Blog 40: Balanced scorecard, a strategy measurement system

In Blog 39, we learned that even the best strategies fail without proper execution. Companies that executed well shared 17 common traits.

Now, moving to the next logical question; how do we measure the effectiveness of a long term strategy?

According to HBR, Balanced scorecard is a strategy measurement system. This system is able to breakdown a long-term strategy into measurable sections. An imbalanced scorecard will be a red flag for the management.

The balanced scorecard, has four sections: Financial, Customer, Learning and Growth, and Internal Business Processes.

Source: Book - HBR’s 10 Must Reads on strategy

Highlights about the balanced scorecard:

• Translating the vision

  • The scorecard forces managers to decide metrics (they will use to operationalise the company vision).

• Communicating and linking

  • The scorecard is shared up and down the organisational chart.

  • Overarching strategies are split into smaller objectives, measures and targets.

  • Tying these targets to individual performance yields ‘personal scorecards’.

  • Thus, employees know how their own productivity supports the strategy.

• Business planning

  • Balanced scorecard forces companies to ensure the financial budgets do support strategic goals.

• Feedback and learning

  • Information can be fed back into the scorecard. Information such as: feedback about products and services, new learnings about key internal processes, technological discoveries and etc.

Jump to blog 100 to refer to the overall product management mind map.

Source: Book - HBR’s 10 Must Reads on strategy

All the best! 😊