The document discusses barriers to implementing strategy and how a balanced scorecard can help overcome those barriers. It outlines common barriers like strategies not being understood, lack of alignment between goals/incentives and strategy, and budgets/resources not linked to strategy. It then presents how a balanced scorecard can help by linking incentives to execution, aligning budgets with strategy, and spending more time on strategy. The balanced scorecard provides a framework to translate strategies into objectives and measures across financial, customer, internal process, and learning/growth perspectives.

1. Balanced Scorecard Achieving Vision by Translating Strategy into ACTIONS!

2. Non Financial Factors Influencing Shareholders Valuation Strategy Execution Management Credibility Quality of Strategy Innovation (New Product) Attract Talented People Source : “Measures That Matter”

3. The Odd of Execution Can you beat the odd? Less than 10% of strategis effectively formulated are effectively executed In the majority of failures – we estimate 70% - the real problem isn’t bad strategy, it is bad execution Source: Fortune Magazine

4. Why is It So Hard in Implementing Strategy?

5. Barriers in Implementing Strategy Strategy Barrier Strategy is not understood by those who must implement it. (Only 5 % of the workforce understood) People Barrier People goals, incentives and competencies are not linked to strategy. (Only 25% of managers have incentives linked to strategy) Strategy is not everyone’s everyday job…

6. Barriers in Implementing Strategy Resource Barrier Budgeting process is separated from strategic planning. (60% of organization don’t link budgets to strategy) Management Barrier Management systems are designed for operational. Little time is spent on strategy. (85% of executives team spend less than one hour per month) Strategy is not a continual process...

7. Our ACTIONS Communicate strategy Link incentive to strategy execution Link budget to strategy Spend more time on strategy Result

9. “ BSC provides management with the instrumentation they need to navigate to future competitive success”

10. Evolution of Balanced Scorecard 1996 2000 2003 2006 Strategic Communication Strategic Management

11. What is Strategy Strategy Formulation

12. Strategy Formulation Process Environment Analysis including Generic Environment Competitive Environment Organization’s Vision and Mission, Values, Beliefs Internal – External Analysis

13. The Four Perspective in BSC Key Strategic Theme in Each Perspective

14. Perspective of Balanced Scorecard

15. Balanced Scorecard Objectives Measures Initiatives Targets FINANCIAL Objectives Measures Initiatives Targets CUSTOMER Objectives Measures Initiatives Targets INT.BUSINESS PROCESS M, V, V, S Objectives Measures Initiatives Targets LEARNING & GROWTH A proven strategic management system that helps organizations to focus and manage their strategies , by providing a framework to translate Mission, Values, vision and strategy into a comprehensive set of performance indicators , and a tool to validate strategies

16. Developing Top Level Scorecard Translate strategies into strategic themes, and strategic objectives Create cause-effect linkage between strategic objectives Developing key outcome measures of each strategic objective Define and cascade performance driver of each outcome measure

17. Strategy Map: A Hypothesis of Strategy Strategy is a set of hypothesis about cause and effect . A good Balanced Scorecard’s Strategy Map should tell you your strategy .

18. Outcome Measures vs Driver Measures Definition Outcome Measures How do we know how well we are achieving our strategic objective? 12 to 20 measures Lagging Indicators Driver Measures What are the key success factors that will ensure the achievement of outcome measures? Many! Leading Indicators Scheduling Accuracy Part Availability On Time Delivery %

19. Outcome Measures vs Driver Measures Employee satisfaction Training plan vs. actual Infrastructure plan vs. actual Employee productivity Job skills coverage ratio Information availability vs. need Employee Satisfaction Employee skill Information availability Learning & Growth Number of rejects/rework ISO 9001 certification Availability of spare parts Number of warranty complaints Number of work done on the same visit Conformance to product specification Technical Support Internal Business Process Number of customer complain Customer satisfaction index Increase Product Quality Customer Revenue growth Profit margin Increase Revenue Financial Driver Measures Outcome Measures Strategic Objectives Perspective

20. Common Financial Measures ROI Return on Investment Sales growth by segment % of revenue from new products, services, and customers Dividends Net Profit Margin Debt to equity Inventory turnover ratio Revenue per employee Share Price

21. Common Customer Measures Product Leadership Brand awareness Help line calls per product Customer acquisition rates /number Percentage sales from new products Customer Intimacy Customer financial loss Rate of customer spending Customer lost Number of refferals from existing customers Complaints resolved at first contact Return rates Operational Excellence Average price vs. competitor’s Product availability / stockouts Customer complaints relating service Service errors

22. Common Business Process Measures Innovation New product introduction versus competitor New product introduction versus plan Time to develop next generation of products Time spent with lead user Operational Quality (rework, reject) Cycle time Cost After Sales Response time for resolution (waiting time) Training hours on client products Hours spent with customer

23. Common Learning-Growth Measures Human Capital Employee satisfaction Employee participation in professional associations Employee productivity Training hours Information Systems Duration of systems breakdown current availability of information relative to anticipated needs Motivation, Empowerment, and Alignment Measures of sugestion made and implemented Turnover rates/average years of service

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