Even companies that embrace the Balanced Scorecard often take a backward approach to monitoring performance. Many organizations choose metrics based on how much effort data collection requires.

What information does your corporate leadership team rely upon to conduct its meetings? Do you use leading indicators that reveal progress toward achieving strategic goals — or do you rely on legacy systems containing lagging indicators such as financial results? Are management or operating review meetings dominated by discussions about who has the most current data and which report is most accurate?

Companies become handicapped by limited, low-quality data views when they allow the information that is already available, and is easiest to gather, determine how they manage the business. It makes sense that an organization should first make decisions about its strategies and information requirements, then subsequently align information assets to support strategy management. But many companies continue to operate in reverse.

When approached as a means to support corporate strategy, business intelligence (BI) solutions can enhance performance management programs' ability to optimize value to the organization. A business that is pursuing Balanced Scorecard strategic alignment can use BI solutions for trend analysis, predictive analytics, customer data integration, scorecards and dashboards, and data mining. We have found through our separate research initiatives that the most successful organizations leverage proven performance management methodologies such as strategy maps and the Balanced Scorecard, then choose metrics based on the strategic objectives set through those methodologies, and finally deploy business intelligence solutions to gather the data necessary for performance optimization.

Step 1: Developing a Top-Level Strategy Map

While leading a consulting practice for Robert Kaplan and David Norton, Bob realized that the first step in preparing to develop a strategy map or a balanced scorecard is to understand the basic terminology. We don't have space here to impart in-depth skills training, but at least we can define the strategy map and balanced scorecard upon which BI infrastructure should be based.

The vertical view. Exhibit 1, below, displays a portion of a corporate (level-one) strategy map focused on the strategic theme “product development.” It contains the four perspectives of the Balanced Scorecard. The strategy map should be read from bottom to top, as movement upward indicates causation from the learning and growth perspective, to the internal process perspective, to the customer perspective, and finally to the financial perspective. The strategy map can be thought of as a company's road map to strategic goals, whereas the organization's balanced scorecards, which report on metrics related to the strategic goals, show the company's progress along the path that the road map outlines.