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Challenges in Implementing the Balanced Scorecard in India/ Asia

Formerly Renaissance Worldwide

Cedar Experience

Sanjiv Anand Regional Director – Asia/ Middle East International Management Consulting Practice Head

Cedar Plc Cedar House, 78, Portsmouth Road Cobham, Surrey KT 11 1HY Tel: +44 (0)1.932.584 000 Fax: +44(0).1.932. 584 001

Cedar Enterprise Solutions Pvt. Ltd. 703, Nirman Kendra, Off E. Moses Road Mahalaxmi, Bombay 400 011, India Tel: +91.22.4619800 Fax: +91.22.4619801

Cedar Enterprise Solutions Pte. Ltd. 8 Shenton Way #2304 Temasek Tower Singapore 068811 Tel: +65.372 1776 Fax: +65.323 7276

The enclosed material is confidential and proprietary to Cedar and is for the internal use of addressees only.


• Cedar (formerly Renaissance) is a leading global management & IT consulting firm with offices in 9 countries. • Cedar is owned by Alchemy Partners, UK’s leading Private Equity firm with over 2 Billion Pounds of Capital under management. • Cedar is a leader in the development & implementation of strategy using the Balanced Scorecard in the India, and Middle East region. • In the last 3 years alone, Cedar has developed over 100 Scorecards for clients including Godrej-GE, BPL Group, RPG Cellular, Orange, Onida, Taj Group, Emirates Bank, etc. • Cedar has developed Scorecards across a wide range of industry sectors including financial services, telecom, oil&gas, consumer products, software, hospitality and industrials.

www.3 17 challenges stand between you and a successful Scorecard .cedar.

cedar.Challenges in implementing the Balanced Scorecard in 4 our region Ability to Ability to Implement Implement Design Design Phase Phase Implementation Implementation Phase Phase .

com .5 Ability to Implement Ability to Implement www.cedar.

underdeveloped. nobody owns them. www. • Business Planning Processes underdeveloped. budget is a minor to a major fudge ! • Strategic Planning guys are second class citizens. • Worse.Challenge # 1 – Lack of Business Planning Process 6 • 9 of 10 companies can’t implement can’ strategy. • Takes a long .cedar.

EBIDTA .Credit Alignment Operating Operating Efficiency Efficiency .Information Technology .Broaden Revenue Mix .RAROC .Business Transformation /BPR .ManageManage ment ment .The Business Planning Cycle 7 .cedar.Cross Selling Alignment Alignment with with Budgets Budgets Revenue Revenue Growth Growth Entry Strategy Entry Strategy Strategy Strategy Formulation Formulation Strategy Strategy Implementation Implementation using Cedar using Cedar Balanced Balanced Scorecard Scorecard •Objectives Objectives •Measures Measures •Targets Targets •Initiatives Initiatives IT Strategy Align Align Individual Individual Performance Performance Measures Measures •Market Market •Competition Competition •Products/ Products/ Pricing •Distribution Distribution •Regulatory Regulatory Issues •Financials Financials •Customer Customer Strategy •Internal Internal Processes •Learning & Learning Growth Risk Risk ManageManage.

• Integrate your BSC into your quality processes. • Determine whether you need an EVA financial measurement or another relevant one. .cedar. • Tool versus measurement.Challenge # 2 – Confusion between BSC/ TQM/ EVA 8 • Role of BSC compared to TQM and EVA.

• They do have a financial and customer strategy. • Lots of initiatives with no timelines & ownership.Challenge # 3 – Do you have a strategy ? • Most Asian companies don’t have a don’ complete strategy.cedar. but little else. www. 9 • Integrate your strategic planning and Scorecard Process. • Complete it in 1 quarter or less every .

centralisation/ centralisation/ decentralisation. • Everything has to be approved by the CEO ! • Doesn’t recognize the challenge in Doesn’ implementing the strategy.cedar. decentralisation. • Group versus • CEOs need to empower more. .Challenge # 4 – Who owns the process ? 10 • Finance versus HR versus Strategic Planning. www.

