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As with any groundbreaking business tool the Balanced Scorecard has a lexicon all its own, and this discussion distinguishes the meaning of two key terms: objective and measure. This is a critical distinction and one the CIO must master to create a scorecard that both accurately describes the IT organization s game plan and brings it to life for those charged with the responsibility of executing it on a day-to-day basis your employees. An objective is a succinct statement, normally beginning with a verb, describing what the IT organization must do well in each of the four perspectives in order to implement its plan. Examples vary widely but could include Reduce costs , Improve service delivery time , Enhance reliability , and Close our skills gap . Strategy maps are comprised entirely of objectives. Tracking success in achieving the objective is the domain of the measure, a (typically) quantitative device used to monitor progress. For those who grapple with an issue best by first defining it, try this for a strategy map: a one-page graphical representation of what the IT organization must do well in each of the four perspectives to successfully execute its game plan. Strategy maps do not take any measurements, no tallying of results here, instead the IT organization is communicating to all its audiences, internal and external, what it must do well to achieve its ultimate goals. This fulfills the description of the strategy map as a powerful communication tool, signaling to everyone within the enterprise what must occur to beat the almost overwhelming odds of strategy execution. So why use the term map Why not a more mundane term such as strategy sheet or must do list A map guides us on our journey, detailing the pathways to get us from point A to point B, ultimately leading us to our chosen destination. So it is with a strategy map defining causal pathways that weave through the four perspectives, which lead to the implementation of the IT organization s strategy. An example strategy map of a fictitious company is displayed in Exhibit 5.4. Using the raw materials previously captured mission, vision, strategy, user expectations the IT organization s scorecard development team starts to build a strategy map for the entire IT organization that describes what it must do well in each of the four perspectives in order to succeed.
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Step Four (a): Gather Employee Feedback Ultimately, the CIO expects the IT organization s Balanced Scorecard to provide information that allows
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EXHIBIT 5.4
Source: Balanced Scorecard Step by Step: Maximizing Performance and Maintaining Results (2nd edition) by Paul R. Niven
A Strateg y Map
chapter 5
it performance management
all IT employees to understand how their day-to-day actions link to the organization s strategic plan. Therefore, the CIO polls IT employees to ensure they feel the strategy map has captured the critical elements of value to the whole IT organization.
Step Five: Develop Performance Measures Returning to the ancestral homeland of the Balanced Scorecard, which was created many years ago as a measurement system, the IT organization s scorecard development team translates each of the objectives on the strategy map into metrics that can be tracked to provide insight into the execution of IT strategy and establish accountability throughout the organization. Step Five (a): Gather Employee Feedback This represents an optional step. While the CIO desires employee feedback at every turn of the scorecard wheel, the appropriate managers must eventually own the highestlevel performance measures, and one would expect their stickiness factor to be off the charts if they have not had the chance to participate. Consider using this opportunity to explain to IT staff members precisely why the particular measures were chosen. Step Six: Establish Targets and Prioritize Initiatives Without a target for each measure, the CIO and measurement managers have no way of knowing whether improvement efforts are yielding acceptable results. The data from the IT scorecard metrics provides the IT organization with only half the picture. A target gives meaning to measure results by affording a point of comparison. Additionally, all measures should be accompanied by initiatives designed to bring the targets to fruition. An initiative may be a specific action, project, or plan that supports the achievement of the target. Step Seven: Gather Data for Your First Balanced Scorecard Report Dare to be bold and proclaim that within 60 days of developing your performance measures the IT organization will conduct its first meeting with its scorecard at the helm. This requires gathering the data necessary to supply that initial report. You may be thinking, We ll never have all the data! And you are probably correct, because most new scorecard adopters are missing at least a portion of the data for performance metrics as they ramp up their reporting efforts. However, don t let that stop you from the many significant benefits that can accrue from discussing the measures you do have: focus, alignment, and improved resource allocation decisions to name