Bsc englisch verkürzt-sofia 1104

© Friedag 2011 1

How to improveFuture with the BSCStrategy development and implementation with the

Balanced Scorecard [BSC]

© Friedag 2011 2

They must often change who would be constant in happiness or

wisdom.___________________

Confucius

They must often change who would be constant in happiness or

wisdom.___________________

Confucius

© Friedag 2011 3

independent consultant specialising in:

Implementation of the Balanced Scorecard in companies

Practice-orientated Balanced Scorecard workshops

Member of the public relations board of the ICV

Lecturer at the Humboldt University Berlin

Hobbies: moving in nature, volleyball, sailing

Dr. Herwig R. Friedag

Dr. Herwig R. Friedag Friedag Consult

Beskidenstr. 33, D 14129 Berlin Fon +49 30 80 40 40 00Fax +49 30 80 40 40 01

[email protected]

Born in 1950, graduate economist

© Friedag 2011 4

Publications

Total number of copies > 75.000 in CZ, D, FIN, PL, RUS

1999, 2000, 20022001

2003

2005

2004

2002, 2003, 2005, 2011

2009

2000, 2002, 2004

© Friedag / Lewandowska 2008 5

01 Introduction

02 The bases of securing the company’s future

03 What is a BSC ?

04 Approach for an objective system

05 OAI– strategic actions

06 Organising the work

07 Conclusions

Strategy development and implementation with the Balanced Scorecard

Agenda

5© Friedag 2011


01 Introduction


03 What is a BSC ?




07 Conclusions


Agenda

6© Friedag 2011

© Friedag 2011 7

„Whatever will be, will be“;

nonetheless, we can, we have to do something today for the future.

Therefore, we should

at least meet the requirements of the future

or better: set standards

or even: try to influence the changes in society

We want, we have to prepare for our future, even though it is not a 100% controllable !

We want, we have to prepare for our future, even though it is not a 100% controllable !

© Friedag 2011 8

Why could a BSC make sense for your company?

We achieve joint objectives

We translate strategies into action

By communication we achieve thinking, responsibility, objective-orientated action of our employees and partners

We assure sustainability of our company

© Friedag 2011 9

52% of the Germans have secluded with their employer.

Responding to the question in a representative study, whether they would presumably be working at their current company next year, they answered:

„No way - as soon as I find a job in a different company, I will be leaving the firm!"

Source: Financial Times Germany, June 02 2004, page 2

Is the BSC sensible for our company ?

© Friedag 2011 10

Requirements to start the process of strategy implementation

Willingness for change

Reduce Blame-Culture – learning to learn from mistakes:“no mistake is the biggest mistake”

Willingness of management to work out and discuss strategic objectives

A strategy !

© Friedag 2011 11

The future has many names.For the weak, it is the unreachable.

For the fearsome, it is the unknown.

For the brave, it is the chance.___________________

Victor Hugo

The future has many names.For the weak, it is the unreachable.

For the fearsome, it is the unknown.

For the brave, it is the chance.___________________

Victor Hugo


01 Introduction


03 What is a BSC ?




07 Conclusions


Agenda

12© Friedag 2011


Strategy

What is the strategic objective of a company/an organisation?

The basic strategic objective is that of securing the sustainability of a company/organisation.

Sustainability can be achieved only on the condition that all relevant stakeholders can benefit from it.

This includes antithetic interests and conflicts which contribute to the dynamic development of an organisation.

Consequently the objective of a strategy is that of generating a dynamic equilibrium of the benefits which can accepted by all the

relevant stakeholders.

Consequently the objective of a strategy is that of generating a dynamic equilibrium of the benefits which can accepted by all the

relevant stakeholders.

13© Friedag 2011

14

Strategy as part of a holistic management

Strategic potentialities as input-parameters for results and finance/liquidity; the Balanced Scorecard as tool to work out and implement the company‘s strategy.

Assets .

Strategy Result Finance

Potential planningwith e.g.

Balanced Scorecardetc.

Controller as a Strategymoderator / consultant

Profit planningwith e.g.

Contribution marginaccounting etc.

Controller as a mediatorbetween internal and external accounting

Finance planningwith e.g.

Free Cash Flow-accounting etc.

Controller as a manager of thestakeholder interests

Logic of the decision

Logic of the tools

liabilities

G

D

PFAWC

EquDbt

© Friedag 2011 15

Expenditures

Accrual of money

develop exploit

Orders / Sales

Use capacities

Quality assurance

Employee engagement

Safeguarding liquidity

Partner engagement

Marketing

Develop capacities

Quality potential

HR competences

Investor Relations

Partnership

strategic operational

PotentialsPossibilities

+competencies

What is strategic, what is operational ?

