Making sure your balanced scorecard’s customer perspective actually represents what customers say they want.
I recently came across an article on the balanced scorecard on the website mycustomer.com. However I think it missed an awful lot out about how to handle customers appropriately in a balanced scorecard. Here was my reply.
There are a few points I would add to from a customer perspective:
1) It is better to start with objectives in each perspective rather than measures. Develop the objectives and then ask – how to measure them. This way you measure what you want to manage. This is what strategy maps are about. If you start with measures you constrain your thinking to what you think you can/should measure. You end up managing what you believe you can measure, rather than measuring what you want to manage.
2) When developing Customer objectives (and measures) ask, from their perspective. You will get a much richer answer than asking, “what should we provide them?” As a rule, put “I want…” in front of the objective description. This forces you to think from the customer’s viewpoint. If you don’t you may describe what you provide rather than what the customer wants.
3) Think not only about the value proposition, but about the customer’s process. What is their process, to which you contribute? This opens up the thinking about how you could add value in different ways. Also different parts of their organisation will have different value propositions (eg purchasing vs operations).
4) Quite often you will have layers of customers where you product contributes through the supply chain. Ensure you represent these.
5) A great advantage of thinking from the customer perspective and then aligning the organisations objectives (and also later measures) around the customer perspective is that it concentrates attention on the customer’s needs. It also breaks down silos, to addresses what the customer wants, rather than the pieces we think they should provide. This leads to better customer orientation.
Getting the customer perspective clear is the key to good balanced scorecards and strategy maps. These principles work in both the commercial and public sector. They align the thinking and actions of the organisation.
Done well you can read your strategy from them and you can use them to discuss strategy and service with your customers.