Balanced Scorecard

A new approach to strategic management was developed in the early 1990's by Drs. Robert Kaplan (Harvard Business School) and David Norton. The balanced scorecard approach provides a clear prescription as to what companies should measure in order to 'balance' the financial perspective. Balanced Scorecard is the Management System that enables organisation to clarify their vision and strategy and translate them into action.It provides feedback on both internal process abd external outcomes in order to continously improve strategic performance and results.

Kaplan and Norton describe Balanced Scorecard as:

Balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation.

Financial Perspectives

Customer Perspectives

Vision and Strategy

Business Process Perspectives

Learning and Growth perspectives

Explanation of the 4 perspectives

Financial Perspectives: Revenue Growth, Profit Cost Reduction Productivity Improvement Asset Utilization Investments

Learning and Growth perspective

Learning and growth constitute the essential foundation for success of any knowledge-worker organization. Employee training and corporate cultural attitude related to both individual and corporate selfimprovement. It includes things like mentor and tutors, within the organization as well as ease of communication among workers that allows them to readily get help on a problem when it is needed. It includes technological tools high performance work system

Learning and growth Perspective

Improving Capabilities for Delivering Values to Customer

People

System
Organization Procedure

Learning and growth Perspective

Core Measurement

Results
Employee Retention Employee Satisfaction Employee Productivity

Enablers
Staff Competencies Technology Infrastructure Climate of Action

Business Process Perspective

There are 3 business process that can be identified: Strategic management process Mission-oriented process (special function of government offices and unique problems are encountered) Support-process (repetitive in nature and easier to measure and benchmark)

Business Process Perspective

Critical internal process in which organization must deal. These processes enable to deliver the value propositions to customers and satisfy stake holders expectations. Innovation Process - Product Design - Product Development - Process Implementation

Operating Process
- Manufacturing - Marketing

- After Sale Service

Customer Perspective
Due to increasing realization of customer focused and customer satisfaction in any organization therefore developing the metrics for satisfaction customers should be analyzed in terms of kind of customers and kind of processes for which we are providing a product or service to those customers groups.

In todays business scenario Customer is the king

Customer perspective
Customer Satisfaction Customer Retention

New Customer Acquisition

Customer Profitability Market Share Measures of value Proposition to customer - Short Lead Time

- On Time Delivery
- Innovative Products - Anticipating Needs

Customer Perspective Core Measure

Market Share

Customer Acquisition

Customer Profitability

Customer Retention

Customer Satisfaction

Summary
Financial Perspective Customer Perspective Revenue Customer
Loyalty

On Time Delivery Process Quality Process Cycle Time

Internal Process Learning and Growth

Employee Competitiveness