Strategic management is an art and science from making,
implementing, and evaluating strategic decisions between functions that enable
an organization to achieve future goals. Strategic management, focuses on
integrating / combining aspects of marketing, research and financial /
accounting development and production / operations of a business. Because it
integrates all business functions, strategic management is used as a name for
the currency in business administration. Strategic management consists of three
processes:
a) Making strategies, which include
developing long-term mission and goals, identifying opportunities and threats
from outside as well as company strengths and weaknesses, developing strategic
alternatives and determining strategies that are suitable for adoption.
b) Implementation of strategies,
including the determination of annual operational targets, company policies,
motivating employees and allocating resources so that the established
strategies can be implemented.
c) Evaluation / control of
strategies, including efforts to monitor all results from the making and
implementation of strategies including measuring the performance of individuals
and companies and taking corrective steps if needed.
Strategic always "gives an
advantage", so if the management process carried out by the company fails
to create profits for the company / organization, the management process cannot
be called strategic management.
Vision is a carefully formulated
statement of intent that defines a goal or future condition that is
specifically desired by a person or group. Vision is the starting point of
tomorrow's reality. The right vision has a strong driving force.
The right vision has several basic
criteria:
• Looking ahead is not just a
projection of the status quo.
• Is a belief in the possibility of
going to a better condition for the organization.
• Right and suitable for the
organization, consistent with the history, culture and values of the
organization.
• Set standards of excellence and
reflect high ideals.
• Clarify directions and goals.
• Stimulate inspiration,
enthusiasm, and commitment.
• Reflecting uniqueness, prominent
competencies, and what you want to fight for.
• Reflect on strong ambitions.
Strategic management system is the
process of formulating and implementing strategies to realize the vision
continuously in a structured manner. Strategy is a pattern of selected actions
to achieve certain goals. At first, the strategic management system was
characterized by:
• Rely on annual budgets
• Long-term and focused on
financial performance.
The implementation of such a
strategic management system in many private companies has failed. The reasons
include:
• Only 25% of managers have
incentives that are linked to the strategy
• 60% of companies do not link
their budget to strategy
• 85% of executive teams spend less
than an hour discussing strategies every month
• 5% of employees who understand
the strategy.
But the strategic management system
is still needed because the company is required to develop in a planned and
measurable manner, so that it requires a travel map to face an uncertain
future, requires strategic steps, and needs to direct HR capabilities and
commitment to realize the company's goals.
Balanced scorecard is briefly a
management system to manage strategy implementation, measure performance in its
entirety, communicate vision, strategy and objectives to stakeholders. The
balanced word in the balanced scorecard refers to the concept of balance
between various perspectives, the length of time (short and long), the scope of
attention (internal and external). The word scorecard refers to the
organizational performance plan and its parts and their size quantitatively.
The balanced scorecard benefits the organization in several ways:
• explain the organization's vision
• align the organization to achieve
that vision
• integrating strategic planning
and resource allocation
• improve management effectiveness
by providing appropriate information to guide change
Balanced scorecard is a method
developed by Kaplan and Norton to measure every activity carried out by a
company in order to realize the goals of the company. The balanced scorecard
was originally a separate activity related to targeting, but then integrated
with a strategic management system. The balanced scorecard is even further
developed as a means to communicate from various units within an organization.
The balanced scorecard was also developed as a tool for organizations to focus
on strategy.
The role of balanced scorecard in
strategic management systems is:
a) Expand perspectives in each
stage of the strategic management system
b) Make management focus balanced
c) Linking various targets
coherently
d) Measuring performance
quantitatively.
The use of balanced scorecard in
the context of private companies is intended to:
a. Produce productive processes and
cost effective
b. Produce multiple and long-term
financial returns
c. Develop productive and committed
human resources
d. Creating products and services
that can produce the best value for customers / customers.
Balanced scorecard is believed to
be able to change strategy into action, make strategy as the center of the
organization, encourage better communication between employees and management,
improve the quality of decision making and provide early warning information,
and change work culture.
The potential to change work
culture exists because balanced scorecards can make:
• The company is more transparent
• Information can be accessed
easily
• Organizational learning is
accelerated
• Feedback is objective, scheduled,
and appropriate for organizations and individuals
• Establish an attitude of seeking
consensus because of the initial differences in setting goals, the strategic
steps taken, the size used, etc.
The advantages of a strategic
management system based on balanced scorecard compared to other management
concepts is that it shows outcome indicators and clear outputs, internal and
external indicators, financial and non-financial indicators, and indicators of
cause and effect.
Balanced scorecards are best
arranged at certain times, for example when there is a merger or acquisition,
when there is pressure from shareholders, when going to implement a large
strategy and when the organization changes direction or will push the change
process. The balanced scorecard is also applied in routine situations,
including:
1. When preparing a budget
allocation plan
2. Develop performance management
3. Conduct socialization of new
policies
4. Get feedback
5. Increase staff capacity.
Balanced scorecard in Government
The government in the current era,
both central, regional and local government is expected to be:
1. Accountable
2. Competitive
3. Friendly people
4. Focusing on performance.
Government organizations are also
challenged to meet the expectations of various groups of stakeholders (ie
service recipients, employees, lending / grant institutions, communities, and
taxpayers). This demand requires government organizations to act professionally
as is done by private organizations.
Government organizations must have
a strategic management system. Because the external world is very unstable, the
planning system must control the uncertainties encountered. Government
organizations, thus, must focus on strategies. This strategy is more
hypothetical, a dynamic process, and is the work of each staff. Government
organizations must also feel, experiment, learn, and adapt to developments.
In order for government
organizations to focus on the strategies that have been formulated, government
organizations must also translate strategies into operational terminology,
align organizations with strategies (and not vice versa), motivate staff so
that strategy is everyone's work, drive change through executive leadership,
and make a strategy as a continuous process.
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