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Balance Scorecard Book Review


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This is a book review on Balance Scoreacard

This is a book review on Balance Scoreacard

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  • 1. Book Review by Manjari Agrawal120th June 2012
  • 2. About the AuthorsTranslating Strategy into ActionDavid P. Norton Robert S. Kaplan2
  • 3. DefinitionBalance Scorecard is amanagement tool thatprovides stakeholders with acomprehensive measure ofhow the organization isprogressing towards theachievement of its strategicgoals.3
  • 4. Why Do We Need a Balanced Scorecard?“Business Strategy is now thesingle most important issue…and will remain so for the nextfive years”Business Week“Less than 10% ofstrategies effectivelyformulated areeffectively executed”Fortune4
  • 5. The Vision BarrierOnly 5% of the work forceunderstands the strategyThe Management Barrier85% of executive teamsspend less than one hour permonth discussing strategy60% of organizations don’tlink budgets to strategyThe Resource Barrier9 of 10 companiesfail to executestrategyThe People BarrierOnly 25% of managers haveincentives linked to strategyFour Barriers to Strategic Implementation5
  • 6. Balanced Scorecard Pyramid6
  • 7. Translating Vision and Strategy: Four Perspectives7
  • 8. Implementation Steps1. Initiative must start at the top2. Requires teamwork, collaboration3. Interview senior managers4. Gain consensus5. Expand consensus6. Selection of metrics7. Roll-out8. Periodic reviews9. The scorecard evolves with the organization8
  • 9. BSC Team Roles• Assumes ownership• Provide Information on strategy and methodology• Commit resourcesExecutiveSponsorChampionTeamMembersOrganizationChangeExpert• Ensure all relevant material is available to team.• Facilitates the development of an effective teamthrough coaching and support.• Provide knowledge of business unit/ function• Act as BSC ambassadors within their businessunits.• Increase awareness of organizational changeissues.• Investigates change affecting the BSC project.9
  • 10. Selection Criteria for Performance MeasurementsRelevantMeasurableActionable10
  • 11. How many measures on a Balanced Scorecard ?Between 4 to 711
  • 12. Seven ingredients of successful Balanced Scorecard1. A Process to Mobilize the Organization and Lead OngoingChange2. Scorecards That Describe the Strategy3. Linking Scorecard to Create an Organization Alignment4. Continuous Communication to Empower the Workforce5. Aligning Personal Goals, Incentives, and Competencies Withthe Strategy6. Aligning Resources, Budgets and Initiatives With the Strategy7. A Feedback Process That Encourages Learning andExperience Sharing12
  • 13. The Road to Disaster1. Senior management notcommitted2. Lack of consensus3. Consultants4. Failure to communicate5. Lack of “push-down”6. Only few individuals involved7. Static not dynamic13
  • 14. Sample Metrics for an ITES Company14
  • 15. Company Strategy – Sample Scorecard15
  • 16. 16Success StoriesCommercialVehicle BusinessUnit2000to2002# 40% Increase in RevenueLakshmiMachineWorks Limited2004to2008Revenue Profit$120Mto$504M$8.8Mto$84.8MTNT ExpressServicesUK & Ireland2007to2009# On time delivery increased by 5%# Market share increased by 14%%# Employee retention increased by 66%
  • 17. Companies which Implemented Balanced ScorecardAbout 50% of Fortune 1000 companies in North America and about 40%of those in Europe use the Balanced Scorecard (Fortune 2002)17