Implementing ISO with Functional Scorecards
ISO standards emphasize the identification of interested parties, definition of goals, action plans, and measures. Learn how to implement this in practice with functional scorecards.
We concluded a case study on how our clients construct functional scorecards aligned with ISO standards. While each standard has a unique application domain, they all follow a common approach in managing business context, objectives, action plans, quantifications, and reviews.
Below is a digest of practical recommendations. For a more detailed explanation, you can refer to the ISO case study and ISO 9001: best practices for strategists.
Understanding Business Context
Section 4 of the ISO standards requires a clear definition of the score or application area of the standard.
On a practical level, boundaries can be defined by dedicated functional scorecards.
ISOs recognize the need for alignment with additional functions (see section 8 in the standard), such as leadership, corporate governance, scenario planning (term “preparedness” used in ISOs), and procurement.
On a practical level, this can be well automated by additional function scorecards aligned with ISO scorecards and theoverall strategy.
Defining Stakeholders
As explained in another medium article, the definition of stakeholders is a critical step often overlooked by strategists.
ISO standards traditionally refer to stakeholders as “interested parties” and suggest analyzing interested parties as part of business context analysis (typically section 4.2).
Definition of Objectives
Section 6.2 of the standard articulates the requirements for objectives. According to ISO, objectives should follow a general theme of being well-defined, consistent, measurable, monitored, communicated, and updated.
In terms of strategic planning, this results in:
- Consistent decomposition of objectives into smaller goals
- Alignment of KPIs with objectives
- Alignment of stakeholders/owners with objectives
- Regular revision of objectives
Definition of Action Plans
Similar to objectives, section 6.1 of a typical ISO defines the need for formulating specific actions following the general requirements from the project management domain, such as action plans having scope, timeline, and resources defined, having a person responsible assigned, and being quantified (having evaluation criteria).
In strategic planning, this perfectly aligns with the concept of initiatives.
Definition of Risk
Risks are recognized by ISOs and are supposed to be identified and managed within objectives and action plans.
A typical ISO doesn’t recommend a specific risk management framework. This aligns with a simplified approach to risk measurement explained in another Medium article, where key risk indicators were compared to simple performance indicators.
Quantification of Objectives and Action Plans
For obvious reasons, the term KPI is not used in the standards, but the idea of having quantified goals and action plans is always stressed.
ISO standards offer general guidelines for measurement (see, for example, section 9.1 of most ISO standards):
- Definition of qualitative or quantitative measures
- Monitoring of measures
- Communication to stakeholders/owners
- Regular updates
These ideas are well automated by any strategic planning software, like our BSC Designer.
Audit and Reviews
All ISOs stress the need to follow the PDCA cycle, where internal audit and management reviews (section 9.2, 9.3) play an important role.
On a practical level, it means:
- Traceability via an audit trail
- Regular review of objectives, action plans typically via performance data, e.g., KPIs
- A possibility to comment on the findings of the review
- Planning improvements via new initiatives or hypotheses to test
Summary
ISO standards share a common structure adapted to various business domains. Any standard underlines:
- The need to define business context and interested parties
- The need to define and quantify objectives and action plans
- The need for regular reviews and learning on findings
While selected standards focus on specific scopes, the connection to other functions of the organization is encouraged.
The Strategy Implementation System is an article on Medium where I connect the dots about strategic planning. The requirements of ISO standards discussed in this article align perfectly with the principles of the system.
