Hi, I'm Jay Gulick, director of BNET. Today, I'm going totalk about implementing the balanced scorecard. If you're not familiar with thebalanced scorecard, you can check out another video I did on understanding thebalanced scorecard. But I'm going to give you a quick recap today.
Basically, Robert Kaplan and David Norton, two really smartguys came up with the concept of balanced scorecard in 1992, and what they saidwas, from a strategic standpoint, companies cannot and no longer afford it,just look at things in terms of financial terms. You also got to think aboutyour customer. How do you add value, your internal business processes, so whatdo you excel at as a company, whether it is manufacturing, or new productintroduction, and finally learning and growth. How you create a climate that isadaptable to change and can foster innovation which is what's necessary intoday's economy?
Basically what Kaplan and Norton said was, there are 5different principles when you are implementing the balanced scorecard. Thefirst one that they talked about was mobilizing change through executiveleadership. You know, this is a major undertaking in a company that requiresthe buying of the executive management team because this is essentially a changemanagement exercise. You have to change the way your culture thinks aboutstrategy. The second thing that they talked about was translating the strategyinto operational terms. That really gets back to these issues right here. Sohow do you look at your company strategically from the standpoint of thingsother than just the financial objectives? The third thing is, lining yourCompany or organization with your strategy. So making sure that everybody inthe organization understands their role in the strategic process. The fourththing they talked about was, making strategy everybody's everyday job. Well,this is what Kaplan and Norton talked about making things like compensationtied directly to the strategy of the organization. How does, what an individualdoes, and an individual contributes to the company reflect the strategy of theCompany overall? The fifth thing that they talked about was making strategy acontinual process. So in other words, strategy is not something that is talkedabout one time of your at budgeting and locked up and not addressed again.Given the marketplace demands, strategy is something that needs to be revisitedon a regular basis by all the people, all the stakeholders in the Company whoimpact it.
So implementing the balanced scorecard is by no means aneasy undertaking. It requires a lot of commitment from the executive managementand everybody within the organization. But the bottomline is it is really agreat way to look at the management in measurement of the company from itsstrategic perspective.
