Strategic goal map - the system helps all employees to understand the goals or objectives of the organization

The financial crisis provides an opportunity for businesses to gain competitive advantages. The choice of development path depends on many external and internal factors of the company, which involves the definition of a strategy. One of the tools for implementing the strategy is a balanced scorecard. This methodology includes the construction of a strategic goal map and a system of indicators. It is the construction of a strategic goal map that provides a clear graphic representation of the strategy.

Today, only the lazy do not write about the financial crisis and its consequences for the global economy. They also write a lot about the fact that the crisis is an excellent opportunity to create new competitive advantages, which means that the foundation for future victories in business is already being laid today. It is difficult to argue with this, but it is necessary to decide what will be a competitive advantage in this bright future, what assets (tangible and intangible) the company should have. The point is small - to move towards the intended goals, and the main aspect in this process should be the strategy.

In general, a simple scheme. However, if it were that simple, then everyone would very often become successful businessmen, organically combining respectability, an impeccable name and social responsibility to society. But in real life, things are completely different. There are certain internal and external factors that allow some to achieve their goals and eventually become leaders, and others to play their assigned role of the second plan and occupy a subordinate position.

At the same time, there are many examples from history in which the characters changed places: the one who played the main role went into the background (and even into “extras”), and the one who was in the supporting roles rose to the podium of the “capitalist competition”. ”, was included in the cohort of the first. Probably, in such a struggle, those advantages are formed that ultimately create a special commitment of the client to the company's products or services.

Issues related to goals, strategies, competitive advantages, etc. are actively discussed on television, radio, on the Internet, in the media. Perhaps, over time, discussions about which strategy for the development of the country's economy has been chosen will be the lot of specialists, managers, i.e. people professionally related to this issue. However, today this discussion is conducted in public, every opportunity to inform the society is used, and in some cases there is a rational grain in this.

For example, if the general public takes part in the discussion of the 2020 Strategy, this may help to find new solutions for the progressive development of the country. However, this strategy was developed in the pre-crisis period. Now it's time for creative rethinking and making balanced decisions.

The question arises what technologies can be used today to implement strategic decisions. One of the approaches to achieve the intended goal is the formation of a strategic goal map. Let's start with defining the goals as such and their role in the organization's management system.

Why are goals needed?

Organizations are created and exist in time. Since the organization is a system, it becomes efficient, i.e. can be successful if there are clear business goals that determine the vector of its evolution. This means that the organization manages its evolution, its development. If there are no goals, then the organization develops in a random, uncontrolled way, i.e. does not control its evolution and, in fact, does not strive for anything.

What has already happened, what has happened cannot be changed, therefore it is impossible to control the past, while the present is formed under the influence of the past. The only thing that can be controlled in this case is the future, because it has not yet "happened" and in it everything is possible.

The main obstacle to achieving goals are restrictions, and people set them for themselves. Depending on whether organizations know how to manage their future or not, they are divided into two groups: those that know how to use proactive feedback, and those that do not. Thus, the former use the proactive type of control, the latter - the reactive type.

The goal-based management system should ensure concentration of efforts. The goals of the company should be clear and there should not be too many of them. Often organizations do not follow this rule, and in vain: try to focus on everything at once and you will not be able to concentrate on anything. For objectives-based management to be effective, the manager must understand what the specific goals of his work are and how they correspond to the goals of the company set by the owners.

The job of a manager is precisely to solve problems in the interests of achieving the goals of the company. Managers of various divisions, departments or sectors of the organization must not only know the goals of their department, but also actively participate in setting these goals and be held accountable for their achievement. This mechanism allows you to effectively organize the work of managers, especially in areas such as marketing, innovation, profit, personnel management, financial and material resources, productivity, social responsibility.

What are goals?

At the stage of setting goals, the business strategy is translated into specific results that the company is striving for. Setting goals and monitoring their achievement helps track the progress of the organization. Think of goals as the link between your strategy of shared priorities and metrics, which are the metrics you use to measure your success.

Goals describe specific actions that you must take to successfully implement your company's strategy. They are more specific than the content of your strategy, but still not as precise as performance measures. At their core, goals translate often vague and nebulous strategic priorities into business direction and action-oriented statements; what needs to be done to implement the strategy.

The goals reflect the defining role of business intangible assets as the basis for the successful implementation of its strategy and the fulfillment of financial objectives; allow managers to manage all key performance factors, including non-financial ones, with the help of indicators that determine at an early stage what the result will be.

