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Balanced Score CardCompilation and Analysis by:Manoj Joshi, Ph.D (Innovation), Chartered Er. (Mech), MBA, PGDFM, M.I.E (Mech), MIMA, Spl CAD/CAE
Professor- Strategy, Entrepreneurship & InnovationEmail: [email protected] / [email protected]
Editorial Board1. International Journal of Entrepreneurship & Innovation, IP Publishing2. Foundations and Trends in Entrepreneurship, Now Publishing3. Business Strategy & Environment, Interscience Willey4. Journal of Family Business Management, Emerald5. Journal of Small Business Management, Blackwell6. World Review of Entrepreneurship Management and Sustainability Development
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What is Balanced Scorecard?
Balanced Scorecard is a: Strategic planning and management system used to align business activities to the Vision Strategy
Of the organization by monitoring performance against strategic goals.
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Why use a Balance Scorecard?
Improve organizational performance by measuring what matters.
Increase focus on strategy and results.
Align organization strategy with workers on a day to day basis.
Focus on the drivers key to future performance.
Improve communication of the organization’s vision and strategy.
Prioritize projects / initiatives.
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4 Original Business Perspectives
The Balanced Scorecard model suggests that we view the organization from 4 perspectives.
Then develop metrics, collect data and analyze it relative to each of these perspectives.
Financial
Internal Business Process
Learning andGrowth
Customer Vision and Strategy
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4 Business Perspective Questions?
Financial: What must we do to create sustainable economic value?
Internal Business Process: To satisfy our stakeholders, what must be our levels of productivity, efficiency and quality?
Learning and Growth: How does our employee performance management system, including feedback to employees, support high performance?
Customer: What do our customers require from us and how are we doing according to those requirements?
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Balanced Scorecard Measurements
Perspective Generic Measurements
Financial Return of Capital Employed, Economic Value added, Sales growth, Cash flow
Customer Customer Satisfaction, retention, acquisition, profitability, market share
Internal Business Process
Innovation, Operations, Post sales service
Learning and Growth
People learning, training, skills , workshops, morale
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Key Implementation: Success Factors
Obtaining executive sponsorship and commitment.
Involving broad base of leaders, managers and employees in scorecard development.
Choose the right scorecard champion.
Viewing the scorecard as a long term journey rather than a short
term project.
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Managing Strategy: Four Processes
Communi-cating
and linking
Business Planning
Feedback and
Learning
Translating the
Vision
BalancedScorecard
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Time Frame: Strategic Management System
Num. Time Frame (Months)
Strategy Building
1. 0-3 Clarify the Vision: generic vision into strategy2. 4-5 Communication to middle managers3. 6-9 Develop business unit scorecards: strategy into
scorecards4. 6-7 Eliminate nonstrategic investments and Launch
corporate change programs5. 9-11 Review business unit Scorecards: (CEO role
comes into play)6. 12 Refine the vision7. 12- 14 Communicate the balance scorecard and
establish individual performance objectives8. 15-17 Update long term plans: goals are established
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9. 18- ongoing
Conduct Monthly and quarterly reviews: Focus more heavily on strategic issue begins
10. 25-26 Conduct annual strategy review
11. 25-26 Link everyone’s performance to the balanced scorecard
Note: Steps 8, 9 10 and 11 are performed on a regular schedule.
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Scorecard Potential Pitfalls and Criticisms
Lack of well defined strategy
Too much focus on the lagging measures: Loss in leading measures
Use of generic methods
Self serving managers
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Balanced scorecard benefits Recap:
Helps align key performance measures with strategy at all levels of an organization
Communication and understanding of business goals
Best practice methodologies: cascade through the entire organization
Mission into strategic plans into long term targets