Transcript Balanced Scorecard

The Ten Essentials of Developing a
Successful Balanced Scorecard
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Agenda – Ten BSC Essentials
• Two Fundamental Issues Leading to the Balanced Scorecard (BSC)
• BSC fundamentals
• Essential 1 – Objectives for the BSC
• Essential 2 – Executive Sponsorship
• Essential 3 – A Solid Implementation Team
• Essential 4 – A Strong BSC Champion
• Essential 5 – Training and Education
• Essential 6 – Cause and Effect; “Strategy Maps”
• Essential 7 – Reporting Results (and soon!)
• Essential 8 – Cascading the BSC
• Essential 9 – Linking the BSC to Key Management Processes
• Essential 10 – Making the BSC Part of the Organization
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Two Fundamental Issues Facing Organizations
• Not consistent with today’s
business realities
• Driving by rearview mirror
90% of
organizations
don’t
implement
their strategy
• Tend to reinforce functional silos
• May sacrifice long-term thinking
• Not relevant to many levels of the
organization
Financial
measures
don’t tell the
whole story
Only 10% of
organizations
execute their
strategy
Barriers to Strategy Execution
Vision Barrier
People Barrier
Only 5% of the
workforce
understands the
strategy
Only 25% of
managers have
incentives linked to
strategy
Management
Barrier
85% of executive
teams spend less
than one hour per
month discussing
strategy
Resource Barrier
60% of
organizations don’t
link budgets to
strategy
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Balanced Scorecard Fundamentals
Financial
"To succeed
Objectives
financially, how
should we appear
to our
shareholders?"
Measures Targets Initiatives
Customer
"To achieve our Objectives
vision, how should
we appear to our
customers?"
Internal Business Process
Measures Targets Initiatives
Vision
and
Strategy
"To satisfy our
Objectives
shareholders and
customers, what
business
processes must
we excel at?"
Measures Targets Initiatives
Learning and Growth
"To achieve our Objectives
vision, how will
we sustain our
ability to change
and improve?"
Measures Targets Initiatives
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Essential 1 - Objectives for the Scorecard
• Why are you developing a
Balanced Scorecard?
• BSC alone will not transform the
organization
• Clear objectives are critical for
communication, education, and
guiding BSC evolution
Put the big rocks in first!
The beginning is the most important part of the work
-Plato, The Republic
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Objectives for the Balanced Scorecard
Aligning
improvement
initiatives
Clarifying
current strategy
New leadership
Setting new
targets
FINANCIAL
CUSTOMER
INTERNAL
PROCESSES
EMPLOYEE
LEARNING
AND
GROWTH
New
organizational
strategy
Aligning
employee goals
Business crisis
Communication and
education
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Essential 2 – Executive Sponsorship
“To make initiatives work it took passionate, allconsuming commitment from the top…Every
leadership action must demonstrate total
commitment to the initiative.”
-Jack Welch, Jack: Straight From the Gut
• No BSC initiative will survive without active
executive sponsorship
• Executives hold key knowledge for BSC
success
• Everyone watches what the boss watches
• You can influence executive sponsorship
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Essential 3 – A Solid Implementation Team
“A team is a small number of people with complementary skills who are
committed to a common purpose, performance goals, and approach for which
they hold themselves mutually accountable.”
-Katzenbach & Smith, The Wisdom of Teams
• No single person or group holds
all the information necessary to
build the BSC
• Team members are crucial BSC
ambassadors
• Team members influence their
own executives
• Team participation is a
wonderful learning opportunity
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Essential 4 – A Strong BSC Champion
“A recent review of our Balanced Scorecard Hall of Fame organizations
demonstrates that virtually every successful CEO had a partner – a change
agent who played the lead role in introducing the Balanced Scorecard program.”
- David P. Norton, The Balanced Scorecard Report (May-June, 2002)
• Guides the BSC process
• Provides thought leadership on the BSC
• Must be a skilled communicator
• Should be full-time role in the organization
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Essential 5 – Training and Education
Companies that
don’t encourage
employee
education of all
kinds are dumb!
• The perceived simplicity of the BSC means
training is often overlooked – that is a
mistake!
• BSC is simple, but not simplistic
• Training “levels the playing field” and
encourages involvement
• Training leads to important questions
• Provide background information, your
objectives, success stories, your plan, etc.
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E.L. & G
Internal Processes
Customer
Financial
Essential 6 – Cause & Effect; “Strategy Maps”
Increase
Profitability
Deliver
Customer
Value
Through
Integrated
Offerings
Serve
customer
s on their
terms
Continuousl
y Improve
Customer
Experiences
Build an
Environmen
t where
people
maximize
their
personal
potential
• A good Balanced
Scorecard should “tell the
story of your strategy”
Allocate
Capital
Resource
s
Effectivel
y
Improve
Communication
s Through
Technology
Develop
New
Product
s
Create a
Safe &
Healthy
workplac
e
• Strategy Map specifies
relationships and makes
them testable
• Also acts as a powerful
diagnostic tool for your
BSC
• Great way to
communicate your
Scorecard
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Essential 7 – Reporting Results (and soon!)
• Don’t wait until you have 100% data
to start reporting
• It’s o.k. to start with simple
reporting tools
• Structure your Management review
meetings around BSC results
• Track action items and review
progress
Is this what your Management
Reporting feels like? If so, you
need a Balanced Scorecard!
• Use the BSC as a tool for “real-time
strategic learning”
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Essential 8 – Cascading the Balanced Scorecard
Mission, Values, Vision
Department, Group
level
B.U. Level, etc.
Highest Level
Scorecard
Strategy
Customer
Financial
Objectives
Measures Targets Initiatives
Objectives
Measures Targets Initiatives
Customer
Financial
Objectives
Measures Targets Initiatives
Objectives
Measures Targets Initiatives
Objectives
Measures Targets Initiatives
Objectives
Measures Targets Initiatives
Customer
Financial
Internal Processes
Objectives
Measures Targets Initiatives
Emp. L. & G.
Objectives
Internal Processes
Objectives
Measures Targets Initiatives
Emp. L. & G.
Objectives
Internal Processes
Objectives
Measures Targets Initiatives
Measures Targets Initiatives
Measures Targets Initiatives
Emp. L. & G.
Objectives
Measures Targets Initiatives
• Allow everyone to
demonstrate how
they contribute to
overall goals
• Create a
consistent
language through
measurement
• Achieve a laserlike focus on
strategy
Team and Personal Balanced Scorecards
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Essential 9 – Link the BSC to Mgt. Processes
Budgets
Compensation
• BSC has evolved from a measurement to a “strategic management”
system
• Initiatives on the BSC provide a natural link to the budgeting process
• Using the BSC, budgets are based on strategy (less than 40% of
organizations currently make this link)
• Linking the BSC to compensation makes it “real” for many employees
• Remember that you get what you measure
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Essential 10 – Making the BSC Part of the
Organization
• Don’t think of the Balanced
Scorecard as a project to be
“checked off”
• Give the BSC a home in the
organization
• Assign accountability for the BSC
(the BSC Champion??)
• Develop BSC policies and
procedures – but keep them simple!
• Update the Scorecard’s core
elements regularly
Will your Balanced Scorecard
stand the test of time?
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Questions?
Thank you for your time. If you have any other questions, please feel free to
contact me through my website at:
www.primerusconsulting.com
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