1. BUILDING A STRATEGY FOCUSED ORGANIZATION
WITH THE BALANCED SCORECARD
Introduction to Basic Concepts
Ng Aung San
Vice President & Head (Strategy & Organization)
1

2. QUOTE…
“ Strategy without tactics is the slowest
route to victory. Tactics without
strategy is the noise before defeat.
”
Sun Tzu
The Art of War
2

3. Content
1. Overview of BSC 3. Customizing BSC to
Architecture Strategy
2. Closer look at Internal
Process Clusters
3

4. BSC Perspectives
#1 - Financial
§ Defines the tangible outcome of strategy in
traditional Financial terms
§ How does success look like?
#2 - Customer (External)
§ Defines the Value Proposition for target
existing and potential customers segments
§ How can we become a Magnet company?
#3 - Channel Partners (Int. Customers)
§ Defines the Value Proposition for existing
and potential channel partners/ agents
§ How can we become a Magnet company?
#4 - Business Model/ Int. Processes
§ Defines the Vehicle for delivering the Value
Proposition
§ How can deliver on our promise?
#5 - Organization Learning & Growth
§ Defines the organization s intangible assets
§ How can we align assets to support Business
Model and Mobilize and sustain change?
4

5. #1 Financial Perspective
Elaboration on Financial Perspective
§ Summarizes readily measurable economic consequences
of actions already taken.
§ Typically comprise two broad drivers:
§ Productivity driver (Improve cost structure/
Enhance asset yield)
§ Revenue Growth driver (Expand revenue
opportunities / Enhance customer value)
#1 - Financial
§ Defines the tangible outcome of strategy in Financial Measures
traditional Financial terms
Two distinct categories of Measures
§ How does success look like? § Productivity measures
§ Revenue growth measures
Examples of Productivity measures
§ Total Assets
§ Return on net assets/ total assets
§ Gross margin/ NPAT
§ Profit as % of Sales
§ Profit/ Value added per employee
§ Return on Equity/ Return on investments
§ Market capitalization/ Share price/ Dividends
§ Credit Rating
Examples of Revenue Growth measures
§ Total/ New Business Premiums (existing/ new sources)
§ New Business Embedded Value (existing/ new sources)
5

6. #2 Customer Perspective
Elaboration on Customer Perspective
§ Identifies the markets and customer segments that
organization will serve and compete
§ Identifies the differentiated Value Propositions that the
organization will offer to target market and customer
segment
#2 - Customer (External)
§ Defines the Value Proposition for target existing Customer Measures
and potential customers segments
Two distinct categories of Measures
§ How can we become a Magnet company?
§ Measures of performance in markets and target
customers
§ Measures of Value Propositions organization will offer to
target customers
Examples of Customer Performance Measures
§ Share in target Market and Customer segments
§ Market and Customer segment profitability
§ Sales Volume/ Sales Volume per channel
§ No. of Customers
§ Target customer acquisition/ retention rates
§ Percentage of revenue from New Customers
§ Target customer segments complaints/ compliments
§ Brand recognition/ awareness in target customer
segments
Customer Value Proposition Measures
§ Measures of elements of value propositions to be
delivered
6

7. #3 Channel Partner Perspective
Elaboration on Channel Partner Perspective
§ Identifies the channel partners which organization can
partner and work with
§ Identifies the differentiated Value Propositions that the
organization will offer to channel partners
#3 - Channel Partners (Int. Customers)
§ Defines the Value Proposition for existing Customer Measures
and potential channel partners/ agents
Two distinct categories of Measures
§ How can we become a Magnet company? § Measures of performance in target channels
§ Measures of Value Propositions organization will offer to
channel partners
Examples of Channel Partner Performance Measures
§ Channel product volume/ product mix
§ Channel productivity/ profitability
§ Channel market share
§ Channel customer acquisition/ retention rates
§ Channel development/ growth
§ Percentage of revenue from new channels
§ Channel complaints/ compliments
§ Channel scorecard/ survey feedback
Channel Partner Value Proposition Measures
§ Measures of elements of value propositions to be
delivered
7

