Vision becomes tangible through an action map, perspectives, and metrics that track what we achieve. Let’s explore the Balanced Scorecard, a strategic management tool that is also valuable for start-ups.
Not all ideas are business ideas, and as we know, not all business ideas succeed. What lies at the foundation of a successful entrepreneurial project? Execution—the transformation of vision into strategy, and strategy into an actionable plan.
The next step involves developing a financial and economic plan and measuring results. Without economic sustainability, there’s no long-term business continuity.
The Strategic Map with the Balanced Scorecard
The activities needed to achieve business objectives go through a set of operational actions, identified through a strategic map. This process is made possible by a well-established strategic and management tool used globally: the Balanced Scorecard. It offers significant advantages, even for startups, as outlined below.
The Balanced Scorecard is both a strategic and operational map, based on four interdependent perspectives:
- Customer: How do our customers perceive us? For example—delivery times, satisfaction levels, loyalty rate, and new customer acquisition rate.
- Process: What do we need to excel at? This includes internal efficiency, productivity, and the quality of service delivered.
- Learning and Innovation: How do we train our capacity to change and improve? Indicators include the development cycle time for new products or technologies, human capital development, and corporate culture.
- Financial Measures: How do investors perceive us? Examples include the company’s financial performance, revenue, profitability, and liquidity.
How to Implement It
To implement the Balanced Scorecard, there are seven key steps:
- Define the vision
- Set the strategy
- Create the strategic map (with the four perspectives listed above)
For each perspective in the strategic map:
- Choose the metric to measure it
- Analyze the results
- Create action plans
- Manage and improve the scorecard
In startups—where fast development and uncertainty outweigh long-term vision—it’s possible to adopt a lighter approach: strategic goals and metrics can initially be defined only for the dimensions where performance can be effectively measured.
The flexible nature of the Balanced Scorecard allows it to be continuously improved and completed, adapting to the needs and environmental conditions in which the startup operates.
The Benefits for Startups
The benefits of the scorecard are many, even for those launching a startup. It provides the entire team with a clear business direction, highlights the areas most in need of focus, and supports funding requests, as it facilitates the development of structured, clear, and comprehensive business plans.
