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Tuesday, July 28, 2009

Avoid These 8 Classic Balanced Scorecard Pitfalls and Realise Your Strategy

The Balanced Scorecard approach was launched in the 1990s by founding fathers Kaplan and Norton. Their article measures that drive performance in Harvard Business Review (1992) received a lot of attention and led to the bestselling book the Balanced Scorecard: translating strategy into action (1996).

The Scorecard is now recognised as an indispensable instrument for clarifying, communicating and managing strategy across an organisation. It provides a framework for translating an abstract strategy into specific, concrete goals and indicators. The Balanced Scorecard focuses on aligning the goals of business units, teams and individual employees with the company's overall business strategy.

Many companies have gone through the process of introducing a scorecard. It's a good idea to do some research to get a feeling for your organisation's particular situation. This will help you avoid some of the classic pitfalls.

Here's a list of 8 typical mistakes you should avoid:

1. Senior management is not convinced and shows little commitment

2. The scorecard is developed by 'the happy few'

3. The internal/external project members have limited or only theoretical knowledge

4. The scorecard is only used by top management

5. The scorecard stays too long in the development stage before it's launched and used

6. There are not enough links to the strategy and planning processes

7. The content of the Balanced Scorecard is unrealistic

8. The scorecard is only used for remuneration purposes

The Balanced Scorecard is an important strategy execution tool. It helps organisations detect problem areas and making sure managers and employees focus their energy on the right things. Learn from others and build a best-in-class scorecard process in your organisation today.


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