Strategic Management Reporting and the Balanced Scorecard

Building a Strategic MIS for a Commercial Bank

In this blog we're looking at building a Strategic Management Information System (SMIS) to support strategy implementation in a commercial bank. We're assuming a starting point where we have a well defined Business Plan which describes a rich set of measures and targets which underpin strategic success. This blog is going to focus on how we might organise these measures and targets in a dashboard format, use the SMIS to cascade objectives throughout the bank, and also to structure and capture our data logically. Along the way we'll be covering many tips and pitfalls which I have experienced in strategic data and information management, and I hope to get lots more in terms of comments and suggestions from readers.

Strategic management reporting and the Balanced Scorecard

In the last post, we looked at the three distinct reporting aspects: strategy - things we need to achieve; change - the things we need to do; and, risk - the rules of the road. Taking strategy as our starting point, the Balanced Scorecard in all its variation is probably the best known and most widely used strategic management framework.

Balanced Scorecard

A deep dive into the Balanced Scorecard is way beyond the scope of this blog and will take far too long. Perhaps it is another blog topic for the future. There are a couple of really interesting and relevant elements of the Balanced Scorecard from the perspective of this blog, however. The first is the emphasis on quantifying strategic success in terms specific measures and targets. It insists that the progress towards strategic objectives be objectively measurable.

The second is that having quantifiable measures and targets makes it much easier to cascade strategic performance management down through the organisation structure. For example, let's say one of the Bank's strategic objectives was to 'Increase customer profitability' or something equally straightforward. The Balanced Scorecard would force us to quantify this Objective in terms of one or more specific measures and targets.

For example - one of these measures could be a measurable increase in the average number of products held per customer. Having decided this - it becomes a much easier task then to allocate responsibilities for achieving the relevant target to sub-ordinate business units - for example, retail or corporate banking. Indeed, we could allocate increasingly more granular measures and targets for any number of strategic objectives right down to the individual staff member. Indeed, that is the logical conclusion of the Balanced Scorecard approach.

So how might our Strategic Management Information System handle this? As usual - it's easier to describe using the simulation than in text. The following video explains how you might approach this challenge. If you are not familiar with the Balanced Scorecard, the Balanced Scorecard Institute has excellent resources. If you're really interested in implementing the Balanced Scorecard in your bank, then we have an excellent course, 'Implementing the Strategy' which covers this topic in depth.