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English Glossary
English Glossary
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Oversigten har til formål at give den engelske beskrivelse af de forskellige Balanced ScoreCard relaterede begreber.
Oversigten er primært baseret på informationer fra:
Balanced ScoreCard Collaborative/Palladium Group
The Balanced ScoreCard Institute
Harvard Business School
Better Management
Six Sigma
2GC
Active Management
MyStrategicPlan
Action Item - A unit within an action plan. Each action item should include the following : 1) Person responsible 2) Measure of success 3) Due date.
Action Plan - A set of tasks assigned to an individual or team that lists targets for each task as well as due dates, responsible persons, and measures for success. Action plans illustrate for individuals or teams how they will affect the completion of organization-wide objectives.
Align - A Strategy-Focused Organization achieves strategic alignment when the whole of the organization exceeds the sum of its parts. This synergy occurs when all parts of the organization focus on strategic themes and priorities as defined by their strategy map and corresponding Balanced ScoreCards for the corporate, business unit and support units.
Balanced ScoreCard - An integrated framework for describing strategy through the use of linked performance measures in four balanced perspectives : Financial, Customer, Internal Process, and Employee Learning and Growth. Balanced ScoreCard is a tool that translates an organization's mission and strategy into a comprehensive set of performance measures that provides the framework for a strategic measurement and management system. The Balanced ScoreCard acts as a measurement system, strategic management system and communication tool.
Benchmarking - The comparison of similar processes across organizations and industries to identify best practices, set improvement targets and measure progress. Benchmarking results may serve as potential targets for Balanced ScoreCard measures.
Cascading - The process of developing aligned ScoreCards throughout an organization. Each level of the organization will develop ScoreCards based on the objectives and measures they can influence from the ScoreCard of the group to whom they report. Cascading allows every employee to demonstrate a contribution to overall organizational objectives.
Cause and Effect - The concept of cause and effect separates the Balanced ScoreCard from other performance management systems. In the context of the Balanced ScoreCard, a cause and effect relationship identifies the initiatives, responsibilities or activities (causes) necessary to achieve an objective or target (effect). The measures appearing on the ScoreCard should link together in a series of cause and effect relationships to tell the organization's strategic story. For example, organizations may hypothesize that an increase in employee training (Employee Learning and Growth Perspective) will lead to increased innovation (Internal Process Perspective). Increased innovation will lead to more loyal customers (Customer Perspective) which will drive increased revenue (Financial Perspective).
Competitive Advantage - A characteristic of an organization that allows it to meet their customer’s need(s) better than their competition can.
Customer Perspective - One of the four standard perspectives used with the Balanced ScoreCard. Measures are developed based on the answer to two fundamental questions - Who are our target customers and what is our value proposition in serving them ?
Customer Value Proposition - Defines who the customer is and what they want.
Differentiation - A company’s efforts to stand out from their competitors in the minds of their target audience.
Effectiveness - In business and manufacturing, effectiveness is determined by amount of output. If output can be increased without an increase of input, then a process is said to have become more effective.
Efficiency - In business and manufacturing, efficiency is determined by amount of input consumed in order to give a certain output. If a process can maintain a certain level of output while using less input, then it is said to have increased in efficiency.
Employee Learning and Growth Perspective - One of the four standard perspectives used with the Balanced ScoreCard. Measures in this perspective are often considered "enablers" of measures appearing in the other three perspectives. Employee skills, availability of information and organizational climate are often measured in this perspective.
External Analysis - The External Analysis examines opportunities and threats that exist in the environment. Both opportunities and threats exist independently of the firm. The way to differentiate between a strength or weakness from an opportunity or threat is to ask: Would this issue exist if the company did not exist? If the answer is yes, it should be considered external to the firm. Opportunities refer to favorable conditions in the environment that could produce rewards for the organization if acted upon properly. That is, opportunities are situations that exist but must be acted on if the firm is to benefit from.
Financial Assessment - A tool used to determine whether your strategic plan makes financial sense. Do the estimated revenue projections exceed your estimated expenses?
