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How to Develop a Strategic Plan based on the Balanced Scorecard

Jun 05, 2021
Hello and welcome to my video on how to

develop

a

strategic

plan

for your organization. My name is Edward Chihab and in this video I will show you the steps you must follow to

develop

a good

strategic

plan

. Well tuned, so what is the strategic plan? A strategic plan is a plan that shows how your company will continually create value for its own shareholders and stakeholders. The strategic plan is present throughout the organization and is part of the continuous operation. Strategic business planning itself helps make the high-level concepts and visions that the organization has become a reality by taking action on specific projects.
how to develop a strategic plan based on the balanced scorecard
Sometimes you know we are confused about who the strategic plan is intended for and therefore one of the first things we need to ask ourselves is who we are developing this for. First and foremost, you need to focus on who your stakeholders are, the people at the highest level who ask for this value to be realized from your plan, so keep that in mind when developing your strategic plan because they play an important role in how Balancing your strategic plan In general, it is recommended that your plan be

balanced

and

based

on four or five different perspectives, such as the shareholders, what is the financial aspect that they need. customers and the value they get, the internal processes that need to be developed as well as the people involved to make this happen, this is called a

balanced

scorecard

and I'll talk about that in a moment, so the first thing you need to do when you develop A strategic plan is understanding what your values ​​are as an organization.
how to develop a strategic plan based on the balanced scorecard

More Interesting Facts About,

how to develop a strategic plan based on the balanced scorecard...

Every organization has some values ​​as part of its core foundation, so what are the things that the organization will never move or change from? Examples of some of these values ​​would be, say, honesty, loyalty, innovation, creativity, maybe ethics, sometimes it's more like profits, market share, so you really need to understand the values ​​your organization stands for if you're not really sure what they are. We get a team together and we brainstorm what you think the values ​​are and you can start with as many as you want and then narrow it down to the 10 most important values ​​and then narrow it down to the five most important values. and then narrow them down to the three most important values ​​that your organization stands for, once you know what your values ​​are, the next step you need to take is to prepare a values ​​statement, something that says this is what is important to us and, so make it like this so you can say, for example, if innovation is really what's important to you, then you could say something like we innovate in everything we work on to create maximum value for our customers, so if Those are your values.
how to develop a strategic plan based on the balanced scorecard
Then that will drive what your vision and mission will be. Most organizations are

