BSC - Introduction, Architecture, Strategy Formulation Guide & Templates

BUILDING A STRATEGY FOCUSED ORGANIZATION
WITH THE BALANCED SCORECARD
§  Introduction to BSC
§  Overview of BSC Architecture & Methodology
§  BSC Internal Process Clusters
§  Customizing BSC to Strategy

Ng Aung San
Vice President & Head (Strategy & Organization)

1

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

Strategy
is… Choices
…About

…What to do, but more importantly, what not to
do
…What will we truly excel in, what will be simply
par
…What is for today, what is for another time

3

Content

1.  Why BSC? 3.  Closer Look at Internal
Process Clusters

2.  Overview of BSC 4.  Customizing BSC to
Architecture & Strategy
Methodology

4

Delivering value requires an strong unbroken continuum…
Mission
Why we exist

Values
What s important to us

Vision
What we want to be

Strategy
Our game plan

Strategy Translation
Communicate, Cascade and Align

Strategy Measurement & Focus
Strategy Scorecard

Targets/ Objectives & Initiatives
What we need to do/ achieve

Personal Objectives
What I need to do

5

…But issues typically arise at critical junctures
Mission
Why we exist
Typical Issues with Vision of most
Values Organizations…
§  Too hazy to provide any real direction or to motivate
action or generate enthusiasm
Vision
What we want to be §  While usually able to recite the vision, Managers
often do not see how to put vision into practice to
direct/ guide strategy
Strategy
Our game plan §  Developed haphazardly, without adequate
consideration of Organization s
§  Internal & external influences/ interests
Strategy Translation §  Hard & Soft dimensions
§  Mistaken as having to be static, like Values and
Mission, rather than dynamic and updated/
Strategy Measurement & Focus refreshed, when appropriate
Strategy Scorecard


Personal Objectives
What I need to do

6

Mission
Why we exist
Typical Issues with Strategy of most
Values Organizations…
§  Little more than a summary statement of the myriad
initiatives, projects and activities going on in the
Vision organization
What we want to be
§  Does not answer the following fundamental
questions:
Strategy §  What differentiates us or makes us special/
Our game plan unique?
§  What is our differentiated Value Proposition to
our customers (internal & external) that we
Strategy Translation can draw and hold them to us?
§  Does not consider all key components of strategy
and interrelationships across the organization
Strategy Measurement & Focus
Strategy Scorecard §  Does not consider how the organization s Business
Model/ Internal Processes and Organizational
Capital would be (re)configured to deliver the Value
Targets/ Objectives & Initiatives Proposition
§  Does not fully consider both the Hard & Soft
determinants of strategy delivery/ change
Personal Objectives management
What I need to do

7

Mission
Why we exist
Typical Issues with Strategy
Values Translation, Focus & Measurement of
What s important to us most Organizations…
§  Gap exists between strategy formulation and
Vision strategy execution/ on-going management
What we want to be
§  Translating strategy top down into demands on
elements of Organization s Business Model/
Strategy Internal Processes is non-uniform and frequently,
Our game plan incomplete

§  No overall one-view of progress of various
Strategy Translation components of strategy across entire Business
Communicate, Cascade and Align Model (cross-functional)

§  No uniform and consistent way to describe the
Strategy Measurement & Focus strategy, so that objectives and measures can be
Strategy Scorecard established and managed

§  No framework to measure progress and learn about
Targets/ Objectives & Initiatives interrelationships/ cause and effect between various
What we need to do/ achieve components of strategy and how each impact
performance and guide resource allocation

Personal Objectives §  Focus on strategy is typically low. Strategy often
What I need to do becomes a bi-annual event at Business Planning
Meetings, rather than an-going process

8

Mission
Why we exist
Typical Issues with Targets/
Values Objectives & Initiatives of most
What s important to us Organizations…
§  No clear linkage, bottom up, between Activities and
Vision Projects with overall strategy
What we want to be
§  Measures only remain at compound Business/
Functional Unit level, rather than at individual key
Strategy initiatives/ project level; Also, measures are typically
Our game plan lag measures, rather than leading indicators of
progress
§  Unit Leaders face difficulty in objectively
Strategy Translation determining on-going progress of respective
Communicate, Cascade and Align initiatives, against set targets/ objectives,
communicated upfront
§  Lesser/ no time to take corrective action and/
Strategy Focus & Measurement or re-allocate resource
Strategy Scorecard §  Lower levels of clarity and accountability at
individual initiatives/ project and/ or personal
level
What we need to do/ achieve §  No framework to conduct a business audit of
direction, scope/ coverage, alignment and
effectiveness and phasing of existing initiatives/
Personal Objectives project/ activities; And guide resource allocation
What I need to do

