Friday, January 31, 2020
Evaluaring Strategies Essay Example for Free
Evaluaring Strategies Essay The final results of any corporation can be measured in financial terms (profit, revenue growth, etc.) The authors of the HBR article on the use of a balanced scorecard recommend that the scorecard be used supplement these traditional financial metrics with performance measurement criteria relating to the perspectives of customers, internal business processes and learning and growth (Kaplan Norton, 1996). Since it is not possible to execute what you cannot measure, the balanced scorecard is a strategic management system that helps to measure and focus a companys strategy. The scorecard was devised to complement financial measures. It enables companies to track financial results while, at the same time, monitor progress of the mechanisms that are needed future growth. The problem with traditional management systems is that there are not able to link a companys long-term strategy with its short-term actions. So while financial measures are essential on the short-term, with the scorecard approach, they do not become the sole indicators of a companyÃ¢â¬â¢s progress. Ã The scorecard introduces four new management processes that provide an avenue for the linkage between long-term strategic objectives and short-term actions. These are: Translating the vision Communicating and linking Business planning and Feedback and learning Translating the vision This process helps managers translate the organizations vision statements and strategy statements into an integrated set of objectives and measures that illustrate what drives long-term success. This process is necessary because some of the generalized statements of purpose (like Ã¢â¬Å"best in classÃ¢â¬ , Ã¢â¬Å"empowered organizationÃ¢â¬ ) defined by top management may not mean much in an operational sense to those tactical managers and operatives who need to carry out the mission in their day-to-day activities. Communicating and linking This process allows managers communicate their strategy upwards (to their superiors) and downwards (to their reports/subordinates) link this strategy to departmental and individual objectives. Since departments are typically evaluated by their financial performance, and individual incentives are tied to short-term financial goals, this process ensures that all levels of the organization understand the long-term strategy and aligns both departmental and individual objectives with it. Business planning Business planning is that process which ensures that business and financial plans of the organization are integrated. The prevalent occurrence of change programs in todayÃ¢â¬â¢s organization makes it difficult for managers to integrate these initiatives with the strategic goal. However, when the scorecard approach is applied towards allocating resources and setting priorities for meeting the change initiatives, such programs can be coordinated in such a way that they line up with the overall strategic goal. Feedback and learning The authors postulate that this process gives companies the capacity for strategic learning. The scorecard enables companies to modify strategies to reflect real-time learning by evaluating strategy in the light of recent performance. By translating the vision, executives can come to such consensus as to what services and products will best stimulate growth or what customer segments to place emphasis on. The specifics of this translation will help the employees realize the vision. Applying the process of communicating and linking may result in managers understanding how business re-engineering initiatives may lead to fulfilling the goal of on-time delivery to clients. Business planning processes can include the integration of the results of budget sessions with those of strategic planning sessions and ensuring that the budget supports the strategy. Feedback and learning processes give the organization the ability to produce Chris ArgyllÃ¢â¬â¢s concept of Ã¢â¬Å"double-loop learningÃ¢â¬ .Ã The concept suggests that cause-and-effect relationships can be identified when linkages are measured based on results from in the first 3 processes (Translating the vision, Communicating and linking, Business planning). Such relationships could result in findings such as that there are correlations between employees morale and customer satisfaction. In summary, it is important to control the short-term measures of financial performance of a company as well as longer-term parameters as learning and growth, internal business processes, and customer satisfaction for proper alignment between the overall strategy of the organization with its subsequent realization. Where such introspection is actively pursued by the organization and it results in projects like business re-engineering, marketing strategies and increased customer satisfaction, all in alignment with the organizational strategy, the end-result will cause a synergy that leads to improved financial results. REFERENCE Kaplan, R. S., Norton, D. P., (1996). Using the Balanced Scorecard as a Strategic Management System. Harvard Business Review, 74(1).