based

on the values ​​of that organization, so if our values ​​relate to education and we believe that knowledge is king and that everyone should have access to knowledge, then our mission. The statement would probably be related to us sharing knowledge and educating people and our vision would be that in the next few years we will have achieved this type of education or knowledge sharing, so once you know what your values ​​are, the next step is To define what your vision is, your vision is how you see your organization over the next two to five or ten years, depending on where you are in the organization's ranking, whether you are a CEO or a C-level person.
how to develop a strategic plan based on the balanced scorecard
You are probably looking at a vision of about five years or more and, if you're a department head, you're probably looking at it for two years and maybe go down from there, at different levels until you get to the team leader level. You're going to see that the length of that vision statement is going to get shorter and shorter, so the lowest you can go is three to six months and that would be someone at a team level trying to execute a short-term vision, so? what includes? a vision statement, well a vision statement, there are two ways of looking at it or maybe there are two sides to a vision statement, there is the one that organizations put on their website for everyone to see and that tends to be quite generic and says you know something like us. our goal is to be the benchmark and let's say in customer service or our goal is to be number one in providing the best hospitality experience, so they are quite generic that companies will put on their websites, but internally the leadership You should have your own vision statement that describes where you see yourselves in the next few years and these vision statements would be more effective if they had some numbers associated with them or some expectations, some benchmarks that we want to use, so the way we you should imagine the vision statement is like this if we're talking about a two year vision statement, then imagine you walked into 2019 today, you walked into a time travel capsule, you walked in and you set it for two years from now, 2021.
So in two years steam comes out, this capsule makes a humming sound. rings, the door opens and out comes what you see out there related to what you had said two years ago should have come true, so if you had declared that your organization, let's say in 2019 right now, your organization has three locations, you is a retail organization and has three locations and in its vision statement it stated that in the next two years it would expand to 25 different locations so now we have a clear understanding of what it expects to happen in the next two years so basically if you enter a time travel capsule at that point and you set it for two years from now and you exit, you should see when you evaluate how many locations you have, you should be able to find that you have 25 different locations, if you see the 25 different locations, then your vision came true, so that's what it means to have a vision statement where you see yourself, but it should be a realistic vision of the future, it shouldn't just be a generic, you know, dreamy, unrealistic vision that if you want You can post it for clients to see, but you know I wouldn't encourage that because if clients see your vision and you know they see maybe this was written a long time ago and they know they're evaluating you right now. and they see that none of that has really happened, then you become a laughing stock, you become a joke, then what you want is a vision that is realistic of where you see yourself as an organization in the next two, five or ten years and when We talk about where you see yourself, we mean the state of your organization, your people, your processes, the tools, the location, the space, the procedures, the policies, the cash position, your network and your participation in the market.
These are some of the things you might consider when we're thinking about what you'll be like in the next two to five or ten years, so let's say you can put together a vision statement that says where you hope to be, so we have three different locations in right now and our goal is to have one. location in every major city over the next two years, which means if a location is a major city we will need to have a branch in it, this is how we prepare vision statements, the next thing to do is consider preparing a vision statement.
Mission and mission statements define who you are and what you are assigned to do. Their mission statement states that this is what we do for business, so for example, our mission is to educate everyone in this city, our mission is to provide world-class healthcare services in our city, okay or could be something that says our mission is to ensure that everyone in our community has access to health insurance, so whatever your mission is is what defines you as an organization and why you've been established. Build an organization now, if you have your values, your vision and your mission, the next thing you need to do is analyze yourself to understand how well you are positioned to make that vision a reality and generally what we do.
Here we do a SWOT analysis and a SWAT which means strengths, weaknesses, opportunities and threats. Well, strengths and weaknesses are internal to us and represent areas in which if we look for strengths, we look for areas in which we feel good. about ourselves in the sense that we have the right amount of cash or we have abundant cash we have qualified resources we are well connected in our organization we have a lot of maturity we have a lot of history in that specific industry uh maybe we have support by the government, so these will be considered strengths, the opposite of that would be considered a weakness, on the other side of the spectrum are opportunities and threats, so where are the opportunities when it comes to our industry?
SWOT analysis Don't do a SWOT analysis for your entire company, do a SWOT analysis for a specific strategic objective that you are working on correctly, so if your goal is expansion to 25 different locations then do a SWOT analysis for expansion How suitable are you? for that expansion, what are the strengths that you have and where do you see that you have some weaknesses internally? These are your current strengths and weaknesses, but then what about the opportunities that present themselves? Where are the opportunities? Let's say we have some areas that are underserved in our right market, maybe these are opportunities for us to open locations in the right and what about the threats, where are the threats coming from?
Maybe you have competition that could challenge you in some of these areas, maybe regulation could limit you in certain ways or maybe in some way. Political instability or, for example, power struggles in the area do not make you feel very comfortable with such rapid expansion, so you have to evaluate where the opportunities are and look at where the threats may come from, so once You have already done this, you have made your strengths, weaknesses, opportunities and threats, you need to evaluate them against each other so that your strengths can help you capture opportunities, your strengths can help you overcome some of the weaknesses or maybe some of the threats, but if You have a weakness in an area that is a threat to you and that would be an indicator of an area that you need to move away from rather than trying to fight it, so try to capitalize on your strengths to capture the opportunities that exist in the future. . overcome the weaknesses and at the end of the SWOT analysis come up with some action plans on how the strengths you have identified can be used to capitalize on the existing opportunities or perhaps overcome some weaknesses so that you can capitalize on the opportunities once. you have these action plans written there, try writing some objectives based on these objectives should be smart, use a clever acronym, so that they are specific, measurable, agreed upon, realistic, time-bound and cost-limited, make sure that are realistic objectives, very specific and that can be measured at some point, you do not want objectives that do not have numbers associated with them because who will know if you really achieve them, so if you said that one of your objectives would be to have three main sponsors, perhaps you may need to qualify. which main sponsor is correct and that way you will know when you have the three main sponsors.
If you indicated that your first six locations should be installed within the first six months and set a date, then it will be easier to measure, so set goals. which are measurable if you said that your staff should start recruiting specialists in a specific field and you should have five of those resources ready by May 2020. That's very specific, so you want something that you can check later and confirm that it really It's like that. instead so develop these objectives and then go to the next step once you have all your objectives start thinking about how to develop your strategic plan now other things can also happen at this point your objectives will need to be assigned you need to calculate it . who will be responsible for specific steps who will go who will support some of these actions but technically it's probably too early what you need to do is evaluate these objectives and determine how they fit into your overall strategic plan, well this is where we get to the balance

