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Balanced score card and strategy mapping

professor / Samir Riyad Helal


by:Ramaz Sami Behery

Agenda
What is balanced score card ? Perspective of BSC Why we call it balanced score card ? Benefits of the BSC BSC and strategy mapping Draw back of the balanced scorecard

What is balanced score card ?


The BSC is a strategic measurement and management system that translates an organizations mission and strategy into a set of performance measures that provides the frame work for implementing the strategy

Agenda
What is balanced score card ? Perspective of BSC Why we call it balanced score card ? Benefits of the BSC BSC and strategy mapping Draw back of the balanced scorecard

Financial What do our financial stakeholders expect or demand ?

Customer Strategy

Internal process At what business processes must we excel to drive value to customers ? Employee learning and growth How do we align our intangible assets to improve our ability to support our strategy ?

Who are our target customers , what are their expectations ?

BSC perspectives
The BSC doesnt focus solely on achieving financial objectives . it also high lights the non financial objectives that an organization must achieve to meet its financial objectives The score card measures an organizations performance from four perspectives 1- financial 2- customer 3- internal business processes 4- learning and growth

1- financial perspective This perspective evaluates the profitability of the strategy and focus on how much of operating income and return on capital results from reducing costs and selling more units. 2- customer perspective This perspective identifies the target market segments and measures the companys success in the segments

3-internal business process perspective This perspective focus on internal operations that further the customer perspective by creating value for customers and further the financial perspective by increasing share holder value. 4-learning and growth perspective This perspective identifies the capabilities the organization must excel at to achieve superior internal process that create value for customers and share holders

Agenda
What is balanced score card ? Perspective of BSC Why we call it balanced score card ? Benefits of the BSC BSC and strategy mapping Draw back of the balanced scorecard

Why we call it BSC ?


its called BSC coz it balances the use of financial and non financial performance measures to evaluate short run and long run performance in a single report

Agenda
What is balanced score card ? Perspective of BSC Why we call it balanced score card ? Benefits of the BSC BSC and strategy mapping Draw back of the balanced scorecard

Benefits of the BSC


1- a means for tracking progress toward achievement of strategic goals . 2-a means for implementing strategy by drawing managers attention to strategically relevant critical success factors , and rewarding them for achievement of these factors . 3-BSC enables managers to see how their activity contributes to the success of others and motivates teamwork.

Agenda
What is balanced score card ? Perspective of BSC Why we call it balanced score card ? Benefits of the BSC BSC and strategy mapping Draw back of the balanced scorecard

BSC and strategy mapping


When trying to understand anything complex , we tend to break ideas into their contributing parts . With BSC , the art of understanding the relationship among all key perspective is done using strategy mapping . Strategy mapping : a technique of drawing the intricate relationships of cause and effect among all perspective and their contributing parts .

A strategy map provides a comprehensive visual representation of the linkages among measures in the four perspective of the BSC . Each measure of a BSC becomes embedded in a chain of cause and effect logic that connects the desired outcomes from the strategy with the drivers that will lead to the strategic outcomes . The strategy map describe the process for transforming intangibles assets into tangible customer and financial outcomes . It provides executives with a frame work for describing and managing strategy in a knowledge economy.

Agenda
What is balanced score card ? Perspective of BSC Why we call it balanced score card ? Benefits of the BSC BSC and strategy mapping Draw back of the balanced scorecard

Drawback of the balanced scorecard


1-BSC still depends on general ledger information . 2-mass information from mixing financial and non-financial measures which can confused managers and be more than its ability. 3-cause and effect relationship which not all researchers say it already exist . 4-most of non-financial measures are hardly evaluated and measured . 5-cost of design BSC may be high

conclusion
Since its inception the BSC has attracted attention around the world. It has been adapted by many companies as an integrated performance measurement system that measure performance of all aspect of companies financial , customer , internal business process , and learning and growth . Companies began to realize the importance of BSC in executing strategy . This creates the need to reconcile BSC . As result , kaplan and norton build strategy map ( 2nd generation BSC) that articulate strategy through a chain of cause and effect relationships . Strategy map helps companies to put strategy at the center of the management processes . Companies that use strategy maps get the benefits of becoming strategy- focused organization . Unfortunately , BSC still depends on general ledger that provides too aggregated , too late , and too distorted performance measures . So BSC needs activity based performance measures to enhance its credibility