Sunday, November 3, 2013

BALANCED SCORECARD AND FEED BACK STRATEGY SYSTEMS

Business process has now turned to be complex followed with everyday changing dynamics of the same. Many organizations still follow the traditional Strategy formulation process where the senior team management takes the decisions based on available facts, formulates the strategy passes  the same to the lower level management to execute followed with an monitoring system. This process of management policy frame work is traditional in terms of today’s changing market dynamics and complicated business process. It is a single-loop feedback process in which the objective has already been determined and will not change.

The drawback of this type of system is that if there are certain changes in the market dynamics the same feedback is never forwarded to the senior management team who have created strategy. Hence the senior management gets delayed feedback of the real changes in the market. Senior managers need feedback about more complicated strategies and more turbulent competitive environments. The planned strategy, though initiated with the best of intentions and with the best available information, may no longer be appropriate or valid for contemporary conditions. This is the key place where every organization fails to grow consistently over the time. Organizations itself create a dead lock system   which slows the growth of the organizations. Peer competition remains the key focus for growth but the loophole of feedback system gives immense momentum to the competitor to grow their business. This entire feed back process is a part of the learning growth phase of the Balanced score card.

In my research I find the SME segments utilizes the efficient system of feedback process of learning curve aspect of Balance score card. They are more open to receive the customer satisfaction feedback and design their products accordingly and their process too. This is one of the prime reasons that SME tends to grow their business more strategically. They implement the Balanced Score card pillars initially at the time of development of their business process. In my research I find that large organization needs to develop and follow these tree steps which have been provided by Robert Kaplan in his Balanced score card strategy implementation process which as follows:

1.       A shared strategic framework that communicates the strategy and allows each participant to see how his or her activities contribute to achievement of the overall strategy;
2.       A feedback process that collects performance data about the strategy and allows the hypotheses about interrelationships among strategic objectives and initiatives to be tested; and
3.       A team problem-solving process that analyzes and learns from the performance data and then adapts the strategy to emerging conditions and issues.
4.        
 Apart from efficient feedback system I find that where the business process is complexes the following test can be applied like
1.       Correlation
2.       InifiQtive Review
3.       Anecdotal Reporting
4.       Management Garning/Scenario Analysis
5.       Correlation Analysis
6.       TEAM PROBLEM SOLVING
7.       Cross- Functional Teams
Adopting the Balanced score card steps helps to develop  common channel for sharing of information which leads to development of strategy based on facts gathered from various segments of an organization. It helps to link individual efforts and accomplishments to business unit objectives which further leads to a consistent growth of an organization. For example if an organization requires extensive knowledge up gradation for selling various products then only making decision about the training would not solve the issue. How long is the delay between quality improvements and increases in customer retention?  This is being derived from proper feedback system.

 Well the above strategies might fall short of the management capabilities but they are more helpful in getting and developing proper management decision making. The main aim of Balanced score card is to get the same into an integral part of the organization business process and align it to respective business goals. A formal, periodic strategic review meeting plays a critical role in the executive team strategic-learning process. Unfortunately, most management meetings focus on operational, not strategic issues. The prime reason of today’s business failure is that strategy is less discussed and more focus gets into short term achievement of business objectives. In my research I have found many times and I have shared many times that short term objective achievement leads to a long term crash of the business vision and its mission. Proper implication of Balance score card could help an organization to grow and achieve the short term mistakes which could affect the long term objectives of an organizations.
Written by Indraneel Kripabindu Sen Gupta & Hardik Bhatt.

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