Financial Perspective - One of the four standard perspectives used with the Balanced ScoreCard. Financial measures inform an organization whether strategy execution, which is detailed through measures in the other three perspectives, is leading to improved bottom line results.
Human Capital - May be considered a metaphor for the transition in organizational value creation from physical assets to the capabilities of employees - knowledge, skills, and relationships for example. Closely related to terms such as "intellectual capital" and "intangible assets."
Hypothesis - A proposition about cause and effect relationships. A hypothesis involves anticipating an effect, and a means of observing whether the anticipation is correct. A company's strategy is based on a hypothesis : If we do A, then B will result. A strategy map for a Balanced ScoreCard explains the hypothesis behind an organization's strategy.
Implementation - The realization of a strategic plan, implementation is the completion of the actions and tasks that the plan laid out. This is the most difficult part of a strategic plan.
Initiatives - The specific programs, activities, projects or actions an organization will undertake in an effort to meet performance targets. It is key action programs developed to achieve objectives or close gap between measures performance and targets. Initiatives differ from objectives in that they are more specific, have stated boundaries (beginning and end), have a person/team assigned to accomplish them, and have a budget. Several initiatives taken together may support a specific objective or theme.
Internal Analysis - The Internal Analysis of strengths and weaknesses focuses on internal factors that give an organization certain advantages and disadvantages in meeting the needs of its target market. Strengths refer to core competencies that give the firm an advantage in meeting the needs of its target markets. Any analysis of company strengths should be market oriented/customer focused because strengths are only meaningful when they assist the firm in meeting customer needs. Weaknesses refer to any limitations a company faces in developing or implementing a strategy. Weaknesses should also be examined from a customer perspective because customers often perceive weaknesses.
Internal Process Perspective - One of the four standard perspectives used with the Balanced ScoreCard. Measures in this perspective are used to monitor the effectiveness of key processes the organization must excel at in order to continue adding value for customers, and ultimately, shareholders.
KPI (Key Performance Indicator) - Metric and non-metric measurements essential to the completion of a company’s strategic objectives. While there are myriads of metrics that a business could monitor to assess their performance, each business narrows the possible list down to a manageable group of KPIs that make the most difference in company performance.
Lagging Indicator - Performance measures that represent the consequences of actions previously taken are referred to as lag indicators - these are results-oriented and do not reflect a process. They frequently focus on results at the end of a time period and characterize historical performance. Sales may be considered a lag indicator. A good Balanced ScoreCard must contain a mix of lag and lead indicators. Lag indicators often appear in the Balanced ScoreCard's outcome-oriented Financial and Customer perspectives.
Leading Indicator - These measures are considered the 'drivers' of lagging indicators. There is an assumed relationship between the two which suggests that improved performance in a leading indicator will drive better performance in the lagging indicator. For example, spending more time with valued customers (a leading indicator) is hypothesized to drive improvements in customer satisfaction ( a lagging indicator). Lead indicators tend often appear in the Balanced ScoreCard's process-oriented Internal and Learning & Growth perspectives.
Measure - A standard used to evaluate and communicate performance against expected results. Measures are normally quantitative in nature capturing numbers, dollars, percentages, etc. Reporting and monitoring measures helps an organization gauge progress toward effective implementation of strategy. Measures are written statements of WHAT we will track and trend over time, NOT the actual targets such as direction and speed. A measure should include a statement of the unit to be measured ($,%, rating).
Milestone - The set of specific deadlines or hurdles that signal progress in completing an initiative. Milestones include progress/completion dates or % completion rates, key presentations/meetings, and key decision points.
Mission Statement - A mission statement defines the core purpose of the organization - why it exists. The mission examines the 'raison d'etre' for the organization beyond simply increasing shareholder wealth, and reflects employees' motivations for engaging in the company's work. Effective missions are inspiring, long-term in nature, and easily understood and communicated.
