Whether your company is a market leader or brand new to the marketplace, all companies are constantly looking for fresh new ways to stay ahead of the competition. Although there are a wide variety of strategy and measurement tools, the balanced score card is a tool that ties these two components together.
This measurement tool was first introduced in the Harvard Business Journal in 1992. The balanced scorecard was designed to provide executives with a new formula for developing a company’s strategic objectives, while creating measurement tools. This tool quickly proved to be successful at motivating executives to come up with breakthroughs in critical areas, such as customer service and bringing new products to market.
While many companies have measurement tools, they are often disjointed and disconnected from financial initiatives. Some companies use the yearly budgeting tool to facilitate planning. However, this can leave gaps in planning and fail to address important points.
Implementing the Balanced Score Card
Introducing the balanced score card is a process that takes hard work from senior management and employees to drive success. Here’s a quick breakdown of the three steps needed to launch this planning tool:
1. Determine which Business Units Needs the Card
The first step in implementing a balanced scorecard is making a list of business units that will use the tool. According to the Harvard Business Review, a scorecard is appropriate for business units that have their own customers, production facilities, channels for distribution and financial performance measures. Once you’ve defined which business units will need their own scorecard, you’ll need to bring senior managers up to speed on the process.
2. Partner with Management Teams
Each senior manager should receive general information about how the balanced scorecard works and the benefits. Once the management team has reviewed the information, they will meet with the facilitator to discuss ideas and input for the process. In these meetings, senior managers will also accomplish the definition of success factors, the company’s mission and performance measures.
After the initial meeting, senior managers will meet for a second workshop to further define the scorecard goals. The attendees of this meeting will be more diverse including senior managers and high level and middle managers. At this meeting, an implementation plan will be developed.
Then, a final meeting will be held with the executive team only. In this meeting, the team will come up with a final plan for the company’s objectives and how they will be measured. During this process, senior management will also need to develop a strategy for rolling the process out to employees.
3. Implementing and Reviewing the Balanced Scorecard
Once all of the details of the balanced scorecard have been finalized, management will need to implement the scorecard. This process includes communication with employees and putting support in place for the new measurement systems. Once the information has been implemented, the scorecard will need to be reviewed quarterly to measure effectiveness and performance. In addition, the senior management team should evaluate the scorecard annually. In this meeting, they will need to determine if the measures still fit in terms of strategic planning and resource allocation.
Trying a Pilot Program
Some companies decide to start out slower when implementing the balanced scorecard. In these cases, a company can launch a pilot program in specific divisions to test the program’s effectiveness. During this process, many companies choose to focus on output measures to drive better success.
After the program has been launched, the company can evaluate the effectiveness of the program and determine if it should be integrated across the entire company.
External Reporting Issues
Many companies wonder if the balanced scorecard should be included in external reporting. The Stanford Business Review explains that the scorecard isn’t easily translated to the investment community. This tool is primarily useful for internal purposes that plan and shape the future of an organization. Also, the information used in the scorecard is sensitive and should be protected.
Getting Rid of Benchmarking
Although benchmarking is a common performance tool, companies often find this requires an investment without much return. If your company is using benchmarking, you’ll need to discontinue it when launching the balanced scorecard. Since the balanced scorecard focuses on output instead of process, it generally can’t be used in conjunction with benchmarking.
When adapting a balanced scorecard, remember to keep it simple. Companies that get carried away, adding hundreds or even thousands of performance goals, don’t get the full benefits. Instead, keep your goals to a dozen or less. The results of using this tool will be well worth the investment and will provide a solid foundation to grow and preserve your business.
Resource:Robert S. Kaplan and David P. Norton. “Putting the Balanced Scorecard to Work.” Harvard Business Review.
Mark Jordan is the Managing Principal of VERCOR, an investment bank that creates liquidity for middle market business owners. He is the author of “Driving Business Value in an Uncertain Economy”, “Selling Your Business the Easy Way”, “Enhancing Your Business Value…The Climb to the Top” and co-author of “The Business Sale…A Business Owner’s Most Perilous Expedition.” For more information, contact him at 770.399.9512 or click here to email Mark.