The presence of goals presupposes the introduction of an appropriate management system. This system can be the methodology of the balanced scorecard, BSC (Balanced Scorecard, BSC), which involves the selection of goals based on the adopted strategy and decomposing them into subgoals.

BSC is a systematic approach that allows the manager to focus on the goals and get the best results with given resources. The principle of operation of the system is as follows: the system helps all employees to understand the goals or objectives of the organization and realize the measure of their own responsibility for achieving the intended.

A complete BSC system directs the actions of managers and employees to implement the strategy, which leads to the automatic achievement of the organization's goals. As the creators of the BSC D. Norton and R. Kaplan point out, if there are difficulties with the strategy, put it on the map.

Formation of a strategic goal map according to the BSC methodology

What is a strategy map? In order to answer this question, it is necessary to highlight the keywords "map" and "strategy".

A map is a graphic representation of a territory or part of it. As you know, a good map is necessary in order to navigate the terrain. If you pick up a geographical map that does not include, for example, settlements and roads, it will be difficult for you to lay the right path to your destination. However, if landmarks are indicated on it, in addition to the image of the entire territory, then you will be able to use such a map and reach the end point of your journey.

On the one hand, strategy for most organizations is a path of movement. On the other hand, strategy can in many ways be compared to a map of a certain area that we want to visit, but without landmarks to guide our movement. For this, the goals of the company's activities are needed: on the strategy map, they act as landmarks on the way to achieve it.

The creators of the BSC D. Norton and R. Kaplan explain: “The strategy implies the movement of the organization from its current position to the desired one. Since this future is still predictable for the organization, the path to it consists of a sequence of interrelated hypotheses. Strategy maps define these cause-and-effect relationships, making the relationships clear and controllable.

Here, "interrelated hypotheses" represent the goals that should transform the strategy. If you have a strategy map, then everything that you consider important for the implementation of the strategy of your enterprise is clearly and concisely described on virtually a single page.

The idea of the BSC is to change the traditional system of business performance criteria by increasing the number of indicators and using a specific structure that links strategic goals and key factors for achieving them. The result of any activity, on the one hand, is determined by the ability to think clearly and correctly, on the other hand, by the ability to translate these thoughts into reality. Since the "genius" of an idea can only be tested after its implementation, it was the methods of implementation that always received more attention. The strategic map appeared precisely in line with this trend.

Its originality lies in the fact that all the actions of the company are interconnected and have clear goals that illustrate the process of implementing the strategic plan. However, it must be remembered that this document is a means of implementing, not developing a strategy, a resource for those companies that already have it and who can begin the process of transferring it to the map.

In addition to the above functions, the BSC also demonstrates the achievement of the company's goals in such four main areas as the financial condition of the company, customer relations, internal business processes, employee training / company growth (Fig. 1).

A reasonable question arises: on the basis of what conclusions is such a structure of the map formed? The answer is obvious: the criteria for highlighting directions on the goal map are dictated by the logic of building an effective business.

The final result of business activity is still reflected in financial indicators (direction "Finance"). This result is achieved in the market, therefore, financial indicators directly depend on the market ones (the “Market / Customers” direction), reflecting the ability to understand and satisfy the needs of customers. The ability to produce and deliver customer value to the client is characterized by indicators of efficiency and productivity of internal activities (direction "Internal processes").

Effective processes are based on the appropriate organization, motivation, culture and knowledge of the personnel, its technological equipment (perspective "Infrastructure / employees").

Prospects for the SSP map

The BSC map, as indicated above, is logically divided into four areas, which should be regarded as a look at various aspects of the organization's activities. With these directions, managers can answer the following key questions.

What kind of company do shareholders and potential investors see (direction "Finance")?
What company do buyers see (direction "Market / customers")?
Which business processes should the company improve, which ones to refuse, which ones to focus on (direction Internal processes)?
Does the company have the resources to further develop, improve efficiency and increase its value (infrastructure / employees direction)?

Finance

The financial direction is one of the key components of the BSC, because. financial results are the main criteria for assessing the current activities of the enterprise. The main goals within the framework of the financial direction are to increase the following indicators:

product profitability;
return on equity;
net cash flow;
net profit, etc.

These goals are the main mechanisms for increasing efficiency in this area. As a rule, financial goals are at the top of the "goal tree" of a commercial organization, but there is a very close relationship with the goals of customers, internal processes and growth of the organization. At the same time, for non-profit organizations, the financial perspective may be absent or of secondary importance.

