Today, companies all have something in common when thinking about how they will meet the new challenges that have been thrust upon them by COVID-19 lockdowns. Leaders and employees are trying to figure out the best ways to stay safe and, stay productive.
Peter Drucker once said, “You can’t manage what you can’t measure.” Drucker also said that you can’t know whether or not you are successful unless success is defined and tracked. So it follows, what you measure is what you’ll get.
Senior executives understand that their organization’s management system strongly affects the behavior of managers and employees. Executives also understand that traditional financial accounting measures like return-on-investment and earnings-per-share can give misleading signals for innovation and continuous improvement during these trying times. The traditional financial performance measures worked well for the industrial and information eras, but they are out of step with the skills and competencies companies require today.
During the early 1990s, Dr.’s Robert S. Kaplan and David P. Norton developed The Balanced Scorecard to provide the measures that drive performance. As managers and academic researchers have tried to remedy current performance measurement systems’ inadequacies, some have focused on making financial measures more relevant. Others have said, “Forget the financial measures. Improve operational measures like cycle time and defect rates; the financial results will follow.”
But managers should not have to choose between innovation and operational measures. Managers need a balanced presentation of both innovation and operational measures to keep their organizations on track with their strategic goals, particularly as they change their strategies to forge new ways of doing business.
MarketCues has developed the SmartPlan™ Scorecard to drive an organization’s innovation and improvement activities while tracking the results of the specific action steps that are taken. KPIs are generated from MarketCues’ SmartPlan360™ organizational software to provide an objective baseline of organizational performance and market readiness. Taken together, these strategic measures drive future financial performance.
Think of the SmartPlan™ Scorecard as the dials and indicators in an airplane cockpit. Pilots need information on fuel, airspeed, altitude, bearing, destination, and other indicators that summarize the current and predicted environment. Similarly, the complexity of managing an organization today requires managers to view performance in several areas simultaneously. The SmartPlan™ Scorecard allows managers to look at their business from four organizational driving perspectives:
The SmartPlan™ Scorecard links an organization’s long-term strategy with its short-term strategic initiatives to reflect the factors that really matter to customers. By demanding that an organization’s general mission statement provides the specific things that customers need and want, the organization can create stronger and longer-lasting relationships. And while regular financial reports are common in the workplace, companies that use smart tools to keep their strategic initiatives on track for the future outperform those that rely on their traditional financial statements.