8. #4 Business Model Perspective
Elaboration on Business Model Perspective
§ Describes how organization will deliver its customer and
channel partner value propositions
§ Identifies related process clusters that make up the
organization. Broadly grouped into three process clusters:
§ Operations Management cluster - Producing and
delivering products to customer
§ Customer Management cluster - Establishing and
#4 - Business Model/ Int. Processes leveraging relationship with customers
§ Innovation processes cluster - Developing new
§ Defines the Vehicle for delivering the Value products, services, processes and relationships
Proposition
§ How can deliver on our promise?
Business Model/ Internal Process Measures
Examples of Operations Management measures
§ Cost of key operating processes
§ Marketing, selling, administrate expense as % of total costs
§ No. of processes with substantial improvements
§ Cycle time
Examples of Customer Management measures
§ No. of referrals/ Percentage of leads converted
§ Customer response rate to campaigns
§ No. of products per customer/ Depth of relationship
§ Costs per new customer acquired
Examples of Innovation measures
§ Time to Market/ Percentage of product launches on-time
§ No. of new products first-to-market
§ No. of new applications from platform products
§ No. of joint collaborative new product projects
8

9. #5 Learning & Growth Perspective
Elaboration on Learning & Growth Perspective
§ Defines organization s intangible asset and their role in
strategy. Intangible assets classified into three categories:
§ Human capital - Skills, talents and know how to
perform activities, required by strategy
§ Information capital - Information systems and
infrastructure required to support the strategy
§ Organization capital - Culture, Leadership,
#5 - Organization Learning & Growth Alignment and Teamwork
§ Defines the organization s intangible assets
§ How can we align assets to support Business
Model and Mobilize and sustain change? Business Model/ Internal Process Measures
Examples of Human Capital readiness measures
§ Training investment per employee/ Training hours
§ Competency coverage ratio
§ % of employees with advanced degrees
§ Number of cross-trained employees
§ Best practice sharing
Examples of Information Capital readiness measures
§ Strategic information ratio
§ Knowledge management index
Examples of Organizational Capital readiness measures
§ Span of control per manager
§ Quality of work environment
§ Motivation index
§ Turnover rate/ Absenteeism
§ Strategic awareness
9

10. BSC comprise two main related elements – Strategy Map and
Scorecard
Strategy Map Scorecard
§ Visual representation of the cause-and-effect § Translates objectives in strategy map into
relationships that connects desired Financial, measures of success and targets, across
Customer and Channel Partner outcomes respective financial/ non financial and
with the Business Model drivers that will internal/ external perspectives.
transform intangible assets into these
outcomes § Organizes in a structured way, bundles of
aligned strategic initiatives – action plans
and scarce resources e.g. people, funding
§ Functions as a checklist for strategy s
and capacity – required to meet targets for
granular components and interrelationships respective measures, and achieve objectives
– Missing components usually indicate
incomplete or flawed strategy § Functions as a checklist and resource
deployment decision tool for strategic
§ Provides an uniform and consistent way to initiatives – emphasis/ coverage of action
describe strategy, so that objectives across plans and targeted allocation of resources.
all perspectives and measures can be
established and managed – through the § Provides a cohesive, integrated and
Scorecard systematic way to manage effective
implementation of strategy
10

11. BSC Strategy Map depicts chain of cause-and-effect
relationships
VISION Guided by and to achieve our Vision…
… To achieve #1 - Financial
Top-down
our financial
success, and
…What is the desired financial Thinking & Logic
§ Defines the tangible outcome of goals we have to achieve…
our Vision strategy in traditional Financial terms
§ How does success look like?
… And, together
with Channel #2 - Customer (External) …What is the unique set of benefits we will
Partners, to our § Defines the Value Proposition for target offer to customers for their patronage...
Customers… existing and potential customers segments
§ How can we become a Magnet company?
#3 - Channel Partners (Int. Customers) …And our channel partners for
… Needed to deliver their partnership...
Value Proposition to
§ Defines the Value Proposition for existing
Channel Partner,… and potential channel partners/ agents
§ How can we become a Magnet company?
#4 - Business Model/ Int. …What do we have to do to
… To build strategic ensure consistent delivery of
capabilities to effectively Processes value propositions…
execute the processes … § Defines the Vehicle for delivering the
Value Proposition
§ How can deliver on our promise?
Bottom-Up #5 - Organization Learning & Growth
Test & Linkage § Defines the organization s intangible
…And what
assets do we
Align and enhance our
Organizational Assets… assets have to develop
§ How can we align assets to support
Business Model and Mobilize and sustain
change?
11

12. Financial perspective provides definition of success or value
in tangible financial terms
Financial
Perspective Sustain growth in
Shareholder Value
Productivity Strategy Revenue Growth Strategy
§ NPAT § ROE/ ROI § NBEV/ Premiums from new § NBEV/ Premiums
§ Expenses § Investment returns products, markets & segment § NBEV/ Prems. per Customer
Improve Cost Enhance Expand Revenue Enhance
Structure Asset Yield Opportunities Customer Value
Typical Objectives
§ Lower direct and § Reduce working and fixed § Tap into new sources of § Deepen relationship with
indirect expenses capital needed to support revenue (new products, existing customers
business markets, segments)
§ Improve investment yield § Tap into new channels
12

