A Balanced Scorecard translates the mission, vision, and strategy into performance objectives and measures in each of the four Scorecard perspectives.
Mission statements communicate the core purpose of an organization, as well as employees’ reasons for engaging in the work of the company. Effective mission statements are simple and clear, inspirational, long term in nature, and easy to communicate. It is not a good idea to assemble a large committee to write the mission statement; Niven recommends a team of two to three individuals.
The vision statement defines where the organization wants to go anywhere from 5 to 15 years into the future. A good vision statement should be quantified and time bound, concise, consistent with the mission, verifiable, feasible, and inspirational to stakeholders. To develop a vision statement, it is essential to interview executives. A well-crafted vision statement makes it easier to create relevant objectives for the strategy map as well as measures for the Balanced Scorecard.
As organizations create a strategy, they must answer four questions:
1. What propels the business forward?
Niven has found that most companies are driven by one of six forces: products and services, customers and markets, capacity or capabilities, technology, sales and distribution channels, or raw materials.
2. What does the organization sell? The goal is to identify which products or services the business will focus on in the future and which ones will be given less attention.
3. Who are the company’s customers?
The objective is to identify which customer groups the business will focus on in the future. This requires a thorough understanding of existing customers and their point of view.
4. How does the business sell?
This question determines the organization’s value proposition, therefore it is essential that teams reach consensus on the answer.
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