how everyone is tom from the team at cascade here and today we're gonna be talking about how to implement the balanced scorecard and we're gonna do things a little bit differently from some of the other articles and videos you may have seen online about the bat scorecard because the truth is that the vast majority of the balanced scorecard implementations that you've likely seen at other organizations may be places you worked out we're actually either completely wrong or perhaps they just didn't go far enough in terms of actually making use of this really powerful strategic framework so the balanced scorecard you probably know roughly what it is it's one of the best-known strategy frameworks out there and it dates back to the 1980s so some people have even kind of called it a lot of old school it actually isn't old school it's really really simple it's really really effective and it remains just as valuable a strategy framework today as when it was first implemented now this particular video this particular article is part of a series of different articles that we've created for probably five of the best strategy frameworks out there so you can see on the screen right now we've got links to the other ones they're also available in this article today they're we're going to be talking about the balanced scorecard so let's quickly say what it is so in very simple terms the balanced scorecard is four perspectives it's four different essentially quadrants that you can categorize goals into across your organization to create a framework for your strategic plan and those four quadrants they've changed a little bit over the years we're gonna call them perspectives for this this guide they are as follows so the first one is financial so this is everything to do with cash flow revenue sales performance etc the second one is customer this is to do with customer experience at the amount of on-time deliveries you do for customers in Net Promoter Score share of customer spend all that kind of stuff we've then got a perspective called internal business processes so this is everything that you do internally within your organization that is not outward facing and then the last perspective there is learning and growth this is really all about people and this is about activities that relate to improving your people and helping them get better at their jobs so very very simple perspectives implementing though is a little bit a little bit more interesting than just looking at the perspectives so before we look at that let's just check out some of the benefits of the bat scorecard now I'm not gonna read everything on screen here you can obviously kind of check that out yourself but I'm just gonna jump ahead to what I think are kind of the the main benefits for me the big benefit of implementing the balanced scorecard yes it gives you a nice way of making sure that you're taking all of the boxes from a strategy perspective so it helps ensure that you've got activities they're going to help your customers you've got activities that are going to help you people your financials and your processes that's a really good starting point and even the kind of like poor implementations of the BART scorecard will deliver some kind of focus in those areas but the real benefit is actually around working through a process to make sure that you deliver your ultimate aims which is those financial outcomes and we're going to talk about that in a while so focus is part of it but having an actual process that you can follow in a series of linear steps is actually where the balanced scorecard really really comes into its own and I'm going to kind of explain that at now so people talk about some challenges with the bat scorecard they say it takes a lot of time to set up they said that people don't really understand it it's too rigid it's too internally focus all of these kind of criticisms are are fair but the majority of them are actually going to be addressed by implementing the balanced scorecard in the way that I'm going to explain in a moment now let's kind of look at how people sort of implement the balanced scorecard usually so the first diagram that I've got on screen here is basically the same kind of diagram that you'll get if you google the balanced scorecard if you in fact I'm actually gonna do it right now if you do a quick google image search or you can actually see the vast majority of the infographics and backgrounds that actually come up they look pretty similar the screen there so you can see here we've got have this one here we've got this one with the boys camp quadrant special album is popped in there you can see that painfully they look pretty similar I'm actually going to tell you that this diagram really isn't very helpful yes it has the four quadrants it looked kind of pretty exposed but it doesn't really tell you anything more than the list that we looked at above and that's because people when they look at the balanced scorecard they think of it as a categorization process so they think that all they need to do to create an effective strategy using the balanced scorecard is basically go and make all of the goals that they're going to do anyway all the objectives all the projects all the KPIs and then categorize them into one of these four perspectives and then basically say oh we don't have enough in our learning and growth perspective let's add a few more goals let's make sure that we've got an even balance and sometimes I think that the the name balanced scorecard actually contributes to some of this confusion implementing that scorecard isn't really about balancing things between the four perspectives although that is a potential side benefit so what I'm gonna do now is I'm actually gonna show you the right way to implement