Lecture 18 MGNM571

MGNM571
Corporate Strategy &

Entrepreneurship-I
RAJEEV GUPTA
1
2
News Article
3
• Bob Jordan, Chief Executive Officer, stated, "We are very pleased to
report all-time record quarterly revenues and net income, excluding
special items, representing a significant milestone in our pandemic
recovery. Travel demand surged in second quarter, and thus far, strong
demand trends continue in third quarter 2022.
4
• "We are making meaningful progress against our 2022 priorities, and I
am very proud of our People and their heroic efforts to fight against
the pandemic. Since April, we have been delivering a more reliable
product for our Customers with cancellations representing less than
one percent of scheduled flights in May and June 2022, which is a
completion factor of more than 99 percent.
5
6
LEARNING OBJECTIVES
Understand how to prepare a BSC and

use it for strategy Implementation
The
BALANCED
SCORECARD
7
SOUTHWEST AIRLINES
8
9
10
STRATEGY MAPS HELP LINK ALL PERFORMANCE METRICS TO STRATEGY
11
EXTEND THE MAP INTO MEASUREMENTS, TARGETS AND INITIATIVES
Strategy Map
Customers
Detailed statement How success in The level of Key action

Faster Service Access of what is critical achieving the performance programs
to successfully strategy will be or rate of required to
achieving the measured and improvement achieve
strategy tracked needed objectives
Self Service
Internal Process
Applications
Objective
Measure Target Initiative
Lean Processes Description
Eliminate waste, Number of Reworks 2 per setup per Lean / Six
reworks, and other month each Sigma
Process and Value errors in our Outlet Office
Map Analysis processes
L&G
Web Enable
Technologies
Financials
Invest in IT
ALIGNMENT OF SCORECARD COMPONENTS
Make sure the components of scorecard fit together. Create a tight model for
driving execution of strategy.
Goal Objective Measurement Target Initiative

Achieve Reduce Cost per Outlet 5% - Year 1 Activity Based
Agency Operational Office, Cost per 10% - Year 2 Costing /
operational Service Costs by Region 15% - Year 3 Management
efficiencies 50% over the next
with best 5 years
practices in
the private
sector Reduce identified Waste Volume Waste stream Lean / Six
re-activities within Charts, Rework reductions of 5% Sigma
primary processes Tracking, Cycle each year,
by 80% over the Time End to Start Reworks cut in
next 3 years half for next 3
years, cycle time
cut by 75%
THE STORY OF A SCORECARD
To be successful for shareholders, co. must be no1,

which means that we must return superior financial results in .......
Customers are the people who will secure these results for co. so co must
offer customers superior value by .........
To deliver this superior value co. must excel in the way people manage the
processes for .......
These processes are operated by our people. Co. must provide our people
with ....... to achieve excellent performance.
14
HOW IT STARTED
• Introduced in 1992, by Robert Kaplan and David Norton
• The Balanced Scorecard is the most commonly used

framework for ensuring that agencies execute their strategies.
• Today, about 70% of the Fortune 1,000 companies utilize the

Balanced Scorecard to help manage performance.
15
BALANCED SCORECARD HISTORY
Measurement Enterprise-wide
Alignment and
and Strategic
Communication
Reporting Management
1992 1996 2000
Articles in Harvard Business Review: Acceptance and Acclaim:

 “The Balanced Scorecard —  “The Balanced
Measures that Drive Scorecard” is
Performance” January - February translated into 18
1992 languages
 “Putting the Balanced Scorecard  Selected by Harvard
to Work” September - October Business Review as
1993 one of the “most
important
 “Using the Balanced Scorecard
management
as 1996 2000
a Strategic Management System” practices of the past
January - February 1996 75 years.“
16
BALANCED SCORECARD
At the highest level, the Balanced Scorecard is a

framework that helps organizations put strategy at the
center of the organization by Translating strategy into
operational objectives that drive both behavior and
performance.
The Balanced Scorecard is a tool that translates an

organization's mission and strategy into a comprehensive
set of performance measures that provides the framework
for a strategic measurement and management system.
17
BSC-CREATES BALANCE
18
ORGANIZATIONS OFTEN HAVE A GAP BETWEEN STRATEGY AND ACTION
Strategy Is a Step In a Continuum
MISSION
Why we exist
VALUES
What’s important to us
VISION
What we want to be
STRATEGY
Our game plan
STRATEGIC OUTCOMES
Satisfied Delighted Efficient and Effective Motivated & Prepared

SHAREHOLDERS CUSTOMERS PROCESSES WORKFORCE
THE BALANCED SCORECARD IS A BRIDGE TO CLOSE THAT GAP
Strategy Is a Step In a Continuum

MISSION
Why we exist
VALUES
What’s important to us
VISION
What we want to be
STRATEGY
Our game plan
BALANCED SCORECARD
Implementation & Focus
STRATEGIC INITIATIVES
What we need to do
STRATEGIC OUTCOMES
Satisfied Delighted Efficient and Effective Motivated & Prepared

