Balanced Scorecard Strategy For Dummies®

Chapter 8. Understanding Your Role in Financial Measurement

<feature><title>In This Chapter</title>

• Seeking the true simplicity of financial measures

• Figuring out how finance helps you understand performance

• Fitting it all together

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Financial measures have been the backbone of companies for decades, consistently reporting on balance sheets, income statements, and cash flow. We see them in every industry, in every form of business — large and small. Financial measures are used by business leaders to make key decisions, and to determine the financial status of a company or business.

When we ask CEOs and COOs what plans they are making for the long-term future, we get great answers, about having a shared vision, compelling missions, clear direction — everything a growing company would need to succeed. However, when we ask mid-level managers the same question — and especially when we ask the folks who make, buy, assemble and produce the products shipped to customers — we get answers more along the lines of “We don’t know what the company has in mind for the future,” or “I’ve got no idea, I just work here.”

Startups never have this problem. They always know exactly where they are going, and they can’t wait to get there. Everyone is involved, and everyone has the same razor-sharp focus on where they are going, how they will get there, weaknesses they have to overcome, and a plan for their own path for the future. Such cohesiveness is indicative of shared clarity in direction, and ...