Balance Scorecard Ppt_Varun73B OS

8/3/2019 Balance Scorecard Ppt_Varun73B OS

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BY: VARUN GUPTA

73B





What is a Balanced Score Card?

1) A measurement system

2) A strategic managementsystem

3) A communication tool



BSC as a Measurement System

Translates mission, vision and strategy throughobjectives and measures

Provides a framework to describe the keyelements in the achievement of the strategy

Measures four perspectives

- Customer Relations

- Financial- Internal Service Process

- Learning, Innovation and Growth



BSC as a Measurement System

Financial

Customer Relations

Learning,Innovation and

Growth

Internal ServiceProcess

Vision andStrategy



Financial Perspective What financial steps are necessary to ensure

the execution of our strategy/goals?

Are the program¶s/ department¶s goals,implementation, and execution contributing tothe bottom line?

Are we meeting operational and financial

targets? Dimensions of Quality:

y E fficiency



Internal Service ProcessPerspective

What critical processes must we excel at tosatisfy our customers/stakeholders?

What must be done internally to meetpatient/customer expectations?

Dimension of Quality:y E ffectivenessy Appropriatenessy Safety



Customer RelationsPerspective

Who are our target customers?

How do our patients/customers see us?

How do patients/customers rate our performance?

Dimension of Quality:y Accessibilityy Acceptabilityy

Continuity



Learning, Innovation and GrowthPerspective

How can we continue to improve?

What capabilities and tools do our employeesneed to execute our strategy/goals?

Dimension of Quality:y Competencey

Participation



BSC as a Strategic ManagementSystem

Translates strategy into:

Objectives

Measures

Targets

Initiatives



Translating with the BSC

Desired state

Differentiating activities

What must be done

well to implement

strategies

How strategic

success is

measured

MissionVision

Strategy/Goals

ObjectivesIn each perspective

MeasuresIn each perspective





CORPORATE PERFORMANCE MANAGEMENT FRAMEWORK



PERFORMANCE MANAGEMENT

COMPONENT



PERFORMANCE MANAGEMENT CYCLE



B ALANCE SCORE CARD

y It is the management tool that provides stakeholders with acomprehensive measure of how the organization isprocessing towards the achievement of its strategic goals.

y Balances financial and non financial measures.y Balances short and long term measures.y Balances performance drivers(leading indicators) with

outcome measures(lagging indicators).y Leads to strategic focus and organizational alignment.



PERSPECTIVE IN B ALANCE SCORECARD



STRATEGY AND B ALANCE SCORECARD



STRATEGY FRAMEWORK MAP



FINANCIAL PERSPECTIVE

y In private companies financial perspective is the mainobjective that is the ultimate goal.

y The strategic goal of financial perspective is the long termshareholder value which is driven by two factors-

y

A) Revenue growthy B) Cost efficiency



STRATEGIC O BJ ECTIVES INFINANCIAL



CUSTOMER PERSPECTIVE

It covers the following elements

y A) Customer acquisition

y B) Customer retentiony C) Customer profitabilityy D) Market share

y E) Customer satisfaction



STRATEGIC O BJ ECTI ES INCUSTOMER



PERSPECTIVE

It has four main components:-

y O perations Management Process.y Customer Management Process.y

Innovation Process.y Regulatory and Social Process.



STRATEGIC O BJ ECTIVES ININTERNAL PROCESS



LEARNING AND GROWTHPERSPECTIVE

It has three important components:-

y A) Human Capitaly B) O rganizational Capitaly

C) Information Capital



STRATEGIC O BJ ECTIVES INLEARNING AND GROWTH





LLSG Mission Statement

In the spirit of innovation and collaboration,London Laboratory Services Group (LLSG)

provides the health care system withappropriate and comprehensive diagnostic,therapeutic and consultative services of the

highest quality.





LLSG Goals/Strategy

The London Laboratory Services Group will: provide cost effective and efficient services

provide an atmosphere of team work which is responsive toand supportive of learning

collaborate with researchers to advance medical science

partner with educational institutions to provide training for

medical professionals develop partnerships with industry and other institutions

which will enhance the range and scope of laboratoryservices



BSC as a Communication ToolDescribes and translates strategy to

employees through clear and objective

performance measures

E xample

Goal: LLSG will provide cost effective andefficient services

Objectives: Reduce costs

Increase productivity

Measures: Supply costs

Workload



Second



Customer Perspective

Financial Accountability Perspective

Internal Process Perspective

Learning and GrowthPerspective

ReduceCrime

IncreasePerceptionof Safety

Availability of Safe,

ConvenientTransportation

MaintainCompetitive

Tax Rates

ImproveServiceQuality

PromoteEconomic

Opportunity

StrengthenNeighborhoods

EnhanceKnowledge

ManagementCapabilities

CloseSkills Gap

AchievePositive

EmployeeClimate

StreamlineCustomer

Interactions

ImproveProductivity

IncreasePositiveContacts

SecureFunding/Service

Partners

Expand

Non-CityFunding

MaximizeBenefit/Cost

Grow TaxBase

Maintain

AAARating

PromoteCommunity

BasedProblemSolving

The City of Charlotte Corporate-level Linkage Model

IncreaseInfrastructure

Capacity

PromoteBusiness

Mix



Why are Companies Adopting aBalanced Scorecard?