13. Customer perspective identifies value proposition to be a
magnet company to External Customers
Sustain growth in
Financial Shareholder Value
Perspective Productivity Strategy Revenue Growth Strategy
Improve Cost Enhance Expand Revenue Enhance
Structure Asset Yield Opportunities Customer Value
Customer (External) § Customer profitability § Market Share § Customer § Customer
Perspective § Segment profitability § Segment Share Acquisition Retention
CUSTOMER VALUE PROPOSITION
Product/ Service Attributes Relationship Image
Price Quality/ Selection Functionality/ Reputation
Returns Availability Features Service
§ Product Price/ § Bonus Levels § Distribution § Range of § Product § Quality & § Brand Strength &
Pricing § Yields/ Channels/ Product Lines Features/ Coverage of § Financial Strength
Investment Reach Quality Support/ & Ratings
Returns Service
§ Identifies the customer and market segments in § Unique configuration of seven pillars of Customer
which organization will serve and compete Value Proposition differentiates organization:
§ Identifies two distinct types of measures: § What company expects to do for its customers
better or differently than its competitors
§ Measures of value propositions organization
will deliver to target customers § What draws customers to our company
§ Measures of performance in the target
segments § Customers perceive where company stands, in
relation to each of seven pillars, and decides on
patronage
13

14. Channel partner perspective identifies value proposition to
be a magnet company to Channel Partners
Sustain growth in
Financial Shareholder Value
Perspective Productivity Strategy Revenue Growth Strategy
Improve Cost Enhance Expand Revenue Enhance
Structure Asset Yield Opportunities Customer Value
Customer Customer Value Proposition
(External) Product/ Service Attributes Relationship Image
Perspective Quality/ Functionality/
Price Availability Selection Service Reputation
Returns Features
Channel Partner (Agency) § Agent Business Volume/ Mix § Agents Recruited § No. of Agents on
Perspective § Agent Productivity § Agent Attrition Management Path
CHANNEL VALUE PROPOSITION
Sales Production Support Growth & Development Support
Product Range Sales Support Brand Support Career & Agency
Admin Support Comp. Mgmt. Support
§ Identifies the channel partners which § Unique configuration of six pillars of Channel Value
organization can partner and work with Proposition differentiates organization:
§ Identifies two distinct types of measures: § What company expects to do for its channel
partner better or differently than its competitors
§ Measures of value propositions
organization will deliver to target § What draws existing partners/ agents to stay with
channel partners/ agents us and new partners/ agents to join us.
§ Measures of performance in the target
channels § Channel partners/ agents perceive where company
stands, in relation to each of six pillars, and decides on
partnership
14

15. Internal Processes/ Business perspective defines vehicle to
deliver on Value Propositions…
Sustain growth in
Financial Shareholder Value
Perspective Productivity Strategy Revenue Growth Strategy
Improve Cost Enhance Expand Revenue Enhance
Structure Asset Yield Opportunities Customer Value
Customer Customer Value Proposition
(External) Product/ Service Attributes Relationship Image
Perspective Quality/ Functionality/
Price Availability Selection Service Reputation
Returns Features
Channel Partner Channel Value Proposition
Perspective
Sales Production Support Growth & Development Support
Product Range Sales Support Brand Support Career & Agency
Admin Support Comp. Mgmt. Support
Internal Process
Perspective
Customer Mgmt. Innovation Processes Operations Mgmt. Regulatory & Social
Processes Processes Processes
Process which expand and Processes which develop new products, Basic, day to day processes by Processes which help organizations
deepen relationships with processes and services, to enable which companies produce their continually earn the right to
targeted customers company to penetrate new markets existing products and deliver operate in communities and
and customer segments them to customers countries in which they operate
§ Identifies Four Process clusters that make § Business Model enables organization to deliver on
up the organization elements of value propositions.
§ Changes to value propositions requires corresponding
changes to business model
15

