In order to inspire staff within an organization, the executive leader must be assertive to regularly communicate the strategic design of the firm, and motivate everyone within the organization from the executive staff all the way to the operational level with a vision for a successful future as partners within the firm. But if you asked the average line staff the mission, vision and values of the firm, you would be hard pressed for an answer. What’s more, even if by lucky chance the staffer knew any or all of these components (I once worked for an organization where we were required to memorize or carry on our person the mission and vision), they would likely be at a loss for how their particular function within the organization fed into these goals, and helped moved the organization toward a realization of its mission. To mitigate this failure, a tool such as a balanced scorecard for example, offers communication that can be used by executive leadership to measure the progress of the firm regarding its mission, vision and values. More importantly, the balanced scorecard offers tangible, measurable results that could be graphically illustrated, highlighted in organizational updates, or celebrated with an adult beverage on casual Friday at the firm.
When mapping the balanced scorecard using a flow chart such as the strategy map found in a typical business text, various perspectives are considered, but ultimately, they feed into financial results. Efficiency measurements may show a potential for the firm’s performance in the future, but it is certainly no guarantee. When all qualitative and quantitative data are summed up in the balanced scorecard, it is only the success of the strategic plan that will prove or disprove that scorecard. On the one hand, you may have a firm with solid earnings such as Yahoo that was a once great performer on the NASDAQ, as illustrated by the super-flameout chart below tracking the decennial stock price (keep in mind the split adjusted chart means in the year 2000 the stock was at the dizzy height of intraday trading north of $500! [NOT a typo]):
Compared with those prices, Yahoo is practically a penny stock that up until recently was in desperate want of a suitor parent firm. This may illustrate that what is good for stocks is not necessarily good for business, and vice-versa. Likewise, the balanced scorecard should be judged with cautionary tones because in the real world, indicators such as mind boggling debt or flat out lack of demand can bring down the most promising of firms.
Carpenter, M. & Sanders, G. (2008). Strategic Management: A Dynamic Perspective. Upper Saddle River, New Jersey: Prentice Hall.
(2011). Yahoo Historical Prices. Yahoo Finance. Retrieved December 7, 2011 from http://goo.gl/qfeAW
(2012). Yahoo! Inc. Google Finance. Retrieved August 27, 2012 from http://goo.gl/1WdfH