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ACCA Strategic Professional · Strategic Business Leader · Enabling success: performance excellence

Delmar Telecom's scorecard shows excellent customer satisfaction and process measures, but financial results are deteriorating and the learning and growth measures were last reviewed three years ago. The CEO suspects the strategy itself may be flawed rather than its execution. Which feature of the balanced scorecard, properly applied, would best help test this suspicion?

The strategy map's cause-and-effect hypotheses best test the suspicion. If customer and process measures improve while financial results fall, the assumed link between them is questionable, which suggests the strategy rather than execution is flawed. Single indices, bonus targets and benchmarking do not test the logic of the strategy.

  1. AIts use of a single overall index that combines all measures into one score
  2. BIts requirement that every measure has a numerical target tied to individual bonuses
  3. CIts strategy map of hypothesised cause-and-effect links, which can be tested against actual results to confirm or challenge the strategyCorrect
  4. DIts focus on benchmarking against industry competitors for each measure

Explanation

The strategy map states hypotheses about how improvements in one perspective drive another. If customer and process measures improve but financial results do not, the hypothesised link is questionable, suggesting the strategy may be wrong. This allows double-loop learning. A single index obscures the links, bonuses address motivation, and benchmarking compares performance, not strategy logic.

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