Clients

As part of this direction, leaders identify key market segments to which the company intends to bring its products. The main goals are:

customer satisfaction;
customer retention;
acquisition of new customers;
customer profitability;
market share in target segments, etc.

In this direction, it is also necessary to include goals that determine the value proposition of the company (value proposition), which in turn largely determines customer loyalty to the supplier of products or services.

Identifying the main criteria for the value proposition for a client or buyer is a very difficult task that requires a complete analysis of needs. So, for example, the value for the client (in relation to this direction) can be fast delivery and the speed of response to the received order, which means that the indicators characterizing the level of efficiency in this case can be the order processing time and the average delivery speed in hours.

Internal processes

The direction "internal processes" shows the main business processes that need to be improved in order to increase the competitiveness of the company. Organizations require efficient and flexible business processes, and these are currently very cumbersome and overloaded in companies.

Often, these processes are carried out without understanding their end result and their value to customers, and their design is carried out without alignment with the strategy of the organization. The goals in this area refer to the processes that provide the main contribution to the achievement of the main strategic goals.

Infrastructure / employees

The fourth direction of the BSC is "infrastructure / employees". It defines the infrastructure that an organization must build in order to ensure growth and development in the long term. Of course, without the use of modern technologies, this is impossible, because. The growth and development of an organization is the result of the synergy of three main factors: human resources, information systems and organizational procedures.

It is for this reason that the company must invest in the development of its employees, information technology, systems and procedures. These goals are key to this direction. In addition to them, the main goals of improving efficiency in this case can be:

employee satisfaction;
employee retention;
skills and qualifications of employees;
the ability to instantly receive the information necessary for making management decisions;
generating initiatives;
efficiency of the information system.

Indicator types

Within the framework of the BSC goal map, it is necessary to distinguish between:

indicators that measure results achieved (“lagging” indicators);
indicators that reflect the processes that contribute to these results ("leading" indicators).

Both categories of indicators should be linked to each other, as to achieve the former (for example, a certain level of productivity), it is necessary to implement the latter (for example, to achieve a certain capacity utilization of machines and equipment).

Causal relationships

All goals and indicators in all areas of the system are interconnected. The chain of interaction is based on a causal relationship. So, if the company’s fundamental goals are to increase net profit from product sales (a mechanism that measures the amount of profit and relates to the financial direction of the system), then possible reasons for this may be, for example, increasing loyalty from existing customers or increasing the number of new attracted customers (corresponding indicators refer to the marketing projection of the system).

In turn, an increase in loyalty from existing and an increase in the number of newly attracted customers, as a rule, is due to an improvement in product quality and a decrease in the number of returns, an increase in the speed of order processing, an increase in the quality of service (indicators related to the direction of internal business processes), which is also a consequence of the growth of staff qualifications (an indicator related to the direction of training and growth).

However, one should not confuse the cause-and-effect dependence of indicators with mathematical dependence. In calculations using formulas, an unambiguous algorithm for determining the value of an indicator is specified, while a causal relationship only indicates possible correlations between BSC indicators. This relationship forms causal relationships between indicators in the model.

What does the use of the goal map according to the BSC methodology give?

1. The BSC links strategic results and factors for their achievement, establishing and tracking cause-and-effect relationships between them. Most of the factors are characterized by non-financial indicators that are not recorded by traditional accounting systems; if they are, they are not associated with financial results. Thus, on the one hand, the BSC expands the possibilities of management accounting, on the other hand, it focuses accounting on a limited set of indicators that are most informative specifically for the strategic assessment of business activities.

2. BSC eliminates conflicts between owners and top managers of companies and makes their relationship more constructive, because. thanks to SSP, these relationships are based on a jointly developed and equally understood system of measurements. Here are some of their options.

Owner and top manager rolled into one. SSP - a system of benchmarks for determining the balance between investment and consumption.
Owner looking for a top manager. BSC is a tool with which the owner can set specific goals for the hired manager and control their achievement. This gives the top manager a clear program of action and clear quantitative targets.
Owner in conflict with top management. The BSC is a tool that helps to visualize the implementation of target indicators and make it understandable for the owner, who eventually stops interfering in operational management and actually delegates authority and responsibility to the top manager.
Owners in conflict with each other. SSP is a great way to resolve conflicting views, as the system gives all owners the confidence that everything necessary is being done to achieve their goals. The top manager does not try to satisfy different requirements at the same time, but is guided by an agreed system of indicators.

3. The BSC allows you to clearly formulate a strategy and translate it into the plane of specific tasks, link the company's strategic goals with the performance of each employee and properly motivate the staff.

