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Balanced Scorecard Translating Strategy into Action Contents:

Why do businesses need BSC BSC Framework Financial Perspective Customer Perspective Internal Business Process perspective Leadership and Growth perspective Structure and Deployments Some other related thoughts

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New Operating Environment      

Cross functional Linkage to Customer and Suppliers Customer Segmentation Global Scales Innovation Knowledge Worker

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Attempted Transformation in the new age         Total Quality Management Just in time distribution and delivery system Time based competition Lean operations Building customer focused organization Activity based cost management Employee empowerment Reengineering

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Why BSC
 Information age companies need to invest in and manage intellectual assets  Functional specialization are integrating into customer focused business processes.  Mass delivered products and services are getting customized to target individuals or segments.  Superior information technology, product and service innovation, reskilled employees will drive business.  Old and traditional does not inspire the new age.

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The bridge between leadership at the top & management of initiatives, process improvements and employees everyday actions
MISSION Why we exist VALUES Whats important to us VISION What we want to be STRATEGY Our game plan BALANCED SCORECARD Translate, Focus and Align STRATEGIC INITIATIVES Set priorities for the actions necessary to succeed TOTAL QUALITY MANAGEMENT Improve local processes EMPOWERMENT / PERSONAL OBJECTIVES Motivate employees

STRATEGIC OUTCOMES
Satisfied
SHAREHOLDERS

Delighted
CUSTOMERS

Efficient & Effective

PROCESSES

Motivated & Prepared

WORKFORCE

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BSC What is it
 Provides executives with a comprehensive framework that translates a companys vision and strategy into a set of performance measures.  Mission statement used to communicate fundamental values and beliefs.
To be the best successful company in Airlines business  It should be inspirational, should have energy and motivate the employees.  Slogans are not sufficient.  Personal vision should become a shared vision.

 All employees should have a clear goal and know what they are supposed to do

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Six Steps to Scorecard

 Step One- An assessment of the organizations foundation, its core
beliefs, market opportunities, competition, financial position, short and long term goals, and an understanding of what satisfies the customer

 Step Two- Development of overall business strategy. In large

organizations several overarching strategic themes are developed that contain specific business strategies

 Step Three- Decomposition of business strategy into smaller

components called objectives

 Step Four- Creation of the strategic map of the organizations overall business strategy.  Step Five- Development of performance measures to track both
operational and strategic progress

 Step Six- Identification of new initiatives

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Four Perspectives
    Financial Perspective Customer Perspective Internal Business Process Perspective Learning and Growth Perspective

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The Five Principles guiding the Strategy Focused Organization ( SFO)

2. TRANSLATE STRATEGY TO OPERATIONAL TERMS 2.1 Strategy map developed 2.2 Balanced Scorecard created 2.3 Targets established 2.4 Initiatives rationalized 2.5 Accountability assigned MOBILIZE CHANGE THROUGH EXECUTIVE LEADERSHIP 1.1 Top leadership committed 1.2 Case for change clearly articulated 1.3 Leadership team engaged 1.4 Vision and strategy clarified 1.5 New way of managing understood 1.6 Program manager identified
STRATEGY FOCUSSED 5. GOVERN TO MAKE STRATEGY ORGANIZATION A CONTINUAL PROCESS
5.1BSC reporting system established BEST 5.2 Strategic review meetings conducted PRACTICES 5.3 Planning, Budgeting and strategy integrated 5.4 HR and IT planning linked to strategy 5.5 Process management linked to 4. MOTIVATE TO MAKE strategy STRATEGY EVERYONES JOB 5.6 Knowledge sharing linked to 4.1 Strategic awareness created strategy 4.2 Personal goals aligned 5.7 Office of Strategy 4.3 Personal incentives aligned Management 4.4 Competency development aligned established

1.

3. ALIGN THE ORGANIZATION TO THE STRATEGY 3.1 Corporate role defined 3.2 Corporate SBUs aligned 3.3 SBU support units aligned 3.4 SBU external partners aligned 3.5 Board of directors aligned

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SFO PRINCIPLE 1: Mobilize Change through Executive Leadership

2. TRANSLATE STRATEGY TO OPERATIONAL TERMS 2.1 Strategy map developed 2.2 Balanced Scorecard created 2.3 Targets established 2.4 Initiatives rationalized 2.5 Accountability assigned MOBILIZE CHANGE THROUGH EXECUTIVE LEADERSHIP 1.1 Top leadership committed 1.2 Case for change clearly articulated 1.3 Leadership team engaged 1.4 Vision and strategy clarified 1.5 New way of managing understood 1.6 Program manager identified
STRATEGY FOCUSSED 5. GOVERN TO MAKE STRATEGY ORGANIZATION A CONTINUAL PROCESS
5.1BSC reporting system established BEST 5.2 Strategic review meetings conducted PRACTICES 5.3 Planning, Budgeting and strategy integrated 5.4 HR and IT planning linked to strategy 5.5 Process management linked to 4. MOTIVATE TO MAKE strategy STRATEGY EVERYONES JOB 5.6 Knowledge sharing linked to 4.1 Strategic awareness created strategy 4.2 Personal goals aligned 5.7 Office of Strategy 4.3 Personal incentives aligned Management 4.4 Competency development aligned established

1.

