Balanced Score Card

Dr A. P. Dash Power Management Institute

Strategy to Business Results

BALANCED SCORECARD
Financial To succeed financially, how should we appear to our shareholders

Customer To achieve our vision, how should we appear to our customers? Vision and Strategy To satisfy our shareholders and customers, what business processes must we excel at?

Internal Business Process

Learning and Growth To achieve our vision, how will we sustain our ability to change and improve?

The source of value creation has shifted from Tangible to Intangible assets
1983
IMPACT OF MEASURES BALANCED SCORECARD

1993 38% 62%

2003 15% 85%

Tangible

62% 38%

Intangible

Voice of the Business

Voice of the Customer

THE
FINANCIAL PERSPECTIVE
Voice of the Process

THE

CUSTOMER
PERSPECTIVE
Voice of the Employee

THE

THE

INTERNAL BUSINESS LEARNING & GROWTH

PERSPECTIVE

PERSPECTIVE

Finance
Measures
Revenue ROCE Profit Cost EVA

Customer
To achieve our vision, how should we appear to our customers in terms of
Product attributes Brand Relationship with the customer

in the targeted segments Measures

Customer Sat/retention/expansion Value delivery - to customer Market/segment share

Process
What processes must we excel at in order to achieve our vision Measures of the process
Quality Cost Delivery Asset effectiveness

Learning and Growth

To achieve our vision, how will we sustain our ability to change and improve in terms of
People Systems Infrastructure

Measures
Employee Satisfaction & Retention Skills - inventory & build up Investment in strategic systems

Balanced Scorecard
BALANCES

Leading and Lagging Indicators

Leading Measures - Performance Drivers
Before the damage is done Help take midcourse correction Examples Kms walked/week Total Cholesterol/HDL ratio Employee satisfaction

Leadership role

Criteria for setting goals

Specific Measurable Achievable Relevant Time Bound

SMART goals - Are these SMART?

Complete 3 benchmarking projects by June 2003 Develop a new supplier for fabricated spares by June 2003 Improve power generation efficiency by 10%

SMART Goals
Ensure cost reduction of Rs. --- crores by Sep 2007 through successful implementation of at least 3 benchmarking projects Ensure new supplier for <name> spare is certified as approved vendor by June 2007 (as per certification norm) Reduce cost of power generation from avg. Rs.<>/unit in 2005-06 to Rs. <>/unit in 2006-07

Scorecard - Cause & Effect

Finance Profit Customer Loyalty

Customer
On-time delivery Process Quality Employee Skills Process Speed Strategic Systems

Internal Processes

Learning and Growth

The BSC Strategy Map

CAPTURES THE KEY CAUSE & EFFECT HYPOTHESES Improve Shareholder Value

FINANCIAL PERSPECTIVE

Grow Net Revenues

Grow the customer base Improve customer profitability Retain existing customers

Improve Resource Productivity

Improve cost structure Improve asset utilization

CUSTOMER PERSPECTIVE

Acquire new customers

Increase segment penetration Communicate core value proposition Improve operating efficiencies Build a pro-active empowered culture Reduce waste

Improve customer satisfaction

Improve customer relationship Improve Service Attributes Build relationship management skills

PROCESS PERSPECTIVE LEARNING PERSPECTIVE

Innovate new products/services Prepare & educate the work force

Strategy Map

PMI- BSC Strategy Map Internal & External Customers

Increase ROTI Revenue/Investment
FINANCIAL PERSPECTIVE

Business Growth Growth Of Demand of organised Programs

Increase Cost Competitiveness Improve Resource Utilization

Retaining, increasing revenue from existing customer; Acquiring new customer

Improve customer satisfaction

CUSTOMER PERSPECTIVE

Objective Fulfilment from Training Program Providing Learning Solution to Business Problems Increasing Value From Faculty Design, delivery, program Taking up Benchmarking projects HR-Admin Support
Environmental Scan and Business Intelligence

PROCESS PERSPECTIVE

Faculty Value Proposition

Robust TNA Process

Positioning of PMI, Brand Building

LEARNING Competencies PERSPECTIVE

Faculty

Development

Developing Marketing Team

Training Administration

The Strategy Map

An example: Telephony Service provider

Financial Perspective

Improve XYZ Cos Return on Capital Employed

Revenue Growth Strategy understand customers needs and differentiate accordingly Productivity Growth Strategy maximize the use of existing asset integrate the business to reduce total delivered cost