A practical example of building a goal map according to the BSC methodology on the example of the Raduga company

The Raduga company produces consumer cosmetic products, is located in the central part of the Russian Federation, and employs about 500 people. The enterprise has achieved significant success in its activities, but further growth has caused certain difficulties in its work, and the management decided to use the BSC to control the implementation of the strategy. At the first stage, it was necessary to determine the object for the development of the BSC map. Since the company is a mono-enterprise, i.e. strategic business unit (SBU), then the object of developing a goal map is the company itself as such. Next, the “goal tree” of the company was developed (Fig. 2).

After the target structure was formed, it was necessary to conduct a strategic analysis of the company as a basis for developing its strategy, which usually reveals the weaknesses and strengths of the organization. An analysis of weaknesses showed that, first of all, attention should be paid to work with personnel (expanding the functions of the unit), ideology and changing the corporate culture in accordance with the goals set (development of market thinking instead of a production approach), working out interaction with dealers, and developing brands , on the organization of planning and the rhythmic loading of production, on the limitation in terms of physical resources (increase in production capacity, possibly through attracting investments).

Other factors are also important, but are not of paramount importance in terms of influencing the attainability of goals. "Threats" will affect all industry participants in the same way, so they can be considered neutral factors. An analysis of opportunities and strengths showed that the situation in the external environment is favorable for the company and makes it possible to increase its presence in the market and push out competitors, thereby ensuring the achievement of its goals.

Based on the results of the formed target structure and the analysis carried out, the company's strategy was developed. Raduga serves the functional segment and the lower segment of standard consumption, so the indicator characterizing the financial goal will be gross profit. Raduga chooses to increase its market share by expanding the geographical boundaries of its activities as its basic direction of development. At the same time, the main way to achieve this will be the development of a network of regional distributors (creating your own branch network will require very large resources). Partners in the regions should be attracted by the most favorable terms of cooperation and by ensuring the popularity and appropriate image of the company and products in the target regions.

Functional consumption, as a rule, uses the formula "price reduction contributes to the growth of sales volume", and the lower segment of consumption - "growth is achieved by varying the price / quality ratio"

The competitive strategy of the company was determined on the basis of the Porter / Tracy - Wiersem matrix (Table 1), and the direction "proximity to the client" was chosen.

Table 1. Porter / Tracy Matrix - Wiersema

From the "tree of goals" you need to take their formulations and enter them into tables reflecting the data of each of the four directions. Further, based on the adopted strategic decisions, the goals must be “decomposed” into indicators and a list of activities should be formed, the implementation of which should ensure the achievement of each of these decisions.
Then the process changes its direction, because you need to check the balance of the set goals. To do this, the logic is tested: how, by achieving the goals of the lower directions (“Infrastructure / employees”), the indicators of the upper directions (“Processes” and then “Customers” and “Finance”) will be achieved.
Responsibility should be established for the implementation of activities. This step is called decomposition: the indicators are projected onto the company's divisions and an employee is appointed in each division responsible for them.
Next, it is necessary to establish how the data collection will be organized to determine the indicators. To do this, moving from top to bottom in directions, a feedback process is established for each indicator.
The final step is to create a cause-and-effect diagram that clearly shows how the goals of the directions are interconnected with each other. This diagram will be the prototype of the strategic goal map (Fig. 3).

The developed system of goals and indicators should be summarized in an information table based on the four aforementioned areas (finance, market / customers, internal processes, infrastructure / employees). An example of an information table of the financial direction is given below (Table 2).

Table 2. Strategic goals and indicators of the financial perspective

The constructed map of the top-level goals of the Raduga company takes into account the developed strategy. In fact, this is the visualization of the strategy as one of the main requirements of the BSC concept. A well-presented strategy should not leave any ambiguity about how the set strategic goals are to be achieved.

The BSC concept involves the decomposition of a strategic goal into subgoals, which in turn can also be decomposed into subgoals, up to those that allow the development of specific actions to achieve them. Accordingly, at the next stages, goal maps are developed for departments in which they are a decomposition of the company's top-level goals.

Thus, the application of the goal map according to the BSC methodology allows you to turn the strategy into actions. The strategy becomes a daily affair of every employee, because the relationship between the goals and indicators of the BSC with the performance indicators of each employee of the company is ensured. The strategy is transformed into a continuous business process by constantly monitoring the achievement of map targets and taking prompt action to identify the causes and eliminate discrepancies.