16. … And groups Organization s myriad existing and new
processes into four Clusters
Sustain growth in
Financial Shareholder Value
Perspective Productivity Strategy Revenue Growth Strategy
Improve Cost Enhance Expand Revenue Enhance
Structure Asset Yield Opportunities Customer Value
Customer Customer Value Proposition
(External) Product/ Service Attributes Relationship Image
Perspective Quality/ Functionality/
Price Availability Selection Service Reputation
Returns Features
Channel Partner Channel Value Proposition
Perspective
Sales Production Support Growth & Development Support
Product Range Sales Support Brand Support Career & Agency
Admin Support Comp. Mgmt. Support
Internal Process
Perspective
Customer Mgmt. Innovation Processes Operations Mgmt. Regulatory & Social
Processes Processes Processes
Process which expand and Processes which develop new products, Basic, day to day processes by Processes which help organizations
deepen relationships with processes and services, to enable which companies produce their continually earn the right to
targeted customers company to penetrate new markets existing products and deliver operate in communities and
and customer segments them to customers countries in which they operate
§ Customer Selection § Opportunity Identification § Supply § Environment
§ Customer Acquisition § R&D Portfolio § Production § Safety and Health
§ Customer Retention § Design/ Develop § Distribution § Employment
§ Customers Growth § Launch § Risk Management § Community
16

17. Learning & Growth perspective defines and aligns
organization s intangible assets, completing Strategy Map
Sustain growth in
Financial Shareholder Value
Perspective Productivity Strategy Revenue Growth Strategy
Improve Cost Enhance Expand Revenue Enhance
Structure Asset Yield Opportunities Customer Value
Customer Customer Value Proposition
(External) Product/ Service Attributes Relationship Image
Perspective Quality/ Functionality/
Price Availability Selection Service Reputation
Returns Features
Channel Partner Channel Value Proposition
Perspective
Sales Production Support Growth & Development Support
Product Range Sales Support Brand Support Career & Agency
Admin Support Comp. Mgmt. Support
Internal Process
Perspective
Customer Mgmt. Innovation Processes Operations Mgmt. Regulatory & Social
Processes Processes Processes
§ Customer Selection § Opportunity Identification § Supply § Environment
§ Customer Acquisition § R&D Portfolio § Production § Safety and Health
§ Customer Retention § Design/ Develop § Distribution § Employment
§ Customers Growth § Launch § Risk Management § Community
Learning & Growth
Perspective Organization s Intangible Assets
Human Capital Information Capital Organizational Capital
§ Skills/ Talent § Systems § Culture
§ Knowledge § Databases § Leadership
§ Capabilities § Networks § Alignment/ Teamwork
17

18. Closer look at Human Capital Readiness – Strategic Job
Families, Headcount, Knowledge, Skills & Capabilities
Sustain growth in
Financial Shareholder Value
Perspective Productivity Strategy Revenue Growth Strategy
Improve Cost Enhance Expand Revenue Enhance
Structure Asset Yield Opportunities Customer Value
Customer Customer Value Proposition
(External) Product/ Service Attributes Relationship Image
Perspective Quality/ Functionality/
Price Availability Selection Service Reputation
Returns Features
Channel Partner Channel Value Proposition
Perspective
Sales Production Support Growth & Development Support
Product Range Sales Support Brand Support Career & Agency
Admin Support Comp. Mgmt. Support
Internal Process Perspective
Customer Mgmt. Innovation Processes Operations Mgmt. Regulatory & Social
Processes Processes Processes
Learning & Growth
Perspective (illustrative for Human Capital Readiness – Identify Strategic Job Families)
Operations Marketing BD
Underwriters Executives Underwriters Executives BD Executives
(No.) (No.) Executives (No.) ??? ??? ???
(No.) (No.) (No.)
Competency Profile
§ Knowledge
List the Knowledge & Skills Required by various Strategic Job Families identified above
§ Skills
Readiness Assessment (Assess HC Readiness in terms of adequacy of Headcount, required level of Knowledge & Skills)
XX% XX% XX% XX% XX% XX% XX% XX% XX%
18

19. Strategy comprise complementary strategic themes that cut
across respective perspectives
Sustain growth in
Financial Shareholder Value
Perspective Productivity Strategy Revenue Growth Strategy
Improve Cost Enhance Expand Revenue Enhance
Structure Asset Yield Opportunities Customer Value
Strengthen franchise for sustainable growth
Customer Customer Value Proposition
(External) Product/ Service Attributes Relationship Image
Perspective Quality/ Functionality/
Price Availability Selection Service Reputation
Returns Features
Channel Partner Channel Value Proposition
Transform Product Mix
Perspective
Sales Production Support Growth & Development Support
Product Range Sales Support Brand Support Career & Agency
Admin Support Comp. Mgmt. Support
Deliver profit
Internal Process
Perspective
Customer Mgmt. Innovation Processes Operations Mgmt. Regulatory & Social
Processes Processes Processes
§ Customer Selection § Opportunity Identification § Supply § Environment
§ Customer Acquisition § R&D Portfolio § Production § Safety and Health
§ Customer Retention § Design/ Develop § Distribution § Employment
§ Customers Growth § Launch § Risk Management § Community
Learning & Growth
Perspective § Organization s Intangible Assets
Human Capital Information Capital Organizational Capital
§ Skills/ Talent § Systems § Culture
§ Knowledge § Databases § Leadership
§ Capabilities § Networks § Alignment/ Teamwork
19

