Putting the

Balanced
Scorecard to work
Presented by :

Group 2
Anup A.Gholap
Devesh Pratap Singh
Jijo Thomas
G. Laxman Kishore
Najeeb T.K
Pratik Kumar Sahoo
Shibasish Bhattacharya
Sunil Dath S R
Vivek Agarwal
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 Preface
• Companies use old measures for new strategies.
• How balance scorecard helps to translate objectives of the
company into performance measures.
• Organization’s efforts are the focal point for balance
scorecard.
• Examples to be discussed:-
– Rockwater translated its strategic objectives into tangible goals.
– Apple uses balance scorecard to plan long-term performance.
– AMD uses balance scorecard to consolidate strategic information.

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 Fundamental objective of BSC
• In modern era manager’s recognize the impact of measures
on performance.
• Still Measurement is not as an essential part of organization’s
strategy.
• Effective measurement must be and integral part of the
management strategy.
• BSC provides executives with a comprehensive framework
that translates a company’s strategic objectives into a
coherent set of performance measures.

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 Four Perspectives of Balanced
scorecard
• Balanced scorecard works as a management system
also apart from being just a management exercise to
motivate improvements in critical areas. (Product,
process, customer and market development)

• The scorecard presents four different perspectives.

1. Customer perspective
2. Financial perspective
3. Internal business perspective
4.Innovation and learning perspective

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 How BSC Perspectives are different
from Traditional Measures
Basis of difference Traditional BSC perspectives
Measures Local measures are Grounded in
bottom up and derived organization’s strategic
from ad-hoc processes. objectives and
competitive demands.
Reporting time Based on past data Cornerstone of a
without indicating company’s current and
feedback to improve future success.
performance.
Other measures v/s TQM, BPR, employee Focal point for the
BSC empowerment lack a organization’s efforts,
sense of integration. defining and
communicating
priorities to employees,
managers, investors &
customers.
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Overview on Rockwater
• Rockwater a wholly subsidiary of brown and root/
Halliburton a global engineering and construction company.

• In 1980 the competition in subsea business had become

keener and many small companies left the industry.

• In 1989 company hired Norman chambers, as CEO who knew

that industry , competitive world had changed dramatically.

• He with the help of senior management , developed a

VISION. As our customer , preferred providers , we shall
provide highest level of safety and quality
 Customer Segmentation
Tier 1
• Value added services

Tier 2
• Cheaper Price

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 Five Elements of strategy by Norman Chambers

Continuous
High level of improvement of
customer safety, Equipment
satisfaction reliability,
Responsiveness,
Cost Effectiveness

Realization of Service that

High Quality
shareholder’s surpass customer
Employees
expectations expectations
 What are the strategic
objectives considered by
Rockwater?

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 The Vision Strategy

“As our  Services that surpass needs

customers’ Customer satisfaction
preferred
Continuous improvement
provider, we shall
be the industry Quality of employees
leader. This is our Shareholder expectations
mission

Financial -Return on capital

-Cash flow
-Project profitability
-Reliability of performance

Customer -Value for money

-Competitive price
-Hassle free relationship
-High performance professionals
-Innovation

Internal -Shape customer requirement

-Tender effectiveness
-Quality service
-Safety/loss control
-Superior project management

Growth -Continuous improvement

-Product and service innovation
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 Rockwater’s Balanced Scorecard
• Return on Capital Employed
• Cash Flow
Financial Perspective • Project Profitability
• Profit Forecast Reliability
• Sales Backlog

• Pricing Index – Tier II Customers

• Customer ranking survey – Tier I customers
Customer Perspective • Customer satisfaction index – Tier I customers
• Market share – Tier I customers

• Hours with customers on new work

• Tender success rate
Internal business • Rework
Perspective • Safety incident index
• Project performance index
• Project closeout cycle

• % revenue from New services

• Rate of improvement Index
Innovation and • Staff attitude survey
Learning Perspective • Number of employee suggestions
• Revenue per Employee
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 How Rockwater fulfills customer
needs

Identify Win Prepare Perform Closeout

Customer Need Customer Need
Recognized Development Cycle Met
Supply Cycle

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 CONCLUSION
• The balanced scorecard has helped Rockwater management
emphasize a process view of operation.

• It has developed a consensus on the necessity of creating

partnerships with key customers .

• Importance of order-of-magnitude reductions in safety-

related incidents.
 Apple Computer:
Adjusting Long-Term Performance

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 Apple’s Balanced Scorecard
For financial perspective emphasized on shareholder
value.

For customer perspective emphasized on market share

and customer satisfaction.

For internal process perspective focused on core

competencies.
For innovation and improvement perspective focused on
employee attitude.

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 Customer Satisfaction
• Historically –
– Apple was a technology and product focused company.
– Was competed by designing better computers.

• Presently –
– They have become a customer driven company by introducing
customer satisfaction metrics.

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• J.D. Power & Associates is a customer survey
company which works for the computer industry.
• Its customer base was not homogenous.

• But Apple has to go beyond J.D. Power

• So it has to develop its own independent surveys in
order to track its market segment.

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 Core Competencies
• Employee should be highly focused on few key components.
– E.g. user friendly interface, powerful software
architectures, effective distribution system.

• But measuring performance along with these competencies is

difficult.
• So avoid this the company is experimenting with obtaining
quantitative measures f these hard-to-measure competencies.

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 Employee Commitment and
Alignment
• Apple conducts a comprehensive employee survey in
every two years.
• The survey is done by selecting certain number of
employees randomly.
• The survey is done to understand-
– How well the employee is aware about the strategies
of the company.
– Whether the employee is delivering the result
according to the strategy or not.
– The delivery of the result is persistent or not.
• The results are displayed in terms of both actual level
of employee response and the overall trend
response.

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 Market Share
• Gaining market share is important for the
senior managers.
• It is important for sales growth and also to
attract and retain the software developers to
apple platform.

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 Shareholder Value
• Shareholder value is included as a performance indicator
though this measure is a result not a driver performance.
• It is included to offset the previous emphasis on:
– Gross margin and sales growth.
– Measure that ignored the investments required today to
generate growth for tomorrow.

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 Shareholder value Contd….
• But shareholder value metric quantifies the impact of
proposed investment for business creation and development.
• Apple’s business is organized on functional basis like sales,
product, design and worldwide manufacturing and
operations.
• So shareholder value can be calculated for the entire company
but not for a decentralized level.
• It helps to asses the senior managers, the impact of their
activities on the entire company’s valuation.

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• These 5 indicators are developed now only.
• It helped the senior managers to focus on the strategy in
various ways.

• BSC in Apple serves as a planning device and not as a control

device.
• Apple uses the measure to adjust the “long wave” of
corporate performance and not to drive operating changes.

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 Driving the process of change
• Rockwater

– A merger of two different organization

– Cultural diversity
– Balance Scorecard helped to retain focus

• Barclays Bank operating division

– Objective: Transformation from internal supplier of services to a global

competitor
– Strategy made but steps of implementation undefined
– Scorecard brought this to notice and also helped to prioritize

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 AMD Strategy of putting Balance
Score Card

BSC objectives of the AMD are mainly based on Trend Analysis

 It Stated it’s objectives in the form of More Forecasting to get

differentiated

Scorecard did not have a great impact

Only consolidated all strategic information

Reinforces the fact that scorecard is most useful to drive

changes

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 Driving process of change contd…
• Analog Devices
– Uses scorecard to update the targets of division managers, each year
– Uses scorecard to focus on particular areas
– Scorecard helps sustain programs
– Integrate scorecard metrics with hoshin planning

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 Thank you

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