9

BSC can address issues, if well embraced and executed
Facilitate Vision Setting & Strategy formulation
§  Balance Internal/ External influences and Hard/ Soft
dimensions in Vision setting
§  Framework to address in Strategy Formulation:
§  Differentiation/ unique value proposition
§  Re-configuration of Business Model and
Organizational Capital
Make Strategy a §  Hard & Soft determinants of Change Translate the Vision &
Continual Process Strategy to Operational Terms
§  Management Meetings §  Strategy Maps
§  Feedback system §  Scorecards
§  Learning Process
BALANCED §  Demands on Business Model/
Internal Processes
§  Linked to Budgeting Process
SCORECARD §  Financial & Non-Financial
Objectives & Measures
§  Framework to pull together one-
view of all initiatives and activities

Mobilize Change Align the Organization
through Executive to the Strategy
Leadership §  Cross-Functional Unit
§  Executive Sponsorship, linkages/ coordination
Ownership & Engagement §  Strategy Education
§  Change Mobilization Communication & Awareness
§  Change Governance §  Initiative Prioritization
§  Sustaining Change

10

Content

Process Clusters

Architecture & Strategy
Methodology

11

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

#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?

12

#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)

13

#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
§  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

14

#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
§  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

15

#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
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

16

#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

17

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

18

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

#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

#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
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?
19

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

20

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


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

21

Channel partner perspective identifies value proposition to
be a magnet company to Channel Partners
Sustain growth in


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

22

Internal Processes/ Business perspective defines vehicle to
deliver on Value Propositions…
Sustain growth in


Returns Features

Channel Partner Channel Value Proposition
Perspective

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
23

… And groups Organization s myriad existing and new
processes into four Clusters
Sustain growth in


Returns Features

Perspective

Internal Process
Perspective
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

24

Learning & Growth perspective defines and aligns
organization s intangible assets, completing Strategy Map
Sustain growth in


Returns Features

Perspective

Internal Process
Perspective

Learning & Growth
Perspective Organization s Intangible Assets
Human Capital Information Capital Organizational Capital

§  Skills/ Talent §  Systems §  Culture
§  Knowledge §  Databases §  Leadership
§  Capabilities §  Networks §  Alignment/ Teamwork
25

Closer look at Human Capital Readiness – Strategic Job
Families, Headcount, Knowledge, Skills & Capabilities
Sustain growth in


Returns Features

Perspective

Internal Process Perspective

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%
26

Strategy comprise complementary strategic themes that cut
across respective perspectives
Sustain growth in


Strengthen franchise for sustainable growth

Expand Revenue Opportunities
Returns Features

Perspective
Deliver profit

Internal Process
Perspective

Learning & Growth
Perspective § Organization s Intangible Assets
Human Capital Information Capital Organizational Capital

§  Skills/ Talent §  Systems §  Culture
§  Knowledge §  Databases §  Leadership
§  Capabilities §  Networks §  Alignment/ Teamwork
27

Strategy Map Construction – Step1: Vision
Theme: EXPAND REVENUE OPPORTUNITIES
§  STEP 1: Clarify, in detail, respective internal,
Vision

VISION external, hard and soft components of overall
strategic vision
Perspective
Financial
Perspective
Channel Partner Customer
Perspective
Business Model
Perspective
Perspective
L&G

28

Strategy Map Construction – Step 2: Financial
§  STEP 1: Clarify, in detail, respective internal,
Vision

VISION external, hard and soft components of overall
strategic vision
Grow new sources
Perspective

Strategic objective §  STEP 2: Identify a strategic theme for the
Financial

of revenue
identified to grow
new sources of financial perspective, linked to Strategic Vision,
revenue Tap into new that will drive the target financial result
customer segment
§  Revenue Growth Strategy
§  Theme 1: Expand revenue opportunities
Perspective

§  Theme 2: Enhance customer value

§  Productivity improvement strategy
§  Theme 3: Improve cost structure
§  Theme 4: Enhance asset yield
Perspective
Business Model
Perspective
Perspective
L&G

29

Strategy Map Construction – Step 3: Customer
§  STEP 1: Clarify, in detail respective internal,
Vision

VISION external, hard and soft components of, overall
strategic vision
Grow new sources
Perspective

§  STEP 2: Identify a strategic theme for the
Financial

of revenue
financial perspective, linked to Strategic Vision,
Strategic objective Tap into new
identified for Target customer segment
that will drive the target financial result
Market & Customer
Segment
Increase new §  STEP 3: Identify the target market and
customer segments in which organization will
Perspective

customer acquisition

Strategic objectives serve and compete and unique customer value
identified for Offer innovative Offer highest
Customer Value features service level proposition organization will offer
Proposition
§  Components of Customer Value Proposition:
Price, Features, Quality. Availability, Service and
Perspective