Objective - A concise statement describing the specific things an organization must do well in order to execute its strategy/what is critical to its success. Objectives often begin with an action verbs such as increase, reduce, improve achieve, etc. and may include the means and/or desired results as well as the action. Each perspective usually contains 3-6 primary objectives that state a key aspect of the strategy to be achieved over the next 3-5 years. Examples : "Increase Market Share Through Current Customers" (Financial), "Be Service Oriented" (Customer), "Achieve Order Fulfillment Excellence Through On-line Process Improvement" (Internal), "Align Incentives and Rewards With Employee Roles for Increased Employee Satisfaction" (Learning & Growth).
Organization-Wide Strategies - While strategies are embedded in all elements of your strategic plan, consider listing the top one to two strategies or long-term activities your company needs to pursue in order to achieve its vision. Your strategies are the general methods you intend to use to reach your vision. A strategy is like an umbrella. It is a general statement(s) that guides and covers a set of activities. You can develop strategies for your whole organization, a department, a specific set of activities, or a guiding statement for a year. No matter what the level, a strategy answers the question “how.”
Outcome Measure - Measures to determine the outcome of an objective that indicate company performance at the end of a period. These are results-oriented and do not reflect a process. Examples include : Year-end Sales, Cycle Time, and Market Share. Outcome measures often appear in the Balanced ScoreCard's outcome-oriented Financial and Customer perspectives.
Performance Driver - Measures that indicate progress against a process or behavior. Performance Drivers often appear in the Balanced ScoreCard's process-oriented Internal and Learning & Growth perspectives. These measures are helpful in predicting the future outcome of an objective. Examples include: Hours Spent with Customers, # of Meetings with Cross-Functional Representation, # of Process Reworks, etc.
Performance Indicators - Measures of WHAT a company will track and trend over time, NOT the actual targets such as direction and speed. A performance indicator should include a statement of the unit to be measured ($, headcount, %, rating).
Performance Management - A process by which organizations align their resources, systems and employees to strategic objectives and priorities.
Perspective - In Balanced ScoreCard vernacular perspective refers to a category of performance measures. Most organizations choose the standard four perspectives (Financial, Customer, Internal Process, and Employee Learning and Growth), however, the Balanced ScoreCard represents a dynamic framework and additional perspectives may be added as necessary to adequately translate and describe an organization's strategy. Other possible perspectives include Regulatory and Environmental. The perspectives, when taken together, permit a complete view of the strategy and tell the story of a strategy in a clearly understandable framework.
Priorities - Objectives or tasks that have been determined to be essential to meeting a company’s strategic direction and or time-sensitive.
Resource Allocation - The specific dollar budget or resource amount allocated to a particular initiative. This amount should be presented in total, and can also be decomposed over specific periods, such as years/quarters, as appropriate to the budgeting/strategic planning process.
Scorecard - A representation of how a company is doing in Key Performance Indicators, presented graphically so that management and employees can easily ascertain the company’s current position. Your scorecard is used to measure and manage your strategic plan. What are the key performance measures you can track in order to monitor whether you are achieving your goals ?
Short-term goals/priorities/initiatives - Goals that convert the strategic objectives into specific performance targets. Effective goals clearly state what, when, how and who and are specifically measurable. What are the 1 to 3 year goals that you are trying to achieve to get to your strategic objectives ?
Stakeholders - Any party who is affected by or could affect the actions of your organization.
Strategic Destination - The overarching goal of the company.
Strategic Management System - Describes the use of the Balanced ScoreCard in aligning an organization's short-term actions with strategy. Often accomplished by cascading the Balanced ScoreCard to all levels of the organization, aligning budgets and business plans to strategy, and using the ScoreCard as a feedback and learning mechanism.
Strategic Resource Allocation - The process of aligning budgets with strategy by using the Balanced ScoreCard to make resource allocation decisions. Using this method, budgets are based on the initiatives necessary to achieve Balanced ScoreCard targets.
Strategic Plan - When taken together, all of the Balanced ScoreCard components represent a strategic plan. This form of strategic plan ensures the linkage between an organization's strategy and its activities. It also ensures consistency across the organization from a framework and definitional standpoint.
