Hafsteinn Þór Einarsson Helmut Neukirchen University of Iceland, Reykjavík, Iceland
Can libraries benefit from the use of Balanced Scorecard? Snjólfur Ólafsson University of Iceland...
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Transcript of Can libraries benefit from the use of Balanced Scorecard? Snjólfur Ólafsson University of Iceland...
Can libraries benefit from the use of Balanced Scorecard?
Snjólfur ÓlafssonUniversity of Iceland
Faculty of Economics and Business Administration
8th June 2004
2 Snjólfur Ólafsson, 8th June ‘04
Aim of my talk
To provide the participants with an understanding of what Balanced Scorecard is,how it works and what it deliversand thereby allowing them to evaluate whether
Balanced Scorecard is something that could be a helpful tool for their libraries.
(A presentation at the NVBFs forårskonference I Island, Reykjavik 7. – 8. juni 2004
Abstract written by Hrönn Pétursdóttir)
3 Snjólfur Ólafsson, 8th June ‘04
Structure of my talk
The Balanced Scorecard in a nutshellThe development of the Balanced Scorecard Implementing strategyThe two main tools of the Balanced Scorecard
– Strategy maps– Scorecards
Implementing and using the Balanced Scorecard
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The Balanced Scorecard (BSC)
BSC developed from being– a measurement system to be
– a methodology for implementing strategy
BSC offers two tools Strategy maps Scorecards
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Litterature
Kaplan & Norton (1992): The Balanced Scorecard – Measures That Drive Performance. Harvard Business Review, 70 (1), 71-79.
Kaplan & Norton (1996): The Balanced Scorecard: Translating strategy into action. Harvard Business School Publishing Corporation.
Kaplan & Norton (2001): The Strategy Focused Organization: How balanced scorecard companies thrive in the new business environment. Harvard Business School Publishing Corporation.
Niven (2003): Balanced Scorecard step by step for Government and Nonprofit Agencies. New York: John Wiley & Sons.
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Snapshots from history
195x: General Electric developes the first scorecard
1983: Eden et al. presents cognitive maps to analyse issues
1989: Eden calles the cognitive maps strategic maps when the issue is a strategy
________________________________________________________________________________________________________________________
1990: Research project (KPMG ...)
1992: Kaplan & Norton write a paper about scorecards
1996: Kaplan & Norton write a book about scorecards
2000: Kaplan & Norton write a paper about strategy maps
2001: Kaplan & Norton write a book about strategy maps and scorecards
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Balanced Scorecard
Describe the strategy– with strategy maps (with objectives)– in more details than is usally done– translate the strategy into operational terms
Define measures– which are put on scorecards– and tell what is stratically important– and measure how the implementation goes
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The balance – the four perspectives
Financial perspective In order to get financial results
Customer perspective
you must keep the customers satisfied, and thus you need to
Internal business process perspective
have effective and efficient processes, and thus you need
Learning and growth perspective
good people in a learning organization
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Put in other words
To succeed financially, how must we look to our shareholders?
To achieve our mission, how should we appear to our customers?
To satisfy our customers, which business processes must we excel at?
To achieve our vision, how will we sustain our ability to change and improve?
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Implementing “strategy”
Definition by Quinn (1980), (see Grant 2002):A strategy is the pattern or plan
that integrates an organization’s main goals, policiesand actions sequences into a cohesive whole
Definition by Olafsson (2003) – translation from Icelandic:Strategy is a description
of the results that are sought afterand how they are to be optained/accomplished
Usually, only a part of the description exists in writing
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The two tools of BSC
Strategy map is– “a logical and comprehensive architecture for describing
strategy”– If you want to implement a strategy it is important to have a
clear desciption of your strategy
Scorecard (balanced scorecard)– Measures are the pillars but objectives the foundation– Other information on the scorecards, e.g.
Measurements Targets Projects
Use the strategy maps to find out what is important and measure it in the scorecards
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Strategy map
Different variants / lookThe strategy map should tell the story of the strategy
You make profit
Satisfied customers
Good processes
Learning and growth
means “leads to”
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Scorecards
Different what information is on scorecardsNext slide shows typical informationSoftware
– Excel– specialised software
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Information on scorecards
Perspective Objectives Measure Measurements Targets Projects
Low turnover Turnover 13%, 11%, 12% 10% Instr. system
Finance
Customers
Processes
People
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Strategy implementation
General management issues– Key managers and structure – The employees must know, want to and be able to
The work of the employees must support the strategy– Cascading strategy (The strategy should be developed
clear and detailed)– Change projects vs Business as usual
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Cascading strategy
If you want the employees to support the strategy (implementation) it should be clear how their objectives are linked to the strategy
Cascading means building lower order scorecards (or strategy maps)
A sub-objective (or task) in a higher order strategy can be a main objective in a lower order strategy
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Change projects vs Business as usual
The employees work can be split in two parts:A. Business as usual
B. Change projects (implementation pr., development pr.)
Some write as if strategy is implemented mainly through projects
BSC is more concerned with Business as usual “Managing continuity and strategic change” (Eden &
Ackerman)
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Change projects
Project management– How to manage a project
Projects management– (portfolio management, program management)– Projects play now much greater role in business than before
• Development projects, change projects, implementation projects, …
– Managing change
List of change projects in the light of strategy mapList of change projects in the scorecards
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Business as usual
Possible effects of BSC on employees– How the employee prioritizes tasks (his time)– Put emphasis on ...– Make changes in some processes og behaviour– Make notice of and pass information (because they know
that other employees need the information)
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The reasons for implementation
E.g.To clarify the strategy and develop itTo help employees know the strategy
– and be able to support it
To improve management information
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Non-profit organizations
The BSC can be as useful as for companiesUsually more difficultThe perspectives
– Don’t let them be in the way– Finance perspective can be anywhere
Can libraries benefit from the use of Balanced Scorecard?
Yes, most of them, IF it is done professionally
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Experience
The Balanced Scorecard insures a clear linkage between projects and strategic objectives. In addition,
the process of Balanced Scorecard development enforces alignment, transparency and accountability
throughout the organization.
Dr Bernhardt Gueldner, Senior Process Engineer,
Siemens-ICM
24 Snjólfur Ólafsson, 8th June ‘04
Experience - 2
One of the things I like about the Balanced Scorecard is that it ‘turns over the rocks,' if you will. Nothing can
hide. If you’re doing well, you see it; if you need improvement in some areas, you see that as well. You get smarter. It is an essential component of our culture
and supports ongoing change.
Dr. Jon Meliones, Chief Medical DirectorDuke Children's Hospital
25 Snjólfur Ólafsson, 8th June ‘04
Experience - 3
For me, the most exciting thing about the Balanced Scorecard is that we won’t be allocating resources to
non-strategic activities anymore. As soon as I realized that having a Balanced Scorecard will help us with this,
it was like a light went off in my head!
Joe Verbarro, Private BankingSummit Bank
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Experience - 4
The Balanced Scorecard has become an integral part of our change management process, enabling us to look
beyond financial measures and concentrate on factors that create economic value: quality, organizational learning, and focusing on customers. The scorecard has delivered on our
major goals in communication, teamwork, learning, and commitment.
Michael Hegarty, vice chairman
Chase Manhattan Bank