the route scorecard and that is using this diagram here which is a little bit more complicated but far more useful so you can see that we've got the same four quadrants financial customer process and learning and growth and but now we've actually got them in some kind of order and if you follow the arrows you can see that this data actually starts at the bottom so the first entry point is into the learning and growth perspective and what that's basically telling you is that in order to get to the top of this diagram which is financial gains you actually need to work through each layer in order so it's not about just working on the four perspectives equally at the same time instead it's about making sure that you're actually nailing each of the perspectives because each perspective unlocks the one above it now if you think about at a different way you could almost argue that you've got a series of kind of leading and lagging perspectives here and what we mean by that is that a leading perspective is something that enables you to achieve a result and that would be learning a growth internal process and customer these are enable as in your organization essentially and then the financial perspective is probably your strongest lagging perspective and by lagging what we mean is that it's an output it's an outcome it's the things that the other three allow you to do so what we're actually trying to do the theory of the bounce scorecard is ultimately all organizations are trying to drive their financial game but in order to do that we need to actually work through these perspectives in order so you can see here the theory would go something like this if you invest in improving the skills of your people if you invest in better training and tools for your people that is going to help them be better at their jobs and the vast majority of their jobs involve some kind of internal process even if it's an externally facing outcome such as marketing most of that marketing will actually start off with an internal process so your people will become more efficient and they'll output faster now once the output faster that means that your customers are going to get a better experience so whether they're going to get a better experience if you're a if you're a physical goods company it might be lower delivery time or it might be higher speed to market with you know outputting physical products or even for us as a software company we're outputting better products better features sooner for our customers were responding to their queries on the live chat faster all of that is driving a better customer experience and that in turn is driving better customer attention and also other things like referrals goodwill all those kind of things potentially even bigger share of wallet if we follow that up you can see that that also leads to an increase of revenue which ultimately ends at this top middle point of an increase of profit now there is another way you can get there as well if we go back to process efficiency sometimes process efficiency actually has nothing to do with customers and it's just about lowering costs it's just about being more internally a fish so you can see here we've actually got an arrow that goes right up to the lower-cost section of the the financial goals and then ultimately that leads to an increase of profit as well so you can see here that looking at the balanced scorecard in this way it's actually far more useful because what it does is it tells you you need to invest in these things in this order to get to your ultimate goal of an increase of profit so rather than looking at your strategy as a simple kind of set of quadrants and goals sitting amongst the four instead what you need to be doing doing is categorizing your strategy into this kind of it's almost like a pyramid where you start at the bottom and you work up to this ultimate goal of increased profit it's a little bit more complicated but it actually makes the balanced scorecard really effective in really interesting and people can actually understand now why is it important to do learning and growth why is it important to do better internal processes because ultimately this is how you're going to increase your profit whereas when we look at it in the old way people can easily look at that and go yeah well you know my job really is nothing to do with these three all I worry about is the bottom line I just got a drive revenue yeah that's not actually very helpful though because it doesn't actually change anything just being accountable for revenue target is not the same as actually implementing projects and objectives that are gonna drive that revenue to a new place launching new products etc etc so when you think about your strategy think about it in this sense and categorize your goals yes into the quadrants but more specifically make sure that you've got a really good foundation in the learning and growth internal process and customer perspectives because these are the ones that are going to help you ultimately low cost increase revenue and therefore increase profit so a really different way of looking at it from the simplistic approach we started with now I will say that one of the criticisms of the balanced scorecard is that sometimes people say that perhaps it's not that well suited for organizations that want to do things other than increase profit so that could be government organizations it could be even companies like Google and arguably Facebook who kind of claim that they have objectives around world betterment and sort of societal games you know technological advancements that they go beyond a pure profit now that is true and I think there are elements of the balanced scorecard that are going to be perhaps less appropriate to some organizations