Do you know what BSC means and how it can boost the results of your strategic actions? The methodology that covers all areas of the organization presents very positive results when well implemented.
According to research conducted by 2GC, 76% of businesses already use the Balanced Scorecard to develop their strategic planning, and 79% of the actions created are influenced by the methodology.
To understand more about the importance of the BSC, how to implement it, and why so many companies adopt this method, continue reading!
What is BSC?
It is very common for managers to create strategic plans that end up stagnating due to a lack of action. To solve this problem, there emerged the Balanced Scorecard, BSC.
The term, translated from English, means “Balanced Performance Indicators” and is one of the best methodologies for facilitating the execution of planned actions. It was created in the mid-1990s by two well-known professors: David Norton and Robert Kaplan.
You should know that during the Industrial Revolution, many methodologies and tools for tracking performance related to financial indicators emerged.
It was based on this scenario and a study, motivated by the belief that these methodologies were no longer effective, that Norton and Kaplan developed one of the most innovative methods for organizations, allowing managers to strategically evaluate and improve business performance.
In addition to measuring organizational actions and processes, the BSC allows for mapping long-term actions and extracting real and relevant data for decision-making. It is well-known for helping businesses establish their missions, visions, and values, going beyond financial analysis and focusing on 360º management.
What is the Balanced Scorecard used for?
OBSC is a methodology that helps managers define and measure processes and strategies based on four perspectives:
- FinancialThe more satisfied customers are, the better the financial results will be.;
- Clientseffective processes lead to customer satisfaction;
- Internal processesTrained, motivated, and engaged times improve processes;
- Learning and growthTeam skills are essential for carrying out activities.
In other words, it serves to perform a 360-degree analysis of all processes that are critical to the success of the business. This allows for the definition of future goals and metrics, creating a long-term strategic plan.
The perspectives behind the Balanced Scorecard, BSC
The BSC concept considers that the strategies and planning goals are achieved by taking into account all organizational aspects, not just financial indicators. Therefore, the concept is based on the following words
- Strategic Management;
- Strategy;
- Objectives;
- Goals;
- Indicators;
- Progress measurement;
- Strategic initiatives.
The goal is to make managers realize that a 360-degree view is fundamental for defining the goals that will make the company grow. Therefore, the Balanced Scorecard considers four perspectives when creating a plan, which are:
Financial perspective
We know that financial performance indicators are essential for analyzing the effectiveness of actions taken and understanding if they are yielding the expected returns. However, when using the BSC, financial and accounting aspects become one part of the analysis, not the whole.
According to Kaplan, financial indicators should not guide strategies, much less the company. They should only present the results of other actions developed by the organization.
Typically, the financial objectives that present this information are growth, profitability, and shareholder value. Therefore, the question that guides this perspective is: “How do shareholders see our company?”.
2. Customer Perspective
It's quite common for organizations to aim to propose actions that offer true value to their customers, based on their mission. This habit has become increasingly common in companies.
However, many of them face problems translating this and strategically incorporating it into planning. The BSC facilitates this. After all, one of its objectives is to ensure that the business's mission is put into practice through measurable actions that can be controlled and truly make a difference for customers.
The question that guides and facilitates the implementation of this perspective is: “Based on our mission, how should customers see us?”
3. Internal Processes Perspective
Ensuring that the actions proposed from the customer's perspective are fulfilled is essential. To achieve this, it is necessary to pay attention to internal processes, as they are what will lead to the goals being met.
In the BSC methodology, the focus should be especially on business processes. These are what guarantee customer conversion and satisfaction. To.
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4. Learning and Growth Perspective
With the previous outlook indicators defined, the company can see and understand what is important to maintain competitive success. Nevertheless, competition and the market also demand that organizations reinvent and innovate themselves.
This applies to both products and processes. The focus is on maintaining continuous improvement, along with learning and growth for the teams. In this case, the question that will guide the planning is: “How does the company need to learn and innovate to achieve its objectives?”.
Based on these 4 pieces of information, planning becomes much more effective, ensuring that all actions are actually carried out and encompass all important areas of the company.
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Why use the BSC in your company?
One of the main reasons to adopt the Balanced Scorecard in your company is the possibilities that can arise. This is because with this methodology, it is possible to know which paths your business should follow to grow.
The BSC's strategic vision allows for the definition of more complete and detailed action plans, considering all sectors and business needs. With this, goals are created and developed based on everything that involves the company.
Furthermore, with the support of indicators, aligned with objectives, when using the Balanced Scorecard, managers can visualize what might happen in the future, providing a risk management more assertive.
By identifying the best paths for your company, you can also ensure that all communication between departments becomes more transparent and, consequently, more fluid.
All of this, together, improves the quality and performance of teams and processes, leading the company to achieve ever-better results.
What are the advantages of BSC?
OBSC is a methodology that benefits the entire company, from operational actions to strategies. Check out the main advantages it offers below.
