Welcome

To
Our Presentation
 Presenting BY
Group-02
Associates:

➢ Gopal Karmakar -001

➢ Md. Shamim -009
➢ Shanti Ranjan Howlader -023
➢ Mohiuddin Ahmed -024
➢ Sabbir Ahmed -051
Strategic Management
BALANCED
SCORECARD
 Part -01

Presenting BY:

Shanti Ranjan Howlader

SL NO: 023
 Diffusion of a New Idea

 “The Balanced Scorecard: Measures

that Drive Performance” (Robert S.
Kaplan and David P. Norton, Harvard
Business Review, February 1992)

About 50% of Fortune 1000 firms

have adopted a balanced scorecard,
55% of those firms are very satisfied
with it. (R. D. Banker, C. Konstans and S.
Janakiraman; January 2003)
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 (Balanced Scorecard Collaborative).
 They named this system the 'balanced
scorecard'. Recognizing some of the weaknesses
and vagueness of previous management
approaches, the balanced scorecard approach
provides a clear prescription as to what
companies should measure in order to 'balance'
the financial perspective.
Evolution of Balanced Scorecard

1St generation (1992)

2nd generation(1996)
3rd generation(late 1990s)
4th generation
The 1st generation Balanced scorecard

 Aims to solve the issue of control and “getting a grip on the organization”
 A mix of financial and non-financial measures system was created by Art
Schneiderman in 1987
 In 1990 Art Schneiderman participated in an unrelated research study led
by Robert S. Kaplan & David P. Norton
 Kaplan and Norton published the first article on the Balanced Scorecard in
the Harvard Business Review in 1992. They explained the results of their 1990
research involving 12 companies (such as Apple, HP and Analog Devices)
that led to the initial Balanced Scorecard framework.
2nd generation balanced Scorecard
 Translating Strategy into Action (1996)
 Kaplan & Norton’s first book is structured in two parts.
 How to build a Balanced Scorecard
 How to use the Balanced Scorecard as an integrated strategic
management system
3rd generation Balanced Scorecard
 Developed in the late 1990s to address design problems inherent to earlier
generations
 A Destination Statement or Vision Statement
 A strategic linkage model
 A set of definitions for each of the strategic objectives
 A set of definitions for each of the measures selected to monitor each of
the strategic objectives, including targets
4th generation Balanced Scorecard
 about managing Strategy, People and Performance in a changing
environment
 updates earlier generations of the Balanced Scorecard approach for agile,
learning organizations that contain human beings
Why use a Balanced Scorecard
 Improve organizational performance by measuring what matters
 Increase focus on strategy and results
 Align organization strategy with workers on a day-to-day basis
 Focus on the drivers key to future performance
 Improve communication of the organizations vision and strategy
 Prioritize projects/ initiatives
 Part -02

Presenting BY:

Sabbir Ahmed
SL NO: 051
Balanced Score Card
Financial Perspective
Customizing Measures for the Growth Stage
 Sales growth rate
 Sales in new markets
 Sales to new customers
 Sales from new products
 Investment in product development
 Investment in information technology
 Investment in employee skills
 Investment in new distribution channels
 Financial Perspective
Customizing Measures for the Sustain Stage
 Return on capital employed
 Economic Value Added (EVA)
 Operating income/Gross margin
 Discounted cash flows
 Asset utilization rates
 Cost reduction rates
 Cost benchmarked against competitors
 Customer and product line profitability
Financial Perspective
Customizing Measures for the Harvest Stage

Current cash flows

Payback period
Spending ratios
Throughput ratios
Product line profitability
Negative cash flow customers
Customer Perspective:
Strategic Outcome Measures
Financial Objectives

Customer Outcomes
Market
Share Customer
Account Profitability
Share

Customer Customer
Acquisition Retention

Customer
Satisfaction

Internal Process Outcome Drivers

Customer Perspective:
Unique Value Proposition
Customer Customer
Acquisition Retention

Customer
Satisfaction

Product/Service + +
Value = Image Relationship
Attributes

Uniqueness Functionality Quality Price Brand Equity Convenient Trusted

Time Responsive
 The Internal Perspective
Generic Service Value Chain Model

Innovation Operations Post-Sale

Cycle Cycle Service Cycle

Create Satisfy
Identify Identify the Produc Deliver Service
Custom the Service e the the the Custom
er Market Offering Service Services Customer er
Needs s Needs

Efficiency

Effectiveness
Learning and Growth Perspective
Objectives Capability Measures
•Real-time availability
Employee Skills •Accuracy
•Pervasiveness

•Alignment of incentives with

key success factors
Long Term Information
Success Systems •Improvement in key customer
and internal processes