however the principle of structuring your goals in this way still makes sense so you could actually remove the increase of profit from the top of this pinnacle and you could make it something else and then you may have to tweak some of the drivers as you get there but the whole approach and the whole kind of four perspectives approach is still going to be pretty similar for the vast majority of organizations now we've kind of covered how this actually works and we've covered sort of like you know what the difference is between the traditional approach or rather the simplistic approach to implementing the math scorecard and the approach that I've outlined above and so the benefits of that first of all it helps you create a really tangible roadmap to get from where you are today to where you want to be tomorrow and rather than just being a simple set of categorization it's a it's a path it's a road map and it also really helps you kind of identify where you've got major roadblocks on that path to driving better financial performance it helps you articulate exactly what your goals are doing to drive towards the ultimate revenue objective or or cost reduction objective and it helps you to prioritize your business activities in the order that they need to be tackled so there's really no point trying to launch fantastic products if you don't have good people it's simply not going to work so by putting it in those layers it actually helps you figure out what you need to do first so a ton of benefit it also just makes the balanced scorecard relevant and interesting something that people can talk about rather than just being this simple categorization kind of exercise now when it comes to actually putting some meat on the bonus and implementing the bat scorecard for the business there's a couple of things that you really need to think about that there's there's kind of two main phases to the strategy lifecycle that you're going to want to put the bar scorecard into the first is the strategic planning side of things and we're going to cover that in a moment and then the second is actually in the strategy tracking side of things so you're gonna want to implement balanced scorecard processes in both your strategy planning and your strategy tracking now let's have a look at that first and actually see what that looks like so when it comes to implementing the route scorecard in strategic planning there are two ways that you can actually do this and method one is I would say the simpler approach and this is using something that we call focus areas so this basically requires you to set up a series of focus areas for your business and those focus areas are actually going to align to the perspectives of the bar scorecard so you can see here I've got a customer focus area finance Learning a growth and process just make your focus areas your perspectives and then put all of your goals into those focus areas that is what we've kind of called method one in the article now method two is better suited to organizations who perhaps a little more mature around strategic planning and that is using something that we call goal types and what this basically allows you to do is it allows you to add the balanced scorecard to your existing kind of like strategy configuration so let me show you what I mean by that so instead of using focus areas as equivalent to the actual bar scorecard perspectives what you're gonna be able to do with this approach is you're gonna be able to have your own set of different focus areas so you can see here now on my focus areas I've got ones around growth manufacturing couple around manufacturing and around being a tough place to work now that's cool but you may ask okay well where then is the bar scorecard in this model so what we've done here is we've used something called custom fields essentially depending on which kind of strategy software you're using or how you're doing it you make do it a little differently and but you can see here that I've actually got a field against all of my activities all of my projects kpi's etc that is then allowing me to categorize my goals into the balanced scorecard using these custom fields and these colors and what this allows you to do is basically mix and match between having your own set of distinct focus areas and still getting the benefit of the bat scorecard methodology it's a little bit more sophisticated because you've actually got two elements you need to manage from a strategic plan perspective but it does give you a little bit more flexibility so depending on how much sure you are as an organization you may choose option one which is a simple perspective focus area approach or you might go with option two which allows you to have separate focus areas combined with some goal types now from a planning perspective really everything from this point works just the same as creating any other strategic plan and we've created loads of articles about that so you can check out all of the links in the article how to actually write those objectives those projects those KPIs but from a structure perspective this is going to give you a strategic plan that you're going to be able to report on with the Vark scorecard really really easily so let's move on now to the second part of implementing the barque scorecard and that is around strategy tracking so it's all very well having a strategic plan that uses the bat scorecard but you need to actually infuse the balanced scorecard into your strategy rhythm into your monthly team meetings into your board updates whatever that looks like so I'm going to show you a couple of ways that you're going to want to do that so the first thing you're gonna want to do again this is regardless of what strategy execution solution you're using whether