20. BSC Scorecard translates Strategy objectives into Measures,
Targets and Owners…
Strategy Map (Strategic Business Unit) Scorecard
Theme: TRANSFORM PRODUCT MIX Objectives PI/ KPIs Target Owner
§ Deliver targets § NBEV/ Premiums § $ XXX § ABC
Perspective
Financial
NB EV § Increase new § Market share § $ XXX § DEF
segment revenues § Premiums from new segments § GHJ
Desired Desired § $ XXX
§ Increase wallet share § Share of wallet § KLM
Volume Mix § $ XXX
§ Increase # of § Depth of customer relationship § $ XXX § ABC
Competent competent planners § DEF
Perspective
§ % of premiums from referrals § $ XXX
Customer
Planners § Deliver consistent/ § Returns/ bonus § GHJ
§ $ XXX
Competitive Innovative competitive returns/ § # of NTM features § KLM
§ $ XXX
Returns features bonus
§ NTM product features
§ Enhance product § # of NTM Products § $ XXX § ABC
Business Model Channel Partner
Innovative range § # of Sales Leads § $ XXX § DEF
Perspective
Products/ Range § Provide Customer § % selling Linked/ NP products § $ XXX § GHJ
knowledge § KLM
Sales Brand § Linked/ NP Case Count & Size § $ XXX
§ Increase channel
Support Support focus & productivity May be delivered also by
§ Strengthen brand Shared Support Units
Channel § Enhance Operations/ § Service levels § $ XXX § ABC
Reliability Innovation
Perspective
Partner Asset Mgmt. reliability § Investment returns § $ XXX § DEF
§ Enhance consistency § Peer/ Industry product rankings § $ XXX § GHJ
Product Product Product of investment returns § KLM
§ Various process indicators § $ XXX
Fulfillment Dist. Innovation § Develop Product
Innovation process May be delivered also by
FOCUS Shared Support Units
§ Develop/ hire to § HC readiness § $ XXX § ABC
Perspective
Strategic Job Cross Function obtain capabilities § Product creation effectiveness § $ XXX § DEF
Families Alignment
L&G
§ Align product creation § Segment knowledge § $ XXX § GHJ
§ Tap CRM § Partner value add § $ XXX § KLM
Strategic IT Strategic
Systems collaborations § Extend through
collaborations
20

21. ...And Business Model and Organizational Assets Initiatives
to deliver on Strategy Objectives and Targets
Strategy Map (Strategic Business Unit) Scorecard Initiatives
Theme: TRANSFORM PRODUCT MIX Objectives PI/ KPIs Target Owner Initiatives/ Activities
§ Deliver targets
Perspective
OUTCOME OF BUSINESS
Financial
NB EV § Increase new
segment revenues MODEL & ORGANIZATIONAL
Desired Desired § Increase wallet share ASSET INITIATIVES &
Volume Mix ACTIVITIES
§ Increase # of
Competent
Perspective
competent planners OUTCOME OF BUSINESS
Customer
Planners § Deliver consistent/ MODEL & ORGANIZATIONAL
Competitive Innovative competitive returns/ ASSET INITIATIVES &
Returns features bonus ACTIVITIES
§ NTM product features
§ Enhance product
Business Model Channel Partner
Innovative range
Perspective
Products/ Range OUTCOME OF BUSINESS
§ Provide Customer
knowledge MODEL & ORGANIZATIONAL
Sales Brand ASSET INITIATIVES &
Support § Increase channel
Support focus & productivity ACTIVITIES
§ Strengthen brand
May be executed also by
Shared Support Units
Channel § Enhance Operations/ § Product Fulfillment Process
Reliability Innovation
Perspective
Partner Asset Mgmt. reliability Initiative #1, #2, #3
§ Enhance consistency § Product Distribution Process
Product Product Product of investment returns Initiative #1, #2, #3
Fulfillment Dist. Innovation § Develop Product § Product Innovation Process
FOCUS Innovation process May be executed also by Initiative #1, #2, #3
Shared Support Units
§ Develop/ hire to § HC Initiative #1, #2, #3
Perspective
Strategic Job Cross Function obtain capabilities § IT Initiative #1, #2, #3
Families Alignment
L&G
§ Align product creation § Alignment Initiative #1, #2, #3
Strategic IT Strategic § Tap CRM § Strategic Collaboration
Systems collaborations § Extend through Initiative #1, #2, #3
collaborations
21

