The basis of the second book of R. Kaplan and D. Norton “The Strategy - Focused Organization” (“Strategy-Oriented Organization”) formed the study, during which a series of interviews were conducted with the top management of companies that achieved success and used BSC. Analysis of the answers allowed us to identify three key concepts underlying the management of such companies:
Strategy: strategy is the main plan of the company;
Focus: strategy is always in focus;
Organization: mobilization of employees to work at a qualitatively new level, determined by the strategy.
Strategy-oriented organizations abandon traditional management systems and performance measurement and build a management system based on strategy. The basis of their success is in understanding the cause-and-effect relationships in the company's strategy, in the ability to identify key indicators that reflect strategic changes and to encourage the organization to focus on the implementation of the strategy.
Kaplan and Norton (the authors of the concept) identified five key principles for building an organization that can focus on strategy and achieve high results.
Stimulate change at the management level. To manage change, management must form a vision and strategy, determine the direction of change, know exactly where it leads the organization. Need to have a detailed plan. The critical part at this stage is to define a detailed plan or “strategy map”.
Translate strategy into functional terms. The BSC and the strategy map translate the company's strategy into terms that are understandable to the employees of the organization and according to which they can act. A critical part at this stage is the identification of key objectives, indicators, targets and initiatives necessary for managing the strategy.
Build organizations in accordance with the strategy. After the BSC is created at the top level of the organization, the system should be transferred to the functional units and support services. This will allow each department to understand what their contribution to the achievement of strategic goals.
Make the strategy a concern for every employee. While the strategy is formulated “in the rear”, its implementation is happening “on the front lines”. Communication and education are becoming critical for strategy execution. Matching incentives and personal goals with strategic goals is critical to success. Leading organizations also develop personalized BSCs to further link the personal development process of employees and the strategic management process.
Make the strategy a constantly working process. One of the key characteristics of the BSC is that the system allows the strategy to work continuously, and not just at the annual meeting to revise and adjust it. Communication BSC with information-analytical, planning and budget systems and control systems
knowledge is critical to the development of an organization that constantly works with strategy.
Kaplan and Norton consider these five principles to be central to the strategic success of organizations. The latest research conducted by Balanced Scorecard
Collaborative, confirmed the findings that those organizations that apply all five principles in practice are much more likely to succeed.
Balanced scorecard standards and software.
If you are convinced that your company needs to implement the BSC system, then inevitably there are questions of practical implementation: how to organize a project, what needs to be done and what should be avoided, with what information systems can you organize data collection and analysis? How to ensure the success of the project?
Kaplan and Norton with their colleagues in the BSC Collaborative, continuing to work on improving and popularizing their concept, provided consultants with something of a guide. The authors of the system have developed relevant standards, which are published on the BSC Collaborative website (www.bscol.com).
Despite the fact that during the development and implementation of the BSC system, software is not one of the main problems, today without it - nowhere, as collection, evaluation
and data analysis plays a big role. And although in practice applications for creating spreadsheets, such as Microsoft Excel, are sufficient for implementing BSC, more and more software companies are creating special software. For such products, there is a software certification program that supports the BSC methodology. A list of certified products can also be found on the BSC Collaborative website.
The choice of software for the implementation of BSC is quite rich: the 275-page research report of the Gartner Group “Balanced Scorecard Software Report” includes descriptions of software of this type
from 28 companies of various degrees of fame, including the offers of such major vendors as SAP, Oracle, Cognos and others. However, for the first practical acquaintance, the free option supporting the basic actions is quite suitable.with a Balanced Scorecard, for example, the English-language Dialog Strategy package from Dialog Software, www.dialogsoftware.com. In addition, the company offers two paid versions that have additional features and are focused on professional use.