Designing and Implementing Business Process Models 10.5 | Designing and Implementing Business Process Models | ARIS Method manual | Balanced Scorecard method | The Balanced Scorecard concept | Strategic management process and Balanced Scorecard | Formulation and realization of vision and strategy
 
Formulation and realization of vision and strategy
 
Standard perspectives of a Balanced Scorecard
Cause-and-effect chain
Definition of leading and lagging indicators
The strategy of a company results from its vision.
The vision represents a superior mission statement for the company under consideration; as a general, but striking statement it is vague, yet serves as the prime principle of action and as such expresses a sort of short version of the company's philosophy.
Individual strategies are determined for different strategic business units. These strategies must be geared to the performance goals of the company. Therefore, it is necessary that prior to introducing a BSC, senior management holds a workshop to determine the vision and resulting strategies for the strategic business units. In most cases, this involves setting a financial target (financial perspective). The focus may vary: Possible objectives are particular values for return on capital employed, ROI, shareholder value, sales revenue, or cash flow. The financial objectives need to be realized through specific behavior on the relevant market (customer perspective). Therefore, after defining the objectives, appropriate market and customer segments are selected. This customer perspective also involves the definition of strategic objectives and the identification of relevant KPIs. For example, they may relate to market shares or growth rates in a given customer segment.
Appropriate company resources are required to implement specific market-oriented strategies. When establishing a Balanced Scorecard, resources are divided into two categories as follows:
1. Once the financial and customer objectives are defined, the main business processes (process perspective) are looked at, objectives determined, and initiatives and KPIs generated. The focus is usually on process times and costs.
2. As part of the so-called learning and growth perspective, strategic objectives for human resources development, information technology, and innovation are derived from the strategic objectives of the financial, customer, and process perspectives.
When setting up a Balanced Scorecard, all strategic objectives defined are mutually interactive, which is known as the cause-and-effect chain.
For the first step to be effective it is important that a general consensus on the vision, strategies, and resulting strategic objectives be reached at the management level.
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