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Balanced Scorecards For The Busy Business Person
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Balanced Scorecards For The Busy Business Person

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  • Transcript

    • 1. Balanced Scorecards for the Busy Business Person Warren J. Rutherford Rutherford Advisors, Inc.
    • 2. What is a Balanced Scorecard?
      • A strategic planning & management system.
      • Used to align business activities to -
        • business vision and strategy,
        • improve internal and external communication,
        • monitor performance against goals.
    • 3. Why is it used?
      • 1978 NYU Stern School of Business Study (5,000 companies)
      • 95% correlation between balance sheet and business value
      95%
    • 4. Why is it used?
      • 2005 NYU Stern School of Business Study
      • 28% correlation between balance sheet and business value
      • Intangibles – the 72%
        • Intellectual Property
        • Strategy
        • Brand
        • Systems
        • Processes
        • Access to Capital
        • Off balance sheet items
        • Customer reputation
        • Executive Team
      72% 28%
    • 5. Why is it used?
      • Financial measures not enough
      • Need to measure value from knowledge -centric activities and perspectives
      • *Balanced Scorecard Institute
    • 6. What does it measure?
      • Perspectives in each company concerning –
      • Learning & Growth,
      • Business Process,
      • Customer, &
      • Financial.
    • 7. Why is that important to you?
      • Only 5% of a workforce understands their company’s strategy.
      • Only 15% of senior management spends more than 1 hour a month defining strategy and aligning operations to it.
      • Only 25% have their operations aligned to the strategy.
      • Only 40% align company from budget to strategy.
      • David Norton, Balanced Scorecard Report, Vol. 3, No. 5 (Sep/Oct 2001)
    • 8.
      • W hat is it that makes us valuable and profitable?
      • How can we identify, quantify, and measure the intangible assets so that we can increase value and our performance ?
      The Questions companies have to ask themselves today are:
    • 9. Learning & Growth Perspective
      • Employee training.
      • Company cultural attitudes toward individual & corporate self-improvement.
      • Workforce alignment -
        • Person/future fit (selecting for the long-term contributions of a person to the business’ long-term strategy).
        • Formal processes and procedures and professional standards created the best, long-term workforce alignment
        • Family-like community created the best, long-term workforce alignment.
    • 10. Business Process Perspective
      • Internal processes w/ metrics looking at -
        • How well is the business running?
        • Do products conform to customer requirements (mission)?
        • What are your major processes?
        • Are they optimized – tasks, time, money?
        • Who has participated in their review?
    • 11. Customer Perspective
      • Customer focus.
      • Customer satisfaction.
      • Analyze by kinds of customers.
      • Analyze the kinds of processes that we use to provide our products & services to those different customer groups.
    • 12. Financial Perspective
      • Look at change from prior year & objective for following year.
      • Analyze significant indicators -
        • Revenues,
        • Profit,
        • COGS,
        • Gross Margin,
        • Operating Expense,
        • Inventory, &
        • Return on Assets, etc.
    • 13. What do you put in the Scorecard?
      • Objectives,
      • Measures,
      • Targets, &
      • Initiatives.
    • 14. What are some ways to start?
      • There are many ways to start, and there are programs available to assist.
      • Develop your vision for a multi-year period .
      • Ensure your mission is in alignment with customer needs.
      • Develop strategies that complement your vision and mission.
    • 15. What are some ways to start?
      • Develop objectives that seek annual achievement of these strategies.
      • Develop action plans that set and track targets for accomplishment of your initiatives.
      • These can be developed by project, by section, division, department, by company.
      • Report and discuss monthly to reinforce accountability.
    • 16. Example
      • The following illustrate an approach by The One Page ® Business Plan to illustrate -
        • Development of a Strategy,
        • Objectives by the 4 perspectives, and
        • Action plans for 1 quarter.
    • 17.  
    • 18.  
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    • 21.  
    • 22.  
    • 23. Summary
      • Establish benchmarks that are manageable.
      • Manage the data.
      • Use the data to improve collaboration, communication, & accountability toward vision, mission, and strategy.