SHAREHOLDERS CUSTOMERS PROCESSES WORKFORCE
MEASUREMENT SYSTEM
Translates mission, vision and strategy through objectives

and measures
Provides a framework to describe the key elements in the

achievement of the strategy
Measures four perspectives

- Customer Relations
- Financial
- Internal Service Process
- Learning, Innovation and Growth
21
MODEL BALANCED SCORECARD
Each Balanced Scorecard should be customized to match organizational

structure, strategy, and situation.
Still, all Balanced Scorecards should contain these components:
Perspectives – Groupings of organization's high-level focus areas (should take

all key "stakeholders" into account).
Objectives – Critical top-level goals derived from current strategic plan (phrased
in short, verb-noun statements, e.g. "improve customer satisfaction.")
Measures – The best indication(s) that co is on track to achieve each objective

(should have no more than 1-3 per objective).
Initiatives – Time-specific projects (e.g. with defined start- and end-dates) that
are separate from, but aligned to, strategic objectives and measures.
22
FINANCIAL PERSPECTIVE
1. What financial steps are necessary to ensure the execution of our

strategy/goals?
2. Are the program’s/ department’s goals, implementation, and

execution contributing to the bottom line?
3. Are we meeting operational and financial targets?
4. Dimensions of Quality: Efficiency
23
INTERNAL SERVICE PROCESS PERSPECTIVE
1. What critical processes must we excel at to satisfy our

customers/stakeholders?
2. What must be done internally to meet patient/customer
expectations?
3. Dimension of Quality:
Effectiveness
Appropriateness
Safety
24
CUSTOMER PERSPECTIVE
1. Who are our target customers?

2. How do our patients/customers see us?
3. How do patients/customers rate our performance?
Accessibility
Acceptability
Continuity
25
LEARNING INNOVATION AND GROWTH PERSPECTIVE
1. How can we continue to improve?

2. What capabilities and tools do our employees need to execute our
strategy/goals?
Competence
Participation
26
EXAMPLES OF MEASUREMENTS BY PERSPECTIVE
Stakeholder / Customer Internal Processes

• Current customer satisfaction level • Number of unscheduled maintenance calls
• Improvement in customer satisfaction • Production time lost because of maintenance
• Customer retention rate problems
• Frequency of customer contact by • Percentage of equipment maintained on
customer service schedule
• Average time to resolve a customer • Average number of monthly unscheduled
inquiry outages
• Number of customer complaints • Mean time between failures
Learning and Growth Investments

• Percentage employee absenteeism • % of facility assets fully funded for
• Hours of absenteeism upgrading
• Job posting response rate • % of IT infrastructure investments
• Personnel turnover rate approved
• • # of new hire positions authorized for
Ratio of acceptances to offers
filling
• Time to fill vacancy
• % of required contracts awarded and in
place
27
28
29
HOW SOUTHWEST AIRLINES DEVELOPED ITS BALANCED SCORECARD ANALYSIS
Strategic Theme: ‘operating efficiency’
The four perspectives

 Financial: What will drive operating efficiency?
 Answer: More customers on fewer planes.
 Customer: How will we get more customers on fewer planes?
 Answer: Attract targeted segments of customers who value price and on-time arrivals.
 Internal: What must our internal focus be?
 Answer: Fast aircraft turnaround time.
 Learning: How will our people accomplish fast turnaround?
 Answer: Educate and compensate the ground crew regarding how they contribute to the
firm’s success.
30
31
CREDIT CARD COMPANY EXAMPLE
32
THANK YOU
RAJEEV GUPTA
33

Lecture 18 MGNM571

Uploaded by

Copyright:

Available Formats

Lecture 18 MGNM571

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Lecture 18 MGNM571

Uploaded by

Copyright:

Available Formats

MGNM571

Corporate Strategy &

Understand how to prepare a BSC and

Detailed statement How success in The level of Key action

Goal Objective Measurement Target Initiative

To be successful for shareholders, co. must be no1,

• Introduced in 1992, by Robert Kaplan and David Norton

• The Balanced Scorecard is the most commonly used

• Today, about 70% of the Fortune 1,000 companies utilize the

1992 1996 2000

Articles in Harvard Business Review: Acceptance and Acclaim:

At the highest level, the Balanced Scorecard is a

The Balanced Scorecard is a tool that translates an

Strategy Is a Step In a Continuum

Satisfied Delighted Efficient and Effective Motivated & Prepared

Strategy Is a Step In a Continuum

Satisfied Delighted Efficient and Effective Motivated & Prepared

Translates mission, vision and strategy through objectives

Provides a framework to describe the key elements in the

Measures four perspectives

Each Balanced Scorecard should be customized to match organizational

Still, all Balanced Scorecards should contain these components:

Perspectives – Groupings of organization's high-level focus areas (should take

Measures – The best indication(s) that co is on track to achieve each objective

1. What financial steps are necessary to ensure the execution of our

2. Are the program’s/ department’s goals, implementation, and

3. Are we meeting operational and financial targets?

4. Dimensions of Quality: Efficiency

1. What critical processes must we excel at to satisfy our

1. Who are our target customers?

1. How can we continue to improve?

Stakeholder / Customer Internal Processes

Learning and Growth Investments

Strategic Theme: ‘operating efficiency’

The four perspectives

You might also like