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    An enterprise-level Balanced Scorecard is owned by the senior team (which is responsible for strategy). To create a high level Scorecard and formulate a robust plan for strategy implementation, the initiative needs to take into consideration the people-related elements that need to be addressed at the very outset. This article, structured in a Q & A format, answers the question ‘What is the role of the HR function in creating an enterprise-level Balanced Scorecard?’

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    In this article, author, management consultant and Balanced Scorecard expert Paul Niven sounds a strong note of caution against overloading Balanced Scorecards with Key Performance Indicators (KPIs) and Strategic Objectives.

    Once early adopters of the Balanced Scorecard started seeing results, organizations were convinced that more objectives and measures would make performance management even more effective. This led to overcrowded Strategy Maps and Balanced Scorecard Maps that failed to offer a coherent picture of strategy and strategy execution.

    The author points out that organizations experience an overwhelming temptation to factor in every objective and measure. However, more does not mean better. According to the author, such an approach violates the number one rule of strategy and strategy execution – focus. Instead, the author advises organizations to focus on quality rather than quantity. By focusing on what is really essential, organizations can create a set of objectives and measures that represents what is unique to them. This creates organization-wide clarity and makes it possible to communicate strategy powerfully, thus paving the way for effective performance management.

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    In this entertaining article, author, management consultant and Balanced Scorecard expert Paul Niven takes a closer look at movie making to borrow lessons for making management meetings better.

    Ultimately, movies are all about stories and how they progress, scene by scene. While volumes have been written on creating winning scenes, expert screenwriters have found a way to keep it very simple…and very effective.

    Just as scenes can drive a movie’s progression, meetings can drive an organization’s performance management. Two of the most critical shortcomings of management meetings are that they lack constructive difference of opinions and typically have no context to guide the discussions on performance. The author focuses on these issues and shows how asking and answering three simple questions makes management meetings highly effective. The author then illustrates this approach by applying it to a typical meeting for reviewing Balanced Scorecard results. Adopting such an approach to all management meetings, the author promises, can be highly rewarding.

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    In this article – the last of a four part series – author, management consultant and Balanced Scorecard expert Paul Niven discusses the need for a Learning and Growth Perspective in a Balanced Scorecard. The other three parts focus on the Financial, Customer and Internal Process perspectives.

    The author begins by focusing on the need for a Learning and Growth Perspective. Organizations that seek to create a culture of performance management typically wish to create flawless processes, fulfill customer expectations, and create value for financial stakeholders. To achieve these goals, organizations need a strong foundation. People, the author argues, provide this foundation. The knowledge and talents of people are the intangibles that account for upward of 80 per cent of value creation in modern organizations. In the ultimate analysis, committed and capable people dictate the success or failure of an organization.

    The author then proceeds to examine the three focus areas for developing measures under the Learning and Growth perspective. The three areas are 1) Human Capital, 2) Information Capital, and 3) Organizational Capital. Together, they bring into focus an organization’s skills, knowledge, the collective capability to leverage information, and the ability to put heart and mind into the work.

    When companies monitor these three areas of capital under the Learning and Growth perspective, they will build a foundation for excellence in performance, ensuring success today and tomorrow.  

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    In this article – the third of a four part series – author, management consultant and Balanced Scorecard expert Paul Niven discusses the need for an Internal Process Perspective in a Balanced Scorecard. The other three parts focus on the Financial, Customer and Learning and Growth perspectives.

    The author begins by pointing out that, with the Internal Process perspective, the focus of performance management shifts from the “what” of value creation to the “how” of value creation. Specifically, the Internal Process perspective describes how an organization will achieve outcomes envisioned in the Customer and Financial perspectives.

    The author points out that the Internal Process perspective tends to generate the highest number of performance measures because every organization relies on numerous processes. Hence, the selection of Internal Process measures is critical for putting together elements of strategy into a unified whole.

    Paul Niven then discusses a framework of four process ‘clusters’ that organizations typically employ to narrow down measures in the Internal Process perspective to a manageable number. The four clusters are Operations Management, Customer Management, Innovation, and Regulatory and Social. 

    When companies identify and monitor measures in these four clusters, they ensure that Internal Processes actually result in satisfied and loyal customers and create value for shareholders. 

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    In this article – the second of a four part series – author, management consultant and Balanced Scorecard expert Paul Niven discusses the need for a Customer Perspective in a Balanced Scorecard. “The remaining two parts focus on the Internal Process, and Learning and Growth perspectives.” 

    The author begins by discussing the explosion in the options available for a consumer’s choice. A century and more ago, producers of goods and services enjoyed great power over customers who had extremely limited choices in the market. Today, the scenario has reversed, with customers exerting far greater power in the purchase transaction. Technologies like the Internet increase customer knowledge and insight and deliver greater bargaining power to customers. This makes it absolutely vital for companies to have a well-defined Customer Perspective.

    The author then moves to explain the three questions companies must answer when developing a Customer Perspective. These questions are: 1) Who are your customers?, 2) What do those customers expect or demand from you?, and 3) What is your value proposition in serving your customers?

    Answers to these questions help companies understand the target segments, the aspects that motivate customers, and decide whether they will pursue one of the three traditional value propositions of product leadership or customer intimacy or operational excellence. Here, the author advises that companies need to offer all three – innovation, outstanding customer care and flawless execution – because of today’s hyper-competitive environment. Only then can companies meet customer expectations and succeed at performance management that translates into leadership in the marketplace and customer minds.  