scorecard

.
You don't necessarily need to use the balance sheet scorecard, but it has been used by many Fortune 500 companies and most say it brings them good benefits and value. What does it mean? Using the well-balanced balanced scorecard means that you look at different perspectives when developing your goals for the next few years and make sure you address all of these perspectives and this scorecard is where we represent the goals and associated metrics. with them, who we're going to measure against eventually, so let's talk about the balance side of things, the four areas you want to look at are the financial aspects, which is what shareholders care about, what value they wantyour shareholders if they are in community service, if you are a government, then what do the taxpayers want?
You have to find out who your customers are, who are the people who finance your operation, what exactly do they want from you, the other thing you have to ask is if we are going to bring this kind of value to our shareholders, what do we need to offer? as a service to customers that helps us generate this type of income so that we can satisfy the needs of our shareholders and, therefore, the customer? This side of things will require you to provide some added value. These are the things that customers want from you now so that you can provide these valuable customer service or ads.
There are internal processes that will need to be improved, so that's the third one. perspective you need to see what it is that we need to do internally and change as it relates to processes and services so that we can provide the added value for the customer so that we can generate revenue that pleases our shareholders and finally what you need to ask yourself is whether We are going to improve these internal processes. and so on, what kind of learning and growth will we require? You may need to grow your team and you may need to educate yourself.
Train yourself so you can develop these processes that will help you provide good value to the customer. which in turn will also generate additional revenue for your organization, so that is the summary about the balanced scorecard and then the scorecard is where you analyze the actions that need to be taken and the metrics against them, for For example, if one of the things we want to provide to customers is faster service at that time. What do we measure to ensure we have provided faster service to our customers? Let's say your Amazon is correct. Amazon.com and for you, the faster you can get your products to the customer, the better they will be.
The more business you do, what do you need to measure to ensure you've provided good customer service or fast delivery? Let's focus on delivery. What guarantees that you have delivered your products quickly and efficiently to your customers? Well, the delivery time from the moment they place the order to the moment the customer receives their order, that would be the cycle or the time you need to measure, so we can say that the delivery cycle from order to delivery of the product should be less than two days, for example, or less than 48 hours, so that is the metric you want measure and action would be to facilitate faster delivery, say by drones, is fine for your customers or perhaps through partner networks that would enable faster delivery. for our clients and the metric or the measure there is less than 48 hours, so that is what it will be qualified against and over time, once you have implemented this action, if your strategic plan is executed, you will be looking for these results that you can deliver in less than 48 hours, that's what it means to have a balanced scorecard and that's how we develop the kpis against the balanced scorecard most of the time your strategic plan is developed in the form of what we call a strategic map and that strategic map, as you see here, will have at the highest level the financial expectations or objectives and below that it will have the customer values ​​that we are going to provide so that we can achieve the financial objectives for our shareholders and so that we can To deliver these customer value ads, we need to look at what internal processes need to be improved and improved, and then we need to look at what learning and growth is needed to This happens and you see there are arrows connecting from the bottom to the top, so It is a cause and effect relationship.
If we do the following learning and growth, we should be able to improve our internal processes so that we can deliver the following values ​​to the customer, which will help us generate financial profits for our shareholders. This is the four sided perspective, the balanced approach so that we can develop our objectives and this balanced approach will be used for the same objectives that we discussed above. linked to your SWOT analysis, so let's recap: at this point you wanted to develop a strategic plan, so you need to know in the next two to five years what actions need to be taken in order to achieve your vision correctly, so you identified your values, you identified your vision, you know what your mission is, you did a SWOT analysis to look at your strengths and weaknesses and where measurable goals were evaluated with the balanced scorecard approach or evaluated to determine how balanced they are for you to execute your Plan to overcome the Weaknesses or capture opportunities in your SWAT so your vision can become a reality.
He is doing it with a balanced approach. You're addressing what your stakeholders want, what value, what values ​​your customer is looking for, and what internal processes should be. improve and what learning and growth needs to occur, keep in mind that once you develop this plan, this plan must be executed, therefore projects will be initiated to execute in the small parts of your strategic plan, work must be assigned and must be secured that people KNOW that they are responsible for this work that must be done as scheduled because every part of this will be strategic for us and will have consequences if it is not done and therefore it is very important that people know that they are responsible. and in this case I would recommend that you use a raci chart to clearly indicate who is responsible and who is responsible who can be consulted who is informed but most importantly who is responsible for each part of that strategic plan as well as being sensitive to the The fact that every strategic plan and every improvement we make in the organization will mean change and people are generally not very comfortable with change, so you also need to address the fact that your stakeholders and your community may have difficulty with the change, so you have to work to alleviate the impact of this change on that community or stakeholders, so if you are able to manage the change and assign responsibilities and have your strategic plan as discussed, the most It is likely that you will be able to execute your plan.
Pretty good strategic plan. I hope this video has helped you understand the concept of strategic planning. If you have any questions or want to share your feedback on how you make strategic plans or if there is any advice you would like to give, please. let me know, leave your comments below if you like this video or would like to see more of these videos, please subscribe and hit the notification bell if you think others might benefit, share it with them and we hope to see you in the next video take care bye

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