Professional Documents
Culture Documents
Balanced Scorecard
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How would you feel about boarding the plane after the following conversation with the pilot?
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Q: I am surprised to see you operating the plane with only a single instrument. What does it measure ? A: Airspeed .I am really working on airspeed of this flight.
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Q: That is Good. Airspeed certainly seems important. But what about altitude. Would not an altimeter be helpful? A: I have worked on altitude for the last few flights and I have gotten pretty good on it. Now I have to concentrate on proper air speed.
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Q: But I notice you dont have a fuel gauge. Would not that be useful ? A: You are right; fuel is significant, but I cannot concentrate on doing too many things at the same time. So on flight I am focusing on air speed. Once I get to be excellent at Air speed, as well as altitude, I intend to concentrate on Fuel consumption on the next set of flights.
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Q: to the participants Would you like to board this plane after having this discussion ? A: Perhaps not.
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They also require instrumentation to guide their organizations . like pilots have to guide an aeroplane
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Would you be satisfied as manager getting one dimensional Information about your organization ?
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4 Balanced Perspectives
Financial Customers Internal Business Processes Learning & Growth
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future performance
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Industrial Age Financial Control ROCE Prod Control Profitability Physical Capital
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Information Age Financial Control ROCE Prod Control Profitability Physical Capital
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Information Age
Develop Customer Relationship Introduce innovative products/services Quality products at low cost Employee development and motivation Deploy information technology
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Cross Functional Links to customers and Suppliers Customer Segmentation Global Scale Innovation Knowledge Workers
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Information Age Total Quality Management JIT-Production and Distribution Time based Competition Lean Production/Lean Enterprise Building Customer-focused Org Activity Based Cost Management Employee Empowerment Reengineering
Improvement initiatives
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Capital You dont see on the Balance Sheet
Human Capital
The collective skill, knowledge attitudes and behavoiur of the People in the Organization
Information Capital
Organizational Capital
The resources and processes in place that ensure effective use of The human capital
The values, working relationship And cultural norms at work in The organisation
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balanced scorecard
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Through
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A balance scorecard translate a organizations mission and strategy into set of performance measures that provide the framework for implementing its strategy
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Strategy
Strategy specify how an organization matches its own capabilities with the opportunities in the marketplace to accomplish its objectives
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A strategy is a set of goals and specific action plans that, if achieved, provide the desired competitive advantage
Strategic Management involves identifying and implementing these goals and action plans
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A goal or objective consist of a projected state of affairs which a person or a system plans or intends to achieve or bring about A personal or organizational desired endpoint in some sort of assumed development.
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Vision: Defines where the organization wants to be in future. Vision: Defines where the organization wants to be in future.
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Mission: Defines where the organization is going now, describing why this organization exists
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Goal 2008
5000 Cr
Objective 2013
12,000 Cr
Mission 2028
50,000 Cr
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Goal 2009
7000 Cr
Objective 2014
15,000 Cr
Mission 2029
55,000 Cr
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Emphasizes
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4 Perspectives Financial Perspective Customer Perspective Internal Business Process Perspective Learning & Growth Perspective
Mission
Vision
Strategic Goals
Sub-Goals
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Financial Sub-Goals Customer Sub-Goals Internal Business Sub-Goals
Methodology Overview
Indicators
Trouble Reports
Module
Data Elements
FINANCIAL
CUSTOMER
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4 Perspectives
Financial
Perspective
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4 Perspectives Customer Perspective
Customer Perspective identifies Targeted Customer and market Segments and Measures the Organizations success in these Segments
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Internal Business Process Perspective 4 Perspectives
This perspective focuses on internal operations that create value for customers that ,in turn, furthers the financial perspective by increasing the shareholder value
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Internal Business Process Perspective 4 Perspectives
3 sub Processes
Innovation Process Creating Products Services &Processes To meet the demand Of Customers
Operations Process Producing & delivering Existing products that Will meet the needs Of Customers