Accrual of potentials

to do ?

to do nothing ?

long-term ?

short-term ?

© Friedag 2011 16

orientation by objectives

orientation by objectives

financial resources

financial resources

motivation for implementation

motivation for implementationxx

economic forceeconomic force

time resourcestime resourcesx

Aspects of the development of potential

© Friedag 2011 17

Kaplan/Norton

Balanced Scorecard:translate strategy into action!

Only the one who possesses a strategy, can implement it.

Therefore: The one who wants a Balanced Scorecard has to start with the strategy!

Only the one who possesses a strategy, can implement it.

Therefore: The one who wants a Balanced Scorecard has to start with the strategy!

Strategic House

Strategicprojects

18

How do we proceed ?

Business model

Strategy-development

Strategy-Use

(Integration in the management cycle)

Mission* Tasks - strategic challenge

Corporate Policy Orientation

Reporting Scorecard

Strategy-implemen-

tation

running businessmiddle term planning / Budget /

Profit / Liquidity

Balanced Scorecard

Vision*Closeness => Bearing business idea

* long-time

19

Example: Vision & Corporate Policy Orientation

Company producing rear-view mirrors for cars

the “vision” of this company: the leading car-manufacturers are our clients

the “Corporate Policy Orientation”: target-year: 2020 Turnover: from 750 Mio € to 2.500 Mio € profit-margin: 7%

20

Exercise: decisions to be made

Please decide which company could be the “target” of our work

What could be the (long-time) “vision” of this company?

What is the “Corporate Policy Orientation”: target-year Turnover profit-margin

You have 30 minutes time !


01 Introduction


03 What is a BSC ?




07 Conclusions


Agenda

21© Friedag 2011

© Friedag 2011 22

The Balanced Scorecard is a universal tool to align the acting of a group of people toward

a joint objective.

The Balanced Scorecard is a universal tool to align the acting of a group of people toward

a joint objective.

subjective: What are we ready to do and will we take

over the responsibility?

subjective: What are we ready to do and will we take

over the responsibility?

objective:What objectives and tasks do we want to

commit ourselves to?

objective:What objectives and tasks do we want to

commit ourselves to?

What is a Balanced Scorecard ?

© Friedag 2011 23

I. Identification of objectives

(Mission, vision, leading indicators)



II. Develop strategic

action frame


action frame

III. Complete action frame

with actions (collect ideas)



IV. Bundle actions into

strategic projects


strategic projectsV. Reporting with the

Balanced Scorecard

V. Reporting with the

Balanced Scorecard

VI. Arrange the BSC into the

process of leading


process of leading

VII. Organize learning process


Communication

Steps to a BSC-development and -implementation

© Friedag 2011 24






action frame




strategic projects


Balanced Scorecard

VI. Arrange the BSC into the process of leading


Communication




Strategic starting point: our business model Who is our customer ?

Target persons

What are the needs of our customer?

Core need

How can we find a cost-covering solution for that? Core competence

How can we be better than the competitors?

Uniqueness

25© Friedag 2011

26

Example: business model & strategic challenge

Our business model Target-customer: the three technical-leading car-producer Core need: distinctive rear-view mirrors Core competence: specific mirrors in all

quantities/specifications Uniqueness: innovation on highest performance

And then: Our strategic challenge:

to have the most innovative developments

27

Please name in a few words the four aspects of the business model for our example-company

What will be the strategic challenge to be achieved


Exercise: business model & strategic challenge

28

What we focus on the implementation of the strategy ?

What will be our strategic period?

Vision* What do we want to achieve in this period ? (a “milestone“ of the vision)

Mission Statement Strategic message: How do we want to be seen after this period ?

Key indicatorHow can we recognise that we are successful?

* “Vision” from now on will be the main goal for the next two or three years

goals we want to realise in the next future

© Friedag 2011 29

What do we want to achieve ?

We are becoming technological market leader

Vision

The vision is destined for our company‘s employees.

It matches our values that are exemplified through our own life.

The vision is destined for our company‘s employees.

It matches our values that are exemplified through our own life.

© Friedag 2011 30

Why shall people be our customers ?

Mission statement

We are worldwide leading innovative supplier of rear-view mirrors.

