Concept and ExecutionBalanced Scorecard (BSC)

Balanced ScorecardConcept and Definition

Balanced Scorecard is..

Management system

• Clarifies mission & vision

• Translates mission & vision into measurable and actionable measures

• Helps provide feedback and meaningful information

• Pioneered by Robert Kaplan and David Norton of Harvard Business School in 1992

Suggested Strategy Focus in BSC Framework

Advantages of Having Balanced Scorecard

Strategic Alignment

Transparency

Manageable Performance

Clarity of Management Direction

Why the name Balanced Scorecard?

Signifies balance between

• Short and long-term objectives

• Financial and Non-Financial measures

• Lagging and Leading indicators

• Internal and External Perspectives

Balanced Scorecard's 4 Perspectives

Balanced Scorecard's Measurement Method

PLAN

DO

CHECK

ACT

BSC Cycle of a Small

Business

Balanced Scorecard Execution Framework

BSC Execution Stages

BSC Execution Stages

1. Develop the Strategy

2. Plan the Strategy

3. Align the Organization

4. Plan the Operations

5. Monitor (Execution) and Learn

6. Test and Adapt

1. Develop the Strategy

1. Clarify mission, vision, values

• What business are we in and why?

2. Conduct strategic analysis of key issues

• What are the key issues?

3. Formulate strategy to compete

• How can we best compete?

2. Plan the Strategy1. Create strategy maps

• How do we define our strategy?

2. Select and measures and targets

• How do we measure our plan / objectives?

3. Choose strategic initiatives

• What action programs does our strategy need?

4. Establish STRATEX

• How do we fund our initiatives?

5. Create theme project teams

• Who will lead the execution of the strategy?

Strategic Initiatives (example)

3. Align the Organization

1. Align business units

• How do we ensure that all units are on the same page?

2. Align support units

• How do we align support units with business units and corporate strategies?

3. Align employees

• How do we motivate employees to help us execute the strategy?

4. Plan the Operations

1. Improve key processes

• Which process improvements are critical for executing the strategy?

2. Develop resource capacity plan

• How do we link strategy with operating plans, sales forecast and budgets?

5. Monitor and Learn

1. Hold operational review meetings

• Are our operations under control?

2. Hold operational review meetings

• Are we executing our strategy well?

6. Test and Adapt

1. Hold a review meeting for the strategy testing and adapting

• Is our strategy working?

Update the plans and scorecard for the next cycle

References:

• "Balanced Scorecard", www.lassib.org

• "Performance Measurement with Balanced Scorecard", Stefano Biazzo and Patricia Gareno, Springer - Verlag Berlin Heidelberg 2012

• "Execution Premium", Robert S. Kaplan and David P. Norton, Harvard Business School Publishing, 2008