Using the Balanced Scorecard to design your Digital Strategy

The Balanced Scorecard was developed by Kaplan and Norton as a strategic approach and performance management system, which enables organisations to translate a company’s vision and strategy into implementation. It works from 4 perspectives:

• Financial perspective;

• Customer perspective;

• Business process perspective; and

• Learning and growth perspective.

These perspectives are a useful departure point for translating Organisational Strategies into implementable Digital Strategies.

The Financial Perspective

Timely and accurate financial data is always be a priority, but the emphasis on financial issues can lead to an unbalanced situation with regard to other perspectives, therefore we use the financial perspective as a quantification of the success of the other elements of the Digital strategy and programmes.

The Financial perspective is satisfied when we are able to capture financial information to report on the period. Generally, when implementing a Balanced Scorecard Digital Strategy, we determine which numbers we will be interested in seeing at the end of the financial period and how we will quantify the success of the implementation and applications.

These numbers could include ROI on the digital investment, percentage increase in sales, reduced cost of attrition and recruitment, increased margin on innovation, R&D etc. The numbers are determined by the organisational strategy and the metrics which the organisation choose to report on. They could be as simple as Balance Sheet and Income Statement line items and as complicated as optimising the digital asset management life-cycle.

The Customer Perspective

Using the Customer perspective to develop digital strategies should be the most lucrative aspect of the digital strategy.

The customer perspective elements of the Digital Strategy include providing information through the website, sales enablers including eCommerce applications, customer self-service where customers can manage their own portfolios through extranets, building communities of value where customers can network and engage with each other, crowdsourcing initiatives so that the customer can help the organisation design products, using social media such as blogs to educate the customer, social tools to create and retain relationships and a host more applications. Feedback remains a critical part of the digital strategy and it is important to watch the Social Media sites where your clients are discussing you, your products and your services.

When developing customer facing applications it is important to note that these are not just transactional applications and that their value is also derived from the data that we can collect around the clients which may be lead indicators of future value. For example, on-line community satisfaction is a lead indicator; if members are not satisfied, they will find other suppliers that will meet their needs. Poor performance is a lead indicator of future decline.

Other tools include Google analytics and the social media insights tools.

The Business Process perspective

This perspective refers to internal business processes. Key applications for digital strategies include the development of collaboration tools, document management, content management, online project management, leave management and in-situ knowledge management and collaboration tools to name a few. These applications are more successful when accessed through the Intranet, and perceived by the employee to be part of the Intranet, rather than a standalone application.

Learning and Growth perspective

This perspective includes employee training and corporate cultural attitudes related to both individual and business improvement.

The Intranet is the key application for managing employees, programmes that can be run through the Intranet include employee relationship programmes, on-line learning and education, strategic behavioural alignment, succession programmes, network analytics and performance management dashboards.

Management by Fact

The use of the Balanced Scorecard enables us to measure our Digital Strategies, applications and implementations effectively.

The goal of measuring is to see more clearly and to make wise long-term decisions. Measurements are derived from strategy to provide critical data and information about key processes, outputs and results. Data and information needed for performance measurement and improvement could include: customers, sales, market, competitive comparisons, supplier, employees, cost and financial data. Analysis uses data to determine trends, projections, and cause and effect. Data and analysis is used to support a variety of company purposes, such as planning, reviewing company performance, improving operations, and comparing company performance with competitors’ or with ‘best practices’ benchmarks.

A major consideration in performance improvement involves the creation and use of performance measures or indicators. A comprehensive set of indicators tied to performance requirements will align all business activities with organisational goals.

1 Kaplan, R.S. and Norton, D.P. (2006) Alignment Using the Balanced Scorecard to Create Corporate Synergies Harvard Business School Publishing Corporation