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TABLE OF CONTENTS

LEAD AND LAG INDICATORS ........................ ERROR! BOOKMARK NOT DEFINED.

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GLOSSARY OF TERMS
INTRODUCTION

Many terms we use when talking about Strategy Management are used
interchangeably. The following list defines most of the terms used. These
definitions have been derived from authoritative sources and in the most
part can be considered as correct. There will always be a minority who
would like to argue the case!

GLOSSARY OF STRATEGIC TERMS

Alert - Notifications by email or to a web page, updating users about

changes to items that they have subscribed. Examples might include
notifications about performance changes or commentary.

Balanced Scorecard - An integrated framework for describing strategy

using linked performance measures in four, balanced perspectives -
Financial, Customer, Internal Process, and Organisational Capacity. The
Balanced Scorecard acts as a measurement system, strategic management
system, and communication tool.

Benchmarking - The comparison of similar processes across organisations

and industries to measure progress, identify best practices, and set
improvement targets. Results may serve as potential targets for key
performance indicators.

Budget - A description of the funding of existing and/or proposed

actions/initiatives/projects.

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Business Plan -These comprise the Corporate, Directorate, Service and

Team plans, which specify the key priorities and activities to be undertaken
and how they will be measured.

Business Objective – (also known as Strategic Objective) A concise

statement describing specific, critical, actionable and measurable things an
organisation must do to effectively execute its strategy and achieve its
mission and vision. They should begin with action verbs such as increase,
reduce, improve, decrease, strengthen, maximise, minimise. Business
Objectives should be descriptions of continuous improvement.

Business Objective Result - A single short statement describing exactly

what is meant by the label given to a Business Objective

Business Performance Management - A type of performance

management that includes finance, covering compliance issues,
competition, risk and profitability and human resources performance
management encompassing employee performance appraisals and
incentive compensation and other types of performance management
include operational performance management and IT performance
management.

Cascading - The process of developing aligned goals/objectives throughout

an organisation, connecting strategy to operations to initiatives, allowing
each employee to demonstrate a contribution to overall organisational
objectives. Methods of cascading include identical (objectives and measures
are identical), contributory (translated, but congruent, objectives and
measures), unique (unique objectives and measures; do not link directly to
parent) and shared (jointly-shared unique objective or measure).

Cause and Effect - The way perspectives, objectives, and/or measures

interact in a series of cause-and-effect relationships demonstrate the
impact of achieving an outcome. For example, organisations may
hypothesise that the right employee training (Organisational Capacity
Perspective) will lead to increased innovation (Internal Process Perspective),

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which will in turn lead to greater customer satisfaction (Customer

Perspective) and drive increased revenue (Financial Perspective).

Core Values - Representing an organisation’s deeply-held and enduring

beliefs, an organisation’s Core Values openly declare how it expects
everyone to behave and are often embedded in its vision.

Critical Success factor (CSF) - A CSF is a business event, dependency,

product, or other factor that, if not attained, would seriously impair the
likelihood of achieving a business objective.

Customer-Facing Operations - Encompasses those facets of the

organisation that interface directly with customers; typically, an
organisation’s sales, service and marketing functions. Also, referred to as
Demand Chain.

Customer Perspective – Objectives and measures are developed based on

an organisation’s value proposition in serving their target customers. In
many organisations, especially public sector and non-profit, the Customer
perspective is often elevated above the Financial perspective.

Dashboard - A dashboard is a reporting tool that consolidates, aggregates

and arranges objectives and metrics (measurements compared to a goal)
and sometimes scorecards on a single screen so information can be
monitored at a glance. Dashboards differ from scorecards in being tailored
to monitor a specific role or generate metrics reflecting a particular point of
view; typically they do not conform to a specific management methodology.

Drill Down - A method of exploring detailed data used in creating a

summary level data. Drill Down usually starts at a Dashboard and ends up
with metric data. The level of Drill Down depends on the granularity of the
data held in the system being used.

Economic Value Added (EVA) - A financial performance measure used to

determine whether a company or activity has truly created shareholder
value; in other words, EVA aims to distinguish real profit from paper profit.

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EVA is determined by calculating a business’s after-tax cash flow minus the

cost of the capital it deployed to generate that cash flow.

