One of the things usually not found on a balanced scorecard, tool vendor rating can really help an organization save time in choosing business partners, as well as be able to work with them more consistently. The balanced scorecard is a strategic management approach that emphasizes getting the big, complete picture in order to be better able to make important decisions. By using this framework, organizations can effectively orient themselves toward their goals while being aware of the many aspects of overall performance. The concept is not a new one, and it has been applied to many parts of organizational endeavor, from performance management to planning and maintenance.
Basically, the balanced scorecard consists of four integrated perspectives: financial, marketing, developmental, and operational. In the original terminology by the proponents Kaplan and Norton, these were the Financial, Customer, Learning & Growth, and Internal Business Process perspectives. As can be seen, these encompass all the activities of an organization, and hence can rightly claim to be able to measure and integrate all of these.
In an ideal implementation, the scorecard would be developed from the top down. That is, everything would begin with one mission or vision for the entire organization, which is a long term goal. Then, in accord with this vision, smaller and smaller goals and objectives could be formulated as necessary. Each department, subgroup, team, and employee would eventually be tasked to fulfill a particular goal so that, all together, they can move towards the accomplishment of the vision. This would indeed ensure unity within the organization, since everyone would then be working towards the same goal. Coherence would also be much improved since ideally, everyone would then know why they need to do what they are assigned to do.
Even in less than ideal implementations where, to some extent, a bottom up approach also needs to be used, the balanced scorecard is a powerful tool. It is useful, for one thing, in bringing clarity to an organization, by forcing management to clearly decide on a set of goals, and then to ensure that everybody in the organization is made aware.
Another reason why the balanced scorecard is useful is that it provides an effective way of monitoring these goals from all perspectives. Performance can then be measured using relevant metrics against an ideal or desired outcome. Progress towards these goals can be determined, and whether there is significant progress or not, will correlate with performance. This is in contrast to some of the hazy, ambiguous management and performance tracking policies that have plagued many organizations since the beginning of humankind.
Using the balanced scorecard, tool vendor selection and relations can be much improved. In the same way, a complete picture of these vendors’ past performance can be determined using a scorecard. Smooth working relationships can then be maintained by managing the proper department’s performance, again using the scorecard methodology or concept. This flexible, powerful tool should be in any smart strategic manager’s arsenal, since it can both clear things up and make them easier to track and improve.