Strategy - Describes the differentiating activities an organization pursues to gain competitive advantage. Situated at the center of the Balanced ScoreCard system, all performance measures should align with the organization's strategy. The strategy is a description of what the organization is attempting to accomplish over the next 3-5 years, as represented by the organization's themes and objectives, taken collectively. By stating the strategy in terms of themes and objectives, the strategy will be represented in a concise, holistic, process-oriented manner, rather than financial-only or departmentally segmented.
Strategy Map - Balanced ScoreCard architects Kaplan and Norton coined this term to describe the inter-relationships among measures that weave together to describe an organization's strategy. A strategy map is a visual representation of an organization's strategy and the processes and systems necessary to implement that strategy. A strategy map will show employees how their jobs are linked to the organization's overall objectives.
Strategy-Focused Organization (SFO) - A Strategy-Focused Organization places strategy at the center of its management processes - strategy is central to its agenda. There are five principles to a Strategy-Focused Organization : Mobilize Change through Executive Leadership, Translate the Strategy to Operational Terms, Align the Organization to the Strategy, Make Strategy Everyone's Job, Make Strategy a Continual Process.
Stretch Target – Are higher than targets. Some organizations indicate stretch targets as blue in color and targets as green in color. This is to illustrate over achieving figures.
Supply Chain - The supply chain represents the flow of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer. Many organizations are looking to supply chain optimization as a means of gaining significant competitive advantages. The Internal Process Perspective of the Balanced Scorecard often contains performance measures pertaining to supply chain performance.
SWOT analysis - SWOT analysis is a type of strategic-level analysis. SWOT stands for Strengths, Weaknesses, Opportunities & Threats : Strengths = The internal strong points of an organization. Things they are good at that competitors would find it difficult to emulate. Weaknesses = The internal weak points of the organization. Things that are difficult to overcome, poor image, out-dated equipment, poor location etc. Opportunities = External opportunities, new markets opening up etc. Threats = External threats, legislation, overseas competition etc.
Tactical - Dealing with or related to the accomplishment of tasks that support the strategic vision of the organization.
Target - Represents the desired result of a performance measure. Targets make meaningful the results derived from measurement and provide organizations with feedback regarding performance. Targets are stated in specific units ($, #, %, Rating, etc.), and should include time-based segments (annually, quarterly, etc.) as appropriate. Targets should be observed over time to determine important trending behavior, so that corrective action can be taken as needed.
Task ‐ Represents details activities or tasks to be carried out to achieve each initiative. It captures information like resources, time , constraints, risk, budgets, milestone, duration to complete the task.
Theme - Descriptive statement representing a major component of a strategy, as articulated at the highest level in the Vision. Most strategies can be represented in 3-5 themes. The key is that themes represent vertically linked groupings of objectives across several ScoreCard perspectives.
Translate - A Strategy-Focused Organization translates strategy into action when it organizes a 'strategy map' framework of cause and effect between its strategic objectives, then operationalizes these objectives with measures which, considered as a group, comprise a Balanced ScoreCard. This "hypothesis" about how the strategy will create value involves objectives drawn from, at a minimum, four perspectives : Financial, Customer, Internal Process, and Learning and Growth.
Values - An organization's values make an open proclamation about how it expects everyone to behave. Values should endure over the long-term and provide a constant source of strength for an organization.
Value Chain - The process steps by which a company moves from the identification of its customer needs to customer fulfillment.
Value Proposition - Describes how an organization will differentiate itself to customers, and what particular set of values it will deliver. A value proposition is the unique mix of product, price, service, relationship and image that a provider offers its customers. It determines the market segments to be targeted and how the organization will differentiate itself in those segments, relative to its competition. To develop a customer value proposition many organizations will choose one of three "disciplines" articulated by Treacy and Wiersema in "The Discipline of Market Leaders" : operational excellence, product leadership, or customer intimacy.
Vision - A powerful vision provides everyone in the organization with a shared mental framework that helps give form to the often abstract future that lies ahead. A vison is a concise written statement defining the mid-long term (3-5 year) strategy of the organization. The vision is the summary statement of how the organization wants/intends to be perceived by the world. The vision statement should not be abstract - it should contain as concrete a picture of the desired state as possible, and also provide the basis for formulating strategies and objectives.