ECONOMY

The benefits of communicating strategy throughout a business

Strategy lies at the heart of every successful business and its human resources are its main vehicle for development, according to a management approach, the Balanced Scorecard, presented in Athens last month by one of its two authors, business consultant Dr David Norton (the other author is Harvard University Professor Robert Kaplan). Norton addressed the First Strategic Enterprise Management Forum, organized by SAP Hellas and attended by over 450 leading Greek executives. The management guru explained to Kathimerini the significance of this strategy in today’s businesses and the important role played by human resources in the application of business management strategies. «Strategy is an inexhaustible parameter that must be present at any given moment,» said Norton. «There is no such thing as an organization without a strategy and, unfortunately, less than 10 percent of business strategies are effectively implemented, while 95 percent of employees do not have a comprehensive understanding of the strategies applied.» Norton stresses that the application of a strategy such as the Balanced Scorecard is absolutely necessary, both because it corresponds directly to the real needs of any given organization and because it gives tangible results. «What an organization needs is, first, the involvement of executives from all levels and departments in the issue called strategy,» argues Norton.«It’s a common mistake to think that strategy only concerns high-level management. In fact, informing every executive of all financial data and the organization’s goals, always through the point of view of the employee, is the first step in the right direction.» The basic premise of the Balanced Scorecard strategy is, in a few words, intra-business communication, meaning that all employees are well informed and know what they can do as part of their daily tasks to contribute to the organization’s overall goals. It takes a minimum of two years for the Balanced Scorecard to be fully applied and begin having an impact, and one might well wonder just how it could apply to Greece, where 90 percent of business are small to medium-sized. «From the moment that an organization employs more than three people – even in the case of a family business – it requires the cooperation of all members to achieve its goals,» proposes Norton. «The difficulty of circumstances or the size of a business are not prohibitive to the application of the Balanced Scorecard, because its basic premise allows strategies to be broken down and allocated in measurable parts that can then be evaluated.» Given the structure of the strategy, one can argue that it is applicable in Greece both to businesses and to state institutions. This, Norton says, poses a real challenge. «We recently saw the Balanced Scorecard applied in quite a few businesses in Croatia, while an increasing number of organizations in various countries of the world and in various continents are looking to boost their competitiveness by adopting the same methodology. I don’t see why Greece should be any exception,» he says. Norton further adds that though many companies are applying the Balanced Scorecard method by following the guidelines set out in the two books on the subject written by Kaplan and Norton («The Balanced Scorecard: Translating Strategy Into Action,» 1996, and «The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment,» 2000), very few do so properly. So Norton now finds himself very busy developing a methodology that connects a company’s non-material assets – human resources included – to its goals and, in effect, to its strategy. «This is the next big challenge on which I am focusing all my energies,» he says.