Financial Perspective – This is the perspective that looks at bottom line

results. In public sector and non-profit organisations, the Financial
Perspective is often viewed within the context of the constraints under
which the organisation must operate.

Forecast - Forecast usually refers to a projected value for a metric.

Organisations will often create a forecast that is different than their target
for a given metric. There are multiple types of forecasting methods for
creating forecasts based on past data and usage of them varies widely
across organisations.

Goal - An observable and measurable result having one or more objectives

to be achieved within a fixed timeframe. In a Balanced Scorecard
framework, the term Goal is not used, it is replaced with Strategic Objective
or Business Objective

Goal Diagram - Generically used to describe the one-page visualisation that

shows the different goals of the organisation and how they are related.
Examples of goal diagrams include strategy plans, strategy maps and
process diagrams.

Human Capital - A metaphor for the transition in organisational value

creation from physical assets to the capabilities of employees. Knowledge,
skills, and relationships, for example. Closely related to terms such as
intellectual capital and intangible assets. Some experts suggest that as
much as 75% of an organisation’s value is attributable to human capital.

Initiatives - Initiatives organise people and resources and dictate which

activities are required to accomplish a specific objective by a date; initiatives
provide the how while objectives provide the what. As differentiated from
projects, initiatives directly support an organisation’s strategic/business
objectives; projects may or may not have strategic impact.

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Inputs - Commonly used within the Logic Model to describe the resources
an organisation invests in a program, such as time, people (staff,
volunteers), money, materials, equipment, partnerships, research base, and
technology, among other things.

Internal Process Perspective - This perspective is used to monitor the

effectiveness of key processes at which the organisation must excel to
achieve its vision and mission.

IT Performance Management - A type of performance management that

assists organisations with the increasing demands of maximising value
creation from technology investments; reducing risk from IT; decreasing
architectural complexity; and optimising overall technology expenditures.
Other types of performance management include operational performance
management and business performance management.

Key Outcome Indicator (KOI) - Often used in the public sector to describe
key performance indicators, those metrics most critical to gauging progress
toward objectives. KOIs are metrics that are: tied to an objective; have at
least one defined time-sensitive target value; and have explicit thresholds
which grade the gap between the actual value and the target.

Key Performance Indicator (KPI) - Distinguished from other metrics, key

performance indicators (KPIs) are those metrics most critical to gauging
progress toward strategic/business objectives. KPIs are metrics that are:
tied to an objective; have at least one defined time-sensitive target value;
and have explicit thresholds which grade the gap between the actual value
and the target.

Lagging Indicator - Backward-looking performance indicators that

represent the results of previous actions. Characterising historical
performance, lagging indicators frequently focus on results at the end of a
time period; e.g., third-quarter sales. A balanced scorecard should contain
a mix of lagging and leading indicators.

Leading Indicator - Forward-looking in nature, leading indicators are the

drivers of future performance. Improved performance in a leading indicator

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is assumed to drive better performance in a lagging indicator. For example,

spending more time with valued customers (a leading indicator) is
hypothesised to drive improvements in customer satisfaction (a lagging
indicator).

Learning and Growth Perspective – This term has been replaced by

Organisational Capacity and should no longer be used. It has been included
as older Balanced Scorecard documentation may refer to it.

Logic Model - Having gained prominence in the ’90s largely in response to

the Government Performance and Results Act (GPRA), the Logic Model is
now a widely-accepted management tool in the public and non-profit
sectors as well as the international arena. The model is a roadmap or picture
of a program that shows the logical relationships among resources or inputs
(what an organisation invests); activities or outputs (what an organisation
gets done); and outcome-impacts (what results or benefits happen as a
consequence).

Malcolm Baldridge - Established by the U.S. Congress in 1987, the Malcolm

Baldridge performance framework is a rating tool that assesses
management systems and helps identify major areas for improvement in
seven categories of performance criteria: Leadership; Strategic Planning;
Customer and Market Focus; Measurement, Analysis, Knowledge
Management; Human Resource Focus; Process Management; and Business
Results.

Measure (also called metric) - Term to describe a standard used to

communicate progress on a aspect of a program. Measures typically are
quantitative in nature, conveyed in numbers, currency, percentages, etc.
(e.g., actual revenue, headcount number, % increase, survey rating average,
etc.) though they may be describing either quantitative (e.g., sales made) or
qualitative (e.g., employee motivation) information.

