Toward a New Strategic
Management System
Many companies adopted early balancedscorecard
concepts to improve their performance
measurement systems. They achieved
tangible but narrow results. Adopting those
concepts provided clarification, consensus,
and focus on the desired improvements in performance.
More recently, we have seen companies
expand their use of the balanced scorecard,
employing it as the foundation of an
integrated and iterative strategic management
system. Companies are using the scorecard
to
• clarify and update strategy,
• communicate strategy throughout the
company,
• align unit and individual goals with the
strategy,
• link strategic objectives to long-term targets
and annual budgets,
• identify and align strategic initiatives, and
• conduct periodic performance reviews to
learn about and improve strategy.
The balanced scorecard enables a company
to align its management processes and focuses
the entire organization on implementing longterm
strategy. At National Insurance, the
scorecard provided the CEO and his managers
with a central framework around which they
could redesign each piece of the company’s
management system. And because of the
cause-and-effect linkages inherent in the scorecard
framework, changes in one component of
the system reinforced earlier changes made
elsewhere. Therefore, every change made over
the 30-month period added to the momentum
that kept the organization moving forward in
the agreed-upon direction.
Without a balanced scorecard, most organizations
are unable to achieve a similar consistency
of vision and action as they attempt to
change direction and introduce new strategies
and processes. The balanced scorecard provides
a framework for managing the implementation
of strategy while also allowing the
strategy itself to evolve in response to changes
in the company’s competitive, market, and
technological environments.
Toward a New Strategic
Management System
Many companies adopted early balancedscorecard
concepts to improve their performance
measurement systems. They achieved
tangible but narrow results. Adopting those
concepts provided clarification, consensus,
and focus on the desired improvements in performance.
More recently, we have seen companies
expand their use of the balanced scorecard,
employing it as the foundation of an
integrated and iterative strategic management
system. Companies are using the scorecard
to
• clarify and update strategy,
• communicate strategy throughout the
company,
• align unit and individual goals with the
strategy,
• link strategic objectives to long-term targets
and annual budgets,
• identify and align strategic initiatives, and
• conduct periodic performance reviews to
learn about and improve strategy.
The balanced scorecard enables a company
to align its management processes and focuses
the entire organization on implementing longterm
strategy. At National Insurance, the
scorecard provided the CEO and his managers
with a central framework around which they
could redesign each piece of the company’s
management system. And because of the
cause-and-effect linkages inherent in the scorecard
framework, changes in one component of
the system reinforced earlier changes made
elsewhere. Therefore, every change made over
the 30-month period added to the momentum
that kept the organization moving forward in
the agreed-upon direction.
Without a balanced scorecard, most organizations
are unable to achieve a similar consistency
of vision and action as they attempt to
change direction and introduce new strategies
and processes. The balanced scorecard provides
a framework for managing the implementation
of strategy while also allowing the
strategy itself to evolve in response to changes
in the company’s competitive, market, and
technological environments.
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