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AIM Presentation - March 2007
A fast practical physical approach to the basicmechanics of Implementing a Balanced
Scorecard (BSC) on a Personal Computer System.
Phil Best BSc(Elec) CertEng(Elec)
Director Applied PC Systems P/L ABN: 64.056.607.713Strategy Map Software System Architect
t: +61.7.3871.0011
w: www.strategymap.com.au
www.StrategyMap.com.au
www.StrategyMap.com.auThe worlds most popular Strategy Map Balanced
Scorecard Software System
Mentors:
Paul Arveson, BSC InstituteNigel Penny, Claritas Asia
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Welcome!As a Guest Speaker my goal is to leave you with a simple methodology that you can
immediately apply.
We describe BSC basic concepts within a framework relevant to Computer Screen
Tables & Relational Data Structure.
W
hilst it is essential that you understandStrategic Planning Concepts, it is also
necessary that you be able to practically
implement an automated solution using
some sort of software framework and
avoid the PTCLP (Office Dust) problem.
Ok, I have heard all the theory, but how
can I actually physically start? - NOW!
PTCLP = Post Training Course Latency ProblemStrategic Framework -> Data (automation) Framework
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Presentation Agenda
The BSC Spectrum
Balanced Scorecard (BSC) & Evolution
BSC Performance Grid or Table a Golf Game?
Where is the Strategy in a BSC Table?
Where is the How andWhy?
How can we be Right on the Money?
HTDI Converging Starting Points
Tools you can use.
Types of Software Systems.
Platforms and Development Systems.
Mission > StrategyMap > BSC > Implementation
Strategic Plan
Static Components Strategic Components
Scorecard Components
Cross Referencing
Strategy Map WYSIWYG
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The BSC Spectrum & Package
Harvard BS, Kaplan & Norton, BSCol - USA
Cranfield CBP Performance Prism - UK
Various Other Systems
KRA or KPI Based
Project Based
Almost anything imaginable is possible
Every implementation is different
Software Scene & Flow Charts
Software Variability and Setups
Our new Version 3 has > 150 setup options
Harvard or Cranfield
Strategic
BSC/HR
Collaboration
Budget
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The Strategy Map is the most strategic part
and now drives the more HR based BSC
MeasurementSystem
StrategyImplementation
Total StrategyManagement
Articles in Harvard BusinessReview:
The Balanced Scorecard Measures that Drive PerformanceJanuary - February 1992
Putting the Balanced Scorecard to
Work September - October 1993
Using the Balanced Scorecard asStrategic Management SystemJanuary - February 1996
1996 2000 2004
1992 1996 2000 2004
Books are pre-Internet and mainly for Reference Only
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A BSC is a HR (QA style)Collaboration Tool where
associates can work
together to establish their
quality and makeimprovements to their work.
The BSC & Initiatives Grid (not a starting point)
Implemented using a
SuccessiveApproximation
refinement process
where you improve the
Quality of your
Scorecard Quality.
Obj Kra Meas Score Wt
Init Date Status Money
Note
Use Cell Merging to display grid
One-to-Many relationship.
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BSC Grid Objectives and Initiatives
Everything is written down and refined and checked
Can be Cross Referenced, targeted and collaborated
A Measurement & Status Device
Why, How and When stored in Initiatives
HR rather than Strategic
The Work Specification
Each Objective can have many Initiatives
Engage the employees through Change Management
Line Managers do the lower levels -> Their New Budget
An Aligned strategic means to obtain funding
(for everyone)
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Strategic Planning:
The tool we use to establish our direction
SM Goal: Define and Align Objectives. Refine until correct.Define BSC Col1. (Sits nice)
SM Vision: Have every employee carry it in their heads
(engage & think strategically).
SM Objective: Look concise but sit perfectly. Not too heavy
not too light. A Recursive Development Process.
SM Structure: Inter-related Objectives categorized by View-
ports (Perspectives)
SM Mission: Provide the structural focus to answer the
questions: Where are we going, Why do we come to work?
Why an I doing this? How will our careers improve? Will weexpand or downsize?