Postsales-Service Process Providing service and Support to the customer After the sale of a product or service
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4 Perspectives Learning & Growth Perspective
This perspective identifies the capabilities the organization must excel at to achieve superior internal processes that create value for Customers and shareholders
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FINANCIAL PERSPECTIVE
Target Perform Actual Perform
Initiatives
Rs 20 Cr
Rs 20.12Cr
Rs 30 Cr
Rs 34.20 Cr
Revenue Growth
6%
6.48%
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Customer Perspective
Target Perform Actual Perform
Initiatives
Identify future Needs of Customers Identify new Target Customer Seg Increase Cust Focus of Sales
6%
7%
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Objective Reduce Delivery Time Target INTERNAL BUSINESS PROCESS PERSPECTIVE Measures Initiatives Perform Reduce Setup time Re-engineer order Automation of Orders Delivery process 30 days Actual Perform 30 days
92%
90%
Within 4 hrs
Within 3 hrs
Improve Processes
5 75%
5 75%
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Objective
Target Perform
90%
92%
80%
80%
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1 Clarify and Translate vision & Strategy 2 Communicate and link strategic objectives and Measures 3 Plan, Set Targets and align Strategic Initiatives 4 Enhance Strategic Feedback and Learning
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Clarifying and Translating the Vision & Strategy Clarifying the Vision Gaining Consensus
Communicating & Linking Comm and Educating Setting Goals Linking Rewards to Performance
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Articulating the shared Vision Supplying Strategic Feedback Facilitating Strategy review and Learning
Planning & Target Setting Setting Targets Aligning Strategic Initiatives Allocating Resources Establishing Milestones
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Clarifying the Vision Formulation by Sr Executives Reaching Consensus Sorting Out Differences Joint Accountability
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Communicating and Educating Newsletter Bulletin board Brochure Videos Intranet meetings Setting Goals Linking Rewards to Performance Every one Understand
Strategy for achievement Outcome Measures Efforts and Initiatives required
On time Delivery
Reduce setup time Buy new machines Improve delivery time Improve packing
Communicating to
Directors Executives Employees
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Plan to Change Set target for 3-5 years Stretch targets Benchmarking Alignment of Targets Alignment of Strategic Planning with operational Budgets
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Periodic Review and Change Targets-achieved or not Past and future Review Information from all Double loop learning Cause and effect Relationship Validity and Viability Strategy replacement according to outcomes/performance drivers
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Indicate companys strategy and its link with perspectives Strategy is communicated to all Strategy translated into measurable targets Motivates Managers to achieve targets BSC limits the measures to only four Highlights effect of one perspective on another
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Barriers to effective Implementation of BSC
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Barriers to effective Implementation of BSC
1 Vision & Strategy not Actionable
Budget
not strategic
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Barrier No 1: Vision and strategy not Actionable
Cant be translated into action Cant be acted Upon Cant be understood Fragmentation & Sub optimization of efforts Lacking consensus & Clarity Different Agendas No integration Not linked coherently to overall strategy
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Barrier No 3: Strategy not Linked to Resource Allocation
Separate Processes for Long term & Short term Strategic planning Funding to unrelated priorities Poor Monthly Reviews Unfocused New Mgt Techniques Poor Integration
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Barrier No 4: Feed back not tactically strategic
Bulk of feedback is only financial measures Little time on strategy implementation & success No priority to periodic review and meetings Inadequate information Poor tactical review process
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Different Management System for Strategic Implementation
The strategy is the reference point for the entire management process The shared vision is the foundation for strategic planning
Goal alignments from top to bottom Education and open communication about strategy
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Let Us Review
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4 Perspectives Financial Perspective Customer Perspective Internal Business Process Perspective Learning & Growth Perspective
The Strategy
Financial Perspective
If we succeed, how will We look to our Shareholders?
Measurement is the language that gives clarity To vague concepts
Customers Perspective
To achieve our vision, How must we look to our Customers ?
Internal Perspective
To satisfy our customers, Which processes must We excel ?
Organizational Learning
To achieve our vision, how must our organisation team Improves?
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Clarifying and Translating the Vision & Strategy Clarifying the Vision Gaining Consensus
Communicating & Linking Comm and Educating Setting Goals Linking Rewards to Performance
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Articulating the shared Vision Supplying Strategic Feedback Facilitating Strategy review and Learning
Planning & Target Setting Setting Targets Aligning Strategic Initiatives Allocating Resources Establishing Milestones
CORP SBU
Education
85% of Mgt teams Spends less than 1 hr per month On strategy issues
Budget
Input
Output
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Questions