Thursday, July 2, 2009
The Core Competence of the Corporation: Develop for Growth
Often times, companies discover that losing sight of core competencies isn’t difficult. With expanding technology, many businesses find themselves offering new products and services that simply don’t mesh with their core competencies. But the problem is, losing sight of these attributes can severely limit a company’s success and hamper future opportunities for growth. Investing time in developing a set of strong core competencies can give a company the ability to expand product offerings, and drive profit - without sacrificing the foundation of the company.
Developing Core Competencies
When perfecting core competencies, it’s important to ask a few questions about your current product offerings. Determine if your current core competencies allow you to tap into a variety of markets. If not, you could be limiting your company’s ability to grow in the future. Also, determine if your competencies are producing strong benefits to consumers. And finally, make sure your competencies aren’t generic and competitors can’t “copy” your unique abilities.
Reshaping Management Strategies
Although market leaders make developing core competencies look easy, it’s often the complete opposite. This leaves many businesses wondering “what’s the secret?” These skilled companies are able to design competencies that are flexible; they can easily change with the marketplace. When rethinking these attributes, keep in mind that products need to be capable of adapting to a consumer’s desire for functionality and likeability.
This may sound straightforward, but in practice, accomplishing this task is often difficult. Companies need strong management to make these changes. And often times, management changes will be needed. Maximizing internal resources can also help companies recognize their core competencies and then develop additional opportunities.
Making Core Competencies Stronger
Once a company has identified core competencies, it’s important to strengthen those attributes to drive success. Putting together groups and committees that include individuals from all business units of the organization can help a company develop stronger core competencies. During this process, the company will also need to look at how funds are allocated. For example, if a large chunk of the budget is allocated for breaking into emerging markets, some of that money should be shifted back to strengthening core competencies.
Organizing Delivery Value
Before a company can successfully strengthen their core competencies, they must determine the delivery value. Marketers, salespeople and production staff must all understand the customer’s needs and how to deliver a message and product that fits perfectly with those needs. This will allow companies to differentiate their products from key competitors and earn a reputation as the market leader.
Partnering with Employees
Senior managers should invest time in employees so they understand the company’s core competencies. Employees who work in a “silo” environment are so focused on their individual tasks they often can’t see the big picture. Integrating employees into a process that helps connect their job function to core competencies can help employees have a broader focus. They will also be able to share their experience with other individuals in the organization, which is crucial to success.
Protecting Core Competencies
If a company loses sight of core competencies, they can often lose their best assets in the marketplace. These attributes provide strength and lay the foundation to develop new products and technologies. Keeping core competencies in mind when entering new markets can also help guide success. The Harvard Business Review article “The Core Competence of the Corporation” discusses 3M’s competency with sticky tape. The company recognized that their core competency lay with sticky tapes and developed the famous post-it-notes, magnetic tape and pressure sensitive tapes. Although the company’s product offerings are broad, each product can still be tied to the company’s core competencies.
Perfecting Technology
Technology is an important driver to success. For example, auto manufactures often have distinct engines that give them a competitive advantage in the market place. This is also true for video cameras, digital cameras and computers. Focusing on technology provides a core competency that customers start to recognize and feel a loyalty towards.
Also, over time the marketplace changes and consumers demand technology advances. For example, many consumers are drawn to “miniaturization,” wanting smaller, sleeker and more advanced products. Companies that anticipate these advances and incorporate them into current core competencies can gain market share and drive up profits.
Protecting Core Competencies
The Harvard Business Review article explains that companies who judge their competitiveness by pricing and performance of end products are risking the erosion of core competencies. Outsourcing important components can often be a mistake. Instead of outsourcing, companies should try to keep unique technology and designs in-house instead of trusting them with an outsourced company. This allows a company to keep control over their core products and services and have greater power to determine future success.
Investing in the development and preservation of core competencies can help a company enter markets more effectively and develop a market leader position. All business units must work together and share talented employees for the greater good of the company. Managers must be willing to circulate talent and skills to protect and build the most effective core competencies.