Change

Formulate and communicate a newstrategy for a more competitive

environmentGrowth

Increase revenues, not just cut costsand enhance productivity

ImplementFrom the 10 to the 10,000. E veryemployee implements the newgrowth strategy in their day-to-dayoperations

TheRevenueGrowthStrategy

³Improvestabilityby broadeningthesources ofrevenuefromcurrent customers

TheProductivityStrategy

³Improveoperatingefficiencyby shiftingcustomerstomorecost-effectivechannelsof distribution

ImproveReturns

ImproveOperatingE fficiency

BroadenRevenueMix

IncreaseCustomer Confidencein Our FinancialAdvice

IncreaseCustomerSatisfactionT h r ou g h S u pe r i o r E xecution

IncreaseE mployeeProductivity

A cc es s t oStrategicInformation

DevelopStrategicSkills

AlignPersonalGoals

Financial Perspective

Customer Perspective

Internal Perspective

LearningPer spective

Cross-S e l l t h eProductLine

S hi ft t o AppropriateChannel

ProvideRapidResponse

DevelopNewProducts

MinimizeProblems

UnderstandCustomer Segments



Why Do We Need a Balanced Scorecard?To Implement Business Strategy!

³Less than 10% of strategies effectively formulated are effectively executed´

Fortune

³Business Strategy is now the single most important issue« and will remain sofor the next five years´

BusinessWeek





The BSC ³ E arly Adaptors´ Have E xecutedTheir Strategies Reliably and Rapidly

The Solution Was Already There

Beat the Odds

9 of 10 companiesfail to execute their

strategies

Fast

2 to 3 years toachieve

breakthrough results

The BSC helped create focus and alignment to unlock theorganization ¶s ³hidden assets ´



STRATEGY

HUMAN RESOURCES

BUSINESS UNITS EXECUTIVE TEAM

INFORMATIONTECHNOLOGY

BUDGETS AND CAPITALINVESTMENTS

The Balanced Scorecard process allows an organizationto align and focus all its resources on its strategy

Question:

H ow can complex organizationsachieve results like this in such

short periods of time?

Answer:

Alignment!



How Do They Do It?

1. A Process to Mobilize the Organization and Lead OngoingChange

2. Scorecards That Describe the Strategy3. Linking Scorecard to Create an Organization Alignment

4. Continuous Communication to Empower the Workforce

5. A ligning Personal Goals, Incentives, and Competencies With

the Strategy6. Aligning Resources , Budgets and Initiatives With the Strategy

7. A Feedback Process That Encourages Learning andExperience Sharing

The Seven Ingredients of Highly Successful BalancedThe Seven Ingredients of Highly Successful BalancedScorecard ProgramsScorecard Programs



. Leadership From the Topy C reate the C limate for

C hangey C reate a C ommon Focus

for C hange Activities

y Rationalize and Align theO rganization

3. Unlock and Focus HiddenAssets

± Reengineer Work Processes

± C reate Knowledge

Sharing Networks

2. Make Strategy Everyone¶s Job ± C omprehensive

C ommunication to C reate Awareness

± Align Goals and Incentives ± Integrate Budgeting with

Strategic Planning ± Align Resources and

Initiatives

4 . Make Strategy aContinuous Process

± Strategic Feedback That EncouragesLearning

± Executive TeamsManage Strategic Themes

± Testing H ypotheses, Adapting, and Learning

The Ingredients of Highly SuccessfulBalanced Scorecard Programs

STRATEGY

FormulateFormulate

NavigateNavigateCommunicateCommunicate

ExecuteExecute



A Good Balanced Scorecard Tells theStory of our Strategy

y E very measure is part of a chain of cause and effect linkages

y A balance exists between outcomemeasures and the performance

drivers or desired outcomes



The Problem:Most of Today¶s Feedback Systems

Are ³Controls´ Oriented

Correction

Applied

VarianceDetected

Management

Feedback &Control Loop



Not all E nvironments are Appropriate for a BalancedScorecard

y Balanced Scorecard must be driven from the top:y CEO/COO as sponsor y Executive leadership team commitment

y A clear sense of purpose is required to:y Drive changey Clarify and gain consensus about strategyy Build a senior executive teamy Focus the organization: align programs and investmentsy Integrate cross-functionallyy Educate and empower the organization

y The dynamics of the senior executive team will determinewhether the Balanced Scorecard becomes a strategicmanagement system



THE BALANC E D SCOR E CARDMANAG E ME NT SYST E M

Significant results can be achieved in relatively short periods of time...

Implement a framework to align and focus theorganization from top to bottom on its strategy

Identify the related key change initiatives requiredto realize the strategy and mobilize theorganization

Create feedback processes at all levels toevaluate progress against strategy, monitor andmanage issues and priorities, and measureperformance and contribution to the business.

LEVERAGEPERFORMANCEPERFORMANCE

KNOWLEDGE BASE INSIGHTS

Strategic MeasuresStrategic Objectives

Q FinanciallyStrongQ Delightthe Consumer Q Win-WinRelationshipQ Safe&Reliable

Q Competitive Supplier

Q GoodNeighbor Q QualityQ Motivated &Prepared

Q Return on Capital E mployedQ Mystery ShopperRatingQ Dealer /Pioneer Gross Profit

SplitQ Manufacturing Reliability IndexQ Days Away from Work RateQ Laid DownCost vs. Best

Competitive Ratable SupplyQ EnvironmentalIndexQ Quality IndexQ StrategicCompetency

Availability

F I N A N C I A L

C U S T

I N T E R N A L

L & G

Bala nced Sc ore card Outcomes

Processes

Insights

The Strategy Teams

LEARNING

STRATEGY

ALIGNMENT



The Balanced Scorecard is a veryimportant strategic management tool

which helps an organization to not onlymeasure the performance but also decide

the strategies which are needed to be

adopted so that the long-term goals areachieved.



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