cedar. • Transition from Family Owned/Family Managed to Family Owned/Professionally Managed is a challenge. • Inability of family members to get out of operations. • Scorecard will allow the family to get a comprehensive view of organizational performance without having to deal with it everyday. www.Challenge # 5 – High percentage of family owned businesses 11 • 80% of corporations worldwide are family owned. • Scorecard will allow the family to better articulate their/shareholder .

com . www. so why bother? • Scorecard will clearly define ownership at enterprise level.cedar.Challenge # 6 – Scared to be measured 12 • Measurement in our part of world. doesn’t motivate ! • Less information is better. • Annual performance review is in any case not linked to quantifiable performance. doesn’ often scares. • The Individual Performance measurement system can be made more effective as it is aligned to enterprise performance.

• Initiative expenditure is OK. Payback is immediate ! www.Challenge # 7 – Unwilling to spend 13 • Advertising spend effectiveness is not that’ quantifiable but that’s OK! • We all want to be strategy focused organizations.cedar. but strategy deployment is not? • Spend .

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cedar. www. • Must have a comprehensive view of the organisation. • Strong . • Assign a team.Challenge # 8 – Selection of the wrong Scorecard coordinator and lack of resources 15 • Must be credible! • Must be senior.

• Don’t worry about . Charts are missing.Challenge # 9 – Underdeveloped MIS systems/Data availability/Organisation charts • Lack of historical performance data.cedar. 16 • Updated Org. • If you can’t get enough can’ information for the Balanced Scorecard. you are in trouble in any case. www.9% Don’ accuracy. • Unwilling to do the hard work to get the data.

Challenge # 10 – Unwilling to speak up ! And intelligently17 • Sharing views openly in a meeting is . won’ work” • Worried more about the exception rather than the rule! www.cedar. • Easy to say “it won’t work”.

• 35-45 measures are chosen.Challenge # 11 – Too many measures ! 18 • Looking for the perfect measure. and unit of . www. • Can’t get to agree on a sub-set of 20Can’ sub2025.cedar. It doesn’ doesn’t exist. • Confused on frequency. Often it is 35too much.

• Value to business is even more .Challenge # 12 – It’s raining projects ! 19 • Too many projects. • No inventory of projects exists. • Ownership & value is suspect.cedar. www.

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Challenge # 13 – Lack of sustained CEO commitment. Scorecard co-ordinator. www. • He tampers with the Scorecard to hide problems. What’s important for the boss is important for me ! 21 • He’s moved on to a new . He’ • He says the wrong things.cedar. • He doesn’t act on lack of doesn’ performance. • Need to formally mandate the co-ordinator.

• Annual budget submission must be accompanied by Scorecard. • Difficulty in aligning Scorecard and budget numbers due to budget cycle. .cedar. corecard. • They need to match.Challenge # 14 – Manual collection of data and Scorecard/budget numbers mismatch • Manual collection of data on a monthly basis becomes difficult. 22 • Need to automate the Scorecard.

3• Don’t tamper with Scorecard design Don’ at every meeting. • Annually review the Scorecard during planning process.Challenge # 15 – Conduct the monthly review on time. substart with a sub-set and get going. Focus on the right hand side – the actual. • Must have the monthly meeting.cedar. and some members are missing. • Keep the meeting focused 3-4 hours. targets/ projects. keep the meeting focused and don’t tamper with the Scorecard 23 • Even if the Scorecard is . even if it is on the 10th. www.

create events/awards. • Don’t expect the Scorecard Don’ coco-ordinator to do your job. • Communicate themes. www. creating a “climate for action” action”. • Build a communication plan for the communication Scorecard.Challenge # 16 – Own & Communicate ! 24 • Owners must . take responsibility of both objective and project that is important to them.

Challenge # 17 – Stick with it 25 For a successful implementation don’ of the Balanced Scorecard.cedar. Only then will it help you implement your strategy . www. don’t treat it as another project. measurably and rapidly. .com www.cedar.26 www.