Project Map or extra Project Perspective
Child Maps with inherited Objectives
Arrows pointing upwards if possible with optional goalsrow.
StrategyMap
Needs
Design
Strategies
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Objectives
Fast groundturnaround
Statement ofwhat strategymust achieve
and whats
critical to itssuccess
Target
30 Minutes 90%
The level ofperformance or
rate of
improvementneeded
Cycle timeoptimization
Key actionprogramsrequired to
achieveobjectives
InitiativeMeasurement
On Ground Time On-Time Departure
How success inachieving the
strategy will bemeasured and
tracked
Strategic Theme:Operating Efficiency
ProfitabilityFinancial
Learning
Morecustomers
Ground crewalignment
Lowestprices
Fewer planes
Customer
Internal
Fast groundturnaround
Strategy Map: Diagram of the
cause-and-effect relationshipsbetween strategic objectives
FlightIs on time
Balanced Scorecard terminology
South-West Airlines
Non KRA example (an early SM/BSC)
Possible Grid Conflict now with automation
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% Ground crewtrained
% Ground crewstockholders
Objectives Measurement
Market Value
Seat Revenue
Plane Lease Cost
FAA On TimeArrival Rating
Customer Ranking(Market Survey)
On Ground Time On-Time Departure
Strategic Theme:Operating Efficiency
Initiative
Cycle timeoptimization
program
ESOP
Ground crewtraining
Qualitymanagement
Customerloyalty
program
Target
30% CAGR
20% CAGR
5% CAGR
#1
#1
30 Minutes 90%
yr. 1 70%yr. 3 90%yr. 5 100%
ProfitabilityFinancial
Learning
MoreCustomers
Ground CrewAlignment
LowestPrices
Fewer Planes
Customer
Internal
Fast GroundTurnaround
FlightIs on Time
Profitability
More Customers
Fewer planes
Flight is on -time Lowest prices
Fast groundturnaround
Ground crewalignment
BSC Needs to be aligned (driven by) the
Strategy MapHarvard K&N Southwest Airlines Example
Stylised SM->BSC no clear responsibility or one-to-many structure
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Profitability Growth Shareholder
Value
Organisation Vision
Price Service Quality
Market Innovation Continuous Learning Intellectual Assets
Strategy is described usingfour perspectives
Cause and effect is a keyelement
Measures are developed tomonitor performance
If we succeed, howwill we look to ourshareholders?
To achieve our vision,how must we look toour customers?
To satisfy ourcustomers, whatmanagement processesmust we excel at?
To achieve ourvision, how must ourorganisation learnand improve?
Cycle Time Productivity Cost
Financial Perspective
Customer Perspective
Internal Perspective
Organization Learning
Perspectives as view-ports or windowsBalanced Scorecard provides the framework to translate strategy into
operational terms.
Commit this Framework to your memory!
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With Forward Planning, New Strategies kick-in to take us to thenext level of growth
..
Needs Collaboration & Alignment: Vision, Persps, Objectives, Inits. & BudgetsNeeds Collaboration & Alignment: Vision, Persps, Objectives, Inits. & Budgets
T1T1 T2 T2S1S1
S2S2
Plan for T2 before reaching the top of T1Plan for T2 before reaching the top of T1 Especially in IT and Share TradingEspecially in IT and Share Trading
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Successful Balanced Scorecards start with a StrategyMap Example Mobil (US Marketing & Refining)
Growth Theme
Improve quality of revenue by understanding customer needs anddifferentiating ourselves accordingly.
Productivity Theme
Maximize utilization of existing assets and integrate thebusiness to reduce total delivered cost.
