To evaluate how successful Chipset’s strategy and its implementation have been, its management compares the target- and actual-performance columns in the balanced scorecard (Exhibit 13-3). Chipset met most targets set on the basis of competitor benchmarks in 2020 as improvements in Chipset’s learning-and-growth perspective quickly rippled through to the financial perspective. While Chipset will continue to make improvements to achieve the targets it did not meet, managers are satisfied that the strategic initiatives that Chipset identified and measured for learning and growth resulted in improvements in internal business processes, customer measures, and financial performance.
If Chipset did not meet all its balanced scorecard goals, how could it tell if the failure to meet its objectives was because of problems in strategy implementation or because of problems with its strategy? Consider first, the situation where Chipset did not meet its goals on the two internally focused perspectives: learning and growth and internal business processes. In this case, Chipset would conclude that it did not implement its strategy because it did not implement the activities that would give it competitive advantage. But what if Chipset performed well on learning and growth and internal business processes, but customer measures and financial performance in this year and the next year still did not improve? Chipset’s managers would then conclude that Chipset did a good job of implementation, as the various internal nonfinancial measures it targeted improved, but that its strategy was faulty because there was no effect on customers or on long-run financial performance and value creation. In this case, management failed to identify the correct causal links but did a good job implementing the wrong strategy! Management would then reevaluate the strategy and the factors that drive it.