Resource:C.K. Prahalad and Gary Hamel. “The Core Competence of the Corporation.” Harvard Business Review.
Mark Jordan is the Managing Principal of VERCOR, an investment bank that creates liquidity for middle market business owners. He is the author of “Driving Business Value in an Uncertain Economy”, “Selling Your Business the Easy Way”, “Enhancing Your Business Value…The Climb to the Top” and co-author of “The Business Sale…A Business Owner’s Most Perilous Expedition.” For more information, contact him at 770.399.9512 or click here to email Mark.
Developing Core Competencies
When perfecting core competencies, it’s important to ask a few questions about your current product offerings. Determine if your current core competencies allow you to tap into a variety of markets. If not, you could be limiting your company’s ability to grow in the future. Also, determine if your competencies are producing strong benefits to consumers. And finally, make sure your competencies aren’t generic and competitors can’t “copy” your unique abilities.
Reshaping Management Strategies
Although market leaders make developing core competencies look easy, it’s often the complete opposite. This leaves many businesses wondering “what’s the secret?” These skilled companies are able to design competencies that are flexible; they can easily change with the marketplace. When rethinking these attributes, keep in mind that products need to be capable of adapting to a consumer’s desire for functionality and likeability.
This may sound straightforward, but in practice, accomplishing this task is often difficult. Companies need strong management to make these changes. And often times, management changes will be needed. Maximizing internal resources can also help companies recognize their core competencies and then develop additional opportunities.
Making Core Competencies Stronger
Once a company has identified core competencies, it’s important to strengthen those attributes to drive success. Putting together groups and committees that include individuals from all business units of the organization can help a company develop stronger core competencies. During this process, the company will also need to look at how funds are allocated. For example, if a large chunk of the budget is allocated for breaking into emerging markets, some of that money should be shifted back to strengthening core competencies.
Organizing Delivery Value
Before a company can successfully strengthen their core competencies, they must determine the delivery value. Marketers, salespeople and production staff must all understand the customer’s needs and how to deliver a message and product that fits perfectly with those needs. This will allow companies to differentiate their products from key competitors and earn a reputation as the market leader.
Partnering with Employees
Senior managers should invest time in employees so they understand the company’s core competencies. Employees who work in a “silo” environment are so focused on their individual tasks they often can’t see the big picture. Integrating employees into a process that helps connect their job function to core competencies can help employees have a broader focus. They will also be able to share their experience with other individuals in the organization, which is crucial to success.
Protecting Core Competencies
If a company loses sight of core competencies, they can often lose their best assets in the marketplace. These attributes provide strength and lay the foundation to develop new products and technologies. Keeping core competencies in mind when entering new markets can also help guide success. The Harvard Business Review article “The Core Competence of the Corporation” discusses 3M’s competency with sticky tape. The company recognized that their core competency lay with sticky tapes and developed the famous post-it-notes, magnetic tape and pressure sensitive tapes. Although the company’s product offerings are broad, each product can still be tied to the company’s core competencies.
Perfecting Technology
Technology is an important driver to success. For example, auto manufactures often have distinct engines that give them a competitive advantage in the market place. This is also true for video cameras, digital cameras and computers. Focusing on technology provides a core competency that customers start to recognize and feel a loyalty towards.
Also, over time the marketplace changes and consumers demand technology advances. For example, many consumers are drawn to “miniaturization,” wanting smaller, sleeker and more advanced products. Companies that anticipate these advances and incorporate them into current core competencies can gain market share and drive up profits.
Protecting Core Competencies
The Harvard Business Review article explains that companies who judge their competitiveness by pricing and performance of end products are risking the erosion of core competencies. Outsourcing important components can often be a mistake. Instead of outsourcing, companies should try to keep unique technology and designs in-house instead of trusting them with an outsourced company. This allows a company to keep control over their core products and services and have greater power to determine future success.
Investing in the development and preservation of core competencies can help a company enter markets more effectively and develop a market leader position. All business units must work together and share talented employees for the greater good of the company. Managers must be willing to circulate talent and skills to protect and build the most effective core competencies.