FinancialPerspective
Return on Capital
Increased from 6% to 16%
Competitive Position(profitability)
From last (1993)to first (95, 96, 97, 98)
Volume GrowthExceeds industry by 2-2.5% annually
Reduce Cash ExpensesDown by 20%
Improve Cash FlowFrom -$500 M/Yr to +$700 M/Yr
CustomerPerspective
InternalPerspective
Customer Satisfaction
Continuous improvement for 3consecutive years
Speedpass Active
Increasing at rate of 1Mper year
Dealer Quality Perfect Orders
Continuousimprovement for 4consecutive years
Learning &Growth
Perspective
Quality Capacity Utilization Safety Lost work incidentsdown from 150 to 30
per year
Environmental
Number of incidentsreduced by 63%
Continuousimprovement for 4consecutive years
Annual value of lostyield reduced from
$175m to $50m
Product Innovation Customer Management
Operational Excellence Good Neighbor
Motivated & PreparedWorkforce
Continuousimprovement for 4consecutive years
Strategic Awareness
Annual employee survey shows awareness of strategy
increased from 20% to 80%
Source:Source:The Balanced ScorecardThe Balanced ScorecardD. Norton & R. KaplanD. Norton & R. Kaplan
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Back at the BSC Coal-Face Implementation
Assign SM Objective to an employee
Break down each (broad) Objective with related
measurable concepts in one or more columns called
KRA, KPI, CPI, Target, Focus, etc.
How to Measure it and Score it?
Repeat the planning and building process until correct.
Correctness = Alignment = Efficiency = Collaborative
Cross Referencing.
Every Org BSC is different and changes regularly.
New BSC every year for Planning & Budgeting
Comparison between Planned and Actual Income and
Expenses
1.Static Done!2. Strategic Done!
3. Scorecard Components
with SM Alignment
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Choice of Objective Grid ColumnsWhere does the actual strategy live?
KPIKPI Brand ImageBrand Image KPIKPI Value for moneyValue for money
Both these companies make cars but its the strategy that
differentiates
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The SM >> BSC Full Data Structure
Static Components Vision Mission Goals
Perspectives (4 or 5 is common) possible Multiple Goals
Initiatives with Dates,
Gauges, Budgets
Objectives KRAs
Measures & Scores
Monthly Outcomes
Planned Vs Actual
Income Vs Expense
Does not have to be overly complex. Eventually involves a seriesof Tiered One-to-Many relationships
Make itsit justright
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How to do itSM/BSC is not a Tertiary Education Concept (not Rocket Science).It is practical & hands-on and requires your extensive company structural knowledge.
It is a successive approximation process using the industry skills that you already have.The CEO flies Solo with managers as flight attendants.
1. Train CEO and Upper Management.2. Run strategic retreat for managers. Discard current roles. Combine their
industry and company knowledge. Use Strategic Facilitator (Quality >>Outcome).3. Define Static Components: Vision, Mission, Market, SWOT, Values,
Policies, etc.4. Strategic Components: Persps. & Objectives5. Alignment with (KISS) Objectives in Strategy Map6. Build Alignment & Accountability. Define & assign Employee KRAs/KPIs
to Objectives
7. Engage and Train Employees in Your Vision/SM/BSC Framework andhow they can help.
8. Focus on Change Management if needed.9. Train and engage Managers & Employees to complete the picture and
prepare budgets.10. Monitor & Continue to improve the SM&BSC.
The CEO
Leads fromthe front.
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Scorecard Benefits for Your Organisation?
Clarify the vision
Gain consensus and ownership
Align the organisation
Integrate strategic planning
Drive resource allocation
Improve management effectiveness
The journey is not easy or short
Source:The Strategy Focused Organization, D. Norton & R. Kaplan
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Tools you can use
AIM Training,Facilitators to guide you, Case
Studies.
StrategyMap Balanced
ScorecardSoftware BSC SystemsSM front End,Adaptable,
Cross ReferencingStrategy Map WYSIWYG
Avoid the Post-Training-Course Latency Period (The OfficeDust) by using an office automation and collaborative
software product.
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Types of software systems
Word tables with cell merging
Excel with formulas
Old Tech Windows Forms based BSC Products
DedicatedWindows Forms based BSC Products
DedicatedWindows Forms based SM/BSC products
More complex systems that link to Outlook Tasks
Web Browser Based Systems (Insecure or Expensive) Lower usability, sometimes
better availability.
The Strategic Planning system is not an accounting system. (Some finance data maybe duplicated)
It has different users and data entry permissions. It operates in a different time-zone.
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Thankyou
Questions Please
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