Balanced Scorecard
Innovation Alphabet
Balanced Scorecard
in a nutshell
In business, as in life, you need balance. The Balanced Scorecard is a holistic tool for strategic management. It offers, in fact, the possibility of assessing corporate performance in its wholeness. An overview that embraces four perspectives: the business/financial side, customers and stakeholders, internal processes, and learning and growth.
Application Fields
• Customer care: Since the value of a company no longer depends solely on profit, but also on customer perception, it is inevitable to strengthen customer care. Regular consumers may even become the most important brand promoters. After all, the concept of the Balanced Scorecard is that improvement in one area will inevitably reflect on the others.
• Strategy: A balanced evaluation form helps outline the path the company is on, identifying the value pieces that make up that path. Holistic performance evaluation, by considering aspects that are usually overlooked, pushes for improvement in terms of strategy, for a planning process that keeps all the pieces connected between the various business components.
• Training: One of the cornerstones of business success is undoubtedly the innovation and learning pillar. Consequently, constant and sustained staff training is something to focus on, starting with the HR department.
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Industries
• Balanced Scorecard in the IT and technology industry
ECI is an American company that provides end-to-end technology solutions for the financial industry. With the aim of providing services that could result in attracting new customers, ECI adopted a strategic management system. The decision was related to the choice of having to derive data and information not only related to classical economic, financial, and capital aspects, but also outside the company. The tool led to the achievement of the initial purpose.
• Balanced Scorecard in the research industry
The Royal Botanic Garden Edinburgh is a major scientific research organization in the field of botany that operates internationally. The Center first adopted the Balanced Scorecard in 2004. Resulting in the development of an optimal cost calculation system and improvement of existing performance management.
• Balanced Scorecard in the healthcare industry
Sunnybrook Health Science Centre is a Canadian company that began as a hospital for war veterans and has now grown into a full-fledged healthcare institution. It boasts an affiliation with the University of Toronto, with which, for the 2018-2021 strategic plan, it used a balanced evaluation form to achieve four macro-objectives: personalized medicine, sustainable models of care, better experience of care, and teams with excellent performance.
Business Functions
• Balanced Scorecard in support of HR
Following the 2008 financial crisis, a Volkswagen industry management team in Brazil embraced a Balanced Scorecard to effect cultural change and align financial resources related to the company’s overall strategy. It was a tactic that proved effective, as programs capable of unifying the vast network consisting of suppliers and dealers were established.
• Balanced Scorecard in support of performance
A private company can carry out performance measurement completely independently. But what about a free, public service? Even the University of Virginia Library was able to accommodate a comprehensive planning tool such as the Balanced Scorecard for university library lending. This has enabled the Library to achieve tangible efficiency results over the long term.
• Balanced Scorecard in support of strategy management
The Federal Bureau of Investigation had to reorganize following the 9/11 terrorist attack and go through a real transformation process. The Strategy Management department understandably decided to rely on the world’s best practices for the industry, including the implementation of the scorecard to manage the balance between crime prevention and law enforcement.
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Check out more of the Innovation Alphabet:
Gamification
Gamification
Gamification is actually adding a game-like element to make more fun and engaging something that’s not necessarily a game. It’s all about turning a task that might be boring or difficult into a more enjoyable and motivating activity. You can also earn points, badges, and rewards for completing certain actions or challenges. Are you ready to play?
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Business Intelligence
Business Intelligence
A smart business means efficiency: Business Intelligence represents the ability to collect up-to-date data, present it in easy-to-understand formats, and deliver it in a timely manner to employees. Making data-driven decision-making and management processes leads to competitive advantage, reduces inefficiencies, and improves productivity and service at all levels.
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Artificial Scarcity
Artificial Scarcity
We often tend to desire what we cannot have. Or what we are in danger of losing: Artificial Scarcity is a strategy that flaunts a limited number of items that do not correspond to actual availability. The goal is to stimulate the perception in consumers that the stock of items is about to run out and thus create a need based on the “fear of being cut off” or the intention to buy the item in order to resell it at a higher price.
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Subscription Model
Subscription Model
A subscription model is a business tool that generates revenue by charging customers a fee at regular intervals. The company provides products or services to subscribers on a subscription basis, usually monthly or annually. In this way, loyalty has become more important than acquiring new users.
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Holacracy & Flat Organization
Holacracy & Flat Organization
A “flat organization” breaks down the traditional hierarchy and removes its negative connotation, while “holacracy” is the business tool that facilitates its formation. Flat organizations place more emphasis on communication and collaboration, aspiring to a distributed decision-making process that gives each employee a voice. But this is a model that is difficult to implement.
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Mass Customization
Mass Customization
Mass customization is an initiative adopted by companies to embrace the increasingly diversified needs of customers. By offering customizable products and services, consumers feel engaged and can bring their creativity into play. Brands gain from this a boost in perceived value and the opportunity to fuel a positive word-of-mouth marketing.
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Coopetition
Coopetition
If you can’t beat them, join them. Coopetition is a business strategy that defines cooperative and competitive relationships between competing companies in the same young or high-growth market. The goal is to travel a stretch of road together to lower initial research and development costs. Once the desired results are achieved, the companies will return to being enemies as before.
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MVP
MVP
To the disappointment of all sports fans, this is not an article about Michael Jordan. In the language of business, MVP stands for Minimum Viable Product and indicates the version of a new product that has enough features to attract customers. In this way, a team can gather the most feedback with the least effort, improve the prototype, and validate its sale.
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Agile
Agile
Agile is an approach to software development designed to respond to change. Teams quickly analyze the context in which they operate, identify uncertainties faced, and figure out how to adapt to always move forward. Interaction between individuals comes before processes and tools; collaboration with the customer is more important than negotiating contracts.
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Bounded Rationality
Bounded Rationality
The best solutions always come to mind when it is too late. This is because human beings tend to make decisions on the basis of satisfaction rather than optimization. Bounded Rationality means that we are unable to think clearly and linearly, we proceed by trial and error and forget all the possible variables that affect the process. But we are also flawed.
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