•Satisfaction
•Retention
Organizational
Processes •Training
•Capabilities
 Part -03

Presenting BY:

Md. Shamim
SL NO: 09
Assigned topics
➢ Balanced Scorecard as a Strategic Management System

➢ Building a Balanced Scorecard: The Process

➢ Example of a Balance scorecard

➢ Linking the Balanced Scorecard Measures to Strategy

 Balanced Scorecard
A Strategic Management System

 The term balanced scorecard (BSC) a strategic management

performance metric

 Balanced Scorecard use to make better decisions

 The scorecard help top-level management link the

long-term strategy with the short-term actions.
Building a Balanced Scorecard:
The Process

Identify strategic
objectives

Outline the Create a

measures strategy map
Kaplan and Norton briefly suggested eight
actionable steps

Preparation

The first round of interviews

First executive workshop

The second round of interviews

Second executive workshop

Third executive workshop

Implementation

Periodic reviews
Example of a Balance scorecard
Linking the Balanced Scorecard
Measures to Strategy

Cause-and-effect relationships

Performance drivers

Linkage to financials
 Part -04

Presenting BY:

Mohiuddin Ahmed
SL NO: 24
Assigned topics
✓ Knowledge management
✓ Knowledge management as balanced
scorecard tool
✓ Advantages & disadvantages of the
balanced scorecard
 Knowledge management

Knowledge management (KM) is the process of organizing,

creating, using, and sharing collective knowledge within an
organization. Successful knowledge management includes
maintaining information in a place where it is easy to
access. Only a few initiatives are able to truly transform
how an organization operates, and knowledge management
is one of them.
 Types of knowledge management

➢ Explicit knowledge (knowledge that is easy to write down and share)

➢ ‍Implicit knowledge (applied knowledge)‍

➢ Tacit knowledge (knowledge gained from personal experience)

➢ Declarative knowledge (static knowledge that is specific to a topic)

➢ Procedural knowledge (knowledge that focuses on the 'how')

➢ A Posteriori knowledge (subjective knowledge gained from individual

experience)

➢ A Priori knowledge (knowledge gained independent from evidence)

Knowledge management process
 Benefits of knowledge management

• Faster decision-making
01

• Efficient access to knowledge and information

02

• Increased collaboration and idea generation

03

• Enhanced communication throughout an organization

04
 Knowledge management:
A balanced scorecard tool

The importance of Balanced Scorecard (BSC) while

researching the use of KPIs to measure the performance and
effectiveness of knowledge management within an
organization is immense. Researchers believe that the
learning and growth perspective is one of the most important
perspectives of the BSC, which implies that a company is
proactively exercising knowledge management practices to
develop and mentor its knowledge workers
 Advantages & disadvantages of the
balanced scorecard

Advantages:

✓ Brings structure to business strategy

✓ . Makes communication easier
✓ Facilitates better alignment
✓ Connects the individual worker to organizational
goals
✓ It Works as a Base for the Discussion
Disadvantages:
✓ It must be tailored to the organization
✓ It needs buy-in from leadership to be successful
✓ It can get complicated
✓ It requires a lot of data
✓ Balanced Scorecard Term is misleading
 Part -05

Presenting BY:

Gopal Karmakar
SL NO: 001
Case Study of United Way of Southeastern
New England (UWSENE)
The Balanced Scorecard is really a managerial tool, not a policy tool. A CEO
needs to keep the Board fully informed but not overwhelm the members with
details and operational decision making.
-Doug Ashby, President, UWSENE.
 History
 A not-for-profit organization
 Provide services to donor, communities and social service agencies
 Provide community services by giving local human service agencies
access to the fund raising capabilities.
 Provide agencies and other funders with information and technical
assistance to assist in program planning, service co-ordination and service
improvement.
 Consolidated fund raising originated in 1926 to eliminate the inefficiency
and disorganization caused by having each individual social service
agency conduct its own annual fund-raising drive.
 Has an endowment of $50 million.
 Faces particular local challenges with declines in regional employment,
downsizing and relocation of corporate divisions.
 Organization

 President – Doug Ashby

 Six Vice-Presidents
 40 additional staff (25 salaried and 15 hourly employees)
 The board of 21 members consisted of representatives of UWSENE’S
constituent groups primarily corporations, agencies, unions and local
government.
Launching the Balanced
Scorecard
 The contact among Harvard Business School(HBS), United Way of
America(UWA) and the president of UWSENE in late 1995
 An HBS team conducted a morning briefing session for the seven senior
managers in January 1996.
 One month later, the HBS team gave an afternoon briefing to all the staff.
 UWSENE agreed to go forward with developing BSC.
 Developing the scorecard

 Eileen Moser, Executive Vice President of organizational development and

marketing, was selected to be the senior manager
 Kelly Nevins – Director of Donor Services was selected to be the on-site
facilitator
 Ellen Lasher, an outside consultant volunteered to facilitate the scorecard
building process
 Launched the project with a series of brainstorming meetings and senior
level interviews
 Translate the mission of UWSENE- increase the organized capacity of
people to care for one another
 Setting four perspective : Financial, Customer, Internal Business Process and
Learning and Growth
 Developing the scorecard

 Financial perspective is to stress the cost effective generation of funds.

