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BalancedScorecard

BalancedScorecard
Anovelapproachtostrategicmanagement. D l Developedintheearly1990'sbyRobertKaplan d i th l 1990' b R b t K l andDavidNorton (HarvardBusinessSchool). Providesaclearprescriptionastowhat companiesshouldmeasureinorderto 'balance'thefinancialperspective.

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TheBalanceScorecard
Itretainsthetraditionalfinancialmeasures. Itintroducesnewmeasurestohelpustoknowthe currentandfuturehealthofkeyaspects. Objectivesandmeasuresofthescorecardarederived fromtheorganizationsstrategies. Corporateexecutiveswillbeabletomeasurehowtheir businessunitcreatesvalueforthecurrentandfuture.

The Balance Scorecard


Measurement System Strategic Management y System Communication Tool

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FromVisiontoAction
Clarifyandtranslatevisionandstrategy. Communicateandlinkstrategicobjectivesand measures. Plan,settargetsandalignstrategicinitiatives. Enhancestrategicfeedbackandlearning.

The Original Version of Balanced Scorecard by Norton and Kaplan, 1992

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FinancialPerspective
Financialmeasuresindicatewhether acompanysstrategy, t t implementation,andexecutionare contributingtobottomline improvement.

FP TypicalMeasures

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CustomerPerspective
Identifythecustomerandmarketsegments thatwilldelivertherevenue. Aligningcorecustomeroutcomemeasures totargetedcustomersandmarketsegments

CP TypicalMeasures

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CustomerPerspective
Market Share

Customer Acquisition

Customer Profitability

Customer Retention

Customer Satisfaction

InternalBusinessProcessesPerspective

Identifyingtheprocessesthatare mostcriticalforachievingcustomer andshareholderobjectives d h h ld bj ti Generallyafterformulatingobjectives andmeasuresforfinancialand p p customerperspectives

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IP TypicalMeasures

TheValueChain
Innovation Process Operations Process Post-sale Service Process

Customer Identify Need the Identified Market

Create Product/ Service Offering

Build Deliver the the Products/ Products/ Services Services

Service Customer Need the Customer Satisfied

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LearningandGrowthPerspective

Providetheinfrastructuretoenableobjectivesin theotherperspectivestobeachieved. Driversforachievingexcellentoutcomesinthefirst threescorecardperspectives. Wayofinvestingforthefuture:people,systems, andprocedures.

LearningandGrowthMeasurementFramework
Core Measurements Results

Employee Retention Employee Satisfaction Enablers Employee Competencies Employee Motivation

Employee Productivity

Supportive climate for Action

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LP TypicalMeasures

TheMetroBankStrategy
The Revenue Growth Strategy Improve Returns The Productivity Strategy

Broaden Revenue Mix

Improve Operating Efficiency

Increase Customer Confidence in Our Financial Advice

Increase Customer Satisfaction through Superior Execution

Understand Customer Segments

Develop New Products

Cross-Sell the Product Line

Shift to Appropriate Channel

Minimize Problems

Provide Rapid Response

Increase Employee Productivity Develop Strategic skills Align Personal Goals Access to Strategic Info.

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Strategy Maps

LeadandLagIndicators
Lag Lead Definition
Measures focusing on results at the end of a time period, normally characterizing historical performance Measures that drive or lead to the performance of lag measures, normally measuring intermediate processes and activities ti iti Hours spent with customers Proposals written Absenteeism Predictive in nature, and allow the organization to make adjustments based on results May prove difficult to identify and capture; often new measures with no history at the organisation

Examples

Market share Sales Employee satisfaction Normally easy to identify and capture

Advantages

Issues

Historical in nature and do not reflect current activities; lack predictive power

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MeasureDictionary
Containscomprehensiveinformationrelated tomeasure. Servesasareference.

IT Support

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BSCImplementation
ABoardRepresentative(Preferred)as ExecutiveSponsor OverallSteeringTeamheadedbyA BSChampion ImplementationTeam[MeasureOwners]for eachdivision/SBU headedby TeamLeaders

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