Glossary of Strategic Planning Terms Used in BSC Designer

A definition of key terms used in the BSC Designer platform, aimed at facilitating the adoption of the strategic planning software within the organization.

  • Facilitate team onboarding.
  • Ensure consistent use of terms.

Strategy

From the perspective of strategy implementation, strategy is the decomposition of an organization’s mission into actions through aligned strategic and functional scorecards.

This practical definition should be complemented by conceptual definitions of strategy proposed by various schools of thought, such as "strategy as the validation of hypotheses in practice" or "strategy as integrated choices to create sustainable advantage."

The high-level strategy, or strategy core, is formed by:

  • Mission - A goal at the highest level of abstraction that provides context for all other goals and actions.
  • Vision - A description of the future as envisioned by the organization, outlining its aspirations and desired long-term outcomes.
  • Core Values - The principles by which an organization operates and makes decisions, ensuring alignment with its mission and vision.

Decomposition

Decomposition is the process of breaking down high-level objectives into specific components such as sub-goals, KPIs, and initiatives, ending when actionable items like initiatives are reached.

Strategy Workspace

The strategy workspace is a centralized area where users in the role of administrators can manage scorecards.

Scorecard

A scorecard is a container for quantifiable items that may include goals, indicators, initiatives, and risks. It is structured with a root item at the top, followed by perspectives, goals/sub-goals, KPIs, and initiatives.

Initiatives can be added as extensions to any item, but no sub-items can be added to an initiative.

Cascading or Alignment

Cascading or alignment describe the connection of various levels of strategy represented by scorecards.

  • Cascading by data links one goal or KPI to another by using its data as input. When the source is updated, the destination is automatically updated.
  • Cascading by perspectives occurs when scorecards with the same perspectives are placed hierarchically in the strategy workspace; their perspectives are automatically connected by data.

Alignment by context is a conceptual connection between items, such as goals, KPIs, or initiatives. It is displayed in the Context tab and reports. While it does not affect calculations, it helps explain the rationale behind relationships.

Quantification

Quantification is the process of mapping observations into numbers.

Strategic Scorecard

A strategic scorecard represents a part of an organization’s strategy by organizing goals, KPIs, initiatives, and risks. It can follow the decomposition principles of a specific business framework, such as the K&N Balanced Scorecard or OKRs.

Functional Scorecard

A functional scorecard conceptually focuses on specific functions or domains (e.g., HR, IT, Compliance) rather than on a main strategy. In terms of calculations, it operates the same way as a strategic scorecard.

Root Item

The root item is the topmost level in a scorecard that contains all subsequent items, including perspectives, goals, KPIs, and initiatives. Its settings determine how the scorecard is displayed in the strategy workspace.

Perspective

From the viewpoint of scorecard calculation, a perspective is a container that aggregates the performance of the items it contains. In the scorecard hierarchy, the root item occupies the highest level, with perspectives representing the next level directly below it.

From a conceptual viewpoint:

  • In functional scorecards, perspectives may serve as simple data containers.
  • In strategic scorecards, perspectives follow a cause-and-effect logic, where some act as drivers (Internal Processes, Learning and Growth), while others represent outcomes (Customer, Finance/Stakeholder).

KPIs

KPIs (Key Performance Indicators), also referred to as metrics, indicators, or measures, are values used to evaluate progress towards achieving goals. They are associated with goals to quantify and provide measurable insights into performance.

Container

In the scorecard, several KPIs can be placed into a recipient KPI. In this case, the recipient KPI becomes a container for a group of KPIs. By default, the container aggregates the weighted performance of the KPIs inside it.

Self-Standing Container

A self-standing container is configured in such a way that its performance or value remains independent. It is not influenced by any of the items it contains.

Goals / Objectives

Goals/Objectives represent the aspirations of the organization. In the scorecard, the goals are typically containers for KPIs, meaning their performance is defined by the performance of the containing items.

While there is a conceptual difference between goals and KPIs, they are similar from a calculation perspective, as both have performance and values calculated.

Measurement Units

Measurement units define the standards by which KPI values are measured and quantified, such as percentage, currency (e.g., USD), or binary states (e.g., Yes/No).

Optimization Function

The optimization function defines how the performance of a KPI is evaluated in relation to its current state. For example:

  • Maximization: Higher values represent better performance (e.g., revenue).
  • Minimization: Lower values represent better performance (e.g., error rate).
  • Binary: The KPI is either achieved or not (e.g., Yes/No).

Custom formulas may also be used to reflect more complex dependencies.

Raw Data Indicator

A raw data indicator is a KPI used as a repository for data. It does not directly contribute to performance or progress but can be referenced in formulas by other indicators.

Value

The value defines the current state of the KPI. The value can change over time.

Baseline, Target, Min, Max

These define the measurement scale of a KPI:

  • Baseline: The starting value for a KPI.
  • Target: The desired value to achieve.
  • Min (Minimum): The lowest possible value.
  • Max (Maximum): The highest possible value.

These parameters of an indicator can be changed over time.

Update Interval

Update Interval is a formal period of actualization that, for data consistency purposes, is assigned to a KPI.

Data Inheritance

Data Inheritance defines the behavior of a KPI for dates where no specific value has been entered. A KPI can either reuse a previously known value or display no value.

Progress and Performance

Progress and performance are calculated using the optimization function of a KPI.

  • Progress is the extent to which KPIs have advanced from the baseline value towards the target value.
  • Performance is the extent to which KPIs have advanced from the minimum value towards the maximum value.

Weight

Weight represents the relative importance of a KPI within its container. It is used in the calculation of the performance or progress of the container where the metric is located and remains constant over time.

Leading Indicator

A leading indicator measures actions or inputs that influence the goal it is aligned with. In the scorecard, leading indicators are used to calculate leading performance. It is tied to success factors.

Lagging Indicator

A lagging indicator measures the results or outcomes achieved. In the scorecard, lagging indicators are used to calculate lagging performance.

Initiative

An initiative is a specific action plan or project aligned with a goal or KPI. Initiatives typically include elements like budgets, timelines, and dependencies, and they act as extensions of goals or KPIs.

Comment

A comment is a date-specific initiative added to a goal or KPI to document relevant information or observations. It can be reported for each date, similar to the values of KPIs.

Risk

Risks are defined in relation to their associated goals and might consist of likelihood and impact indicators that can change over time, risk mitigation initiatives, or other related items.

Owner

An owner is the individual or team assigned to manage, or oversee a specific goal, KPI, or initiative. Owners have access rights to their assigned items and receive notifications about relevant changes.

Stakeholders

Stakeholders are systems, individuals, or groups with an interest in the organization. They are included in the scorecard for analysis and reporting purposes but do not have access rights or receive notifications.

Rationale

The rationale explains why specific goals, metrics, or actions are chosen, providing context and justification for strategic decisions.

Map

A map is a visual representation of a scorecard, showing goals, KPIs, initiatives, and their cause-and-effect relationships. It can vary in form, such as a strategy map, business canvas or process map.

Strategic Themes

A strategic theme can be assigned to a goal and impacts the colors used for the goal on the strategy map.