Balanced score card for strategy evaluation
- 1. BALANCED SCORE CARD FOR STRATEGY EVALUATION Submitted by, Jibin Paulose
- 2. WHAT IS A BALANCED SCORECARD? The Balanced Scorecard is a strategic planning and management system used to align business activities to the vision and strategy of the organization by monitoring performance against strategic goals.
- 3. BALANCED SCORECARD CONCEPT Was first published in 1992 by Kaplan and Norton, a book followed in 1996. Traditional performance measurement that only focus on external accounting data are obsolete. The approach is to provide 'balance' to the financial perspective.
- 4. WHY USE A BALANCED SCORECARD? Improve organizational performance by measuring of management functions. Increase focus on strategy and results. Align organization strategy with workers on a day-to-day basis. Focus on the drivers key to future performance. Improve communication of the organization’sVision and Strategy. Prioritize Projects / Initiatives.
- 5. STRATEGIC MANAGEMENT Strategic management is the continuous planning, monitoring, analysis and assessment of all that is necessary for an organization to meet its goals and objectives.
- 6. STRATEGY EVALUATION Finding out what is going on is what evaluation is all about. Strategy evaluation means collecting information about how well the strategic plan is progressing. Strategic Evaluation is defined as the process of determining the effectiveness of a given strategy in achieving the organizational objectives and taking corrective action wherever required.
- 7. IMPORTANCE OF STRATEGY EVALUATION Strategy Evaluation helps to keep a check on the validity of a strategic choice. Strategy Evaluation can help to assess whether decisions match the intended strategy requirements. Strategy Evaluation, through its process of control, feedback, rewards and review, helps in a successful culmination of the Strategic Management process. In the absence of such evaluation process, managers would not know explicitly how to exercise such discretion. The process of Strategic Evaluation provides a considerable amount of information and experience to strategists that can be useful in new strategic planning.
- 8. BALANCED SCORECARD FOR STRATEGY EVALUATION It is a process that allows firms to evaluate strategies from four key perspectives: financial performance, customer knowledge, internal business processes and learning and growth. It answers the following questions: How well is the firm continually improving & creating values such as innovation, product quality? How well is the firm sustaining & even improving upon its core competencies & competitive advantage? How satisfied are the firm’s customers?
- 14. BALANCED SCORECARD BENEFITS Helps align key performance measures with strategy at all levels of an organization The methodology facilitates communication and understanding of business goals and strategies at all levels of an organization Strategic initiatives that follow "best practices" methodologies that cascade through the entire organization Transforms an organization’s mission statement and strategic plan from a passive document into the "marching orders" for the organization on a daily basis. It enables executives to truly execute their strategies by identifying what should be done and measured.