Page 375 - Operations Strategy

350 The proCess oF operaTIons sTraTegy – monITorIng and ConTrol

Figure 10.5 The measures used in the balanced scorecard

Financial performance
measures
To achieve strategic
impact, how should we
be viewed by shareholders?

Internal process Customer performance
performance measures Overall measures
To achieve strategic impact, strategic To achieve strategic
what aspects of perfor- objectives impact, how should we
mance should business be viewed by customers?
processes excel at?

Learning and growth
performance measures
To achieve strategic impact,
how will we build
capabilities over time?

of performance it uses, encourages companies to take decisions in the interests of the
whole organisation rather than sub-optimising around narrow measures. Developing a
balanced scorecard is a complex process and is now the subject of considerable debate.
One of the key questions that has to be considered is how specific measures of perfor-
mance should be designed. Inadequately designed performance measures can result in
dysfunctional behaviour, so teams of managers are often used to develop a scorecard
that reflects their organisation’s specific needs.
Writing about how to create a strategic control system, and making use of balanced
scorecard principles, Stephen Bungay and Michael Goold say that there are a few
5
important lessons about how to make strategic control really work effectively. Their
prescriptions are as follows:
● Invest in the necessary training and adopt an appropriate style in reviewing plans,
especially in the early stages.
● Invest in careful preparation before review sessions, as good questions are vital.
● Set stretching targets, but only a limited number.
● Follow through, take it seriously and make actions and words consistent.
● Create an explicit link with financial targets and budgets, integrating the two pro-
cesses (or none of it will be taken seriously at all).
● Show that the operating company benefits from the process (e.g. through the busi-
ness becoming easier to manage) and give strong support for success so that another
real benefit becomes the approval of senior management, or a better relationship
with the centre.

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