Introduce new source e of Revenue through Value Added Services

*revenue from VAS *Profit margin

Sell Sticky VAS services to help Customer to communicate better

*Services used compared with the rest of the country

Become the Industry Cost Leader in every Services we Provide

*VAS cost compared with the rest of the country

Maximize the use of existing assets

*Actual cash flow compared with business plan

Customer Perspective
Product/Service attributes

Win Win Dealer Relations

Relationship
Friendly helpful employees Recognize customer loyalty

Image
Trusted Brand

Fast Activation Price

VAS Bill Plan

Offer more types of services

Help dealers develop their business skills

* Dealer Profitability * Dealer Satisfaction

Delight the customer

Financial Perspective

Improve XYZ Cos Return on Capital Employed

Revenue Growth Strategy understand customers needs and differentiate accordingly Productivity Growth Strategy maximize the use of existing asset integrate the business to reduce total delivered cost

Introduce new source e of Revenue through Value Added Services

*revenue from VAS *Profit margin

Sell Sticky VAS services to help Customer to communicate better

*Services used compared with the rest of the country

Become the Industry Cost Leader in every Services we Provide

*VAS cost compared with the rest of the country

Maximize the use of existing assets

*Actual cash flow compared with business plan

Customer Perspective
Product/Service attributes

Win Win Dealer Relations

Relationship
Friendly helpful employees Recognize customer loyalty

Image
Trusted Brand

Fast Activation Price

VAS Bill Plan

Offer more types of services

Help dealers develop their business skills

* Dealer Profitability * Dealer Satisfaction

Delight the customer

Internal Process Perspective Understand & decide Customer segments better and build best in class Channel teams
Improve hardware performance and CAS, deliver quality services and on time and become Industry Cost Leader * Network downtime * Stock out rate * TRAI quality parameters * VAS rate Vs Industry

Innovate & develop New VAS

Improve Environmental Health & Safety

* reduce number of Envi. & safety incidents

* new Service acceptance * Share of target market rate * Dealer quality rating * Return on investment

Learning & Growth perspective

Promote functional excellence,develop leader ship skills and create an integrated view of the Co.
* Ratio of Strategic skills to job coverage

Adopt new technology that encourages and helps Process Improvement

Align business and personal goals

* On time deployment of system

* Personal Balanced Score Card * Employee feed back

BSC Matrix
The one page communication system of strategies, goals, projects and initiatives

The Balanced Scorecard Matrix

STRATEGIC PERSPECTIVE Asset productivity Customer Loyalty Value delivery Relationship mgmt Product innovation Relationship skills Product devt. skills Improve revenue productivity of locations Win customer trust Market new products Establish Reln ship mgmt process Improve Product devt. process Relationship team in place Learn new product development

THEMES

OBJECTIVES

MEASURES & TARGETS

Rs 45 cr Revenue pa per location by Mar 03 95% customer approval rating 3 new products by Mar 03 90% compliance to plan elements Avg. cycle time from concept to launch < 3 months in 2002-03 5 relationship execs by Sep 02 100% Mktg execs certified on new process by Dec 02

INITIATIVES

FINANCIAL CUSTOMER

ABC costing system Loyalty campaign Product devt. cell

INTERNAL

Benchmarking Relationship marketing & New product devt. processes Recruitment Profiling tool New product identification pilot project

LEARNING

Implementing the Balanced Scorecard

DEPARTMENT:

HOD and Managers Scorecard

SMART GOAL SHEET FOR 2003 - 04 - NTPC POSITION: No. KRA/OBJECTIVE 1 1.1 1.2 2 2.1 3 3.1 4 4.1 4.2 5 6 7 8 9 9.1 10 TOTAL WEIGHT MEASURE HOW CALCULATED TARGET

BUSINESS/FINANCE

CUSTOMER

PROCESS LEARNING, GROWTH

100

ORIGINATOR: DATE: APPROVED BY: DATE:

Broad Implementation Time Table

MTH 1 MTH 2 MTH 3 MTH 4 MTH 5 MTH 6 ORIENTATION CONTRACT APPROVAL MGMT STRUCTURE AS-IS ASSESSMENT STRATEGY WORKSHOP DEPLOYMENT EDN, PLAN BUILDING FIRST LEVEL BSC BUILDING SUPPORT SYSTEMS CONSOLIDATING UNIT LEVEL BSC SMART GOAL EDUCATION DEPT MGR LEVEL DEPLOYMENT BSC COMMUNICATION PROJECT REVIEW