22. Resources are then planned and committed to implement
Business Model and Organizational Asset Initiatives
Strategy Map (Strategic Business Unit) Scorecard Initiatives Resources
Theme: TRANSFORM PRODUCT MIX Objectives PI/ KPIs Target Owner Initiatives
§ Deliver targets
Perspective
Financial
NB EV § Increase new
segment revenues OUTCOME N.A.
Desired Desired § Increase wallet share
Volume Mix
§ Increase # of
Competent
Perspective
competent planners
Customer
Planners § Deliver consistent/
competitive returns/ OUTCOME N.A.
Competitive Innovative
Returns features bonus
§ NTM product features
§ Enhance product
Business Model Channel Partner
Innovative range
Perspective
Products/ Range § Provide Customer
knowledge OUTCOME N.A.
Sales Brand
Support § Increase channel
Support focus & productivity
§ Strengthen brand
May reside in/ committed
by Shared Support Units
Channel § Enhance Operations/ § Initiative #1 § $ XXX/
Reliability Innovation
Perspective
Partner Asset Mgmt. reliability § Initiative #2 Headcount
§ Enhance consistency § Initiative #3 § $ XXX/
Product Product Product of investment returns Headcount
§ Initiative #4
Fulfillment Dist. Innovation § Develop Product § $ XXX/
FOCUS Innovation process May reside in/ committed Headcount
by Shared Support Units
§ Develop/ hire to § Initiative #1 § $ XXX/
Perspective
Strategic Job Cross Function obtain capabilities Headcount
§ Initiative #2
Families Alignment
L&G
§ Align product creation § Initiative #3 § $ XXX/
§ Tap CRM Headcount
Strategic IT Strategic § Initiative #4
Systems collaborations § Extend through § $ XXX/
collaborations Headcount
22

23. Content
1. Overview of BSC 3. Customizing BSC to
Architecture Strategy
2. Closer look at Internal
Process Clusters
23

24. Closer look at Internal Processes - BSC groups an
Organization s myriad internal processes into four Clusters
Cluster 1 - Customer Management Cluster
Understanding customers and value proposition that attracts them is fundamental to any strategy. Customer Management
Processes help company acquire, sustain, and grow long-term, profitable relationship with targeted customers, viz.:
1. Customer Selection – Identifying customer segments attractive to the company; Craft the value proposition to appeal to
these segments; Create a brand image that attracts customers in these segment to the company's products and
services
2. Customer Acquisition – Communicate the message to the market, secure prospects; Covert prospects to customers
3. Customer Retention – Ensure quality, correct problems; Develop loyalty in customers.
4. Growing Relationship with Customers – Get to know customers, build relationships with them; Increase the company s
share of targeted customers purchasing activity
Cluster 2 - Innovation Management Cluster
Processes that help companies create competitive advantage by bringing innovative products – well matched to target
customers needs – to the market fast and efficiently. Successful Innovation drive customer acquisition and growth and
margin enhancement and customer loyalty and includes four important processes, viz.
1. Identify opportunities for new product and services – Anticipating future customer needs; Developing more effective
product and services
2. Manage the research and development portfolio – Actively manage the product/ offer portfolio for superior innovation
and customer positioning, performance and profitability; Extend current product platforms into new and existing markets;
Extend product portfolio through collaboration
3. Design and develop new products and services- Concept development; Product planning; Detailed product and process
engineering
4. Bring the new products and services to market – Rapid launch of new products; Effective production of new products;
Effective marketing, distribution and sales of new products
24

25. Closer look at Internal Processes - BSC groups an
Organization s myriad internal processes into four Clusters
Cluster 3 – Operations Management Cluster
Operations Management Processes are the basic, day-to-day processes by which companies produce their existing
products and services and deliver them to customers.
Successful management of processes that deliver goods and services to customers vital in helping organizations improve
the cost, quality and responsiveness of critical processes, and includes four processes, viz.:
1. Develop and sustain supplier relationships
2. Produce products and services
3. Distribute and deliver products and services to customers
4. Manage Risk
Cluster 4 – Regulatory & Social Cluster
Regulatory and social processes help organizations continually earn the right to operate in the communities and countries in
which they produce and sell
25

