The document discusses the balanced scorecard framework. It explains that a balanced scorecard translates an organization's mission and strategy into comprehensive performance measures across four perspectives: financial, customer, internal business processes, and learning and growth. This provides managers with a framework to implement strategy and navigate future success. Key metrics are balanced between outcomes and drivers of future performance. The balanced scorecard also emphasizes linking strategic objectives and measures, communicating strategy, and facilitating strategic feedback and learning.
2. How would you feel about boarding the plane after the following conversation with the pilot?
3. Q: I am surprised to see you operating the plane with only a single instrument. What does it measure ? A: Airspeed .I am really working on airspeed of this flight.
4. Q: That is Good. Airspeed certainly seems important. But what about altitude. Would not an altimeter be helpful? A: I have worked on altitude for the last few flights and I have gotten pretty good on it. Now I have to concentrate on proper air speed.
5. Q: But I notice you don’t have a fuel gauge. Would not that be useful ? A: You are right; fuel is significant, but I cannot concentrate on doing too many things at the same time. So on flight I am focusing on air speed. Once I get to be excellent at Air speed, as well as altitude, I intend to concentrate on Fuel consumption on the next set of flights.
6. Q: to the participants Would you like to board this plane after having this discussion ? A: Perhaps not. What could be the reasons?
7. Navigating an organization is as complex as an Aero plane
8. They also require instrumentation to guide their organizations ……… . like pilots have to guide an aeroplane
9. Would you be satisfied as manager getting one dimensional Information about your organization ?
10. Perhaps not, therefore You need instrumentations/ information to navigate in this competitive world
11. BSC provides managers with the instrumentations they need to Navigate future competitive success.
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13. Measures are balanced Between the outcome measures—the results from Past efforts- --and the measures that drive future performance
21. Capital You don’t see on the Balance Sheet Human Capital The collective skill, knowledge attitudes and behavoiur of the People in the Organization Information Capital The resources and processes in place that ensure effective use of The human capital Organizational Capital The values, working relationship And cultural norms at work in The organisation
25. A balance scorecard translate a organization’s mission and strategy into set of performance measures that provide the framework for implementing its strategy
26. Strategy specify how an organization matches its own capabilities with the opportunities in the marketplace to accomplish its objectives Strategy
27. A strategy is a set of goals and specific action plans that, if achieved, provide the desired competitive advantage Strategic Management involves identifying and implementing these goals and action plans
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30. A goal or objective consist of a projected state of affairs which a person or a system plans or intends to achieve or bring about A personal or organizational desired endpoint in some sort of assumed development.
31. Vision: Defines where the organization wants to be in future. Vision: Defines where the organization wants to be in future.
32. Mission: Defines where the organization is going now, describing why this organization exists
37. Balance Scorecard Emphasizes Financial and Non Financial measures must be Part of Information System
38. 4 Perspectives Financial Perspective Customer Perspective Internal Business Process Perspective Learning & Growth Perspective
39. Mission Vision Strategic Goals Sub-Goals Map Sub-Goals to each quadrant of the Balanced Score Card - identify measurement areas - develop measurement goals - postulate indicators - identify data elements For each BSC Quadrant Data Elements Indicators Balanced Scorecard Methodology Overview Develop Strategic Goals Clarify mission & Vision statement Derive Sub-Goals Module Trouble Reports
41. 4 Perspectives Financial Perspective Financial Perspective Evaluate the Profitability of the Strategy
42. 4 Perspectives Customer Perspective Customer Perspective identifies Targeted Customer and market Segments and Measures the Organization’s success in these Segments
43. 4 Perspectives Internal Business Process Perspective This perspective focuses on internal operations that create value for customers that ,in turn, furthers the financial perspective by increasing the shareholder value
44. 4 Perspectives Internal Business Process Perspective 3 sub Processes Innovation Process Creating Products Services &Processes To meet the demand Of Customers Operations Process Producing & delivering Existing products that Will meet the needs Of Customers Postsales-Service Process Providing service and Support to the customer After the sale of a product or service
45. 4 Perspectives Learning & Growth Perspective This perspective identifies the capabilities the organization must excel at to achieve superior internal processes that create value for Customers and shareholders
46. Target Actual Objective Measures Initiatives Perform Perform Financial Perspective Increase Shareholder value Operating income From Productivity Gain Operating Income From Growth Revenue Growth Manage Cost And Unused Capacity Build Strong Customer Relationship Rs 20 Cr Rs 20.12Cr Rs 30 Cr Rs 34.20 Cr 6% 6.48% FINANCIAL PERSPECTIVE
47. Target Actual Objective Measures Initiatives Perform Perform Customer Perspective Increase Customer Satisfaction Market Share in Communication Network Segment Number of New Customers Customer Satisfaction Rating Identify future Needs of Customers Identify new Target Customer Seg Increase Cust Focus of Sales 6% 7% 1% 2% 90% give 87%Gave Top two top two Ratings Rating Customer Perspective
48. Target Actual Objective Measures Initiatives Perform Perform Reduce Delivery Time Meet Specified Delivery dates on time delivery Improve post Sales Services Improve Processes Improve Manufacturing Capability Reduce Setup time Automation of Orders Re-engineer order Delivery process Re-engineer order 92% 90% Delivery process Improve Customer Service process 30 days 30 days Service Response Time Number of Impv. In Business Processes % of processes With Advanced Controls Within 4 hrs Within 3 hrs Organize teams from Sales & Manuf Organize R&D/Mfg Teams to implement Adv. control 5 5 75% 75% INTERNAL BUSINESS PROCESS PERSPECTIVE
49. Target Actual Objective Measures Initiatives Perform Perform Align Employee And Organizational Goals Develop Process Skill Empower Work Force Learning and Growth Perspective Employee Satisfac- tion Rating % Employees Trained in Process & Quality Mgt % Workers Empowered to Manage Processes Employee Participation to Build Team Work Employees Training Programme Supervisors as Coaches rather Decision Makers 80% 88% Employees Give top Two Ratings 90% 92% 80% 80%
51. Balanced Scorecard as a Strategic Management System 1 Clarify and Translate vision & Strategy 2 Communicate and link strategic objectives and Measures 3 Plan, Set Targets and align Strategic Initiatives 4 Enhance Strategic Feedback and Learning
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60. Barriers to effective Implementation of BSC Strategy & Vision Financial Plan & Capital Allocation Personal MBO & Incentives Monthly Review Budget 1 Vision & Strategy not Actionable 2 Strategy not Linked to Dept Team & Individual Goals 3 Strategy not Linked to Resource Allocation 4 feedback that is tactically not strategic
66. 4 Perspectives Financial Perspective Customer Perspective Internal Business Process Perspective Learning & Growth Perspective
67. Translating the strategy to operational terms If we succeed, how will We look to our Shareholders? The Strategy Financial Perspective To satisfy our customers, Which processes must We excel ? Internal Perspective To achieve our vision, How must we look to our Customers ? Customers Perspective To achieve our vision, how must our organisation team Improves? Organizational Learning Measurement is the language that gives clarity To vague concepts Measurement is used to communicate, Not to control Strategy can be described as a series of Cause and Effect relationship
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69. Make Strategy Everyone’s Job CORP SBU The Strategy Focused Workforce Education Personal Goal Alignment Balanced Pay checks
70. Make Strategy a continuous Process Strategy Balanced Scorecard Budget Performance Input Output Strategic Learning Loop Management Control Loop 85% of Mgt teams Spends less than 1 hr per month On strategy issues 60% OF Org Don’t link Strategy & budgets 78% orgs lock Budgets to an Annual cycle 92% of orgs Do not report On lead indicators
