Friday, April 10, 2009

In recession, think risk management published an article entitled Balanced Scorecard founder: In recession, think risk management, by Christina Torode, commenting about some considerations of Robert Kaplan on the recession.

Robert Kaplan co-developed with David Norton, the Balanced Scorecard methodology nearly two decades ago to introduce a corporate strategy methodology that measures more than financial results and aligns business units with corporate objectives.

Kaplan considers that organizations need to include risk management among the key performance indicators that they measure.

Robert Kaplan's comments:
- If you can't measure, you can't manage and you can't improve upon your corporate success.
- Financial performance is a lag indicator. … Now we're seeing the consequences of not making risk management a strategic part of strategy.
- The principles of the Balanced Scorecard can be applied to any business unit, including IT, but it is critical that a department's internal scorecard link to the corporate strategy.
- In a recession you need to focus on short-term goals and the three Cs: reduce costs, rebuild capital and watch your credit.

For long-term corporate strategy success, Balanced Scorecard focuses on several key areas:
- Aligning the organization with strategy and objectives
Create balance and a sense of common purpose.
- Mobilizing change through executive leadership
Everyone in the organization needs to understand why a corporate strategy is changing, and only the leaders can drive that change.
- Linking strategy to business users
Make everyone accountable for individual excellence. But for this to work, every individual needs to be able to visualize the role he plays in making corporate objectives and overall strategy a success. Kaplan advises giving everyone in the organization a strategy map.
- Making strategy a continual process
Develop strategy maps and even dashboards for employees so they can drill down and see the links between objectives, how individuals and teams play a role in that end goal, and how the success of that objective is measured. Visual strategy maps allow employees to see links between objectives and how they are measured.

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