Strategic management and the balanced scorecard

A strategy is only as good as its implementation. No matter how brilliant an organisation’s strategies are, success will only be realised if there is successful implementation. Once an organisation has come up with a vision and overall strategic direction, the next step is to translate these strategies into operational objectives and plans. These objectives ought to be SMART in that they must be specific, measurable, achievable, realistic and time-bound. In line with the concept of the organisation as a collection of resources and functions, it is important to have all these functions aligned to the overall strategies. The balanced scorecard plays this role by enabling alignment and synergy between individual functions and the overall organisational goal. This means that the concepts of strategic synergy and alignment are at the root of an effective implementation of the BSC.

By focusing the attention of managers to every unit within the organisation, the balanced scorecard plays an important role. The role is: to ensure that a holistic view of the organisation is assumed before implementation is started on any of the functions. It facilitates a detailed reflection of the overall organisational goals where the feasibility of various measures is determined before the overall strategies are adopted and implemented. The BSC therefore helps in breaking down the overall strategies for purposes of verifying practicality as well as identifying possible weaknesses in the strategies that would warrant modifications. The BSC therefore makes the strategic planning process more explicit and therefore more likely to lead to success.

The BSC can also be said to be very important in facilitation of strategic alignment. Where departments or functions within the organisation are managed independently in terms of planning and implementation, excellence can be achieved but little success in strategic alignment. Different functions are strategically aligned when each of them contribute to achievement of the same goals. The outcome of each function is therefore likely to reinforce the outcome of other functions. This is called synergy: where the whole is greater than the sum of individual contributions in each department. The balanced scorecard facilitates this synergy by putting each department or function in context: describing the role they are expected to play in the bigger plan and the need for coordination with other departments.

The balanced scorecard can also be seen as a tool for enhanced organisational cohesion. Any strategic manager adopting the BSC would want to consider that every function within the organisation needs to be utilised in a manner that helps in achieving the overall goal. With this consideration, employees will always anticipate that any change in their departments could warrant a change in other departments. This provides the incentive for timely communication of changes and a timely review of procedures in related functions. The keenness with which these reviews are conducted contributes to overall cohesion. Organisations that are innovation-oriented are therefore able to thoroughly analyse the implication of targeted changes and ensure that all modifications are factored in. This helps to facilitate effectiveness and sustainability. This makes the balanced scorecard very important for effective strategic management in any organisation.