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    In this article – the first of a four part series – author, management consultant and Balanced Scorecard expert Paul Niven discusses the need for a Financial Perspective in a Balanced Scorecard. The other three parts focus on the Customer, Internal Process and Learning and Growth perspectives.

    Typically, the mission and vision statements of organizations do not refer to their financial aspirations. However, companies need to have a Financial Perspective so that they can answer shareholders who require a return on their investment.

    Companies must ensure that a focus on customers also leads to improved financial results. Financial performance also enables investment in people, processes and technology so that customers can be served successfully.

    So, how do companies know if they are performing well financially? The Financial perspective of the Balanced Scorecard gauges financial success from the perspective of a company’s shareholders and gives the company the tools to track success over time.

    The author then provides a look inside the Financial Perspective, highlighting the critical elements that companies focus on. The foremost measure is value created for shareholders. Performance management focused on value creation for stakeholders leads to measures like revenue growth, maximizing productivity, lowering costs and asset utilization. In essence, the Financial Perspective focuses on objectives and measures relating to a company’s effectiveness in delivering shareholder value. Here, the author cautions management that they must take a balanced view of all the objectives and measures, even if they are competing measures. Only then can companies succeed at performance management, create the value shareholders demand, focus on customers, execute their strategy and achieve their vision.  

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    In this article, the authors – experts in the field of strategic analysis, strategic planning and strategic initiatives – examine the relevance of the Balanced Scorecard methodology for undertaking a strategic assessment of higher education.

    The authors begin by pointing out that accountability in higher education has become a challenging issue since the 1990s. Increasingly, institutions of higher learning have been required to provide performance indicators – empirical evidence of their value – to state, alumni, prospective student, and other external stakeholders. State commissions of higher education have developed “report cards” that grade colleges and universities according to their level of performance in a variety of categories. Surveys in the popular press and on the Internet rank institutions according to criteria such as retention and graduation rates, resources, and academic reputation. However, such efforts have not dramatically changed the operational performance of most major universities.

    According to the authors, the real test for institutions is to create meaningful systems for strategic organizational assessment and then use that information in internal policy and resource allocation decisions. The authors discuss the importance of performance indicators in internal assessment and in providing substantive information for strategic decision making and performance management.

    The authors make important observations on the key differences between external accountability and internal assessment. Then, they go on to discuss the Balanced Scorecard concept, focusing on how it provides an integrated perspective on goals, targets and measures of progress. Using real-life examples, the article shows how an academic scorecard can be constructed, taking into account the unique challenges posed by higher education. The article also shows how strategic analysis can be linked to the scorecard model. By doing so, higher education institutions can move performance management discussions from an externally driven concern for image and rankings to an internally driven concern for improved institutional effectiveness.

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    In this article, author, management consultant and Balanced Scorecard expert Paul Niven focuses on the enormous challenges that organizations face when mergers happen, contending with aspects like divergent cultures, conflicting sales channels and mismatched strategies.

    Using the case of Aliant, a Canadian information and communications technology company formed as the merger of four telecommunications companies, each with more than a hundred years of operating experience, the author shows how the CEO and his executive team used the opportunity to introduce the Balanced Scorecard as representing a new way at Aliant. The team explained that the Scorecard would supplement traditional financial measures with the drivers of future success and give every employee the opportunity to contribute to the company’s triumphs. Using a multi-pronged communication and training strategy, the leadership also ensured that employees across levels understood the Scorecard. Then, leadership introduced the new objectives and measures that would gauge the company’s strategic progress. Here, the leadership was careful to focus on a select few objectives that were built into the Strategy Map. The leadership also went one step further and creating a measure support team, which documented the measures, used a data dictionary, tested the reliability of measures, and proposed processes for data collection and suggested targets. Over a 3-year and 5-year period, Aliant aimed to achieve best-in-class and world-class performance, respectively.

    All this has played a significant role in creating the excellent results that Aliant has notched up rapidly, be it a measure of net income, earnings per share or share price. It has also played a key role in positively impacting the indicator of employee knowledge of company vision and strategy within the Employee Learning and Growth perspective, pointing to a shift towards a culture of performance, accountability, collaboration, information sharing and a focus on strategy – paving the way for a highly successful merger.

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    In this article, author, management consultant and Balanced Scorecard expert Paul Niven points out that measurement is at the heart of all organizational activity and a variety of performance measures are used to gauge success. However, measurement is in a deficient state today and is even among the weakest areas of management.  

    The article examines why this is so and finds the answers in the three challenges that organizations face – the limitations of financial measures, the rise of intangible assets, and the difficulty of strategy execution.

    Financial measures are tantamount to driving our car by the rearview mirror because they provide a great view of where the organization has been but little guidance for the road ahead. Thus, what organizations need is a performance measurement system that balances the historical accuracy and integrity of financial measures with the drivers of future financial success.

    Secondly, in the world of business, its things like employee knowledge, databases full of rich information, and cultures of innovation and change that really drive value. Traditional financial measures have a very difficult time tracking these new intangible assets. Today’s situation calls for a new performance measurement system that sheds light on the value of intangibles and allows us to predict and drive future economic success.

    Finally, while most organizations are capable of developing the right strategies, getting strategy execution right continues to be the greatest challenge. Organizations need to understand the enablers of strategy implementation and be able to set them in motion to realize the results they seek.

    The Balanced Scorecard, with its Strategy Map and four strategic perspectives, is a framework that helps organizations successfully respond to these challenges. In the article, the author shows how and uses a case example to illustrate the use of the Balanced Scorecard for driving focus and alignment.

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