The mission statement aims at the memory of our potential customers / partner.

With the mission statement we raise expectations that we have to meet.

The mission statement aims at the memory of our potential customers / partner.

With the mission statement we raise expectations that we have to meet.

© Friedag 2011 31

One key figure for the company

What shall be the most important criteria that subordinates all strategic decisions?

How do we want to measure that ?

Leading indicator

Leading indicator: number of jointly (with customers) developed innovations

With the leading indicator, we concretize our joint orientation

With the leading indicator, we concretize our joint orientation

© Friedag 2011 32

worldwide leading innovative supplier of

rear-view mirrors

We are becoming technological market leader

number of jointly (with customers) developed innovations

visionvision

mission statement

mission statement

leading indicator

leading indicator

Agreement on objectives

33

Exercise: goals for the next future

What could be for our company the

1.strategic period

2.mission,

3.vision and the

leading indicator


33

© Friedag 2011 34

When there is no agreement in principle,

then it is senseless to scheme.___________________

Confucius

When there is no agreement in principle,

then it is senseless to scheme.___________________

Confucius


01 Introduction


03 What is a BSC ?




07 Conclusions


Agenda

35© Friedag 2011

© Friedag 2011 36




action frame


action frame




strategic projects


Balanced Scorecard



Communication



Which tasks do we have to fulfil, in order to achieve our vision?

strategic topics

Which potentials do we have to develop in order to achieve our vision?

development areas (perspectives)

II. Developing the strategic action frame

Mission statement: Worldwide leading innovative supplier of rear-view mirror

Vision: We will become technological market leader

Leading indicator: Number of jointly (with customers) developed innovations

Which potentials do we have to jointly develop so we are able to face the imponderables of the future better than the competitors can do it?

37© Friedag 2011

© Friedag 2011 38

Strategic topicsP

ersp

ecti

ves

what shall we do now?

worldwide leading innovative supplier

we are becoming technological market leader

number of jointly developed innovations

extension of local presence

entry into chinese market

trade volume

image

jointly developed innovations# of projects

higher revenue

extension of sales dept.

sale potential

objective

strategic topic

Indicator

Per

spec

tive

s

customer retentionCustomers

new contracts dedication

employeesCIP-Groups

reliabilityprocesses

error ratio (ppm)

reliabilitypartners

audits

cost consciousness

fin. & controllingCash Flow

© Friedag 2011 39

Perspectives for the stakeholderP

ersp

ecti

ves

With whom and for whom do we intend to do it ?






trade volume

image jointly dev. innov.

# of projects

higher revenueextension of sales

dept.sale potential

objective

strategic topic

Indicator

Per

spec

tive

s

Cost consciousnessfin. & controlling

Cash Flow

reliabilityPartners

Audits

dedicationemployeesCIP-Groups

Customer retentionCustomers

New contracts

CIP = continuous

improvement process

© Friedag 2011 40

Our strategic frameP

ersp

ecti

ves






trade volume

higher revenue


sale potential

objective

Strategic topic

Indicator

Per

spec

tive

s


Cash Flow

ReliabilityPartners

Audits



New contracts

image


41

Exercise group 1: Strategic topics

What are the two main tasks (services, products, changes) that we have to devote ourselves to in order to achieve the vision in the near future ?

For each topic, define an objective and an indicator with which we can measure the achievement

Less is more !Recommendation: less than 5 strategies


41

42

Exercise group 2: Perspectives of the stakeholder

42

Who are the relevant stakeholders ?

How can we motivate our stakeholders to aim at our strategic topics? Define for each perspective an objective and an indicator, which measures the degree of achievement

Less is more !Recommendation: maximum of 6 perspectives



01 Introduction


03 What is a BSC ?




07 Conclusions


Agenda

43© Friedag 2011

© Friedag 2011 44




action frame






strategic projects


Balanced Scorecard



Communication



Kaplan/Norton

Translate strategy into action!

It is only through the concrete, daily actions of all the employees in a

company that potentials can be developed .

45© Friedag 2011


Check if every action matches

the strategic topics and

the development areas (perspectives)!

Objective

Action

Indicator

Strategic topics Development areas (perspectives)

III. Objective-oriented actions - the OAI-principle

46© Friedag 2011

© Friedag 2011 47

Define objective-orientated actionsP

ersp

ecti

ves






trade volume

higher revenue


sale potential

objective

Strategic topic

Indicator

Per

spec

tive

s


Cash Flow

reliabilityPartners

Audits



New contracts

image


Objective: create enthusiasm at the customers

Action: customer visits approx. 8 weeks after first delivery: „Any problems ?"

