Many organizations that use the balanced scorecard approach require different people within different functional areas as well as different levels of the organization to complete a balanced scorecard evaluation. Why would it be important to obtain different evaluations? Would you recommend this approach? Why or why not?
Different evaluations on various levels allow the strategic objectives to "filter down" through the levels. Not all departments or people in a company can directly or even indirectly impact the metrics of the executive balanced scorecard. Allowing and advocating the setting of metrics in all department and ensuring that they align with the mission and vision can be very powerful. All employees feel engaged in the company and feel included in the successes of the company as well. This will lead to increased creativity and innovation throughout the company. This approach is highly recommended and will lead to an agile/responsive company to the changing environment lead by customer demands.
A balanced scorecard would be a very powerful means to not only align the workforce to the company's bottom line, but also ensure that the company does not drift away from the strategic objectives. I would guess that many times subtle changes happen over time "at the ranks" that end up with huge cumulative consequences that had gone unnoticed for too long. Accurate and meaningful metrics at that level would have alerted employees at that level to correct and address those issues. This would result in the problem addressed at the lowest level. If these employees needed help, then they would contact the resources they needed to address the problems. Point is that noticing the changes and issues that cause problems before they get too "out of hand" is key to maximizing success. Allowing problems to get too out of hand lead to a drain on a company's resources and missed opportunities.
Tuesday, January 23, 2007
Reflections on Module 5 - 5b
Does a leader’s lens perspective impact the benchmarks he or she identifies as critical for his or her organization and/or the analysis of such benchmarks? Explain.
The quick answer is yes. Each leader has several benchmarks that are important to them, based on their perspective. If the leader does not use the four-lenses perspective, then too much focus can be placed on one aspect of the company. This can lead to issues being unresolved or addressed in other important/critical areas of the company. It may take years for these issues to finally effect the health of a company - but it will eventually effect the company negatively. The leader should use their preferred benchmarks, but also be open to other benchmarks that measure all of the four-lenses perspectives. Monitoring and evaluating these "other" benchmarks allows the leader to have their hands on the pulse of all the company's activities. This should lead to resources being assigned to where they can maximize profits and sustain long-term growth and stability for the company.
The other point is that as the wave of change enters into the everyday life of a company, past benchmarks may not be great guides in the prediction of the future. This is probably the greatest danger of settling and only using old/past benchmarks. Changes in the global market may have made the benchmarks obsolete. One example is the current ratio. It the current ratio really a good benchmark anymore? It may still have value, but only if you understand the company's business better. Ratios at 1.0 or below may not be bad - but may indicate a market leader, not a laggard. Point is that these old past benchmarks used presently are based on the Industrial Wave mentality - what is there relevance in the Judgment wave? Time will tell!!
The quick answer is yes. Each leader has several benchmarks that are important to them, based on their perspective. If the leader does not use the four-lenses perspective, then too much focus can be placed on one aspect of the company. This can lead to issues being unresolved or addressed in other important/critical areas of the company. It may take years for these issues to finally effect the health of a company - but it will eventually effect the company negatively. The leader should use their preferred benchmarks, but also be open to other benchmarks that measure all of the four-lenses perspectives. Monitoring and evaluating these "other" benchmarks allows the leader to have their hands on the pulse of all the company's activities. This should lead to resources being assigned to where they can maximize profits and sustain long-term growth and stability for the company.
The other point is that as the wave of change enters into the everyday life of a company, past benchmarks may not be great guides in the prediction of the future. This is probably the greatest danger of settling and only using old/past benchmarks. Changes in the global market may have made the benchmarks obsolete. One example is the current ratio. It the current ratio really a good benchmark anymore? It may still have value, but only if you understand the company's business better. Ratios at 1.0 or below may not be bad - but may indicate a market leader, not a laggard. Point is that these old past benchmarks used presently are based on the Industrial Wave mentality - what is there relevance in the Judgment wave? Time will tell!!
Reflections on Module Five - 5a
Why is it important to understand the factors that impact cash flow? How can the factors vary based on the waves of change?
Positive cash flow the lifeblood and the healthy pulse of a company. It is very important to understand what impacts cash flow and how to fully exploit it, how to leverage it many uses in supply chain management, alliances, market channels, and even ICMs. Leaders must understand how to manage positive cash flow and use this advantage to their full advantage. Negative cash flow effects the company in many more perspectives than the obvious ones. Besides the very great potential of going under, the company also will have negative bargaining power and pay higher interest rates, etc - increasing the cost of doing business, thus making the company even less competitive. This list really keeps going.....
The waves of change make these events greater, the multiplier is greater - due to the increase in speed of knowledge and wisdom. Many of the issue with cash flow are due to the factors of business. Supplier want immediate payment and customer want "same as cash" terms for goods purchased. This creates an immediate negative cash flow that must be managed aggressively. As the waves of change progress, the time between collections and receivables start to converge. This brings another "old strategy" that has been overplayed and will stop becoming a piece in a company's ploy to stay alive - losing money, but maintaining positive cash flow - it is possible and is played every day. The waves of change will make this impossible and force companies to be ethically accountable - which globally will be great!
Positive cash flow the lifeblood and the healthy pulse of a company. It is very important to understand what impacts cash flow and how to fully exploit it, how to leverage it many uses in supply chain management, alliances, market channels, and even ICMs. Leaders must understand how to manage positive cash flow and use this advantage to their full advantage. Negative cash flow effects the company in many more perspectives than the obvious ones. Besides the very great potential of going under, the company also will have negative bargaining power and pay higher interest rates, etc - increasing the cost of doing business, thus making the company even less competitive. This list really keeps going.....
The waves of change make these events greater, the multiplier is greater - due to the increase in speed of knowledge and wisdom. Many of the issue with cash flow are due to the factors of business. Supplier want immediate payment and customer want "same as cash" terms for goods purchased. This creates an immediate negative cash flow that must be managed aggressively. As the waves of change progress, the time between collections and receivables start to converge. This brings another "old strategy" that has been overplayed and will stop becoming a piece in a company's ploy to stay alive - losing money, but maintaining positive cash flow - it is possible and is played every day. The waves of change will make this impossible and force companies to be ethically accountable - which globally will be great!
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