Balance scorecard kpi
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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