The balanced score card is known for helping companies identify and implement the changes required to meet their business goals. Yet, for this tool to be effective, it must be linked to a well-defined corporate strategy. If a company’s business units aren’t aligned around the same core principles, it’s unlikely the score card will produce the results the organization desires.
Used properly, however, the balanced score card can address this issue, as well. Simply selecting the score card’s measures often can create the communication an organization needs to get its business units aligned. As a company continues to review its progress in these chosen areas, previously isolated leaders can quickly find themselves working together to meet shared strategic goals.
At Aliant, a Canadian telecommunications company, the balanced score card helped business leaders from four provincial organizations unify their goals after a merger combined the companies in 1999.
In the beginning, Aliant functioned like a holding company for four distinct lines of business, each with its own strategies, cultures and goals, said Jay Forbes, former Aliant CEO. To make the merger successful, the company needed to find a way to bring together these separate units.
“We needed to break down those barriers and create a degree of alignment, a sense of common purpose and concentrate the full might of the organization against a few strategic initiatives,” he said.
To help the business units identify the organization’s most critical goals, Aliant’s leaders called upon Paul Niven, Senalosa Group president, to implement the balanced score card in 2002.
In determining the measures the score card would track, the company’s leaders quickly identified the areas of consensus and the points of contention among the business units, Forbes said. Although the subsequent debate was robust, it eventually resulted in a list of strategic goals on which everyone could agree, he explained.
“The organization now understands what is important,” Forbes said. “So, the focus of the leadership team, the financial resources and the informational resources are all directed to the advancement of the strategic objectives encompassed by the balanced score card.”
Once these primary goals were identified, the company began to focus all its communications on its progress against the balanced score card objectives. Conversations within the executive branch, visits with leaders in the field and messages sent to employees consistently reflected the organization’s dedication to these strategic initiatives.
“It’s important to ingrain the balanced score card into the organization,” Forbes said. “It needs to be part of the machinery that drives the day-to-day operations of the business.”
By the time Forbes left the organization in 2006, this strategy had paid off. In his final year, the company achieved a fully integrated balanced score card, experiencing improved profitability, reduced churn, increased customer loyalty and much more.
Other organizations that hope to experience this kind of success should connect the balanced score card with as many processes and systems as they possibly can, Forbes said. It’s also critical for senior leadership to actively support the score card’s implementation — the CEO needs to be prepared to enact the changes the score card shows are necessary and be willing to reposition the company’s strategies based on the feedback the tool provides, he said.
“In the end, you’re dealing with the strategy of the organization and, ultimately, there is one person that’s going to be responsible for that,” Forbes said.
— Tegan Jones, email@example.comFiled under: Strategy