Broad and intuitive view of planning
A well-thought-out plan is useless if few people can understand it and, most importantly, follow it. The Balanced Scorecard makes the vision of what's important for the company's growth much simpler and more intuitive.
This makes it easy for all teams to understand the main goals proposed and how to achieve them effectively.
Continuous Improvement
In a market with constant transformation and competitiveness, the chosen management method needs to be adaptable to keep up with these changes.
The strategic map developed by the BSC can be updated according to the company's needs, maintaining continuous improvement. As goals are achieved, the framework is renewed, causing the BSC to promote process optimization.
Integrates tangible and intangible indicators
The Balanced Scorecard is one of the first strategic management methodologies to integrate the tangible and intangible indicators used by companies. Thanks to this, the idea that only financial indicators were sufficient for setting goals has become outdated.
This means that the BSC allows you to get a complete view of the company by analyzing all the important indicators for the organization.
Optimize analysis and results tracking
The Balanced Scorecard offers a wide variety of information, very rich and detailed, on the performance and achievement of each employee's objectives. This, in itself, already allows managers to analyze and understand where and how to improve.
Furthermore, this analysis enables more assertive decisions, even if they are made emergently, when the results are different than expected.
It is also important to mention that, by using the BSC as a strategic tool, the company can create its own KPIs, regardless of the objective. This helps in staying focused on what truly matters for the strategy, avoiding unnecessary expenses and improving decision-making.
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9 steps to apply the BSC in your company
Now that you know the importance of the BSC and how it contributes to making strategic planning a reality, why not start implementing it in your company?
To do this, check out the step-by-step guide we've prepared to make it possible!
1. Create a strategic map for the BSC
The strategic map is the foundation for the Balanced Scorecard methodology. It's where you should present the business's mission and goals, covering all sectors and connecting points of different areas.
This map is what will help you define the essential actions for the company's planning. When creating your strategic map, remember to include all employees; it's important that they feel they are part of the process.
2. Define the objectives
The second step in applying the BSC is to define clear objectives. Therefore, when determining yours, consider all the four perspectives we've already mentioned and, of course, the areas of the company. These will guide you and help you achieve the best results.
The objectives can vary according to the company's needs and change if necessary.
3. Establish your BSC indicators
Just like clear objectives, it's important for performance indicators to be well-defined. This will allow the strategy to be measured periodically, tracking the progress of actions, and thus enabling necessary changes to be made to achieve the objectives.
4. Establish goals and individual responsibilities
After defining the objectives and indicators, it's time to put all the planning into action, through well-established and delegated goals. At this stage, they need to be defined individually and collectively, so that everyone participates.
The ideal scenario is for the manager and employee to establish this together, to ensure expectations are aligned.
5. Think about strategic actions
The fifth step is to put the goals into practice. Each of the actions to be developed by the company must be aligned with strategic objectives. For example, implementing new software will bring greater productivity, process improvement, and, of course, results.
The action of hiring a management system like this is aligned with the company's goal of making processes more assertive and effective. In other words, actions need to be planned to achieve objectives.
Align the strategy with the employees
You know that different departments of a company follow different routines. Therefore, it's normal for managers in each sector to have their own approaches. Thus, even though each one has its peculiarities, the teams need to be aligned and in sync.
For this, you can propose meetings or training sessions to explain the importance of each person on the strategic map, planning, and actions that will help the company achieve its goals.
7. Promote improvements
Even though the Balanced Scorecard offers a complete view of the end goal and teams always consult the strategic map, unexpected problems can arise, leading to wasted resources.
This way, it's important not to insist on actions that lead nowhere. Look for alternative routes to achieve your goals and propose improvements that correct flaws; this will make the journey smoother and more efficient.
8. Promote BSC follow-up meetings
Periodic meetings with other managers and also with employees will be fundamental to point out what is or isn't working in the strategy. This is the time to analyze performance indicators, identify failures, and correct them.
This follow-up should be carried out in all areas to ensure the success of the planning.
9. Keep learning constantly
When using the Balanced Scorecard, continuous learning becomes part of the strategies. With this, you and the managers will have the full capacity to review the BSC map, adapting to the company's needs.
Remember that the market is always transforming, and constant learning is the best way to prepare and act to ensure the company's competitiveness.
Count on Actio and elevate your company's strategy
As you may have noticed, the Balanced Scorecard, BSC, is an essential methodology for companies that want to go far, strategically, and ensure positive results.
At Actio, you’ll find the perfect solution to help with this mission. We’re talking about Tune, a complete software that brings together everything your company needs to develop and track performance and results.
The platform offers different methodologies for you to choose the one that best meets your organization's needs. Among the methodologies found are: BSC, OKR, PDCA, ESG, among others.
All of this so that you can boost the performance of all teams, achieving excellence, success, and quality in their processes.
With Tune by Actio, you elevate your results, based on data and methods that make your management more strategic. Visit our website and discover!
