Presented By:-Smriti

Singh
Balanced
Scorecard

Creating
Strategy Map to
Drive Corporate
Performance
CONTENTS
1.Introduction
2.Corporate Performance
Scorecard
3.Strategy Map Framework
4.Four Perspectives in Balanced
Scorecard
5.Identifying Key Performance
Indicators
Introduction
The balanced scorecard is a
strategic planning and
management system that is used
extensively in business and
industry, government, and
nonprofit organizations worldwide
to align business activities to the
vision and strategy of the
organization, improve internal and
external communications, and
monitor organization performance
Contd..
Itwas originated by Drs. Robert
Kaplan (Harvard Business
School) and David Norton as a
performance measurement
framework.
The phrase balanced scorecard
was coined in the early 1990s.
 .Performance Management
Framework

 Vision S tra te g y
 Mission
M ap
 Strategy

K ey
Company
P e rfo rm a n ce strategy
In d ica to rs

Identifying
Defining
Measuring
Monitoring
Reporting
Performance Management
Component
Three critical components for
effective process of performance
management
Performance Performance management
Management cycle is continuous and
Process consistent
Performance
Performance Management
Management
Infrastructure Infrastructur Performance
e Management
Culture

Logistic support and Culture that is

performance management based on performance
administration accountability
Managing Performance with
Balanced Scorecard
Balanced Scorecard is a
management tool that provides
stakeholders with a
comprehensive measure of how
the organization is progressing
towards the achievement of its
strategic goals.

Managing Performance with
Balanced Scorecard
• Balances financial and non-
financial measures
• Balances short and long-term
measures
• Balances performance drivers
(leading indicators) with outcome
measures (lagging indicators)
• Leads to strategic focus and
organizational alignment.

4 Perspectives in Balanced
Scorecard
Financial


The Strategy Perspective

If we succeed , how
will we look to our
shareholders?

Customer Perspective
To achieve our
vision , how must we
look to our
customers?
Internal Perspective
To satisfy our
customers , which
processes must we
excel at?
Learning & Growth
Perspective
To achieve our vision ,
how must our
organization learn and
improve?
Strategy and Balanced
Scorecard
 Mission
 Why We Strategy Strategic
Exist Map : Outcomes
Translate
the
V isio n – Strategy Satisfied
Shareholders
W hat Strategy
: Delighted
W e Our Game Customers
W a n t to Plan
Be Balanced Excellent
V a lu e s – Processes
Scorecard :
W h a t’ s Measure and
Motivated
Im p o rta Focus
Workforce
n t to U s
Strategy Map Framework

• The strategy map framework is

presented in the following
slides.
• This framework describes the
types of strategic target that
should be presented in each
perspective, namely the
financial perspective,
customers, internal business
process, and learning & growth
 Strategy Map Framework
Long - term Shareholder
Value

Cost Efficiency Revenue Growth

Financia l

Price Quality Service Availability Brand

Customer

Regulatory
Operations Customer Innovation
Management Management and Social
Processes Processes
Processes Processes

Internal
Process & Growth
Learning

Human Capital Organization Capital Information Capital

 Financial Perspective

•In private companies, the financial

perspective is the main
objective(ultimate goal) – without
having to sacrifice the interests of
other relevant stakeholders (community,
environment, government, etc.)

•In the financial perspective, the

strategic goal is the long - term
shareholder value.
value This goal is
driven by two factors, namely : revenue
growth and cost efficiency .
 Strategic Objectives in
Financial
. Long - term
Shareholder Value
.

