Chapter 11: Information and Control Processes 397
Executive information systems and dashboards facilitate use of the balanced scorecard by enabling top managers to easily track metrics in multiple areas, rapidly analyze the data, and convert huge amounts of data into clear information reports. The scorecard has become the core management control system for many organi¬zations, including Hilton Hotels, Allstate, British Airways, and Cigna Insurance. British Airways clearly ties its use of the balanced scorecard to the feedback control model shown earlier in Exhibit 11.3. Scorecards serve as the agenda for monthly management meetings, where managers evaluate performance, discuss what correc¬tive actions need to be taken, and set new targets for the various BSC categories.26
In recent years, the balanced scorecard has evolved into a system that helps manag¬ers see how organizational performance results from cause-effect relationships among these four mutually supportive areas. Overall effectiveness is a result of how well these four elements are aligned, so that individuals, teams, and departments are working in concert to attain specific goals that cause high organizational performance.27
The cause-effect control technique is the strategy map. A strategy map provides a visual representation of the key drivers of an organization’s success and shows how specific outcomes in each area are linked.28 The strategy map is a powerful way for managers to see the cause-and-effect relationships among various performance met¬rics. The simplified strategy map in Exhibit 11.7 illustrates the four key areas that contribute to a firm’s long-term success—learning and growth, internal processes, customer service, and financial performance—and how the various outcomes in one area link directly to performance in another area. The idea is that effective perfor¬mance in terms of learning and growth serves as a foundation to help achieve excel¬lent internal business processes. Excellent business processes, in turn, enable the organization to achieve high customer service and satisfaction, which enables the organization to reach its financial goals and optimize its value to all stakeholders.
In the strategy map shown in Exhibit 11.7, the organization has learning and growth goals that include employee training and development, continuous learning and knowledge sharing, and building a culture of innovation. Achieving these will help the organization build efficient internal business processes that promote good relationships with suppliers and partners, improve the quality and flexibility of operations, and excel at developing innovative products and services. Accomplishing internal process goals, in turn, enables the organization to maintain strong relation¬ships with customers, be a leader in quality and reliability, and provide innovative solutions to emerging customer needs. At the top of the strategy map, the accom¬plishment of these lower-level goals helps the organization increase revenues in existing markets, reduce costs through better productivity and efficiency, and grow by selling new products and services in new market segments.
In a real-life organization, the strategy map would typically be more complex and would state concrete, specific goals, desired outcomes, and metrics relevant to the particular business. However, the generic map in Exhibit 11.7 gives an idea of how managers can use strategy maps to set goals, track metrics, assess performance, and make changes as needed.
Department Level: Behavior versus Outcome Control
The balanced scorecard and strategy map are techniques used primarily by top and upper-level managers. Lower level managers focus on the performance of people at the department level, who must meet goals and standards if the organization is to attain its overall goals. Although lower-level managers may use any of the control
