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Balanced Scorecard

IIM Kashipur

The balanced scorecard is a strategic planning and management

system that is used extensively in business and industry, government, and
non-profit organizations worldwide to align business activities to the
mission and strategy of the organization, improve internal and external
communications, and monitor organization performance against strategic
goals.

Robert S. Kaplan

David P. Norton

IIM Kashipur

Balanced Scorecard

IIM Kashipur

Balanced Scorecard

IIM Kashipur

A BSC Map
Objectives

Targets

Initiatives

Targets
Measures
Objectives

Targets

Learning & Growth

Objectives

Measures

Targets

Initiatives

Initiatives

To achieve
our vision,
how will we
sustain our
ability to
change and
improve?

Internal Business Process

VISION
AND
STRATEGY

Measures

To achieve
our vision,
how should
we appear to
our
customers?

Measures

Objectives

Customer

To succeed
financially,
how should
we appear to
our
shareholders?

To satisfy our
shareholders
and customers,
what business
processes must
we excel at?

Initiatives

Financial

 Learning and Growth Perspective

Do we have key skills and information systems?
Where are the gaps?

Internal Process Perspective

What are our key processes?
Should be based on our value proposition

Customer Perspective

Who are our customers?

What is our value proposition?
Operational excellence (Wal-Mart)
Product leadership (Nike)
Customer intimacy (Nordstrom)

Financial Perspective
IIM Kashipur

Profitability

Commonly Used Financial Measures

Total assets
Total assets per
employee
Profits as a % of total
assets
Return on total assets
Revenues/total assets
Gross Margin
IIM Kashipur

Net Income
Profit as a % of sales
Profit per employee
Revenue
Revenue from new
products
ROE
ROI

Commonly Used Customer

Measures

IIM Kashipur

Customer Satisfaction
Customer Loyalty
Market Share
Customer Complaints
Return rates
Response time
Direct Price

Price relative to
competition
Total cost to customer
Customers lost
Customer retention
Customer acquisition
costs
Number of customers

Commonly Used Internal Process

Measures
Average cost per
transaction
On-time delivery
Average lead time
Patents pending
Stock outs
Labor utilization rates

IIM Kashipur

Response time to
requests
Defect percentage
Breakeven time
Cycle time
Warranty claims
Waste reduction

Commonly Used Learning and

Growth Measures
Employee
participation
Training investment
Average years of
service
Turnover rate
Employee suggestions

IIM Kashipur

Motivation index
Diversity rates
Quality of work
environment
Training hours
Reportable accidents
Ethics violations

Link Measurements to Strategy

Define mission and strategy

Determine how performance will differ if I succeed with vision
Determine Critical Success Factors
Determine critical measurements

Implementation

3-4 measures per perspective

Frequency of measurement
Establishing targets
Performance measurement
Incentive systems

IIM Kashipur

Basic structure of Balanced Scorecard

IIM Kashipur

Bottom up approach of Balanced Scorecard

IIM Kashipur

Strategy Map

IIM Kashipur

American Express

IIM Kashipur

South West Airlines

IIM Kashipur

Assignment
What is Mission & Core values of Google ?

Translate it in four perspectives of Balance

scorecard, write down three objectives,
measures and targets/initiatives for each of
these perspectives ?
IIM Kashipur

Thank You

IIM Kashipur