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Performance Management Reference Materials

The Strategy-Focused Organization

How Balanced Scorecard Companies Thrive in the New Business Environment

By Robert S. Kaplan and David P. Norton; Harvard Business School Press, 2001

The ability to execute strategy can be more important than the strategy itself.

Strategy implementation is as important as the strategy itself. In many cases, it is not the strategy but the implementation of the strategy that often leads to problems. In The Strategy-Focused Organization, Kaplan and Norton delve into the processes involved in implementing a balanced scorecard strategy and creating a strategy-focused organization. This book is a hands-on guide for managers and executives that picks up where their earlier book, The Balanced Scorecard, left off. Kaplan and Norton provide practical advice managers can use to implement a balanced scorecard approach to measure organizational performance. Also, they have included case studies of how private and public organizations made the balanced scorecard work and the problems and issues their managers encountered.

In The Balanced Scorecard, Kaplan and Norton provided managers a framework to measure organizational performance from four perspectives: financial, customer, internal business processes, and learning and growth. While organizations worked to implement their own strategy for using balanced measures, Kaplan and Norton discovered a consistent pattern for achieving strategic focus and alignment. This pattern evolved into five principles discussed in The Strategy-Focused Organization. The five principles are:

  • Translate the Strategy in Operational Terms. Once managers identify specific performance measures and develop an implementation strategy, it is important to describe the new performance measures to employees. In a strategy-focused organization everyone understands the performance measures and the goals and objectives of the organization.

  • Align the Organization to the Strategy. Managers work around organizational barriers to achieve success. In a strategy-focused organization, work units become linked to the strategy through common goals and objectives, thus creating a synergy that ensures that the linkages continue to work.

  • Make Strategy Everyone's Everyday Job. In a strategy-focused organization, executives and managers use the balanced scorecard to communicate with and educate their employees about the new business strategy. Everyone understands the strategy and understands how they impact the goals and objectives of the organization.

  • Make Strategy a Continual Process. In a strategy-focused organization, the strategy is linked to the budgeting process, thus protecting long-term initiatives. Managers meet regularly to discuss and review the strategy; they use the strategy to learn of new issues and goals and to adopt new processes for change. As a result, the managers gain new ideas and knowledge that they immediately use to improve organizational performance.

  • Mobilize Change Through Executive Leadership. In a strategy-focused organization, executives instill in their employees how important the change is to the organization and provide leadership and support for the change. The authors note that executives use the balanced scorecard as a vehicle to communicate a vision for future performance that is better than the present.

The balanced scorecard provides employees with a broad understanding of their agency and work unit strategy. It explains where they fit in their organization and how they can contribute to agency goals and objectives. In a strategy-focused organization, executives, managers, and employees realize that teamwork, communication, and commitment are key to successfully implementing a balanced scorecard strategy.

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