One of the things you don’t usually find on a balanced scorecard, tool vendor qualification can really help an organization save time choosing business partners, as well as being able to work with them more consistently. The Balanced Scorecard is a strategic management approach that emphasizes getting the big, big picture so you can make better important decisions. By using this framework, organizations can effectively target their goals while being aware of the many aspects of overall performance. The concept is not new and has been applied to many parts of the organizational effort, from performance management to planning and maintenance.
Basically, the balanced scorecard consists of four integrated perspectives: financial, marketing, development, and operational. In the original terminology of proponents Kaplan and Norton, these were the financial, customer, learning and growth, and internal business process perspectives. As can be seen, these cover all the activities of an organization and, therefore, can rightly claim that they can measure and integrate all of them.
In an ideal implementation, the scorecard would be built from the top down. That is, everything would start with a mission or vision for the entire organization, which is a long-term goal. Then, in accordance with this vision, smaller and smaller goals and objectives could be asserted as necessary. Each department, subgroup, team, and employee would ultimately be tasked with meeting a particular goal so that, together, they can move toward achieving the vision. In fact, this would ensure unity within the organization, since everyone would be working towards the same goal. Consistency would also be greatly improved as, ideally, everyone would know why they need to do what they’ve been assigned to do.
Even in less-than-ideal implementations where, to some degree, a bottom-up approach must also be used, the Balanced Scorecard is a powerful tool. It is useful, on the one hand, to bring clarity to an organization, by forcing management to decide clearly on a set of objectives, and then to ensure that everyone in the organization is informed.
Another reason the balanced scorecard is useful is that it provides an effective way to monitor these goals from all perspectives. Performance can then be measured using relevant metrics against an ideal or desired result. Progress towards these objectives can be determined, and whether or not there is significant progress will be correlated with performance. This is in contrast to some of the confusing and ambiguous performance tracking and management policies that have plagued many organizations since the dawn of mankind.
Using the Balanced Scorecard, tool vendor selection and relationships can be greatly improved. In the same way, a complete picture of the past performance of these providers can be determined using a scorecard. Smooth working relationships can then be maintained by managing the performance of the appropriate department, again using the balanced scorecard concept or methodology. This powerful and flexible tool should be in the arsenal of any savvy strategic manager, as it can clear things up and make them easier to track and improve.