increasing customer value, but one of your
business systems was not prepared well for this idea. As
result, the strategy failed (you have not seen an increase
in your profits). What was the reason for
fo the problem?

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Was the problem with the specific business system that it

failed to deliver expected results, or was the problem with
incorrect information that was learned about customers
buying priorities, or was there any other reason?

The solution to this is to have proper indicators

ndicators on each
level of the strategy. Im not calling them KPIs (Key
Performance Indicators) yet, because there are some
nuances. Youll need financial indicators, customer-related
customer
indicators, indicators for the business systems and
learning & growth indicators. If you are on this stage of
scorecard development then read Why
Why most KPIs dont
work and what to do about this.

ACTION IS THE MOST IMPORTANT

Finally, dont forget that by just describing your intentions
in a form of strategy nothing will happen. You need to
follow the strategy map and KPIs with an action plan.

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The example above demonstrates that we cannot

use financial indicators only, as they dont tell the whole
story of what happened and why. As a result, you wont
find the real reason for the problem and you wont solve
it.

When developing this plan make sure that it is aligned

with business objectives and measures that you have
found.

FINISHING AN OVERVIE
OVERVIEW WITH A GOOD
EXAMPLE
I hope the ideas above help with you having a clear view
of the framework and help to understand the concept
con
itself. Lets try to come up with a simple example to
illustrate what was discussed. Lets take this article and
its role in content strategy as an example.
On the top level there is a typical financial goal to
increase profits. We can possibly do thi
this in several ways:
increase revenue (sell more of our products) and cut the
costs.

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Whats the value of this article for customers? On one

hand the article answered some typical questions that we
have every day in our ticket system, on other hand, it
educates our prospects about what can be done about the
Balanced Scorecard. Some of those who read an article
could try the trial version of BSC Designer software, learn
all its benefits for strategy maps and scorecard design
and decide to buy it. Or these who already use some type
of scorecard
rd software, but struggle with KPIs, might buy

our KPI Best Practice Toolkit.

Toolkit But all this will happen only
if our prospects are able to find an article with search
engines.
In the Customers
stomers
objectives:

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we

have

these

two

Attract more prospects interested in the business

scorecards

Cut the costs of providing support by educating

existent customers via articles

How are we going to know that this approach is working?

perspective

KPI 1 : The number of sales referred by the

article;
KPI 2: The number of support tickets of a specific
type (where customers ask for BSC overview);

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Looks logical for now. What business systems do we need

to do this?
There should be some writing skills and
experience that we can share.

It is also important to have a business system

that can track back certain orders and find the original

Finally, before doing all this, what information do we need

to have about the customers? Obviously, we need to
understand what their problems are, because it makes

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referrer of the customer so that we can find the value of

KPI 1.

It is important to have a support system where

questions are not just answered, but are categoriz
categorized
accordingly to some rules so that we could find out the
value of KPI 2.

And the most important business system is one

that will promote a new article to the prospects.

sense writing about the real world problems, not about

invented ones. It means that we need to focus our
learning systems (CRMs and other means to listen to the
customer) on finding out what challenges our customers
face.

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Thats it. Scorecard is finished. We need to act

respectively. Once we know what customers main
challenges are, one can write an article. In some time, we
will see how many people can find this article with search
engines
es and how many times it was recommended for
reading by our support staff. In about 2-3
3 months we will

be able to estimate the ultimate impact of this article on

the sales and operational costs. This information can be
used then to correct the content strategy
stra
if needed.
Here is how the final map looks like. You will find this
project in Samples folder of the BSC Designer. You can
try BSC Designer right now.

What do you think about the Balanced Scorecard now? Did this article help to see the big picture of the concept? Was the
example useful?

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