The original intent of the Balanced Scorecard attempts to identify targets (both financial and operational) that are strategic in nature. However, most companies that I am familiar with misuse this tool, and tend to merge daily management measures (KPI’s – Key Performance Indicators) and strategic measures together. This often leads to confusion over what is truly strategic and where management needs to focus its attention, as well as confusion as to where to best deploy its resources.
I like to think of measurements as either Daily Management as measured by Key Performance Indicators (KPI’s) and Strategy Deployment (SD) measures that are tied to the strategies of the company. I think that all functional departments should develop their own KPI’s to monitor and improve their specific functions.
Strategy Deployment targets however, are cross-functional and need to be worked on by multi-functional teams. These are the measures that are found in the “Target” section of the SD Matrix. Also, SD targets are set to “breakthrough” measures requiring the focus on the fundamental processes that deliver the desired, repeatable, consistent, breakthrough results. I feel that the Strategic Deployment process does a better job at identifying the underlying business processes that need to be implemented/changed/improved. True sustainability is had by focusing on repeatable business processes that drive breakthrough results.