Benjamin Franklin is credited with the maxim “failing to plan is planning to fail.”
And yet, many organizations have strategic plans, 70% of which fail. Many plans languish on shelves gathering dust, often the product of extensive (and expensive) consultants. Why? Effective planning – that is, planning that truly makes a difference – has several characteristics1,2: (1) it is directly tied to organizational mission and values via input from a variety of sources, (2) it is embraced by leadership and kept front and center through a sense of urgency, (3) it is actionable (presents clear, time-linked steps across all organizational components), (4) it is readily accessible and makes sense to everyone in the organization (communicated clearly and often), and (5) it is evaluated with metrics that are collected and analyzed at specified intervals. There are many approaches that have developed and can lead to organizational gains. Which one is best for an organization depends on its size and scope, but the characteristics identified above cut through them all.
The Balanced Scorecard
In the 1990’s Kaplan and Norton introduced the Balanced Scorecard3,4. Their model made clear that organizational goals need to be structured around organizational aims that are tied to the mission; the model makes clear distinctions between “aims” and “means.” Aims refer to the organizational customer and mission, while means refer to the processes, skills, infrastructure, and resources needed to get there. The model further clarifies that strategic plans are really a series of hypotheses that tie the two together, positing that if we do these things with these resources (means) we believe we will achieve these objectives (aims). As the model evolved, the creators elucidated the complex relationships that go into these strategies and tactics, creating clear paths between stakeholders, specific processes, and the resources or organizational characteristics. These are then translated into a strategy map. Whether the model is adopted in principal or detail (you can become certified in its use5), it offers excellent guidance for creating actionable and measurable plans.
The model breaks the process into four iterative components referred to as “perspectives”: Customer, Finance, Internal Process, and Learning and Growth. Initially developed with for- profits corporations in mind, the finance perspective was the top priority – returning value to investors and owners. Later applied to non-profits, the top priority there shifts to Customer
– the value to the stakeholders and community when the mission is operationalized. In both cases, finances matter – they fund ROI or they fund mission – but their relative priority is reversed. The process for development of objectives in each perspective follows a logical sequence: First, what are you attempting to do and what does that look like financially? Then what must you be able to do extremely well to achieve that? And, lastly, what will that take in terms of new skills or human resources, new technology, and infrastructure. The planning process needs to be iterative because as the means and aims are reconciled, it can become clear that goals need to be scaled back, the financial cost is too high, or the means do not exist to achieve them. The back and forth works to make the plan actionable.
The very name of the Balanced Scorecard suggests the hypothesized causal nature of the relationships (“Balanced”) between the perspectives and the fact that the hypothesized relationships must be measured (“Scorecard”). Developing a strategic plan, however, cannot be a simple internal exercise, nor can it be accomplished by a Board independent of its stakeholders and staff. An effective plan requires internal and external information gathering, industry expertise, and the ability to synthesize and prioritize among many possible goals and objectives. Boards and stakeholders have an important role to play.
Learn more about the Balanced Scorecard and how to build a plan for success at your organization by viewing the full whitepaper above.
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