Relationship between Kaplan and Norton
Strategic planning is the art of determining the direction an organization needs to go in order to achieve or maintain a competitive edge, how it will gain the edge, and how it will recognize success. There are many models and approaches to strategic planning, two of which we will look into here; the Balanced Scorecard by Kaplan and Norton, and the Porter Five Forces perspective. Strategic planning is more than just a list of goals to accomplish; it is in depths look at the internal and external forces driving an industry and an organization.
The Balanced Scorecard Development Model proposed by Kaplan and Norton is a four step methodical review of various aspects of the organization and its environment. They follow the pattern many strategic analysts do of beginning with the internal analysis first. So, step one of their process is to evaluate the organizations mission, vision, and value statements. The mission of an organization is its fundamental purpose, the reason for engaging in business activities. The vision builds upon the mission statement by establishing mid to long term goals, it is normally externally focused and market oriented. While the vision statement is externally focused, the values statement is more internally focused and shares the desired behaviors, character and culture of the organization (Norton, Kaplan, & Barrows Jr., 2008).
The next step in the Balanced Scorecard Model is to develop the strategic goals. This is where the vision of the organization is interpreted into achievable targets. These targets are derived from the gap between the desired outcome and status quo. The value gap represents the difference between aspiration and reality; it becomes the goal for the new strategy to fulfill (Norton, Kaplan, & Barrows Jr., 2008). The vision setting process establishes the start of the strategy development process and allows for the subsequent developmental steps to follow.
According to Kaplan and Norton, now that the organization has
The Balanced Scorecard Development Model proposed by Kaplan and Norton is a four step methodical review of various aspects of the organization and its environment. They follow the pattern many strategic analysts do of beginning with the internal analysis first. So, step one of their process is to evaluate the organizations mission, vision, and value statements. The mission of an organization is its fundamental purpose, the reason for engaging in business activities. The vision builds upon the mission statement by establishing mid to long term goals, it is normally externally focused and market oriented. While the vision statement is externally focused, the values statement is more internally focused and shares the desired behaviors, character and culture of the organization (Norton, Kaplan, & Barrows Jr., 2008).
The next step in the Balanced Scorecard Model is to develop the strategic goals. This is where the vision of the organization is interpreted into achievable targets. These targets are derived from the gap between the desired outcome and status quo. The value gap represents the difference between aspiration and reality; it becomes the goal for the new strategy to fulfill (Norton, Kaplan, & Barrows Jr., 2008). The vision setting process establishes the start of the strategy development process and allows for the subsequent developmental steps to follow.
According to Kaplan and Norton, now that the organization has
Cited: Culp, & Mavis. (2012). Strategic Management, Chapter 7. Overdrive, Inc. Norton, D. P., Kaplan, R. S., & Barrows Jr., E. A. (2008). Developing the Strategy: Vision, Value Gaps, and Analysis. Balanced Scorecard Report. Porter, M. E. (2008). The Five Competitive Forces That Shape Strategy. Harvard Business Review, 86(1), 78-93.