Resource:C.K. Prahalad and Gary Hamel. “The Core Competence of the Corporation.” Harvard Business Review.
Mark Jordan is the Managing Principal of VERCOR, an investment bank that creates liquidity for middle market business owners. He is the author of “Driving Business Value in an Uncertain Economy”, “Selling Your Business the Easy Way”, “Enhancing Your Business Value…The Climb to the Top” and co-author of “The Business Sale…A Business Owner’s Most Perilous Expedition.” For more information, contact him at 770.399.9512 or click here to email Mark.
Middle Market Investment Bank, VERCOR, Expands to Pacific Northwest with Seattle Office
FOR IMMEDIATE RELEASE
PRLog (Press Release) – Jun 22, 2009 – VERCOR, a middle market investment bank with offices in North America, South America and Europe expanded into the Pacific Northwest with the addition of Seattle-based dealmaker, Joe Hoff. Joe brings VERCOR and middle market companies over 20 years of comprehensive business experience.
Joe’s expertise comes from the buy and sell-side of complex business transactions. As a senior leader with Fortune 1000 companies such as General Signal and SPX and as a management investor in private middle market companies with annual revenues exceeding $70 million, Joe has a broad leadership background in mergers and acquisitions, business development, product development, manufacturing and supply chain management throughout North America, Europe and Asia.
Joe’s experience as an entrepreneur enables him to empathize with business owners in the middle market. “Most dealmakers at VERCOR have been involved in starting, buying and selling their own businesses. We can advise clients from an owner’s perspective. That’s why Joe is a perfect fit for our team,” states VERCOR’s Managing Principal, Mark Jordan.
VERCOR advisors are dedicated to identifying strategic and financial buyers, negotiating deal structure and closing transactions no matter the economic climate. Joe states, “The recession has been indiscriminate by region and industry, but some businesses and industries continue to perform moderately well. Now is the time for middle market companies to act on an exit strategy or to implement changes that can improve their performance and prepare them for a future exit.”
About VERCOR
VERCOR is a provider of middle market investment banking services with offices in North America, South America and Europe. Specializing in transactions for companies with revenues of $10 to $100 million, VERCOR offers extensive expertise in all stages of the business sale from concept to completion. The experts at VERCOR have executed transactions totaling over $1 billion in value. For more information about VERCOR, visit www.vercoradvisor.com.
PRLog (Press Release) – Jun 22, 2009 – VERCOR, a middle market investment bank with offices in North America, South America and Europe expanded into the Pacific Northwest with the addition of Seattle-based dealmaker, Joe Hoff. Joe brings VERCOR and middle market companies over 20 years of comprehensive business experience.
Joe’s expertise comes from the buy and sell-side of complex business transactions. As a senior leader with Fortune 1000 companies such as General Signal and SPX and as a management investor in private middle market companies with annual revenues exceeding $70 million, Joe has a broad leadership background in mergers and acquisitions, business development, product development, manufacturing and supply chain management throughout North America, Europe and Asia.
Joe’s experience as an entrepreneur enables him to empathize with business owners in the middle market. “Most dealmakers at VERCOR have been involved in starting, buying and selling their own businesses. We can advise clients from an owner’s perspective. That’s why Joe is a perfect fit for our team,” states VERCOR’s Managing Principal, Mark Jordan.
VERCOR advisors are dedicated to identifying strategic and financial buyers, negotiating deal structure and closing transactions no matter the economic climate. Joe states, “The recession has been indiscriminate by region and industry, but some businesses and industries continue to perform moderately well. Now is the time for middle market companies to act on an exit strategy or to implement changes that can improve their performance and prepare them for a future exit.”
About VERCOR
VERCOR is a provider of middle market investment banking services with offices in North America, South America and Europe. Specializing in transactions for companies with revenues of $10 to $100 million, VERCOR offers extensive expertise in all stages of the business sale from concept to completion. The experts at VERCOR have executed transactions totaling over $1 billion in value. For more information about VERCOR, visit www.vercoradvisor.com.
Subscribe to:
Posts (Atom)
Posts
