The methodology enables organizations to grow from four perspectives. Learn more about the BSC and how it can help your company evolve.
What is the Balanced Scorecard?
In 1992, Harvard professors David Norton and Robert Kaplan introduced a new strategic management model: the Balanced Scorecard or BSC. The idea was to demonstrate a new way of measuring results and, at the same time, ensure that strategies could be defined and plans could be made without being limited solely to financial results.
According to David Norton, in recent years, the BSC has become an organizational communication tool , since its use ensures that everyone knows the company's strategy. “ Today, organizations have very complex structures. Their hierarchies are not clearly defined, activities are very interrelated and there is no categorical division of responsibilities. That's where the Balanced Scorecard comes in. It allows you to communicate the strategy, in a unique way, to thousands of people,” he explained.
Once all employees know the company's growth strategy, the vp business development email lists company's goals become clearer. Consequently, each employee becomes able to contribute to the organization's success.
But communication alone is not enough to boost a company. Before starting organizational communication or while it is developing, it is important for the entrepreneur to know that the BSC is carried out from four perspectives. Check out what they are and how they can help your company grow.
1- Financial Perspective
The financial perspective indicates whether the organization's strategy, implementation, and execution are contributing to the company's financial improvement. In this case, success can be measured based on profitability, organizational growth, and increased shareholder value.
Initially, it is essential to create an action plan, which will define the objectives that are intended to be achieved in the long term. It is also very important to reflect on the vision that the company wants to convey to shareholders and what is actually being conveyed.
After analyzing the results, it will be possible to determine whether or not they are satisfactory. If they are not, the problems may be the result of poor execution and implementation or the definition of strategies.
2- Customer Perspective
From the customer's perspective, the company's market share is assessed and whether customers are satisfied with what is offered. To obtain a good result, the organization must identify its stakeholders and define the indicators that will be evaluated. For the authors, some of the points that should be analyzed are:
– market share: the company must know the proportion of sales in relation to the number of customers, taking into account the market in which it operates. It must also know how many units are sold and how much capital is being invested;
– customer retention: how many customers the company has;
– customer acquisition: how many consumers were acquired in a given period of time;
– customer satisfaction: what is the level of satisfaction taking into account certain criteria;
– profitability: measurement of the profit the company is achieving
3- Internal Processes Perspective
The internal processes perspective consists of identifying and mapping the processes that are essential to achieving the objectives defined by the company in the action plan. The focus here is on the processes that add value to the products or services offered, that create value for investors and that guarantee the attraction and acquisition of customers.
Taking into account the Balanced Scorecard, the recommendation is that executives define a complete value chain of internal procedures, starting with the innovation process. This makes it possible to identify current and future needs. Next, operational processes are defined to ensure improvements in cost, quality and response time. The process ends with after-sales, which is essential for building the company's reputation. This is the part of the process that includes warranties, repairs, returns and effective communication with customers.
4- Learning and Growth Perspective
The learning and growth perspective is responsible for providing a basis for achieving the other perspectives. This is done in the medium and long term, through investments in equipment, research and development of new products and services and in training human resources.
Thorough research must be carried out to verify which financial resources can be used to develop the learning and growth of internal employees.
Infrastructure goals and measures are also important, and there should always be a question regarding the company's capacity for growth and improvement. Important indicators for measuring the success of this perspective are employee turnover; engagement, training, development and team satisfaction.
