If you cannot measure it, you cannot manage it

January 4, 2013 by Juha Merinen

Strategy versus operational excellence

The success of strategy depends on doing many things well, not just a few. However, one should never forget the golden rule to “Walk the Talk” equaling to implementing, measuring and finally managing the strategy. It is of utmost importance to truly understand that if you cannot measure it, you cannot manage it. Therefore companies should put lots of efforts in creating practical and straight-to-the-point measurement systems which will enable them to manage the implementation of their internationalization and sales strategies.

One should not mix up strategy and operational excellence with each other. Why to differentiate these two from each other? Following the basics of the balanced scorecard (BSC) approach one could easily summarize the issue as follows

  • Strategy creates fit among a firms activities
  • If there is no fit, there is no strategy
  • Without fit, management becomes the search for operational excellence
  • Improving operational excellence is necessary but it is not the same as strategy
  • Managing fit is strategic management

Sophistication of measurement systems

When the time evolves, the sophistication of measurement systems will gradually evolve also. It can be stated that
in the early stages a start-up company will have quite simple, but “good enough for the task on hand” traditional accounting and operating measures.

When business will start to develop (and typically the volume also) companies will move one or more steps upwards on the sophistication axis taking in more quality related operating measures. The next logical step to be taken in the journey will be to move onto BSC era adding economic value into the approach at the same time.

This logical evolvement towards more and more sophisticated measurement systems will lead into value-linked measurements for business strategy, stakeholder needs, process attributes and the business environment.

How to tie performance measures to corporate strategy

Balanced scorecards will tie performance measures to corporate strategy. BSC´s “Balance” includes several key areas like short & long term objectives, financial and non-financial measures, external & internal measures and various key perspectives namely Financial, Customer, Process and Learning & Growth.

Purpose of the balanced scorecard is therefore simply to

  • Clarify and translate vision & strategy
  • Communicate & link strategic objectives and measures
  • Plan and set targets & align strategic initiatives
  • Enhance strategic feedback & learning

Potential problems

There are and will be some challenges or even problems arising including at least the following typical ones

  • Lack of time for the decision makers to focus on strategy
  • Confusion between operational efficiency and strategy
  • Difficulty in creating well defined metrics and connecting them to deliverables
  • Cascading the objectives down to the staff that can deliver the results


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