Metric (also called Measure) – See Measure above

Milestone - The set of specific deadlines or hurdles that signal progress in

completing an Initiative or project. Milestones include progress/completion

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dates or % completion rates, key presentations/meetings, and key decision

points.

Mission - A concise statement that describes what a company or

organisation does. The Mission is a statement of fact and usually has
longevity. Any company employee when asked “What does your company
do?” should be able to answer clearly by using the Mission Statement

Mission Statement - A mission statement defines the core purpose of the

organisation - why it exists. The mission examines the "raison d'etre" for the
organisation beyond simply increasing shareholder wealth, and reflects
employees' motivations for engaging in the company's work. Effective
missions are long-term in nature, and easily understood and
communicated.

Objective – Not to be confused with Business Objective or Strategic

Objective. The term Objective is usually used when referring to personal
performance and not business performance. This is an important
distinction when compiling a lexicon.

Operational Alignment - The means to and/or state of alignment of an

organisation’s day-to-day activities with its strategy or business objectives.
Operational alignment helps ensure that an organisation’s daily activities
are advancing its longer-term vision and mission.

Operational Performance Management - A type of performance

management that addresses the growing pressure to increase revenue
while managing costs, while meeting ever-evolving and expanding customer
demands. Other types of performance management include business
performance management and IT performance management.

Operational Reviews - Usually used to describe the regularly scheduled

internal status meetings of an organisation. Going by different names based
on the organisation, manufacturing companies typically call them
Operational Excellence (OPX) meetings, other organisations sometimes just
refer to them as Performance reviews.

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Organisational Capacity Perspective - Capacity is an abstract term that

describes a wide range of capabilities, knowledge, and resources that
companies and organisations need to be effective. This perspective appears
as the bottom layer of a Strategy Map and provides the underpinnings of
the strategy.

Outcome - Commonly used within the Logic Model, outcomes (also called
outcome-impacts) describe the benefits that result as a consequence of an
organisation’s investments and activities. A central concept within logic
models, outcomes occur along a path from shorter-term achievements to
medium-term and longer-term achievements. They may be positive,
negative, neutral, intended, or unintended.

Output - Commonly applied within the Logic Model, outputs describe what
an organisation gets done; e.g., “what we do” or “what we offer” and may
include workshops, delivery of services, conferences, community surveys or
facilitation.

Performance Driver - Measures that indicate progress against a process or

behaviour. These measures are helpful in predicting the future outcome of
a business objective.

Performance-Based Budgeting - A performance budget is an integrated

annual performance plan and budget that shows the relationship between
program funding levels and expected results. It indicates that a goal or a set
of goals should be achieved at a given level of spending.

Performance Gap - The “difference” between actual and target, the trend
of the performance or target gap shows an organisation’s momentum.

Perspective – Each Perspective represents various stakeholders, internal

and external, critical to achieving an organisation’s vision and mission.
Together, the perspectives provide a holistic, or balanced, framework for
telling the “story of the strategy” in cause-and-effect terms. A Balanced
Scorecard consists of four Perspectives: Financial, Customer, Internal
Processes and Organisational Capacity.

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Process Diagram - Process diagrams are used to represent specific

processes that are undertaken in an organisation and the key steps involved
in the process. An example might be a high-level diagram that highlights the
customer experience.

Program Assessment Rating Tool - Developed by the Office of

Management and Budget within the Office of the President of the United
States, the Program Assessment Rating Tool (PART) was developed to assess
and improve program performance so that the federal government can
achieve better results. A PART review helps identify a program’s strengths
and weaknesses to inform funding and management decisions aimed at
making the program more effective. The PART therefore looks at all factors
that affect and reflect program performance including program purpose
and design; performance measurement, evaluations, and strategic
planning; program management; and program results.

Qualitative - Subjective, as opposed to quantitative (measured). A common

source of qualitative metrics are surveys of customers, stakeholders or
employees.

Quantitative - Measured, as opposed to qualitative (subjective).

Quantitative measures often come from transactional systems.

Readiness Scorecard - A specific application of a scorecard, a readiness

scorecard can be used to evaluate an organisation’s state of
readiness/acceptance of a given strategy.

