Professional Documents
Culture Documents
The balanced scorecard moves away from this and looks back up
the process of generating the finances of the company to find vital
non financial measures.
PROBLEM WITH TRADITIONAL
METHODS OF BUSINESS ANALYSIS
No Early Warnings
1. Financial Perspective
2. Customer Perspective
(a) They are historical. Whilst they tell us what has happened to
the organization they may not tell us what is currently happening, or
be a good indicator of future performance.
FINANCIAL PERSPECTIVE
(b) It is common for the current market value of an organization
to exceed the market value of its assets. The excess value can be
thought of as intangible assets. These figures are not measured by
normal financial reporting.
CONCLUSION
The specific measures within each of the perspectives will be
chosen to reflect the drivers of the particular business. Ideally,
there should be about 3 goals/measures in each of the perspectives
for a single year.
Even when there are 10 goals, only 3 should be chosen in a year.
Often there is a spill over effect of improvement in those three areas
on to other desired areas.
EXAMPLE:
XYZ LTD. , A SEMICONDUCTOR COMPANY
Financial Perspective
GOALS MEASURES
Survive Cash flow
Quarterly sales
Succeed Growth
Operating income by division
Increase in market share
Prosper
Increase in Return on Equity
CUSTOMER PERSPECTIVE
GOALS MEASURES
% sales from new products
New products
% sales from proprietary products
On-time delivery
Responsive supply
(customer definition)
Share of key accounts’ purchases
Preferred suppliers
Ranking by key accounts
Customer
# of cooperative engineering efforts
partnerships
INTERNAL BUSINESS PERSPECTIVE
GOALS MEASURES
Technology Benchmark vs. competition
capability
Manufacturing Cycle time
excellence Unit cost
Yield
Design Silicon efficiency
productivity Engineering efficiency
New product Schedule: Actual vs. Planned
innovation
INNOVATION & LEARNING PERSPECTIVE
GOALS MEASURES
Technology
Time to develop next generation
leadership
Manufacturing
Process time to maturity
learning
The strategy map is broken down into subtopics that all work
toward the business’ ultimate goal.
The top of the strategy map shows the business’ main objective,
which is the No. 1 reason why the business exists.