 The Balanced Scorecard was first introduced

in the early 1990s through the work of

Robert Kaplan and David Norton of the
Harvard Business School. Since then, the
concept has become well known and its
various forms widely adopted across the
world.
 By combining financial measures and non-
financial measures in a single report, the
Balanced Scorecard aims to provide
managers with richer and more relevant
information about activities they are
managing than is provided by financial
measures alone.
 LO 4

Translates an organization’s
mission & strategy into
operational objectives &
performance measures.
Strategy describes how an organization matches
its own capabilities with the opportunities in the
marketplace to accomplish its overall objectives.
What is the focus of industry analysis?

Competitors

Potential entrants into the market

Equivalent products

Bargaining power of customers

Bargaining power of input suppliers

1. Product differentiation
2. Cost leadership
 LO 4

Is the ways in which a company

implements it strategy for profit &
growth within the balanced scorecard
framework. It includes choices of type of
customer, product, market, internal &
business processes, etc. Strategy
translation means specifying objectives,
measures, targets & initiatives.
 LO 4

Vision & strategy

works through 4
perspectives to reach
targets & initiatives.
 LO 4

Must be balanced between:

 Lead measures (performance drivers)
 Lag (outcome) measures
 Objective (quantifiable & verifiable) measures
 Subjective (more judgmental) measures
 Financial & nonfinancial measures
 External & internal measures
 LO 4

 Financial perspective
 Economic consequences of actions taken in other 3
perspectives
 Customer perspective
 Defines customer & market segments where the business
unit will compete
 Internal business process perspective
 Describes internal processes needed to provide value for
customers, owners
 Learning & growth (infrastructure) perspective
 Defines capabilities that an organization must have to
create long term growth & improvement
4 Perspectives in Balanced Scorecard
Financial Perspective
The Strategy If we succeed, how will we
look to our shareholders?

Customer Perspective
To achieve our vision, how
must we look to our
customers?

Internal Perspective
To satisfy our customers,
which processes must we excel
at?

Learning & Growth Perspective

To achieve our vision, how must

our organization learn and
improve?
 Strategy and Balanced Scorecard

Mission –
Why We
Exist Strategic
Strategy Outcomes
Map :
Translate the Satisfied
Vision – Strategy Shareholders
What We Strategy :
Our Game Delighted
Want to Be
Plan Customers
Excellent
Balanced Processes
Values – Scorecard :
What’s Measure and Motivated
Important to Focus Workforce
Us
 Strategy Map Template
Enhance Long-term
Shareholder Value

Improve
Increase Revenue Growth
Cost Efficiency
Financial

Build High Performance Expand Enhance

Products Market Share Brand Image

Customer

Achieve Operational Drive Demand Implement Good

Manage Dramatic
Excellence through Customer Environmental
Growth through
Relation Management Policy
Innovation

Internal Process

Learning & Growth

Develop Strategic Build Learning Expand Capabilities with
Competencies Culture Technology
 LO 4

 Flows from other 4 perspectives

 Revenue growth
 Cost reduction
 Asset utilization
Investments
• % of facility assets fully funded for upgrading
• % of IT infrastructure investments approved
• # of new hire positions authorized for filling
• % of required contracts awarded and in place
 LO 4

 Source of revenue component within the

financial perspective
 Core objectives & measures
 Customer value
▪ Difference between what customers receive and what
they have given up
▪ Delivery reliability
Stakeholder / Customer
• Current customer satisfaction level
• Improvement in customer satisfaction
• Customer retention rate
• Frequency of customer contact by customer
service
• Average time to resolve a customer inquiry
• Number of customer complaints
 LO 4

 Process value chain made up of 3 processes

 Innovation process
 Operations process
▪ Cycle time & velocity
▪ Manufacturing cycle efficiency
▪ Day-by-hour report
 Post sales service process
Internal Processes
• Number of unscheduled maintenance calls
• Production time lost because of maintenance
problems
• Percentage of equipment maintained on
schedule
• Average number of monthly unscheduled
outages
• Mean time between failures
 LO 4

 Source of capabilities that enable the

accomplishment of other 3 perspectives
 Employee capabilities
 Motivation, empowerment, alignment
 Information systems capabilities
Learning and Growth
• Percentage employee absenteeism
• Hours of absenteeism
• Job posting response rate
• Personnel turnover rate
• Ratio of acceptances to offers
• Time to fill vacancy
 Goal Objective Measurement Target Initiative

Achieve Reduce Cost per 5% - Year 1 Activity

Agency Operational Outlet Office, 10% - Year 2 Based
operational Service Cost per Costing /
15% - Year 3
efficiencies Costs by Region, Cost Management
with best 50% over the per FTE
practices in next 5 years
the private
sector

