How to build your Balanced Scorecard and KPI. Part two - we define a strategy

In the last issue of our blog, I talked about the theory of building SSP and KPI in small companies by non-specialists. BUT "my friend's theory is dry, and the tree of life is green."
Therefore, today I will tell you about how I created a real MTP for our company without business consultants and special software.

We start with a strategy
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- Tell me, please, where should I go from here?
- Where do you want to go? - answered the cat.
“I don't care ...” said Alice.
“Then it's all the same where to go,” remarked the Cat.
“... just to get somewhere,” Alice explained.
“You’ll go somewhere,” said the Cat. - It is only necessary to go long enough.

If you follow the logic of Alice, then your business will certainly get somewhere, but it is not necessary that he will like this place.

In order to determine the company's strategy, I once wrote such a business case.

Our product monitoring of the activities of employees turned out to be on the market in a difficult period.

Firstly, the market itself is still in the maturation stage. Not all companies are aware of the need to purchase such systems. Someone considers it unnecessary to spend money on them. Someone is afraid to piss off the staff. But the majority for the time being simply did not realize that inefficiently working (or even harmful companies) employees are capable of derailing business in a short time.

Secondly, by the time the product was released, there were already many systems of previous generations on the market. The oldest tried to collect as much as possible given the behavior of users on the PC, and then dump them on managers in the form of huge reports. The next generation in the form of lightweight working time accounting system was reviewed by me in one of the previous posts. Other systems offer online monitoring and recording of computer desktop video (that is, in fact, recording video actions of all company employees on their PCs).

And thirdly, the crisis has entered a protracted phase, budgets began to shrink. Companies began to save on everything, so they were hardly pleased with our proposal to spend money on another computer program.

What should the company want in this situation? What to strive for?

The easiest option would be to write " We want to achieve sales of our software product in the amount of X million rubles until the end of 2016. " Actually, this is what most people who want to invent a KPI system do on their own.
But this is a mistake.

Winning a battle does not mean winning a war. High sales in one year may be the last, if the company's position in the market remains fragile. How can you not remember Aesop's fable about the cat, who quickly destroyed all the mice in the house and was kicked out as useless.

How to write the right strategy

1. Decide what you basically want from your business. So that it will bring you income in the coming years or so that it can be sold in a couple of years.
2. If your strategy is long-term, then outline those very long-term goals, and then distribute by year-stages how your position in the market should change. Gradually you will reach the foundation, where to start. I recall that the actual sales in many cases may not be as important as winning / holding market share or reputation in the minds of potential consumers.
3. If you are planning to sell the company by a specific date, then determine by what criteria your company will be evaluated. And to whom you will sell. Russian investors are usually interested in profits, while Western investors are interested in the customer base. And determine how to achieve these criteria.

I will give an example of our strategy for 2016:

• The company must convince part of the target audience, who have not yet realized the need for employee monitoring, that personnel control in the current environment is absolutely necessary for the company's survival.
• The company must convince potential customers that online monitoring and recording employee video actions on desktops are critical functionality for personnel monitoring systems and systems without this functionality cannot fully solve the company's tasks.

That is, on the one hand, we want to expand the existing market of monitoring systems, and on the other, to transform it.

Now it is time to define the strategic goals of the company. With their help, we will determine whether we managed to implement our strategy or not.

1. At least 50% of clients learned about the existence of a market for employee control systems from us
2. The market share is not less than 15% of the current market of personnel monitoring systems

How do these strategic goals work?
When fulfilling the goal number one, we can be sure that not all of our clients have been “taken away” from competitors, we have attracted at least half of our own and thereby expanded the market.
Meeting goal number two will indicate that we have taken a strong position among existing systems. And since the 15% share is quite large, its achievement is impossible without an understanding of the unique functionality of the client.

And now, when we figured out the strategies, it's time to move on to plans, indicators and perspectives. We will deal with all this in the third and last part of our story .