Reputation
§  Basic Par Requirements vs. Differentiators
Business Model
Perspective
Perspective
L&G

30

Strategy Map Construction – Step 4: Channel Partner
Vision

strategic vision
Grow new sources
Perspective

Financial

of revenue
Tap into new that will drive the target financial result
customer segment

Perspective


serve and compete and unique customer value
Offer innovative Offer highest
features service level proposition organization will offer
Strategic objective
identified for Target Enhance channel
§  STEP 4: Identify the channel partner
Perspective

Channel Partner capability organization can partner and work with and
Offer strongest
unique channel partner value proposition
Offer highest
product quality admin support organization will offer
Strategic objectives
identified for
Channel Partner
Value Proposition
Business Model
Perspective
Perspective
L&G

31

Strategy Map Construction – Step 5: Business Model
Vision

strategic vision
Grow new sources
Perspective

Financial

of revenue
customer segment

Perspective



Enhance channel
Perspective

capability organization can partner and work with and
Offer strongest
Offer highest

§  STEP 5: Choose, align and resource the
Enhance Enhance organization s business model or internal
Business Model

Product Innovation Operational
Perspective

Strategic objectives Process Process processes to deliver on the channel partner
identified for and customer value proposition
Business Model
Perspective
L&G

32

Strategy Map Construction – Step 6: Learning & Growth
Vision

strategic vision
Grow new sources
Perspective

Financial

of revenue
customer segment

Perspective



Enhance channel
Perspective

capability organization can partner and work with and
Offer strongest
Offer highest

§  STEP 5: Choose, align and resource the
Enhance Enhance organization s business model or internal
Business Model

Perspective

Process Process processes to deliver on the channel partner
and customer value proposition
Strategic objectives identified
for Organization s Assets to
enable Business Model §  STEP 6: Identify capabilities and
organizational climate required to enable the
Perspective

Strengthen Strengthen business model or strategic internal processes
L&G

Product R&D Operational IT
capabilities capabilities identified

33

Scorecard Construction – Step 1: Establish Objectives,
Measures, Targets & Measure Owners
Theme: TRANSFORM PRODUCT MIX Objectives Objective Measure Yr 1 Targets Owner
§  Grow new sources of §  Total revenue from new sources §  $50m §  ABC
Grow new sources revenue §  Market share in targeted new
Perspective

§  15% §  ABC
Financial

of revenue §  Tap into new customer segment
customer segments
Tap into new
customer segment

§  Increase new §  No. of new customers from target §  25,000 §  DEF
Increase new
Perspective

customer acquisition customer acquisition segment §  85% §  DEF
Customer

§  Offer innovative §  Brand awareness (survey) §  10 new §  GHJ
Offer innovative Offer highest features §  No. of new-to-market product features §  KLM
features service level §  Offer highest service features
§  95%
level §  Customer satisfaction (survey)

§  Enhance channel §  Channel productivity §  75% §  NOP
Channel Partner

Enhance channel capability
Perspective

capability §  Channel professionalism (survey) §  85% §  NOP
§  Offer highest product §  Product benchmarking §  Top quartile §  QRS
Offer highest Offer strongest quality
§  Total Cycle/ Process Time §  2 days §  QRS
product quality admin support §  Offer strongest admin turnaround
support

§  Enhance product §  No. of new projects or product §  15 projects/ §  TUV
Business Model

Enhance Enhance innovation process concepts presented for concepts
Perspective

Operational §  WXY
Product Innovation development
Process §  Enhance operational §  5 processes
Process
process §  No. of processes with substantial
improvement

§  Strengthen product §  R&D Process Strategic Job §  80% §  UVW
Perspective

Strengthen Strengthen R&D capabilities Family Human Capital Readiness §  75% §  XYZ
L&G

Product R&D Operational IT §  Strengthen §  Operational Process Strategic Job
capabilities capabilities operational IT family IT Readiness
capabilities

34

Scorecard Construction – Step 2: Identify/ Organize Strategic
Internal Business Process & Organizational L&G Initiatives
Theme: TRANSFORM PRODUCT MIX Objectives Measure Targets Owner Initiatives
§  Grow new sources of §  ___ §  ___ §  ___
Grow new sources revenue §  ___ §  ___ §  ___
Perspective
Financial

of revenue §  Tap into new §  ___ §  ___ §  ___
customer segments
Tap into new
customer segment

§  Increase new §  ___ §  ___ §  ___
Increase new
Perspective

customer acquisition customer acquisition §  ___ §  ___ §  ___
Customer

Outcome of Initiatives & Activities
§  Offer innovative §  ___ §  ___ §  ___
features undertaken at Business Model/
Offer innovative Offer highest Internal Business Process and
features service level §  Offer highest service
level Organizational Asset level

