The document discusses the balanced scorecard, a strategic planning and management system used by organizations to align business activities to their vision and strategy, improve internal and external communications, and monitor organizational performance against strategic goals. It was developed in the early 1990s by Drs. Robert Kaplan and David Norton as a performance measurement framework that added strategic non-financial performance measures to traditional financial metrics to give managers and executives a more 'balanced' view of organizational performance. The balanced scorecard has become one of the most widely used strategic management tools.

1. BALANCED SCORECARD
December 2009
Ersin EKER (eeker@thy.com)

2. Management Tools in 2008
USAGE Usage and Satisfaction
80%
Benchmarking Strategic Planning
70% CRM
Outsourcing
Mission and Vision Statements
Balanced Scorecard
55%
Core Competencies
Mergers and Acquisitons Business Process Reengineering
Supply Chain Management Strategic Alliances
Scenario & Contingency Planning
Knowledge Management Growth Strategy Tools
40% Shared Service Centers
Lean Six Sigma
TQM
Downsizing Online Communities
Voice of the Customer Innovation
Price Optimization Models
25% Collaborative Innovation
Loyalty Management Tools
Decision Rights Tools
10%
3.50 3.60 3.70 3.80 3.90 4.00 4.10
SATISFACTION
2 2 / 18
Source : Management Tools And Trends 2009, Bain & Company / 16

3. Management Tools in 2008
Largest Satisfaction Changes
2006 2008 2006 2008
mean mean rank rank
1 Balanced Scorecard 3.60 3.83 21 8
2 Lean Six Sigma* 3.66 3.87 18 5
3 Loyalty Management Tools 3.59 3.79 22 17
Mission and Vision
4 3.78 3.91 8 3
Statements
5 Growth Strategy Tools 3.75 3.87 13 5
*Called Six Sigma in 2006 Source : Management Tools And Trends 2009, Bain & Company 3 / 18
3 / 16

4. Intangible Assets in Industry
and Information Ages
75%
62%
38%
1982 1992 2002
4 / 18

5. One-dimensional to Multi-dimensional
Performance Measuring
 Today, the center of value creation has shifted from tangible assets to
intangibles such as
 Customer relations
 Innovative products and services
 High quality and responsive business processes
 Information technologies and customer databases
 Employee capabilities, skills and motivation
 One-dimensional financial-based models measure past performance and
sacrifice long term to short term results and fail to successfully measure the
performance of today’s firm.
• One of the most widespread multi-dimensional performance measurement
models is the Balanced Scorecard (BSC), which was invented in 1992 by Drs.
David Norton and Robert Kaplan.
5 / 18

6. World Countries Investing
in Intellectual Property
Resource-Poor Countries 1970 GDP per Capita 2007 GDP per Capita
South Korea 1.954 19.751
Taiwan 2.987 16.606
Singapore 4.438 35.163
Hong Kong 5.695 29.660
Israel 8.102 22.475
Denmark 12.685 57.261
Turkey 506 9.629
Resource-Rich Countries 1970 GDP per Capita 2007 GDP per Capita
Indonesia 1.194 1.925
Nigeria 1.233 1.159
Former USSR 5.569 (Russia) 9.075
Saudi Arabia 7.624 15.481
Venezuela 10.672 8.596
Source: A. Maddison, The World Economy: A Millennial Perspective. Numbers are in constant 1990 dollars.
6 / 18

7. Balanced Scorecard Framework
CUSTOMER FINANCIAL
How do we exceed What do our customers/
customer/stakeholder stakeholders look for in
expectations? financial results?
STRATEGY
LEARNING & GROWTH INTERNAL PROCESSES
What skills, tools, and What process do we
culture are required to need to improve to fulfill
perform these processes? these expectations?
7 / 18

8. Build Strategy-Focused Organization
•M o b i l i z a t i o n
•Gov ernanc e Proc ess MOBILIZE CHANGE
•Strategic Management THROUGH
EXECUTIVE
LEADERSHIP
•Link Budgets & Strategy
•S t r a t e g i c L e a r n i n g
•Analysis & Inform. System
TRANSLATE MAKE
•S t r a t e g y M a p STRATEGY STRATEGY A
•Balanced Scorecards INTO CONTINUOUS
OPERATIONS PROCESS
STRATEGY
ALIGN
•C o r p o r a t e R o l e sORGANIZATION
MAKE STRATEGY
•Business Unit Synergies TO STRATEGY EVERYONE’S JOB
•Strategic Awareness
•Support Unit Synergies •Personal Scorecards
•Balanced Paychecks
8 / 18

