“It’s better to 100% fulfill a not very correct strategy than 70% right”

- Expression of one of my employer.

Strategy is a working tool when planning for the next period. It is thanks to the strategy that projects, marketing budget, HR resources, customer segmentation, business proposals, new product development are determined.

Balanced Scorecard (BSC), in the English version - Balanced Scorecard (BSC). BSC is a mechanism for successively communicating to the staff strategic success factors, company goals and monitoring their achievement through the so-called Key Performance Indicators (KPIs), in the English version - Key Performance Indicator (KPI). ( C ) wikipedia

This system was developed by Harvard School professors Businesses by Norton and Kaplan.

This is a whole system of enterprise management, or a large department, which is based on the following postulates:
1) it is necessary to manage what can be considered
2) the strategy of the enterprise can be expressed in quantitative terms very clearly
3) each employee of the enterprise must know for which strategic block he is responsible for , and knowing how important it is for the whole company is more motivated in fulfilling its own plan.


Actually, what is the strategy of an ordinary enterprise?
“The organization“ horns and hooves ”intends to take a leading position in the market for transfusion of water from empty to empty due to the high quality of customer service and leadership in developing new valuable products for the most profitable customers” - if you find something in the business plan, then this will not be the worst option. MTS also allows you to talk about strategy in a much more mundane perspective. Having formed the BSC, your employees will still expect tactical plans, but the goals reflected in the strategy will be much more clear.

The strategy of the enterprise that introduced the MTP will look like this: “The Horns and Hoofs Organization will achieve a 40% increase in share price by reducing the cost of non-core assets and increasing revenue for the most profitable customers (entering new markets, introducing new ones demanded by our current customers products). To achieve such goals, our company will improve the quality of the production process, will engage in a system to increase customer loyalty. To organize such work, we need to have the cheapest production staff, and the most competent managers. ”

As you can see, the MTP considers any organization from 4 sides. Since this tool is mainly used in large and sustainable organizations, the Strategy is a document for a period of 3 years, because projects implementing this strategy will reach the bottom just within 3 years.

So the fish begins to rot from the head:
1) Finance - in this part of the strategy, the CEO describes what financial purpose the meeting of shareholders approved for him after the report. In our example, the horns and hoof shareholders want to get 40% earnings per share in 4 years (a good return for the American stock markets). They also write that for this they will take non-core assets off the balance sheet, which will reduce their costs and aim at increasing revenues.
2) Client component- To increase profitability, our CEO after segmenting customers and analyzing sales concludes that it is better to sell to those who already buy the most profitable products (everyone here thinks for himself, in principle, this is not a McDonald's strategy for example). For customers who do not provide the necessary profitability, the CEO can offer a more standard product option when the cost of servicing such a client is minimal.
3) Component of business processes - well, everything is clear here. To implement the plan, it is necessary to change the production process, reduce the amount of rejects (thereby reducing costs), develop and implement CRM, organize the sales process so that an already attracted customer would be forced to come again for a more expensive product
4) The human component- According to our CEO, production personnel may not get anything, because everyone makes cars, but sellers and management should have a strong and complex motivational system focused on the implementation of the strategy. (By the way, our CEO is wrong: it is better if all employees are performance oriented strategies)

So after a brief analysis we have to draw a strategic map. On the strategic map, we denote KPI (Key Performance indicator) of each component, as well as connect some KPI to each other, as related. As a result, we get something like the following .

After such a document is approved at the general meeting of managers, KPIs will be worked out for each structural unit (at the suggestion of the creators of the system no more than 8 pieces). Heads of departments define KPIs for each employee. Also about 8 pieces per brother. All together gathers in the form of BSC from bottom to top.

Why do IT workers need this?

IT employees, especially those implementing management systems, must have a good understanding of why the client needs it. IT employees in large companies must understand why their goals are as they are now, and how their implementation or failure will affect the welfare of the entire company. IT managers can use the BSC within their unit to improve the quality of service and regulate the assessment of their work with management. By and large, everyone is doing well. Starting from clarity in the head, ending with cutting off unnecessary attempts due to the realization of someone’s ambitions, because the company always goes where you are, and it’s very easy to check any project for compliance with the strategy (at least part of KPIs should come close to the target values) .