How do Digital Transformation leaders use the Digital Balanced Scorecard?

 

Who doesn’t want to be hailed as a visionary?  They are the ones who create the future, innovate and prioritize constrained resources.   

But the business of being a change agent also comes with challenges.  Inside most organizations, they need the time to bring the promises of innovation to the market before the “air supply” from the financial metrics run out.  It’s imperative that DX initiatives produce results and exceed financial expectations, the quicker the better.  That’s why it’s so important for DX executives to spend the time to build consensus from the outset of the journey. 

So how does the newly appointed DX leader start off on the right foot?  

Great performances are measured and optimized. Athletes know their numbers and strong leaders do too. Leadership aligns the organization by setting targets, communicating them, and then optimizing performance to reach the desired business outcomes.  

New unit leaders in the military learn a common mantra: “Set, communicate, and enforce standards.” Translated into business terminology it might be said, “set, communicate and optimize performance.”  

Laying down the balanced scorecard in simple and widespread communications has a far-reaching impact to align even the most distant frontiers of the organization. The benefits are far more profound than can be imagined and usually surprise DX/CX leaders when they receive the feedback of their importance from the rank and file — even from the unexpected pockets that weren’t intended to be impacted as direct stakeholders.  

Know what the desired business outcomes should look like and use them as the guiding principles in establishing the Digital Balanced Scorecard (DBSC) to align board-level directives in creating strategic objectives. Use it before conducting Design Thinking Workshops as a way to communicate the objectives for the initiative, and to clearly communicate the expectations as seen by all the stakeholders in the organization.  It is a powerful tool for consensus building.   

Build Consensus and set standards using the Digital Balanced Scorecard 

The Balanced Scorecard is broken into four areas, called perspectives: the Financial, Customer, Internal, and Growth perspectives. 

The financial perspective will detail specific goals and objectives pertaining to a company’s financials. Are you trying to reduce production costs, increase profit margins, or maybe introduce some new revenue channels?  

The customer perspective will deal with what the customer must do in order to meet the financial objectives set above.  It can involve an NPS score, brand awareness, customer service, and in the digital economy, the winners are competing on the customer’s experience. The breadth of the customer perspective is broad, and includes every channel where a customer can engage with your brand; in-store, your call centers, kiosks, mobile apps, web properties, social media, and in paid, earned and owned media 

In your assessment of the internal perspectivesometimes called the operational perspective, your organization will manufacture the product, service or experience in support of the customer perspective above.  Focus on the value-driving processes and consider using an Activity-Based Cost study crosswalked with the customer’s perceived value for each activity as it relates to the feature set.  This works well for both products and services businesses.  The Internal perspective is typically aligned with the Cost of Goods Sold and in the new age of digital, expands into the sales and marketing engagements shared with the customer.  It will span the people, processes, and platforms used to deliver on the brand promise. 

Begin the assessment for the growth perspectivesometimes called the Innovation or Learning perspective, with an internal skills audit cross-walked with the skills needed. In manufacturing businesses, you could use a demand forecast with the capacity forecast.  How will you manufacture what is needed to meet the internal objectives listed above?  Will you need to technology platforms, new processes, new certifications, and new people or training?  This can include the skills, knowledge, databases, information systems, leadership, and teamwork needed to pull things off.  

With a digital balanced scorecard, you can clearly and easily communicate the strategies and objectives you wish to see throughout your company. As a result, you will have a team that knows what’s expected from the top down and can hold the board accountable to provide you the timeline, investment and human resources needed to meet and exceed attainable financial metrics. 

We provide a sample Excel (.xlsx) Balanced Scorecard Template below for digital transformation and customer experience transformation visionaries.  

Alternatively, you may want to use a software solution, we recommend a solution from Balanced Scorecard Designer.  

Consider carefully how to communicate the DBSC within your organization. Do you keep it on a screen in a public space? Do you refer to it as slide 1 of your internal “drive-by” slides as you conduct your “round-robin” consensus-building meetings? Is it part of your Data Governance and Digital Steering Committee meetings? Once you complete the DBSC, make sure you spend the time to communicate it and ensure that other stakeholders are evaluating the DX initiative using the same rubric.   

Download LCG's Digital Balanced Scorecard Template

Leave a Comment

Your email address will not be published.