3. ALIGN THE ORGANIZATION TO THE STRATEGY 3.1 Corporate role defined 3.2 Corporate SBUs aligned 3.3 SBU support units aligned 3.4 SBU external partners aligned 3.5 Board of directors aligned

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Principles of the Strategy Focused Organization: Leaders Mobilize the Organization for Change Vision and Strategy Financial Perspective

Leaders

If we succeed, how will we look to our shareholders?

Inspire with the Vision Cope with Change in a Dynamic, Competitive Environment Stimulate New Ways of Thinking Help to Create the Differentiating, Sustainable Strategy Build Commitment to the Strategy among the Executive Team

Customer Perspective
To achieve my vision, how must I look to my customers?

Internal perspective
To satisfy customers and shareholders, at which processes must I excel

Organization Learning
How do I align my intangible assets to improve critical processes?

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BSC Provides a Framework to translate a strategy into Operational terms

Financial To succeed financially, how should we appear to our shareholders

Customer To achieve our vision, how should we appear to our customers?

Vision and Strategy

Internal Business Process To satisfy our shareholders and customers, what business processes must we excel at?

Learning and Growth To achieve our vision, how will we sustain our ability to change and improve?

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The Customer Perspective Core Measures

Market Share Customer Acquisition Customer Profitability Customer Retention

Customer Satisfaction
Market Share Customer Acquisition Customer Satisfaction Customer Profitability Reflects the proportion of business in a given market (in terms of number of customers, dollar spent, or unit volume sold) that a business unit sells. Measures, in absolute or relative terms, the rate at which a business unit attracts or wins new customers or business. Assesses the satisfaction level of customers along specific performance criteria within the value proposition. Measures the net profit of a customer, or a segment, after allowing for the unique expenses required to support that customer.

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The Internal Business Process Perspective The Operations Perspective

Post sale Service Process Service Customer the Need Customer Satisfied

Innovation Process Create the Product / Service Offering

Operations Process

Customer Need Identified

Identify the Market

Build the Deliver the Products/ Products / Services Services

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The Internal Scorecard Metro Bank

Value Chain
Innovation Process Operations Process Manage Risk Post sale Service Process

Customer Need Identified

Make the Market

Create the Product

Determine Channels

Market & Sell

Distribute & Service

Leverage RelationshipNeed

Customer Satisfied

Manage the Business

Strategic Themes

Target Profitable Segments Quality of Market Share (profitability by segment)

Match the Customer with the Channel % of Revenue from New Products Channel Transaction Mix

Service Quality Internal Customer Satisfaction Trail way-toTrolls

Cross - Sell Cross-sell Ratio Selling Contacts per Salesperson New revenue per Salesperson

Strategic Measures

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Exercise
 Examine Financial & Learning & Growth perspectives.

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Benefits of Using BSC

Assures Corporate strategies are clearly communicated throughout the organization Provides a common framework for strategic planning Provides key information by measuring the results of the strategic plans and assessing quality of tactical plans Focuses management on cause and effect relationships between processes and key performance indicators Creates balance between. financial and non-financial measures Instills a high performance culture creating value for customers Increases creativity and unexplored ideas Unique Competitive advantages of; Reduced Time, Improved decisions, better solutions & Improved processes

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Power of BSC  Is evident when transformed from a measurement system to a management system.  Clarify and gain consensus about strategy.  Communicate strategy throughout the organization  Aligns departmental and personal goals to the strategy.  Links strategic objectives to long term targets and annual budgets.  Identify and Align strategic objective

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Implementation Challenges
Premature links to Management processescompensation? Lack of CascadingOne scorecard is not sufficient for all levels Terminologyeveryone in the organization should be on the same page No new MeasuresYou do the same and the results also would be same Consistent Management PracticesBalancing internal & external TimingUnveiling the scorecard before all measurements area finalized No Objectives for the BSC programWith heavy weight successes
around, one is likely to copy like a cat without program

No StrategyNot possible to implement BSC without strategy Lack of Balance Scorecard education and training No executive sponsorship

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Financial Perspective  Sir did not understand the format.of the whole slide  ROI EVA ROCE

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Thank You