BALANCED SCORECARD

Amit Kumar
The corporate challenge :
implementing business strategy … fast

“Less than 10% of strategies

effectively formulated are
effectively executed”
Fortune

“Less than 60% of the senior managers

and less than 10% of the employees
think they have a clear understanding
of their company strategy”
Cedar / Business Intelligence
Strategic Management Survey 97
Our research has identified four barrier to strategic implementation
that are built into the way we manage

The Vision Barrier

Strategy is not understood
by those who must
implement it

The People
Strategy
Barrier The Management Barrier
Personal goals, Management systems are
incentives and designed for operational control
competencies are not and little time is spent on strategy
linked to strategy

The Operational Barrier

Budgeting process is separated
from strategic planning
 What is Balanced Scorecard ?

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The Balanced Scorecard provides a four perspective framework to
formulate strategy and translate it into operational terms

Vision

Financial Perspective
"If we succeed, how Profitability
will we look to our Growth
shareholders?" Shareholder
Value

Customer Perspective
"To achieve our Price
vision, how must Service
*Measurement is the language we look at our Quality
that gives clarity to vague customers?"
concepts
Internal Perspective
*Measurement is used to "To satisfy our Cycle Time
communicate, not simply to customers,what Productivity
control management Cost
processes must we
*Building the Scorecard excel at?"
develops consensus and
teamwork throughout the
organization Organisation Development
"To achieve our Market Innovation
vision,how must Continuous Learning
our organisation Intellectual Assets
learn and
improve?"
The Balanced Scorecard makes the strategy operational..

Translate the Vision Develop and Align

Initiatives and Actions

Balanced Scorecard Shareholder

Value
Financial
Perspective Activity
"How do we look to Based
our shareholders?" Customer
Costing
Satisfaction
Customer Business
Perspective Processes BPR
"How do we look "What business Jobs of
to our customers?" processes are the Total
the future
Vision value drivers?" Time based Quality
Mgmt
I /T
Empowered
Organisation
Learning Core Core Process
"Are we able to Competencie Organisation
sustain innovation, s
change
Continuous
& improvement?"
Improvement
The Scorecard contains a balance between outcome measures
and performance drivers

Outcome Measures Performance Drivers

Financial Return on Investment Revenue Mix

Perspective Revenue Growth

Customer Customer Satisfaction Survey Depth of Relation

Perspective Customer Retention

Internal Share of Segment Product Development Cycle

Perspective New Product Revenue Hours with customers
Cross-Sell Ratio

Learning & Revenue per employee Strategic Skills

Growth Employee Satisfaction Strategic Information
Perspective Personal Goals Aligned
 NET PROFITS
ROI,EVA OPERATING PROFIT
ROCE (PBDIT)
- Working Capital Cost Interest & Long Term
- Cash to cash cycle Loan Repayment
Sales Volume & - Risk Management
Revenue & Margins
PRICE -Manufacturing & Procurement
FINANCIAL Productivity
(Growth : ROCE - Cost Management Vs Competition
Sustain:ROI,EVA,ROCE Sales Growth by Customers/Segments/Product Groups - Capacity & Asset Utilisation
Divest/Harvest:Cash Flow Margins Growth by Customers/Segments/Product Groups - Manpower Cost

"If we succeed, how will we

look to our shareholders?" - Technology Tie Up / Upgradation
- R&D Investments (%age of Sales )
 Market Share Account or Category Share
Customer Retention
- New Customer Acquisition
- Customer Satisfaction
- Customer Profitability
CUSTOMER
MARKET SEGMENTATION
- Domestic / Exports
- Products
- Customers
" To achieve our vision, how must we
look to our customers?"
Value Propositions
- Product Quality & Distribution
- Q.C.D
- Customer Relation
- Customer Response
- Brand/Image/Reputation/Trust
- Customer Problem Solving
OTHERS
- New Applications
- Order Servicing Time / Reliability
- Cycle time / Speed
- Product Return Rate
- New Product Dev. Speed / Range
 DEMAND GENERATION TO DEMAND FULFILLMENT PROCESS
1 Inventory Turnover
2 Cash to cash cycle time
3 Procurement Process
Product Dev. Process/ New Product /
4 New Product Introduction/Nos/Type/Speed
5 SBP /Budgeting/MIS Process
INTERNAL Product Management/ Branding & Sales
PROCESSES 6 Promotion Process / Advertising
7 CRM Process
8 Commercial Term & Process
9 Costing Process (Activity based Costing )
10 Order Tracking Process (Air freight/DHL type)
11 PMS (Clarity of Goals/Targets/A/Cs /
Review Quality/Deliver/Cost/Response Time/Order
12 Delivery Process (TQM/TPM/Six SIGMA)
13 Lean/Flexible Mfg. Process
" To satisfy our customers, what management
processes must we excel at ?"
14 Project Management Process
15 Talent Search/Leadership Dev. Process
16 Recruitment Process
17 Manpower Planning
Employee Communication & Involvement
18 Process
19 Negotiating Processes
20 Outsourcing Processes
21 Dealer Selection Processes
22 Customer Satisfaction Process
23 Employee Satisfaction Process
24 Incentive Schemes
25 Reward & Recognition Process
 - Shared Vision/Mission/Buy-In/Involvement/ Communication Effectiveness
- Competencies of Key Positions & Functions ( Develop / Buy )
- Leadership Styles
- Knowledge/ Skills/ Attitudes ( Technical , Managerial , Behavioral )
- Quality of MCS / Workmen
- Employee Motivation & Satisfaction/ Commitment/ Ownership/ Empowerment
- Organisational Climate / Culture
- Sales Staff Motivation
PEOPLE - Employee Productivity
COMPETENCIES & - Sales Staff Technical Competencies
MOTIVATION + - Team Work
WORK CLIMATE - Socialisation
- Delegation & Empowerment
- HRIS
- Rewards & Recognition
- Organisation Structure ( Nos/ Capability/ Quality)
- ESS
- ARM ( Attract,Retain, Motivate Talent)

"To achieve our vision, how must our

organisation learn and improve?"
THANK YOU