9. Performance measuring
- a tool to measure strategic
performance under perspectives
financial, customer, internal processes
and learning & growth
Strategy communication (strategy maps)
- a tool to communicate corporate
Balanced strategies from top management
Scorecard down to the floor by means of
strategy maps
Strategy implementation
- a tool to implement corporate strategies
by aligning distributed day-to-day activities
with strategic goals and objectives 9 / 18

10. Generic Strategy Map
Increase Shareholder Value
Financial
PRODUCTIVITY STRATEGY REVENUE GROWTH STRATEGY
Perspective
Improve Increase Enhance Expand Revenue
cost structure asset utilization customer value Opportunities
CUSTOMER VALUE PROPOSITION
Customer
Perspective
Price Quality Availability Selection Functionality Service Partnership Brand
PRODUCT / SERVICE ATTRIBUTES RELATIONSHIP IMAGE
Operations Management Customer Management Innovation Regulatory & Social
Processes
Perspective Processes that produce Processes that enhance Processes that create Processes that improve
and deliver products and customer value new products and communities and the
services services environment
CREATING
CREATING READINESS
ALIGNMENT
Strategic Job Families Strategic IO Portfolio Organization Change Agenda
Learning and
Human Capital
Skills
 Information Capital
Systems
 Organization Capital
Growth Culture Alignment
Training Databases
Leadership Teamwork
Knowledge Networks 10 / 18

11. Alignment through
Balanced ScoreCard
All organizational activities support strategic objectives
Strategic
objectives
& goals
Plan, processes, actions, initiatives, decisions
11 / 18

12. MISSION
Why We Exist
VALUES
What’s important to us
VISION
What we want to be
STRATEGY
Our game plan
BALANCED SCORECARD
Translate, Focus and Align
STRATEGIC INITIATIVES
What are the priorities
TOTAL QUALITY MANAGEMENT
What we must improve
EMPOWERMENT / PERSONAL OBJECTIVES
What I need to do
STRATEGIC OUTCOMES
Satisfied Delighted Efficient and Effective Motivated and Prepared
SHAREHOLDERS CUSTOMERS PROCESSES WORKFORCE
12 / 18

13. BSC Aligns & Focuses
All Resources on Strategy
Executive Team
Business Units
STRATEGY
Information
Human Resources Technology
Budgets & Capital
Investments
13 / 18

14. 6 EVA EFQM
Sigma
TQM
3rd Generation Balanced Scorecard is an umbrella concept
that links together organizational philosophies and
management tools
Source : Performance Management & 3rd Generation Balanced Scorecard, http://www.2gc.co.uk 14 / 18

15. BALANCED SCORECARD –
QUALITY (6 SIGMA) COLLABORATION
Process Classification
“Quality (6 Sigma)
teaches you HOW TO
Improve to Maintain High
Strategic
fish.
Levels of Quality Levels
The Balanced Scorecard
Quality
Excellence teaches you WHERE TO
fish.”
BSC ASSESSMENT
Improve to Potential to Cut
Vital
Minimum Back Current
Acceptable Investment
Quality Levels
Needs Improvement Excellent
QUALITY ASSESSMENT
15 / 18

16. BSC Allows You
To Do the Right Things Right
Balanced
Scorecard
Objectives
Business Strategy-Focused
Excellence Management
-100
-200
-1000
Time (TBM)
Quality (TQM) Do Things Right Do the Right Things
Cost (ABM)
16 / 18

17. MOBIL NAM&R’s Relative Profitability,
1990-1998
+
MOBIL
Profitability: 100%
Cents per gallon
(percent above 80%
Industry 56%
60%
average)
42%
40% 34%
23%
20%
0 1990 1991 1992 1993 1994 1995 1996 1997 1998
-3% -3%
MOBIL -13% -14%
-20%
Profitability: New Strategy and
-40% Balanced Scorecard
Cents per gallon
(percent below introduced
-60%
Industry
average) -80%
-100% -92%
#4 #3 #6 #6 #6 #1 #1 #1 #1
- MOBIL Industry
Ranking
17 / 18

18. 1 Balanced Scorecard, Paul Niven,
2nd Edition.
Execution Premium, Robert S.
2 Kaplan, David P. Norton
Strategy-Focused Organization, Robert S.
3 Kaplan, David P. Norton
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