Indicator: number of visited customers

© Friedag 2011 48

Create objective-orientated actionsP

ersp

ecti

ves






trade volume

higher revenue


sale potential

objective

Strategic topic

Indicator

Per

spec

tive

s


Cash Flow

ReliabilityPartners

Audits



New contracts

image


ObjectiveActionIndicator

ObjectiveActionIndicatorObjective

ActionIndicator




ObjectiveActionIndicator Objective

ActionIndicator



ActionIndicator




ActionIndicator


ActionIndicator



ActionIndicator





ActionIndicator






So many OAI´s

49© Friedag 2011


Example: customers

Objective: awake enthusiasm among customers

Action: customer visits approx. 8 weeks after first delivery: „Any problems ?"

Indicator: number of visited customers

S 1

For each development field of the company there have to be developed actions supporting the achievement of the goals.

Work group: OAI

50© Friedag 2011


Exercise: Objective-Action-Indicator

What exactly do we have now to do to achieve our

our strategical goals in 2010:

1.Objective

2.Action

3.Indicator

All three points please on one moderation-card – readable written


51© Friedag 2011

© Friedag 2011 54

IV Implement strategic projectsP

ersp

ecti

ves






trade volume

higher revenue


sale potential

objective

Strategic topic

Indicator

Per

spec

tive

s


Cash Flow

ReliabilityPartners

Audits



New contracts

image




ActionIndicator




ObjectiveActionIndicator Objective

ActionIndicator



ActionIndicator




ActionIndicator


ActionIndicator



ActionIndicator





ActionIndicator





Objective Project Indicator

ObjectiveProjectIndicator






© Friedag 2011 55

The most important things:

Don‘t look for perfect solutions!

Delegate responsibilities and competences, demand and support consequence!

Organise the things that can be already done.

The sooner the first success appear, the greater the acceptance of Balanced Scorecard will be.

Projects supporting the implementation of BSC

Let us start, there‘s a lot of work ahead of us!Let us start, there‘s a lot of work ahead of us!

© Friedag 2011 56

having objectives only is not enough – we have to want to do it !

assign clear responsibilities

achieve early wins

develop adjuvant rituals

train consequent leader behaviour

pay attention: time is a critical resource

- time cannot be stored

- each process needs sufficient timing

- point in time as important as the period of time

… and organize active doing

© Friedag 2011 57




action frame




strategic projectsV. Reporting with the

Balanced Scorecard


Balanced Scorecard



Communication


© Friedag 2011 58

V. Reporting components of the BSC

Project-indicators

Indicators of the BSC-house

strategic and operational indicators for internal control

strategic and operational indicatorsfor external reporting

Leadership-Scorecard Reporting-Scorecard

© Friedag 2011 60

Development of potentialities Exploitation of potentialities

Reporting - Scorecard

Main corporate indicators (Development and exploitation of potentialities)

Early

indi

cato

rs

Late

indi

cato

rs

© Friedag 2011 61




action frame




strategic projects


Balanced Scorecard


Communication



process of leading


process of leading

© Friedag 2011 62

Strategy

Leading-

Scorecard

Teamobjectives

Reporting-

Scorecard

Operational

objectives

Sustainable success of

the organizationActing

TransparencyEach area defin

es for it

self how th

ey

can support the vision

VI Arrange the BSC into the process of leading

© Friedag 2011 63

Live the Balanced Scorecard !

Integrate all employees

- What divisions are relevant strategically ?

- Where are different approaches needed in order to achieve the vision ?

- Set a main focus

- Develop and integrate a communication concept

- Use indicators to control

- Establish the Balanced Scorecard in the reporting

- What can be dispensed in the reporting ?

Arrange the BSC into the leading process

© Friedag 2011 64

Diffusion of the BSC into the companyIdentifikations-Verein für die Region

Wir steigen in die Liga auf

TabellenplatzIdentifikations-Verein für die Region




Tabellenplatz

BonitätInvestoren

Innenfinanzkraft

KontakteRegionTreffen

QualifikationMitarbeiter

Fortbildungsquote

ImageFans

Fanclubs

EngagementSpieler

Trainingspunkte

mehr EinnahmenMerchandising /

BrandingUmsatzpotenzial

mehr MitgliederMitglieder-Wachstum

Mitglieder i. Verein

mehr ZuwendungNachwuchs-

förderungTrainerquote

ZielStrategische

ThemenKennzahl

BonitätInvestoren

Innenfinanzkraft



Fortbildungsquote

ImageFans

Fanclubs

EngagementSpieler

Trainingspunkte







ZielStrategische

ThemenKennzahl

En

twic

klu

ng

sge

bie

te(P

ers

pe

kti

ve

n)