Reports - Typically show the details of business performance. Reports

are often used to drill down to the root cause of performance issues.

Scorecard - A scorecard is a visual display of the most important

information needed to achieve one or more objectives, consolidated and
arranged on a single screen so the information can be monitored at a
glance. Unlike dashboards that display actual values of metrics, scorecards
typically display the gap between actual and target values for a smaller
number of key performance indicators.

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Six Sigma - A quality management and process improvement methodology

particularly well suited to process intensive industries like manufacturing.
Six Sigma measures a given process by its average performance and the
standard deviation (or variation) of this performance, aiming to reduce the
occurrence of defects in each process to a level of “Six Sigma” outside the
norm; no more than 3.4 times per million.

Strategic Management System - Describes the use of the Balanced

Scorecard in aligning an organisation's short-term actions with strategy.
Often accomplished by cascading the Balanced Scorecard to all levels of the
organisation, aligning budgets and business plans to strategy, and using the
Scorecard as a feedback and learning mechanism.

Strategic Objective – (also known as Business Objective) A concise

statement describing specific, critical, actionable and measurable things an
organisation must do to effectively execute its strategy and achieve its
mission and vision. They should begin with action verbs such as increase,
reduce, improve, decrease, strengthen, maximise, minimise. Strategic
Objectives should be descriptions of continuous improvement.

Strategy - Strategy is the way an organisation seeks to achieve its vision and
mission. It is a forward-looking statement about an organisation’s planned
use of resources and deployment capabilities. Strategy becomes real when
it is associated with: 1) a concrete set of business objectives; and 2) a
method involving people, resources and processes.

Strategy Map - A specific version of a strategy plan that adheres to the

Balanced Scorecard methodology. Strategy maps depict business objectives
in multiple perspectives with corresponding cause and effect linkages.

Strategy Plan - A visual representation of an organisation’s strategy and the

business objectives that must be met to effectively reach its mission. A
strategy plan can be used to communicate, motivate and align the
organisation to ensure successful execution.

Strategic Priority – (also known as Theme) A short descriptive statement

representing a major component of a strategy. Most strategies can be

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represented in three Strategic Priorities; they enable an organisation to

break the strategy into areas of importance. There are Strategic Priorities
that come up time and time again such as Business Growth or Customer
Satisfaction or Operational Excellence or Innovative Thinking or Team
Culture. These are labels that needs to be described by a Strategic Result.

Strategic Result – A description of a Strategic Priority (or Strategic Theme).

Without the Strategic Result, a Strategic Priority is simply a label. The
Strategic Result brings true meaning to a Strategic Priority.

Strategic Theme – (also known as Strategic Priority) A short descriptive

statement representing a major component of a strategy. Most strategies
can be represented in three Strategic Themes; they enable an organisation
to break the strategy into areas of strategic priority. There are themes that
come up time and time again such as Business Growth or Customer
Satisfaction or Operational Excellence or Innovative Thinking or Team
Culture. These are labels that needs to be described by a Strategic Result.

Target - A target is the defining standard of success, to be achieved over a

specified time period, for the key performance indicators associated with a
particular business objective.

Task - Represents details activities or tasks to be carried out to achieve each

initiative. It captures information like resources, time, constraints, risk,
budgets, milestone, duration to complete the tasks

Theme – See Strategic Theme or Strategic Priority

Threshold - A means of describing and/or depicting the performance gap

in easily understandable terms. Examples of threshold methods include
“letter-grade” (A/B/C/D/F) and “traffic-light” (green/yellow/red).

Values – See Core Values

Value Chain - The process steps by which aa organisation moves from the
identification of its customer needs to customer fulfilment.

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Value Proposition - Describes how an organisation intends to differentiate

itself in the marketplace and what value it will deliver to customers. Many
organisations choose one of three “value disciplines” operational
excellence, product leadership, or customer intimacy.

Vision - A concise statement defining an organisation’s long-term direction,

the vision is a summary statement of what the organisation ultimately
intends to become 3, 5 or even 10 years into the future. It is the
organisation’s long-term “dream,” what it constantly strives to achieve. A
powerful vision provides everyone in the organisation with a shared picture
that helps give shape to its abstract future.

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