26. Customer Management Processes
Sustain growth in
Financial Shareholder Value
Perspective Productivity Strategy Revenue Growth Strategy
Improve Cost Increase Expand Revenue Enhance Customer
Structure Asset Utilization Opportunities Value
Customer Customer Value Proposition
(External) Product/ Service Attributes Relationship Image
Perspective
Price Quality/ Selection Functionality/ Reputation
Returns Availability Features Service
Channel Value Proposition
Channel
Partner Sales Production Support Growth & Development Support
(Agency) Product Quality/ Sales Support Brand Support Agency Mgmt.
Range Admin Support Career & Comp. Support
Perspective
Business Model (Int. Process)
Perspective
Customer Mgmt. Innovation Processes Operations Mgmt. Regulatory & Social
Processes Processes Processes
§ Customer Selection § Opportunity Identification § Supply § Environment
§ Customer Acquisition § R&D Portfolio § Production § Safety and Health
§ Customer Retention § Design/ Develop § Distribution § Employment
§ Customers Growth § Launch § Risk Management § Community
Learning &Growth Perspective
Human Capital
Information Capital
Organizational Capital - Culture, Leadership, Alignment, Teamwork
26

27. Closer look at Customer Management Processes
Sustain growth in
Financial Shareholder Value
Perspective Productivity Strategy Revenue Growth Strategy
Improve Cost Increase Expand Revenue Enhance Customer
Structure Asset Utilization Opportunities Value
Customer Customer Value Proposition
(External) Product/ Service Attributes Relationship Image
Perspective
Price Quality/ Selection Functionality/ Reputation
Returns Availability Features Service
Channel Channel Value Proposition
Partner Sales Production Support Growth & Development Support
(Agency) Product Quality/ Agency Mgmt.
Sales Support Admin Support Brand Support Career & Comp.
Perspective Range Support
Business Model (Int. Process) Perspective
Customer Selection Customer Acquisition Customer Retention Customer Growth
§ Understand segments § Communicate Value Proposition § Premium Customer Svc § Cross-selling
§ Screen unprofitable customers § Customize mass marketing § Sole-Source partnerships § Solution selling
§ Target high value customers § Acquire/ convert leads § Service excellence § Partnering/ Integrated Mgmt.
§ Manage the brand § Loyal customers § Customer education
Learning & Growth Perspective
§ Market research § Telemarketing § Call centre protocols § Consultative sales skills
Human
Capital
§ Profitability analysis § Product line knowledge § Product line knowledge § Customer/ Industry knowledge
§ Market communication § Customer communications § Problem resolution § Product line knowledge
§ Partner management § Customer feedback
§ Customer database § Database marketing § Customer interaction centre § Customer information feedback
Information
Capital
§ Customer analytics § Lead management § Problem tracking system § Portfolio planning models
§ E-polling/ sampling § Sales force automation § Order Mgmt. System § Integrated order management
§ Customer profitability analysis § Web site design
§ Customer focused culture § Customer focused culture § Customer focused culture § Customer focused culture
Capital
Org
§ Personal goal alignment § Personal goal alignment § Personal goal alignment § Personal goal alignment
§ Best practice sharing § Best practice sharing § Best practice sharing § Best practice sharing
27

28. Closer look at Customer Management Processes
Perspective Objective Measure
§ Create new sources of revenue § Revenue from new customers
§ Increase revenue per customer § Share of wallet
Financial § Increase customer profitability § Profits per customer (ABC)
§ Improve sales productivity § Cost of sales by channel
§ Increase customer satisfaction with § % customers highly satisfied (survey)
value proposition § Customer retention
Customer § Increase customer loyalty § Depth of relationship
§ % business from customer referrals
§ Under customer segments § Contribution by segment/ Market share in target segment
§ Screen unprofitable customers § Percentage of unprofitable customers
Selection § Target high value customers § No. of strategic accounts
§ Manage the brand § Customer survey on Brand awareness/ preference
§ Communicate value proposition § Brand awareness (survey)
§ Customer mass marketing § Campaign response rate
Internal Process
Acquisition § Acquire new customers § No. of customer using promotions to sample product
§ Cost per customer acquired/ Life time value (est.) of customer acquired
§ No. of leads/ conversion rate
§ Provide premier customer service § No. of premier customers/ Time for customer to resolve concerns
§ Create sole source partnerships § No. of referrals to new customers
Retention § Provide service excellence § No. of new customer acquired from referrals by existing customers
§ Create highly loyal customers § % revenue from sole source
§ Service levels (by channel)
§ Cross selling § No. of products per customer
§ Solution selling § Cross market revenues
Growth § Partnering/ integrated management § No. jointly developed service agreements
§ Customer education § No./ $ from gain sharing agreements
§ Hours with customers
28