Identifikations-Verein für die RegionWir steigen in die Liga auf





Tabellenplatz

BonitätInvestoren

Innenfinanzkraft



Fortbildungsquote

ImageFans

Fanclubs

EngagementSpieler

Trainingspunkte







ZielStrategische

ThemenKennzahl

BonitätInvestoren

Innenfinanzkraft



Fortbildungsquote

ImageFans

Fanclubs

EngagementSpieler

Trainingspunkte







ZielStrategische

ThemenKennzahl

En

twic

klu

ng

sge

bie

te(P

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pe

kti

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n)

strategic operationalearly late






Tabellenplatz

BonitätInvestoren

Innenfinanzkraft



Fortbildungsquote

ImageFans

Fanclubs

EngagementSpieler

Trainingspunkte







ZielStrategische

ThemenKennzahl

BonitätInvestoren

Innenfinanzkraft



Fortbildungsquote

ImageFans

Fanclubs

EngagementSpieler

Trainingspunkte







ZielStrategische

ThemenKennzahl

Ent

wic

klun

gsge

biet

e(P

ersp

ektiv

en)






Tabellenplatz

BonitätInvestoren

Innenfinanzkraft



Fortbildungsquote

ImageFans

Fanclubs

EngagementSpieler

Trainingspunkte







ZielStrategische

ThemenKennzahl

BonitätInvestoren

Innenfinanzkraft



Fortbildungsquote

ImageFans

Fanclubs

EngagementSpieler

Trainingspunkte







ZielStrategische

ThemenKennzahl

En

twic

klu

ng

sgeb

iete

(Per

spek

tive

n)

strategic operationalealry late

contribution






Tabellenplatz

BonitätInvestoren

Innenfinanzkraft



Fortbildungsquote

ImageFans

Fanclubs

EngagementSpieler

Trainingspunkte







ZielStrategische

ThemenKennzahl

BonitätInvestoren

Innenfinanzkraft



Fortbildungsquote

ImageFans

Fanclubs

EngagementSpieler

Trainingspunkte







ZielStrategische

ThemenKennzahl

En

twic

klu

ng

sge

bie

te(P

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Tabellenplatz

BonitätInvestoren

Innenfinanzkraft



Fortbildungsquote

ImageFans

Fanclubs

EngagementSpieler

Trainingspunkte







ZielStrategische

ThemenKennzahl

BonitätInvestoren

Innenfinanzkraft



Fortbildungsquote

ImageFans

Fanclubs

EngagementSpieler

Trainingspunkte







ZielStrategische

ThemenKennzahl

En

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strategic operationalearly late

contribution

© Friedag 2011 66

assign specific authority and responsibilites to the indicators

learn from the cause-effect-chain

permit, that strategic objectives may be changed

keep on going to discuss the strategic objectives

VII Organize learning process

© Friedag 2011 67

The balanced scorecard puts strategy – not control – at the center

___________________

Kaplan / Norton (1992)

The balanced scorecard puts strategy – not control – at the center

___________________

Kaplan / Norton (1992)

© Friedag 2011 69

Everyone in the company knows his future

All stakeholder aim jointly in one direction

Limitation on less, on the fundamental things for the future

Better rating (Basel II)

Better results in the EFQM-Process

better operating profits as a base of sustainability

Benefits of safeguarding the company with the help of the Balanced Scorecard

© Friedag 2011 70

Leading with joint and clearly defined operative and strategic objectives

By communication we achieve thinking, responsibility, objective-orientated action of all of our employees and partners

Better transparency creates confidence at internal and external partners

Conclusion

more successful because of strategy developemt and implementation with the help of Balanced Scorecard ?

Strategy is the first task of leaders !Strategy is the first task of leaders !

© Friedag 2011 71

"Balanced Scorecard is more than a performance measurement system”

Friedag / Schmidt

"Balanced scorecard is management, not measurement"

Kaplan / Norton

Fazit

balanced scorecard transforms strategy into action

balanced scorecard transforms strategy into action

Bsc englisch verkürzt-sofia 1104

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Transcript of Bsc englisch verkürzt-sofia 1104