Reduce Waste Waste Lean / Six

identified re- Volume stream Sigma
activities Charts, reductions of
within Rework 5% each
primary Tracking, year,
processes by Cycle Time Reworks cut
80% over the End to End in in half for
next 3 years S-LX (5 of 7 next 3 years,
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Sudibyo cycle time 23
 Corporate and Division Scorecard
Sample from GE Lighting Business Group
Level of Organization Financial
Corporate Scorecard Increase profit margin
Division Scorecard Optimize cost of production
Reduce inventory levels
Plant Scorecard Optimize cost of production
Increase yields ratio
Increase labor productivity
Reduce inventory levels
Frontline Employee Reduce waste
Scorecard Reduce overtime
Increase production rates
The above example shows how the scorecard at corporate level is cascaded to
division level, and further to plant level and employee level.
Customer Internal Process Learning & Growth
Improve customer Increase inventory turns Increase level of
satisfaction level Improve internal process employee competency
Improve customer Increase inventory turns Increase level of
satisfaction level Improve internal process employee competency
Increase percent of Increase inventory turns Number of "on the
on time delivery Reduce number of defects job training" delivered
Reduce customer per million Number of performance
complaints per million Improve quality incoming coaching session
materials
Maintain optimum equipment
speed
Reduce equipment downtime Number of "on the
Reduce number of poor job training" attended
solders Number of performance
Reduce number of cracked coaching session
bulbs attended
 HR Strategy Map Template
Drive Long term
Shareholder Value

Enhance People & Organizational

Optimize HR Efficiency
Effectiveness
Financial

Create Positive Work Provide Quality HR Provide High

Environment Service Performance People

Customer

Achieve HR Build Strategic Employee Drive

Process Competencies Organizational
Excellence Performance
HR Internal Process

Learning & Growth

Develop Strategic & Functional Enhance Technology Create Climate for
HR Competencies for HR HR Action
 IT Strategy Map Template
Drive Long term
Shareholder Value

Enhance IT Impact on
Optimize IT Efficiency
Enterprise Outcome
Financial

Deliver Consistent, High Provide Business Units with

Quality IT Service Innovative IT Solutions

Customer

Maintain a Develop Effective Decision Propose and Deliver

Reliable IT Support System Transformational Applications
Infrastructure

IT Internal Process

Learning & Growth

Develop Strategic & Functional IT Enhance IT Tools that Enhance Promote Customer-focused
Competencies the IT Function Culture
 Finance Strategy Map Template
Drive Long term
Shareholder Value

Enhance Finance Effectiveness on

Optimize Financial Efficiency
Enterprise Outcome
Financial

Deliver Responsive & Efficient Provide Clear & Reliable

Finance Operations Required Disclosure

Customer

Achieve Finance Develop Financial Ensure Compliance

Process Information to with Regulatory Requirements
Excellence Improve Decision Making

Finance Internal Process

Learning & Growth

Develop Strategic & Functional Use Technology to Improve Promote Customer-focused
Finance Competencies Financial Information Culture
Delivery
 Marketing Strategy Map Template
Drive Long term
Shareholder Value

Increase Sales
Optimize Marketing Efficiency
Revenue
Financial

Create Satisfied and Loyal Enhance Brand

Customers Image
Customer

Develop Effective Develop Innovative Marketing Develop Accelerate

Customer Relation Communication Marketing Business New Product
Management Program Intelligence Development
Ideas
Internal Process

Learning & Growth

Develop Strategic & Functional Enhance Technology Foster Creative Thinking &
Marketing Competencies for Marketing Innovative Solutions
1. BSC for management Control

2. BSC for Strategic Control

11/17/22 Yvonne Augustine Sudibyo 29

  Help managers monitor and control the
delivery of activities of a predefined set of
activities.
 Operational control involves asking the
following questions :
- What process do we want to monitor
-What aspects of the process do we want to
measure?
- What is considered best practice?

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  Increased understanding, awareness and
alignment about operations across the whole
mgt team arising from discussions during
design process
 Wider and more effective monitoring of
performance improvement initiatives

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  Improved understanding of the links between
measures improves understanding and
makes target setting easier
 a single concise mgt report describes
operational performance across perspectives.

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  4 questions :
- What strategic outcomes are we trying to
achieve?
- What activities need to happen right now to
achieve them?
-Are these activities being done?
- Are we achieving results targeted?

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  Reaching consensus and articulation of a set
of key strategic objectives aligned to
corporate vision
 Clarify concerning of the links between
implementation activities and the strategic
objectives of the organization
 Encouraging dialogue within organization
about strategic goals and expectations.

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1. Adopting unrealistic strategic visions & Plans
2. Not indentifying the right strategic goals
3. Lack of top tem consensus on or ownership of
strategic vision and goals
4. Poor communication of strategic Plans
5. Weak or irrelevant Performance feedback
6. Management processes that fail to support
strategic implementation activities
7. Inadequate or inappropriate Resource allocation

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