Executing a business strategy requires more than financial performance. This is because the lag time entailed in changing a financial result makes it useful more as a long-term success measure, than as a guide for day-to-day action. For this reason, leaders and strategic planners need to identify and measure additional, more actionable factors leading to positive financial outcomes. These additional factors typically include not only 'tangibles', such as operational and business process performance, but also 'intangibles', such as employee, customer, and market success factors that affect tangible results. Taken together, the tangible and intangible success factors identified for a strategy create a consensus cause-and-effect picture of how the organization intends to execute strategy and achieve results. Moreover, when leaders limit the number of strategic success measures to less than 20 or so, this cause-and-effect picture provides a valuable tool for communicating the strategy within the organization, planning and tracking strategy execution, and testing beliefs about the causes of success. Wolf Management Consultants will assist the leadership team in identifying, implementing, and communicating their strategic measures and effectively applying them in performance planning, tracking, and assessment of progress.
The overall Strategic Scorecarding Process for accomplishing this is summarized in the diagram below:
The Strategic Scorecarding Process
The goal of the Plan phase is to agree upon the strategy and create a strategy map depicting success factors critical to strategy execution. This phase is complete when the strategy map has reviewed with stakeholders and operational definitions have been developed for each success factor. In the Do phase, the executive team implements its performance plans and designs any new measures needed to track strategy execution. Baselines and targets are also established for any new measures. The Check phase entails collecting data to update measures, assessing performance relative to targets, and identifying gaps.
In the Act phase, executive management takes steps to close gaps, and more importantly, lock in any gains that have been realized during the performance cycle just completed.
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