using cascade whether you're using a different provider or even just Excel you're going to want to create some kind of balanced scorecard dashboard this is gonna be basically the home of the balanced scorecard for high-level kind of stakeholders people like board members people like you know maybe team meetings at a senior executive level and on that dashboard you're gonna want to do a few things so I've actually got one set up in cascade that I'm gonna show you now and I'm just gonna kind of walk you through how to set up that dashboard so pretty simple you're going to want to set up the dashboard obviously with the four perspectives now I always put finance in the top left of my dashboards because ultimately this is probably the one that people are going to be the most interested in this is probably gonna be the one that people are gonna have a look at first and then they can look at the other four perspectives to say okay well what are we doing to make that those financial results even better so we've got finance we've got customer if I scroll down a bit we've got learning and growth and we've also got internal process now what I've got within each of these Dashboard widgets is I've basically gone on the surface a fairly straightforward list of the key activities that were doing across the organization and they're actually grouped by whether their objectives whether they're KPIs whether their projects so you can see here for all of my finance KPIs underneath that I've got all of my finance objectives and I've got the same kind of structure in each of my quadrants and I've got like an at-a-glance view of how completed we are against all of those different activities and how well those different KPIs are doing there's a nice little Gantt chart views also cash showing me where we're up to which ones are completed which ones are going to be coming up next in the next quarter etc and really crucially we've also got this metric in the top right of each of these widgets which is basically giving essentially a score for how well that particular perspective of a balanced scorecard is tracking so we've got seventy percent completion across all of our KPIs and objectives in the financial space quite a bit lower in our customer learning and growth and Inter processes and in fact if I can look at the internal processes here at 54% you can actually see a lot of our activities here are showing up in orange and that's because a lot of them are actually starting to fall kind so at a glance you might want to say well okay internal process this is something we need to actually attack so this is a really simple really effective way of just demonstrating your commitment to the balanced scorecard by creating a nice clean balanced scorecard dashboard now there's also another way of reporting against the balanced scorecard and I wouldn't do this you stead of a dashboard I would actually do this alongside a dashboard and this basically involves creating slightly more detailed balance scorecard reports so in our tool we're going to use something called the snapshot builder so I'm just going to go into snapshots and I'm gonna quickly create a balanced scorecard report so I'm just going to choose which strategic plan I want to look at and then I'm gonna make sure that on this particular report I've actually got the balanced scorecard actually being displayed so it's gonna kind of show here and I'm just gonna move it over to be this column on the left-hand side I'm gonna make my update column a little bit bigger there and I'm just gonna go and generate a report here just to kind of give you a sense of how this is gonna work now obviously the way that you implement this is gonna vary depending on what reporting methodology using this is basically something called a strategy snapshot it's just showing you again that same list of activities except now we're actually showing a lot more information so we're showing the updates that people are putting in there we're showing any tasks that people have put in and then we're also showing a little bit more detail about the different metrics of those Bart scorecard elements so you can see here we've actually got a profit margin goal and it's showing me exactly where my profit margin is ahead or behind against that goal so introducing some kind of standard templatized team meeting report that brings in these balanced scorecard perspectives is going to be a really good way of bringing this to life across your organization as well now when it comes to kind of wrapping this all together obviously you can implement as many tools as you like ultimately what you need to do is you need to demonstrate that the balanced scorecard is important to you and you need to communicate to people why it's important it's not just about actually creating the reports it's also about communicating effectively this diagram up here because this is the thing that I think is going to motivate people to actually get behind the implementation of the balanced scorecard now obviously this guide is just the beginning if you do want a little bit more help actually setting up the balanced scorecard if you are using something like cascade or you just want to give it a try for the first time No we can actually configure an environment in our strategy tool which is perfect for the bar scorecard it works really really well we've got lots of really big organizations using cascade to implement the balanced scorecard also happy to answer any questions about bar scorecard implementations just leave a comment on the article or hit us up on social media or of course send us an email hopefully there's been a useful and slightly different way of looking at the bounced scorecard and look forward to seeing you in the next video thanks guys bye bye