Balanced Scorecard

Crowdsourced Business
Presentation Design Service
Balanced Scorecard
Using the Balance Scorecard as a
Strategic Management System
February 25, 2014
This document explains the Balanced Scorecard business framework and how to
use it as a strategic management system. It includes instructional slides explaining
the methodology, in addition to examples and slide templates. Topics include the
Four Processes, Four Perspectives, Personal Scorecard, and Strategic Learning.
ORIGINAL PROJECT DETAILS
http://pptlab.com/ppt/HBR-Using-the-Balanced-Scorecard-as-a-Strategic-Management-System-19

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Contents
– Communicating and Linking
– Business Planning
– Translating the Vision
– Feedback and Learning
Examples and Templates
Four Processes
Overview
This document is a partial preview. Full document download can be found on Flevy:
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Four management processes tie short-term activities to long-term
objectives
Overview – Four Processes
Source: Using the Balanced Scorecard as a Strategic Management System, Kaplan and Norton (2005)
The Balanced Scorecard relies on 4 key management processes to tie
short-term activities with long-term objectives:
Translating the
Vision
1
Communicating and
Linking
2
Business Planning
3
Feedback and
Learning
4

BSC measures the organization’s performance against 4 perspectives
Overview – Four Perspectives
The BSC approach evaluates and measures an organization’s performance
across 4 perspectives—1 financial and 3 non-financial
Financial
Measures
1
Customer
Relationships
2
Internal Business
Processes
3
Learning and
Growth
4
To success
financially, how
should we appear
to our
shareholders?
To achieve our
vision, how will we
sustain our ability
to change and
improve?
To achieve our
vision, how should
we appear to our
customers?
To satisfy our
shareholders and
customers, what
processes must
we excel at?

Translating the vision involves measuring against
4 perspectives
Translating the Vision – Four Perspectives
Translating
the Vision
1 Communication
and Linking
2
Business
Planning
3
Feedback and
Learning
4
Translating the
Vision
InitiativesTargetsMeasuresObjectives
FINANCIAL MEASURES
“To success
financially, how
should we appear
to our
shareholders?”
LEARNING AND GROWTH
“To achieve our
vision, how will we
sustain our ability
to change and
improve?”
INTERNAL BUSINESS PROCESSES
“To satisfy our shareholders and customers,
what business processes must we excel at?”
CUSTOMER RELATIONSHIPS
“To achieve our vision, how should we appear to
our customers?”

Feedback and Learning allows the company for
strategic learning and double-loop learning
Feedback and Learning
Translating
the Vision
1 Communication
and Linking
2
Business
Planning
3
Feedback and
Learning
4
The fourth process gives organizations the
capacity for strategic learning
In addition to purely budgeted financial
goals, a Balanced Scorecard at the center
of a company’s management systems
allows management to monitor short-term
results from the three additional
perspectives—1) customers, 2) internal
business processes, and 3) learning and
growth—and evaluate strategy under the
light of recent performance
In other words, the scorecard enables
companies to modify their strategies to
reflect real-time learning
OVERVIEW EXAMPLES
BSC allows a company for “double-loop learning” (learning that produces a change in
people’s assumptions about cause-and-effect relationships).
• A CEO of an engineering company said: “With the Balanced Scorecard, I can
continually test my strategy. It’s like performing real-time research.”
• Most companies today operate in a turbulent competitive environment with
complex strategies that, though valid when launched, may lose their validity as
market conditions change—the BSC framework gives management the ability to
know at any point in its implementation whether the strategy they have formulated
is, in fact, working and if not, why not
• Budget reviews and financially based management tools do not allow this, as they
address performance from only the financial perspective; also, they do not involve
strategic learning

This 26-month timeframe portrays how a company can adopt BSC as its
strategic management system …
Example – BSC Strategic Management Process (1 of 3)
121110987654321
MONTHS
Clarify the vision. Ten members
of a newly formed exec team work
together for 3 months. A Balanced
Scorecard is developed to
translate a generic vision into a
strategy that is understood and
can be communicated. The
process helps build consensus
and commitment to the strategy.
Communication to
middle management. The
top three layers of
management (100 people)
are brought together to
learn about and discuss the
new strategy. The
Balanced Scorecard is the
communication vehicle.
Develop business unit
scorecards. Using the
corporate scorecard as a
template, each business
unit translates its strategy
into its own scorecard.
Eliminate non-strategic investments. The
corporate scorecard, by clarifying strategic
priorities, identifies many programs that are
not contributing to the overarching strategy.
Launch corporate change programs. The
corporate scorecard identifies the need for
cross-business change programs. They are
launched while the business units prepare
their scorecards.
Review business unit
scorecards. The CEO
and the exec team review
the individual business
units’ scorecards. The
review permits the CEO to
participate knowledgeably
in shaping business unit
strategy.
Refine the vision. The
review of business unit
scorecards identifies
several cross-business
issues not initially included
in the corporate strategy.
The corporate scorecard is
updated.

An example of a Personal Scorecard—note how it contains both financial
and non-financial objectives
Example – Personal Scorecard
Achieve an internal rate of return 2% above the cost of capital
Increase our earnings by an average or 20% per year
Double our corporate value in 5 years
CORPORATE OBJECTIVES
3.
4.
5.
2.
1.
5.TargetsTeam/Individual Measures
Development costs per barrel85909395100
4.Production costs per barrel7073757810
Operating
3.Overhead and operating expenses72758085100
Net cash flow235230220420100
2.Earnings in ($ USD MM)220180160120100
Financial
1.2016201520142013201220162015201420132012
Team/Individual Objectives
and Initiatives
Business Unit TargetsScorecard MeasuresCorporate Targets
Name:
Location:

BSC Implementation 2-Year Timeline Template
242322212019181716151413
Establish individual
performance objectives.
Update long-range plan
and budget.
Conduct monthly and quarterly reviews.
Communicate the
BSC to the company.
This step is performed on a regular
schedule. The BSC is now a routine
part of the management process.
Template – BSC Implementation Timeline (2 of 2)

1
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