Tools For Strategy Implementation

The Balanced Scorecard is a strategic management tool developed by Robert Kaplan and David Norton in the early 1990s. It was designed to provide a comprehensive view of an organization’s performance, going beyond mere financial measures. BSC consists of four perspectives: financial, customer, internal business processes, and learning and growth.

Each perspective is associated with a set of performance measures that are linked to the organization’s strategy and goals. For instance, the financial perspective includes measures like revenue growth, profitability, and return on investment. The customer perspective focuses on customer satisfaction, market share, and retention. The internal business process perspective looks at measures such as cycle time, quality, and productivity. Finally, the learning and growth perspective examines factors like employee training, innovation, and satisfaction.

BSC ensures that an organization doesn’t just chase short-term financial success but invests in sustainable performance. It provides a well-rounded view, combining both financial and non-financial measures. This approach helps organizations make better decisions and improve performance sustainably.

However, it’s important to note that the effectiveness of BSC depends on proper implementation and alignment. The objectives and goals should be set for the entire organization, cascading down to all departments and functions. If the cascading objectives are not given due focus, it can harm organizational performance and demotivate employees. BSC generally involves setting objectives for a year.

This framework is suitable for organizations seeking a comprehensive view of performance across various aspects of their business and is often used in traditional corporate settings.

Objectives & Key Results (OKR): The Agile Alternative

OKR is a more recent addition to the strategic management toolkit, and it’s especially popular in the tech industry, largely due to its simplicity and alignment with agile methodologies. Agile methodologies break a project into smaller phases called sprints, with specific outcomes linked to overall project objectives. 

OKR is closely connected to these sprints. OKRs involve setting objectives and defining measurable key results that align with those objectives. Unlike BSC, OKRs focus on specific, measurable, and ambitious objectives. They encourage transparency, alignment, and agility within organizations.

Objectives are the guiding direction, explaining why specific goals are being pursued, which can be a strong motivator for teams. Each objective is associated with a set of key results that determine success. For example, if the strategic goal is to provide high-quality and personalized service to customers, the OKR might look like this:

Objective: To reduce customer resolution time by half.

Key Results:

1. Reduce the time taken by customers to reach the right executive by 20%.
2. Implement a generative AI-based chatbot to support customer service executives.
3. Train customer service executives to reduce call times by 20%.

OKRs can include both specific key results (e.g., measurable time reductions) and binary key results (e.g., successful implementation of an AI-based chatbot). Progress is tracked using completion percentages.

This approach shares some similarities with the Balanced Scorecard in that objectives are often set from the top-down and cascaded throughout the organization, ensuring everyone’s efforts contribute to overarching goals. However, OKRs provide more flexibility, allowing individuals lower in the organizational hierarchy to innovate and adapt.

OKRs are especially well-suited for organizations valuing agility, rapid goal setting, and frequent reassessment of objectives. They are commonly used by startups and technology companies.