Despite a sea of collected data, organizations struggle with making sense of it to arrive at answers. This is not surprising, since, organizations are typically data rich and information poor. Attempts are being made to fix this with "data warehouses" and "number crunching software - however, these technologies are a part of the overall solution but not the solution itself

The solution lies in Corporate Performance Management (CPM) and the underlying organization measurement tools, namely Strategy Maps and Scorecards. CPM process is all about formulating strategy and aligning the overall organization resources for effective execution. It describes how to make a strategy operational without solely relying on quarterly financial measures as the main evidence to judge its success.

The measurement tools, other than financial measures, are the "Strategy Maps" and "Scorecards." Both are management tools that form the link between strategy and on ground operations and tactics thereof. It establishes strong relations between the vital areas of the strategy and the organization's measures of success. They do so:

By making crystal clear "the vital few" strategic objectives (the strategic focus areas) of the strategy plan

By establishing the cause and effect relations between strategic objectives

By cascading strategic measures to employee teams whose performance is being monitored

By aligning employee behavior with a common focus on the strategic objectives typically defined in the boardroom or by the governing body.

Strategy maps are truly like geographical maps that visually aid in understanding how does one get from A (the present capability, organization, and focus of the enterprise) to destination B (the future desired state of capabilities, organization, and focus) as laid out in the enterprise vision, mission, and strategy plan.

Scorecards are like a "cockpit" for managers and employee teams to navigate and steer. It is like the coxswain of a racing boat crew. It periodically 'shouts' critical information to the rowers. To explain, scorecard contains the relevant and key performance measures/indicators KPIs in the context of the strategy. The concept of context is important. It elevates this methodology well above management by objectives (MBO) and spreadsheet performance reports. With strategy-linked measures reported through scorecards, the scorecard immediately explains not only what happened but also where that leads to and why that is important. When scorecards are built and reported in isolation, there is no direct linkage to strategy. Thus, scorecards without strategy maps may lead to failure.

These performance measures, that are related to the strategic objectives as defined in the strategy map, are usually referred to as "strategic" measures. Strategic measures are gathered in what has become popularly known as a "balanced scorecard" – balanced because it is comprised of both financial and non-financial as well as leading and lagging measures. Lower level measures can optionally be derived from the "strategic" measures in a top-down measurement cascading process. These lower level measures are typically referred to as tactical and/or operational measures. Tactical and/or operational measures are gathered in functional scorecards that are understandably not "balanced" the way that measures at the enterprise level are. As a result, the term scorecard – not balanced scorecard – is reserved for the functional level, not enterprise level. For the remaining part of the article I will use the generic term scorecard as synonymous for both balanced and functional scorecards.

Thus, strategy maps and scorecards go hand in hand. Once created, they embody the strategic intent and objective of the organization as well as the critical measures of success for attaining those objectives – be they strategic, tactical and operational measures. This is communicated to all levels in the organization , which in turn keeps the organization on track in keeping with the strategic objectives.

However, typically this endeavor to "manage the strategy" is performed separately from the annual budgeting process with no linkage. (And usually by the finance department). The budgeting process needs to be much more than managing the next year-end's financial results - it must link to executing the strategy. There is a great opportunity for the budget to be an extension of the strategy with these interrelationships linked in a perpetual cycle:

Strategy maps tell where and why

Scorecards explain how well and what next

Budgets tells how

Thus, for instance, how do you know if your organization's measures are driving the right employee behavior for effective execution of strategy? Correctly developed strategy maps and scorecards dramatically increase the likelihood that they are. Strategy maps and scorecards provide a framework for literally keeping score of the functions and processes that are most important to the success of an organization. Focusing on the vital few measures for different employees' teams is a key. What you measure you can likely control, and what you can control you can improve. With the strategy map-derived scorecard, performance is monitored based on weighted measures reflective of their importance to achieving the strategy. Typical organization measures are haphazard, excessively emphasizing after-the-fact financial measures, and consequently the entire measurement system is "imbalanced" and usually fragmented across multiple computers.

Having said this, what reasons have lead to interest in CPM, strategy maps and scorecards? The answer lies in the typical impediments to Organization performance. Here, high on the list of the major frustrations of executives is their inability to get their employees to execute the organization’s strategies. In turn, increasingly the blame for poor organizational performance is pointed directly at senior management – their leadership skills. However, senior executives quietly counter that poor performance is not entirely their fault. They believe they do a good job at formulating and continuously re-defining their organization’s strategies, but they simply cannot get their organizations to execute in alignment with their strategies. They do not view the problem as being solely related to planning and execution systems, such as ERP systems, but rather as being people-related – communications and culture.

However, there are three problems with separate but related explanations:

Lots of energy, but poor traction – Most employees do show up at work to put in a good day's effort. But it is not usually clear to them what the more important priorities are to work on. To complicate matters, frequently there are too many disconnected improvement initiatives going on in parallel (as well as conflicting process improvement initiatives going on). Employees are often participating on numerous improvement project teams at the same time. This can dilute their focus, thus retarding the organization's progress

Poor alignment – Few if any employees truly know and understand what their organization's strategies are as defined by their senior management. Can you succinctly summarize your organization's strategies? If you can, can your co-workers? Most managers and employees, if asked, cannot articulate them. As a result, increasingly empowered employee teams may be selecting the wrong projects to work on – despite their good intentions

In line with this, often we judge employees by monitoring their results with too many measures. Is it fair to measure people on, let's say, ten measures particularly if several of them are outside the employees' influence and control? How fair is it for you or your team to be judged by measures that are affected by the performance of others? Management may think that this type of conflict will motivate teams to pull together and help each other out, but is that practical? When we do assign people too many measures, isn't it likely that an employee will concentrate on only those measures they know they can accomplish?

I am a believer that we should minimize people's measures to roughly a maximum of three or four measures – to only the vital few measures. You cannot just dump a hundred measures and instruct employees to perform well on all of them. Some measures have more impact than others do on overall results. Without some weighting to reflect the relative differences of importance amongst the measures, the organization can roam without a compass. When an organization focuses on fewer, more vital measures, it gets better traction. Organizations also can be monitoring the wrong measures. Selecting the correct measures is critical and is likely the single most impacting factor in making a performance management system successfully work

A Focus on historical financial measures: Many organizations monitor and analyze their financial results with much more energy than they do in understanding the influencing metrics that lead to those financial results. Non-financial measures, such as customer satisfaction or service levels, should get more deserving attention. This evolving management philosophy, The Balanced Scorecard 1 , evokes immediate appeal because of its fundamental message: excessive focus on financial results is unbalanced because non-financial measures influence eventual outcomes.

Thus, organizations need more non-financial measures that are reported during the period, not at the end of the period. This type of measure, that is popularly called a leading indicator measure, if reacted to can provide enough time to favorably change the outcome of the strategic objective(s) it influences and eventually the financial results. In this sense, these leading indicator measures are predictive measures of imminent results

In summary, many factors impede organizational performance. The impediments can be removed if employees better understood their organization's strategy; understand the key initiatives chosen to achieve it; and through selecting the correct performance measures. This way they can more clearly view how what work they do contributes to their organization's results. The overriding goal of a strategy map and scorecard system is to make strategy everyone's job. In short, strategy maps and scorecards are leadership tools that help translate strategies into actions and actions into results. Scorecards are tools that help remove confusion for employees and aid them to better understand priorities. It establishes sufficient ownership and accountability. Finally, it measures things that people can influence