The following is a guest post by Aleksey Savkin. His bio is at the end of the article.
It is a common problem in any business. Employees know how to do their job, but they don’t have a global view of the company’s goals. This results in misunderstandings, loss of valuable resources and time, and an inability to meet requirements. Managers tend to say, “If I were you, I would do it better!”
The problem here is not with the employee’s skills and qualifications, but with the ability of translating company strategic objectives to the lower levels. What business owners think is obvious is a “dark matter” for line level employees.
How to align strategy to actions
When we talk about some intellectual activity such as marketing, then the problem is getting even worst as we have to deal with something that cannot be seen or touched. In this case, managers face more problems translating their ideas to employees.
- Back in the 1990s this problem was addressed by two professors, Norton and Kaplan, and the result of their research was business performance management framework called the Balanced Scorecard. They suggested some key ideas that made the Balanced Scorecard a new buzz-word for business performance management professionals.
One of the most important ideas was that one needs to link strategic objectives to their actions. For example, a Balanced Scorecard supposed to help us in linking the strategic objectives of the company to the marketing activities in social media. If we could achieve this goal we would be able to make the process of marketing more transparent. In other words, line-level employee would be able to answer questions like “Why is he or she acting in this very way?” and “How will it help our company to achieve its goals?”
Facts tell more about the Balanced Scorecard concept, for example 80% of companies that have implemented this concept have reported improvement in operating performance. Most Fortune 1000 companies have implemented this concept in some way. But this method is not only for international companies. I saw this concept used in small businesses and even by individual persons to track their personal growth.
Your strategy map
Let’s see how the magic might happen with a Balanced Scorecard. Before doing any marketing we need to define our goals. I’m not talking about short-term goals of marketing, but about long-term goals of the business. In a Balanced Scorecard we call them strategic goals.
- Where do you want your business to be tomorrow? How do you plan to achieve it?
You need to formalize your thoughts on the paper making a big picture of your business. Put down your strategic goals and priorities; create a map of your business’ journey. In a Balanced Scorecard it is called a Strategy Map.
Pay attention, I have not mentioned any marketing activity yet. It’s because we need to understand the big picture first and only then move to the details.
Your balanced strategy
Another unique feature of the Balanced Scorecard method is that it forces us to think in a balanced way. Let me explain. If your business objective is to “Earn 20% more in the next year,” then you will probably do so, but what about your customers? You might earn a little bit more in the next year, but lose your customer database. Or you might invest everything in the marketing, but in a few years you will find out that your product is out of the date because you have not invested in research and development.
- The Balanced Scorecard concept helps to keep a balance. Four perspectives are suggested by authors of the concept: Finance, Customers, Internal Business Processes, Education and Growth.
When designing your strategy map and researching your strategic goals you need to think about all these 4 perspectives of the business. Review your strategy map you created on the previous step, and make sure you have your strategic objectives aligned within these 4 major perspectives.
Linking strategy to actions
We have our strategic objectives. Our strategy is balanced as we have objectives in all 4 major perspectives of the Balanced Scorecard. What’s next? We have plan, but in order to see any improvement we need to act. There should be an action plan for all strategic objectives on your strategy map.
Here is where you could introduce something like “Using social media marketing toimprove brand awareness.” You can add more details; specify who is responsible for this activity and what exactly you plan to do.
What is really important is how you are going to measure your progress in this area. How could you tell if the brand awareness has improved or not? You can run surveys or you can count a number of “likes” on your Facebook
page or you can check out the number of qualified leads you now have from social media. This part of the Balanced Scorecard is called Key Performance Indicator (KPI).
- The strategy map tells you where you need to go. The action plan tells you what exactly you need to do. And KPIs tell you if you are on the right track.
Improvement is not just on the paper
For some time it might look like that we have introduced a lot of bureaucracy without getting any tangible results. In practice, people stop being skeptical after seeing results.
We were providing Balanced Scorecard software to one company that was working actively on their marketing in social media. The marketing department was taking resources from the company with high promises, but giving out low results.
Surprising changes were seen after partial implementation of the Balanced Scorecard.
- About 40% of social media activity was stopped, because no one could clearly explain why the company had been doing it before.
- 23% of activities showed improvement in performance. Managers started understanding the ultimate goal of their daily job and changed the way they were acting without even having a direct order from top managers.
- Surveys that the company did regularly showed that employees are now more engaged as the management process became more transparent.
I saw Balanced Scorecards that helped many companies to understand their business better and as a result improve their performance. I do recommend any business to take a Balanced Scorecard framework and try it.
Aleksey Savkin is a founder of AKS-Labs, vendor of BSC Designer software and tools for software engineers. His areas of expertise are remote team management, Balanced Scorecard, KPIs, business performance management, general info-business development and marketing. Aleksey is the author of a number of articles and books on Balanced Scorecard. He runs Balanced Scorecard seminars in the Moscow Business School (MBS).