Shared by: N. Adhi W
*"Lead and Manage Your Organization with the Balanced Scorecard"
* /By Robert S. Kaplan [Excerpted from Balanced Scorecard Report, vol. 4, no. 4]/
[The current fascination with leadership is nothing new. Works as diverse as the Bible and The Prince, by Machiavelli, offer insight on the role of leaders in society. Leading management scholars, including Abraham Zaleznik, Warren Bennis, John Kotter, and Ron Heifetz, have contrasted the quite different roles and styles of leaders and managers. Leaders, for example, help people contemplate and adopt new ideas and approaches, while managers maintain stability and order. Leaders inspire employees to make day-to-day decisions that enhance an organization's long-term viability, while managers institute systems to ensure that all employees comply with top-down policies and directives.
Organizations, however, require more than just great leaders. They need executives who can simultaneously lead and manage. Executives must lead by continually adapting to dynamic, highly competitive environments; by communicating vision and strategy to employees; and by inspiring employees to innovate in order to achieve organizational objectives. But, at the same time, executives must manage by orchestrating a complex system of interactions that deliver organizational synergies, allocate resources effectively, align reward and incentive systems, and ensure that valid reporting and control systems are in place.
Historically, measurement systems have been used primarily to manage - for example, through budgeting, reporting, target setting, evaluation, and compensation. Many people may therefore be surprised to learn that a measurement system like the Balanced Scorecard (BSC) has been used by many executives as a powerful leadership tool. By studying their experiences, we learned how executives can use the BSC as a formal, systematic approach to simultaneously lead and manage their organizations to breakthrough success.
*1. Building the Strategy Map and Scorecard (Translate the Strategy into Operational Terms) * Leadership and management activities are central to the initial construction of a strategy map and Balanced Scorecard. Executives use the BSC first and foremost to articulate and communicate the organization's strategy - a leadership action, typically triggered by a changing, challenging environment. The process of building a BSC and a strategy map to describe the strategy helps an executive team develop fresh approaches to long-standing problems and create entirely new ideas for coping with change and challenges. The process shapes attitudes and ideas and establishes new directions for the organization. The interplay of leadership and management duties occurs right at the top of any strategy map and BSC. The high-level financial perspective consists of two overarching strategic themes: Revenue Growth and Productivity. The Revenue Growth theme requires leadership to identify new
products and services, new markets, and the enhanced value proposition that broadens and deepens customer relationships. The Productivity theme, in contrast, calls for management practices that improve the utilization and efficiency of existing resources and processes.
*2. Cascading the BSC Throughout the Organization (Align the Organization to the Strategy) * The second SFO principle, which involves cascading the strategy to decentralized divisions, business units, and support functions, is ostensibly a management function. It's the nitty-gritty of translating a high-level strategy into aligned and integrated substrategies throughout lower-level organizational units. But the cascading and alignment processes themselves actually promote leadership at much deeper levels of the organization. Rather than senior executives dictating the company-level measures to the operating units, the cascading process encourages each operating unit to define its own strategy - based on local market conditions, competition, operating technologies, and resources - to deliver on the high-level strategic objectives. The most remarkable transformation occurs in support functions and shared-services units (like HR, IT, and purchasing). The cascading process transforms support departments from functionally oriented cost centers into strategic partners of line operating units and the company. As support departments gain the ability to articulate - often for the first time - their own strategies for adding value, their department heads become leaders. Before, they managed according to a budget. Now, they lead by developing a mission and a strategy for their respective departments.
*3. Communicating, Aligning, and Rewarding (Make Strategy Everyone's Job) * Communication is clearly a leadership function. Effective, visionary communication is one of the most critical tasks of any organizational leader. The most successful BSC executives clearly understood the import
ance of communicating their companies' mission and strategy when they adopted the BSC. They saw the BSC as a highly effective way to deliver their message clearly and meaningfully to everyone in their organization. Executives use the strategy map and scorecard to communicate the high-level vision, mission, and strategy to the entire organization. The communication process helps organizational leaders motivate their people and align them to the strategy. With a clear understanding of vision and strategy, every employee learns what his or her organization is trying to accomplish and how he or she can contribute to its goals. Such understanding generates intrinsic motivation. Employees come to work energized with the creativity and initiative to find new and better ways through which they can help the organization succeed.
*4. Integrating Strategy with Reporting Systems, Processes, and Learning and Growth (Make Strategy a Continual Process) * In a newly integrated planning
and budgeting process, the executive team - through shareholder feedback and customer and competitor analysis - sets stretch-performance targets for the scorecard's strategic measures. These measures provide the basis for identifying and screening strategic initiatives that will guide the organization in achieving stretch-target performance. The integration with budgeting occurs when the team authorizes scarce resources (people, capacity, and funds) for the strategic initiatives. Finally, the organization links its strategy to existing organizational improvement initiatives, such as activity-based management and total quality management (including Six Sigma programs). All these practices - setting targets, screening initiatives, linking strategy to operational improvement programs - help executives deliver on their managerial responsibilities for strategy implementation.
*5. Mobilizing Change Through Executive Leadership * The fifth SFO principle - executive leadership is not really a separate process. It pervades all aspects of the journey to breakthrough performance. Along this road, the executive leader plays three different roles:
a. Mobilization. Initially, the executive communicates the need for change and creates a coalition at the top to develop and deploy the strategy via strategy maps and Balanced Scorecards.
b. Governance. The executive establishes new systems for planning, budgeting, resource allocation, and reporting, and initiates the new management meeting. These actions reinforce the strategic message, keep the organization focused, and ensure that adequate resources are in place to accomplish strategic objectives.
c. Strategic Management. The executive reinforces the strategic message at every opportunity. He or she communicates with employees and questions managers about their contribution to organizational strategic objectives. He or she conducts the new management meeting, featuring double-loop learning, and asks "why, what-if, suppose that." types of questions to emphasize learning and team problem solving. All aspects of leadership and management become integrated as organizations apply the five principles to become strategy-focused. And rather than switch between leading and managing, executives embody both roles simultaneously and seamlessly.]
============================== Article forwarded by: N. Adhi W. Leading Service Officer BOLDER Mitra Unggul
Jumat, 19 Agustus, 2011 01:05
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