 Customer perspective – Donor focused /Agency focused/Community
focused
 Internal Business Process- Fund raising ,Fund distribution, Community
building, Develop innovative products.
 Learning and growth perspective- Employee productivity and Employee
Satisfaction.
 Employee Involvement

 Assigned employees to the four teams that would refine and define the
objectives for each perspective
 Established the linkages between perspective
 Employees were assigned based on individual preferences
 Initially employees were both skeptical and concerned about BSC process.
 Ashby solved the wrong thinking of the employees
 Outcomes and Strategic objectives in
four perspective
Perspective Outcomes Strategic Objectives

Financial External Growth Increase net amount of fund

raised
Internal Stability Balance internal income and
expenses to maintain our
100% guarantee to donors.

Community Building Increase amount of funds

that go to services and
proprietary products.
 Outcomes and Strategic objectives in
four perspective
Perspective Outcomes Strategic Objectives

Customer Customer Satisfaction Recognition

Ease of giving
Market Growth Products that customers care
about and that will improve
the community
Customer Retention Information on results
Quality, timely service
 Outcomes and Strategic objectives in
four perspective
Perspective Outcomes Strategic Objectives

Internal business Key internal business

Improve Key internal processes in the following areas:

process processes based on quality •

•
Fund raising
Fund distribution
• Community building
• Information processing/communications
• Pledge processing
• Product development
• Volunteer/staff development
• Customer service
• Interdepartmental communications

Develop innovative products Develop a research and

Maintain viable product line
development process to
come up with new,
innovative products
Develop a consistent process
for evaluating existing
products and services
 Outcomes and Strategic objectives in
four perspective
Perspective Outcomes Strategic Objectives

Learning and Growth Employee Productivity Training and development

Technology

Teamwork

Employee Satisfaction Open and effective communication

Employee ownership and

involvement
Agency assistance
Balanced Scorecard and Total Quality
Management
 Moser noted an important connection between BSC and TQM-
Strategic plan is board driven and quality is staff initiative. By
implementing BSC it can be solved.
 Ashby concurred: The BSC gave us a way to pull all the pieces
together with some specific measures. Rather than have each
department come up with its own goals, the BSC demonstrated how
the organizational efforts fit together and how departments
coordinated with one another. We could now look at UWSENE as a
single interconnected system.
 Reactions to the BSC
 Nevins commented on how it should be used on an ongoing basis- When each
department formulates objectives each year, we should make sure that
everything we do is on the BSC. If not, we should question whether we should
do it. Each year, as the organization reviews our annual objectives and
formulates next year's objectives, it must modify the BSC to reflect the new
priorities.

 Moser concurred: The president and the senior managers have the responsibility
to revisit the BSC with their staff and update it on a regular basis. This
document can really direct our energies and help us eliminate a lot of the busy
work‍and‍things‍we‍shouldn’t‍be‍doing.
 One manager, however, was disappointed in the lack of an overriding mission
on the scorecard: The final document seemed like a much colder document
than I would have imagined for an organization that is so mission-driven. Our
scorecard‍doesn’t‍have‍a‍feeling‍component‍to‍it.‍It‍seems‍so‍dry.‍
 Reactions to the BSC
 One middle manager said: You can relate to the BSC. It shows where you fit in the
organization. You can see how you contribute to the customer or financial needs of the
organization and to staff advancement. It's nice to feel that what you're doing is worthwhile,
that it relates to the big picture. I learned things I never knew, even after working here five
years. I heard a lot of people say" I never knew that!"
 Scott Famigletti, chief financial officer, related a conversation with United Way's
custodian about the BSC: Initially he felt that the BSC was only for senior management, not
him. His job was to plow snow, paint walls, and remove trash, and these didn’t have anything
to do with strategy or mission.
 Moser commented, however, that not everyone embraced the concept: Some people in the
organization just don't do well with change. They are unwilling to participate and resist any
new initiative.
 Conclusion

Ultimately, the BSC should improve UWSENE

and help it to push out the envelop of performance.
Board involvement with the BSC is the key to its
long-term success. The board must be part of the
process, because the BSC defines the strategy of
the organization.
Any Questions
Thanks for being with us