29. Closer look at Customer Management Processes
Perspective Objective Measure
§ Develop strategic competencies § Human capital readiness
Learning & Growth
Human § Attract and retain top talent § Key employee turnover
Capital
§ Develop strategic CRM portfolio § Application portfolio readiness
Information
§ Increase knowledge sharing § No. of Customer Knowledge Mgmt. System employees
Capital
§ Create customer focused culture § Customer survey
Organization
§ Create personal goal alignment § Employee objectives linked to BSC
Capital
29

30. Innovation Management Processes
Sustain growth in
Financial Shareholder Value
Perspective Productivity Strategy Revenue Growth Strategy
Improve Cost Increase Expand Revenue Enhance Customer
Structure Asset Utilization Opportunities Value
Customer Customer Value Proposition
(External) Product/ Service Attributes Relationship Image
Perspective
Price Quality/ Selection Functionality/ Reputation
Returns Availability Features Service
Channel Value Proposition
Channel
Partner Sales Production Support Growth & Development Support
(Agency) Product Quality/ Sales Support Brand Support Agency Mgmt.
Range Admin Support Career & Comp. Support
Perspective
Business Model (Int. Process)
Perspective
Customer Mgmt. Innovation Processes Operations Mgmt. Regulatory & Social
Processes Processes Processes
§ Customer Selection § Opportunity Identification § Supply § Environment
§ Customer Acquisition § R&D Portfolio § Production § Safety and Health
§ Customer Retention § Design/ Develop § Distribution § Employment
§ Customers Growth § Launch § Risk Management § Community
Learning & Growth
Perspective
Human Capital
Information Capital
Organizational Capital - Culture, Leadership, Alignment, Teamwork
30

31. Closer look at Innovation Management Processes
Sustain growth in
Financial Shareholder Value
Perspective Productivity Strategy Revenue Growth Strategy
Manage Total Life Revenue from Gross Margins:
Cycle Production Costs New Products New Products
Customer Customer Value Proposition
(External)
Perspective High Performance
First to Market Extend into
Products New Markets
Channel Value Proposition
Channel
Partner Sales Production Support Growth & Development Support
(Agency) Product Quality/ Sales Support Brand Support Agency Mgmt.
Range Admin Support Career & Comp. Support
Perspective
Business Model (Int. Process)
Perspective
Identify Opportunity Manage the Portfolio Design & Develop Launch
§ Anticipate customer needs § Choose and manage mix of § Supply § Environment
§ Discover new opportunities projects § Production § Safety and Health
§ Extend products to new § Distribution § Employment
applications
§ Risk Management § Community
§ Collaborate
Learning & Growth
Perspective
Human Capital Information Capital Organization Culture
Technology to explore, integrate Culture of Creativity
Multi-disciplinary Skills
and Speed to Market & Innovation
31

32. Closer look at Innovation Management Processes
Perspective Objective Measure
§ Revenue growth from existing customers § Revenues and margins from existing customer from product released
§ Revenue growth from new customers in last 12 months
Financial § Manage life cycle costs § Percent growth in sales to existing customers
§ Revenues and margins from new customers with new products
§ Maintenance cost as percent of total manufacturing costs
§ Offer enhanced product/ service § Specific performance attribute of new product/ service
functionality to customers § Lead time relative to competitors
§ First to market with new product service § No. of new products/ service first to market
Customer § Extend products/ services to new segments
§ Percent of products launches on time
§ No. of new application from platform products
§ Revenue from new markets and segments
§ Anticipate future customer needs § Time spent with key customers learning about their future
§ Discover and develop new, more effective opportunities and needs
Identify new products and services § Number/ percent of new projects launched based on client input
opportunities
§ Number of nee projects or concepts presented for development
§ Number of new value-added services identified
Internal Process
§ Actively mange the product portfolio for § Actual vs. desired mix of projects (advanced development, platform,
superior innovation and customer derivative and outsourced)
positioning, performance and profitability
§ Actual vs. desired spending on projects of each type
§ Extend current product platforms into new
and existing markets § Technology ranking (independent peer review of current technology
capabilities)
§ Extend product portfolio through
Manage the § Net present value of products in project pipeline
collaboration
R&D
Portfolio § No. of project leveraged from existing platforms that are targeted at
new markets
§ No. of life cycle extension projects
§ No. of licensed products
§ No. of joint projects in new or emerging markets
§ No. of technology or product partners 32