Cost Revenue Growth

Efficiency

Improve Cost Structure Expand Revenue

Opportunities

Increase Asset Enhance Customer Value

Utilization
Customer Perspective

• This perspective is very instrumental,

because without customers, how can
a company survive?
• Customer perspective covers the
following elements:
• Customer acquisition
• Customer retention
• Customer profitability
• Market share
• Customer satisfaction

Strategic Objectives in
Customer
.
Customer Retention Customer Profitability
.
Customer Satisfaction Market Share

Customer Acquisition

Price Quality Service Availability Brand

Internal Process
Perspective
• This perspective reflects the processes in
key business that should be optimized in
order to meet the needs of the
customers.
• There are four main themes in this
perspective, namely:
• Operations Management Process
• Customer Management Process
• Innovation Process
• Regulatory and Social Process

 Strategic Objectives in Internal
Process
Operations Customer Regulatory
Management Management Innovation and Social
Processes Processes Processes Processes

Processes that Processes that Processes that Processes that

produce and enhance create new improve
deliver customer value products and communities and
products and services the environment
services

•Supply •Selection •New Ideas •Environment

•Production •Acquisition •R & D Portfolio •Safety & Health
•Distribution •Retention •Design / Develop •Employment
•Growth •Launch •Community
•
Learning & Growth
Perspective
• This perspective reflects the capability
that a company should have, namely:
• Human Capital
• Organization Capital
• Information Capital
• This perspective shows us that good
human resource development system,
organizational system and information
system forms a solid foundation for
improving company performance
 Strategic Objectives in
Learning & Growth

Organization Informatio
Human Capital n Capital
Capital

•Skills •Culture •Systems

•Knowledge •Leadership •Database
•Attitude •Organization Development •Networks
• •
 Strategy Map Template
Enhance Long-term Shareholder Value

Improve
Increase Revenue Growth
Cost Efficiency
Financial

Build High Performance Products Expand Enhance

Market Share Brand Image

Customer

Drive Demand
Achieve Operational through Customer Relation Management
Excellence Implement Good
Manage Dramatic Growth through Innovation
Environmental Policy

nternal Process
arning & Growth
Develop Strategic Competencies Build Learning Expand Capabilities with Technology
Culture
 Key Performance Indicators ( KPI )

KPI = Measurement or indicator that provides information on how far we have su

Vision
Mission and Values Strategy

Strategic Objectives
Key Performance Indicators
Finance
Key Performance Indicators
Customer

Internal
Business
Process
Key Performance Indicators

HR
Development
 KPI Guidelines

Guidelines in Formulating the KPI

 The measure of success must show clear, specific and

measurable performance indicators.

 The measure of success should be declared explicitly and in

detail so that it is clear what is being measured.

 Costs to identify and monitor the measure of success

should not exceed the value that will be known from the
measurement.
Integration between Corporate
and Division / Department

Vision
Mission
Strategy

Corporate
Scorecard
The Division Scorecard
is built by referring
Division to the corporate
Scorecard scorecard
 Corporate and Division
Scorecard
Corporate
Finance

Financial
Corporate
Marketing

Customer
Production
Supply Chain
R & D
Internal Process
Learning & Growth Corporate HR
Info
Technology
 Corporate and Division
Scorecard
•Division Scorecard is formulated by
looking at the four perspectives in
Corporate Scorecard.

•As shown in the previous slides, the

learning & growth perspective provides
guidelines for developing scorecard at
the Human Resource and IT divisions, while
the internal process perspective provides
guidelines for developing scorecard at
the supply chain division or R&D.
 Corporate and Division
Scorecard
Sample from GE Lighting Business Group

The above example shows how the scorecard at corporate level

is cascaded to division level , and further to plant level and
employee level .
Advantages
1.Taking these four different perspectives as a
whole ensures that senior management is
taking a balanced view about the
performance of the organization.
2.The short , medium and long-term views are
managed in an ongoing, cohesive
manner.
3.Top level strategy and middle management
level actions are clearly connected and
appropriately focused.
4.The organization’s performance reporting
system is much more likely to be focusing
on the things necessary to stay
Disadvantages
I.The Balance Scorecard approach
is not a quick fix, it takes
considerable thought to
develop an appropriate
scorecard.
II.While communication can
commence within a short time ,
the complete implementation
should be staged.
Conclusion
BSC is a great way for
organization to assess the total
picture of how they are
performing.
An organization needs to be able
to know if the non-financial
measures are worth the time
and money spent on funding
them.
The organization then have a way
to communicate their strategies
 Thank you