§  Enhance channel §  ___ §  ___ §  ___
Channel Partner

Enhance channel capability §  ___ §  ___ §  ___
Perspective

capability
§  Offer highest product §  ___ §  ___ §  ___
product quality admin support §  Offer strongest admin
support

§  Enhance product §  ___ §  ___ §  ___ §  Pro-active manage and extend
Business Model

Enhance Enhance innovation process §  ___ §  ___ §  ___ Product Portfolio
Perspective

§  Enhance operational §  ___ §  ___ §  ___ §  Extend current product platforms
Process Process
process into new markets
§  Improve process efficiency and
responsiveness

§  Strengthen product §  ___ §  ___ §  ___ §  R&D process training
Perspective

Strengthen Strengthen R&D capabilities §  ___ §  ___ §  ___ §  Operational IT process
L&G

Product R&D Operational IT §  Strengthen §  ___ §  ___ §  ___ management training/ systems
capabilities capabilities operational IT §  Operational IT process
capabilities management staff alignment

35

Scorecard Construction – Step 3: Determine/ Allocate
Resource Requirements
Theme: TRANSFORM PRODUCT MIX Objectives Measure Targets Owner Initiatives Resource
§  Grow new sources of §  ___ §  ___ §  ___
Grow new sources revenue §  ___ §  ___ §  ___
Perspective
Financial

of revenue §  Tap into new §  ___ §  ___ §  ___
customer segments
Tap into new
customer segment

§  Increase new §  ___ §  ___ §  ___
Increase new
Perspective

customer acquisition customer acquisition §  ___ §  ___ §  ___
Customer

§  Offer innovative §  ___ §  ___ §  ___
Offer highest features N.A. N.A.
Offer innovative
features service level §  Offer highest service
level

§  Enhance channel §  ___ §  ___ §  ___
Channel Partner

Enhance channel capability §  ___ §  ___ §  ___
Perspective

capability
§  Offer highest product §  ___ §  ___ §  ___
product quality admin support §  Offer strongest admin
support

§  Enhance product §  ___ §  ___ §  ___ §  ___ §  5 Headcount/
Business Model

Enhance Enhance innovation process §  ___ §  ___ §  ___ §  ___ 50 Man-days
Perspective

§  Enhance operational §  ___ §  ___ §  ___ §  ___ §  $100k
Process Process
process §  8 Headcount/
80 Man-days
§  $200k
§  Strengthen product §  ___ §  ___ §  ___ §  ___ §  Total of $300k
R&D capabilities §  ___ §  ___ §  ___ §  ___ for training
Perspective

Strengthen Strengthen §  ___ §  ___ §  ___ §  ___ §  $500k for IT
§  Strengthen
L&G

Product R&D Operational IT system upgrade
capabilities operational IT
capabilities §  $20k for
capabilities
Workshop

36

Bringing it all together… BSC Strategy Map and Scorecard
Strategy Map Scorecard STEP 1: Clarify Vision
§  Clarify, in detail components of overall strategic vision
Theme: TRANSFORM PRODUCT MIX STEP 2: Define the Shareholder Value Gap
§  Define the financial objectives and measures
Grow new sources
Perspective
Financial

of revenue §  Measures §  Define the targets and value gap
§  Target §  Allocate the value gap to growth and productivity goal
Tap into new
customer segment STEP 3: Reconcile the Customer Value Proposition
§  Owner
§  Define the target customer segments
Increase new §  Initiatives §  Clarify the customer value proposition
Perspective

Customer

§  Resources §  Select the measures
Offer innovative Offer highest §  Reconcile customer objectives with financial growth goals
features service level
STEP 4: Reconcile Channel Partner Value Proposition
§  Define the target channel partners
Channel Partner

Enhance channel §  Clarify the channel partner value proposition
Perspective

capability
§  Select the measures
Offer highest Offer strongest §  Reconcile channel partner objectives with customer goals/
product quality admin support
objectives
STEP 5: Identify Strategic Themes
§  Identify the critical few processes that have the greatest
Business Model

Enhance Enhance
Perspective

Product Innovation Operational impact to deliver value propositions
Process Process §  Establish measures and targets
STEP 6: Create Strategic Asset Readiness
§  Identify human, information and organizational capital
required to support critical processes
Perspective

Strengthen Strengthen §  Assess readiness of assets
L&G

Product R&D Operational IT §  Establish measures and targets
capabilities capabilities
STEP 7: Identify & fund the initiatives
§  Define the specific initiatives required to support the
processes and to develop capital
§  Clarify, secure and allocate funding
37

Content

Process Clusters

Architecture Strategy

38

BSC - Introduction, Architecture, Strategy Formulation Guide & Templates

BSC - Introduction, Architecture, Strategy Formulation Guide & Templates

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