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Balanced Scorecard: Business Strategy I 10. Management Tools in Strategy 1/15

The Balanced Scorecard is a strategic planning and management tool that provides a comprehensive framework for measuring an organization's performance across four key perspectives: Financial, Customer, Internal Business Processes, and Learning and Growth. It balances both financial and non-financial metrics and leads organizations to align goals and activities to their stated strategy. The Balanced Scorecard was created by Robert Kaplan and David Norton to translate an organization's mission and strategy into a comprehensive set of performance measures.

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Mona Agarwalla
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137 views15 pages

Balanced Scorecard: Business Strategy I 10. Management Tools in Strategy 1/15

The Balanced Scorecard is a strategic planning and management tool that provides a comprehensive framework for measuring an organization's performance across four key perspectives: Financial, Customer, Internal Business Processes, and Learning and Growth. It balances both financial and non-financial metrics and leads organizations to align goals and activities to their stated strategy. The Balanced Scorecard was created by Robert Kaplan and David Norton to translate an organization's mission and strategy into a comprehensive set of performance measures.

Uploaded by

Mona Agarwalla
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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BALANCED SCORECARD

Business Strategy I 10. Management Tools in Strategy 1/15


Goals & their Measurement

“If you don’t know where you’re going, you’re


probably not gonna get there.”
Forrest Gump

Business Strategy I 10. Management Tools in Strategy 2/15


The Balanced Scorecard
What is it?

Definition:
The Balanced Scorecard is a management tool
that provides stakeholders with a
comprehensive measure of how the
organization is progressing towards the
achievement of its strategic goals.

Business Strategy I 10. Management Tools in Strategy 3/15


The Balanced Scorecard
What is it?
The Balanced Scorecard:
• Balances financial and non-financial measures
• Balances short and long-term measures
• Balances performance drivers (leading indicators)
with outcome measures (lagging indicators)
• Should contain just enough data to give a complete
picture of organizational performance… and no
more!
• Leads to strategic focus and organizational
alignment.

Business Strategy I 10. Management Tools in Strategy 4/15


BALANCED SCORE CARD
(Robert S Kaplan & David P Norton)
Performance measurement & management system
for aligning strategic objectives, management
systems & corporate performance

Implementation through five core principles


1. Mobilize change through executive leadership
2. Translate strategy into operational terms
3. Align the organization to the strategy
4. Make strategy everyone’s every day job
5. Make strategy a continual process

Business Strategy I 10. Management Tools in Strategy 5/15


The Balanced Scorecard and The Big
Picture

•Activity Based Costing


•Economic Value Added
•Forecasting
S trategic •Benchmarking
P lanning •Market Research
•Best Practices
M ission
•Six Sigma
and
•Statistical Process Control
V ision
•Reengineering
B alanced •ISO 9000
S corecard •Total Quality Management
•Empowerment
•Learning Organization
•Self-Directed Work Teams
•Change Management
Business Strategy I 10. Management Tools in Strategy 6/15
THE BALANCED SCORECARD

FINANCIAL/REGULATORY
CUSTOMER
To satisfy our constituents,
To achieve our vision,
what financial & regulatory
what customer needs must
objectives must
we serve?
we accomplish?

INTERNAL
To satisfy our customers and
stakeholders, in which business
processes must we excel?

LEARNING & GROWTH


To achieve our goals, how
must we learn, communicate
and grow?

Business Strategy I 10. Management Tools in Strategy 7/15


Customer Perspective

To achieve our vision, what customer needs


must we serve?
Possible Performance Measures

o Customer Satisfaction (Average)


o Satisfaction Gap Analysis (Satisfaction vs.
Level of Importance)
o Satisfaction Distribution (% of each area scored)

Business Strategy I 10. Management Tools in Strategy 8/15


Financial / Regulatory Perspective

To satisfy our constituents, what financial


and
regulatory objectives must we accomplish?
Possible Performance Measures

o Cost / Unit
o Unfunded Requirements or Projects
o Cost of Service
o Budget Projections and Targets

Business Strategy I 10. Management Tools in Strategy 9/15


Internal Perspective

To satisfy our customers, in which business


processes must we excel?

Possible Performance Measures

o Cycle Time
o Completion Rate
o Workload and Employee Utilization
o Transactions per employee
o Errors or Rework
Business Strategy I 10. Management Tools in Strategy 10/15
Learning and Growth
To achieve our goals and accomplish core
activities, how must we learn, communicate
and work together?
Possible Performance Measures
o Employee Satisfaction
o Retention and Turnover
o Training Hours and Resources
o Technology Investment

Business Strategy I 10. Management Tools in Strategy 11/15


D. BALANCED SCORE CARD
(Robert S Kaplan & David P Norton)
Uses objectives and measures in four inter-related
perspectives
Financial – strategy for growth, profitability & risk –
shareholders’ perspective
Customer – strategy for creating value &
differentiation – customers’ perspective
Internal Business Processes – strategic priorities
for business processes that create customer &
shareholder value
Learning & Growth – priorities to create a climate
that supports change, innovation & growth
Renaissance Solutions – David Norton’s consulting firm
Business Strategy I 10. Management Tools in Strategy 12/15
D. BALANCED SCORE CARD
(Robert S Kaplan & David P Norton)

Financial – return on capital, cash flow, revenue


growth, performance reliability
Customer – market share, customer satisfaction &
loyalty indices
Internal Business Processes – cycle times, unit
costs, defect rates, time to market
Learning & Growth – new ideas & suggestions,
employee satisfaction, skill levels, retention, staff
attitude

Business Strategy I 10. Management Tools in Strategy 13/15


Strategic Direction
Create Environment Strategic Performance Management
For Change System

Communicate Strategies
Define Objectives
Implement BSC

Balanced Scorecard
Measure Performance
Improve Processes

Evaluate and Adjust


Linking it all together…. Continuous Improvement
Redefine Initiatives

Business Strategy I 10. Management Tools in Strategy 14/15


Link it together….
DIVISION

CUSTOMER INTERNAL LEARNING &


FINANCIAL
PROCESS GROWTH
DEPT.

Hum. Rscrs. Univ. Police Facilities


FUNCTION

Police Parking

Measure: Satisfaction Index


Current: 3.0 Target: 4.0

Business Strategy I 10. Management Tools in Strategy 15/15

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