The Balanced ScorecardCreating Strategy Map to Drive Corporate Performance Prepared by : Gajendra Khare Founder Director – Siddhartha Consultancy Services www.scsuniversal.com
balanced Scorecard -Defined Was first published in 1992 by Kaplan and Norton, The Balanced Scorecard is a strategic planning and management system used to align business activities to the vision and strategy of the organization by monitoring performance against strategic goals. o Translate strategy into action o Planning for long term organizational success Balance between - Financial measure and performance - Long range competitive abilities - Offers balanced view of the organization upon which they can further add-onPrepared by Gajendra Khare
Balanced score card perspectivesA. Financial How do we succeed financially?B. Customer How do we appear to our customers?C. Internal ProcessAt what processes must we excel?D. Learning and GrowthHow do we sustain our ability to change and grow?
Why BSC Focus on key things needed to achieve breakthrough performance Integration of various corporate program like Quality, Business process re- engineering and Customer service initiatives Communication and understanding of business goals and strategies at all levels Provide comprehensive picture of business operation
We Use the Scorecard to ArticulateStrategic Hypotheses in Cause-effectTerms Financial Results To Drive Financial Success... Customer Benefits Needed to Deliver Unique Sets of Benefits to Customers... Internal Capabilities To Build the Strategic Capabilities..Knowledge, Skills, Systems, and Tools Equip our people
Managing performance with BSC Balances – Financial and non Financial measured Balances – short term and long term measures Balances – performance Driver with outcome measures Leads to Strategic focus and organizational alignment
Process – Strategy and BSC Strategic OutcomeMission – why we Satisfied shareholdersexists Strategy Map- Translate the Delighted Customers strategy Strategy – Vision – what Balanced Our game we want to be Plan Score Excellent Process Cards – Measure and Focus Motivated workforce Values – What is important to us
Key Implementation Success Factors… Obtaining executive sponsorship and commitment Involving a broad base of leaders, managers and employees in scorecard development Choose the right Scorecard Champion Beginning interactive (two- way) communication first Viewing the scorecard as a long-term journey rather than a short-term project Getting outside help if needed
The Successful Scorecard Is a dynamic process – continues to set higher targets and achieves them – Define jobs strategically from the perspective of where it fits in with the strategic business goals Supports joint decision making about what you do/don’t do based on strategic goals
Scorecard PotentialPitfalls & Criticisms Lack of a well Defined Strategy The balanced scorecard relies on a well defined strategy and understanding of linkages between strategic objections and metrics. Without this foundation the implementation could fail. Too much focus on the lagging measures Focusing on only the lagging measures may cause a lack of priority or opportunity for the leading measures. Use of Generic Metrics Don’t just copy metrics from another firm. Identify the measures that apply to your strategy and competitive position . Self-serving managers Managers whose goal is to achieve a desired result in order to obtain a bonus or other self reward.