|
Advantage Over Balanced Scorecard Comparison with an established methodology might be the best way to understand the effect the Provisdom Decision Platform will have on the value creation ecosystem. Balanced Scorecard is a “strategic planning and management system that is used extensively in business and industry, government, and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals.”1 According to the Balanced Scorecard Institute, “There are over a hundred Balanced Scorecard and/or performance management automation development companies,” and the major enterprise software vendors (e.g. Oracle, SAP, IBM) all offer some variant of Balanced Scorecard capability. A detailed discussion of Balanced Scorecard is beyond the scope of this article. More information can be found at the website of the Balanced Scorecard Institute (http://www.balancedscorecard.org). The goals of Balanced Scorecard, such as strategic alignment and agility, are clearly positive. Yet the devil appears in the details. For instance, Balanced Scorecard requires the use of different performance measures or Key Performance Indicators (KPIs) to both assess progress towards various strategic objectives and attempt to insure strategic alignment with enterprise goals; but which KPIs to choose, and why? The KPI Library (http://kpilibrary.com/), for example, boasts nearly 1000 KPIs in 16 major categories. Do the chosen KPIs and associated human decisions actually maximize shareholder value? If a KPI falls below some (arbitrary) threshold, how does a decision-maker know what action to take in order to bring it back in line? And what effects does that action have on other corporate objectives? Enterprise strategic planning with the Provisdom Decision Platform becomes considerably simpler and more transparent. In Provisdom’s world, there is only one enterprise objective: maximize True Shareholder Value. The True Shareholder Value of all decisions is directly connected to information, obviating the need for multiple strategic objectives and associated KPIs. Instead of reporting KPIs, a digital dashboard might report the current action required, based on the strategic model, along with key information identified during model analysis. Instead of spending time “watching the lights”, a manager’s role becomes more involved with execution (e.g. managing people), ensuring the model continues to match intuition about reality, and identifying new strategies for creation of True Shareholder Value. 1 http://www.balancedscorecard.org/BSCResources/AbouttheBalancedScorecard/tabid/55/Defa ult.aspx The Balanced Scorecard Institute published an article titled “The Revolution in Strategic Planning”2, comparing traditional strategic planning methods to the Balanced Scorecard method. The table below, we have expanded this comparison to include Provisdom’s approach. Note the considerable simplification with Provisdom, to the extent that the Provisdom column becomes rather repetitive, since the True Shareholder Value of all decisions is connected directly to relevant information, eliminating the need for KPIs, etc. 2 http://www.balancedscorecard.org/OldWayNewWay/tabid/105/Default.aspx
|