Balanced Scorecard-Cost-Value Creation

1. BALANCED SCORED
TOOL FOR VALUE CREATION

2. Why Need a Balanced Scorecard?Why Need a Balanced Scorecard?
The Source of Value Has Shifted From Tangible to
Intangible Assets
Intangible
Assets
Tangible
Assets
38% 62% 85%
38%
15%
62%
1982 1992 2000 +
percentage of market value related to…

3. Value Creation: IntangibleValue Creation: Intangible
AssetsAssets
Intangible Assets Do Not Have AIntangible Assets Do Not Have A
Direct Impact on Financial ResultsDirect Impact on Financial Results
They Have Second- or Third-OrderThey Have Second- or Third-Order
ImpactsImpacts
Service
Quality
Service
Quality
Customer
Confidence
Customer
Confidence Revenue
Customer
Retention
Training
Information
Technology

4. Value Creation: Intangible AssetsValue Creation: Intangible Assets
 Conventional approach to managingConventional approach to managing
financial & operational indicatorsfinancial & operational indicators
insufficientinsufficient
 Balanced Approach to StrategyBalanced Approach to Strategy
Implementation should includes focusImplementation should includes focus
on:on:
 customer/stakeholdercustomer/stakeholder
 LearningLearning
 growth & innovationgrowth & innovation

5. BALANCED SCORED
Understanding &Understanding &
managing/leveraging inter-managing/leveraging inter-
relationships between the aboverelationships between the above
areas necessary for value creationareas necessary for value creation

6. Balanced Scorecard as a Tool forBalanced Scorecard as a Tool for
Business ExcellenceBusiness Excellence
Malcolm BaldrigeMalcolm Baldrige Balanced ScorecardBalanced Scorecard
LeadershipLeadership Learning & Growth
Perspective
Learning & Growth
Perspective
Human Resource CapitalHuman Resource Capital
Business ResultsBusiness Results
Process ManagementProcess Management
Strategic PlanningStrategic Planning Strategy MapStrategy Map
Learning & Growth
Perspective
Learning & Growth
Perspective
Internal Process PerspectiveInternal Process Perspective
Customer FocusCustomer Focus Customer PerspectiveCustomer Perspective
Targets, Financial
Perspective
Targets, Financial
Perspective

7. Balanced ScorecardBalanced Scorecard
Balanced Scorecard’s keyBalanced Scorecard’s key
objective is not aboutobjective is not about
Measurement as the termMeasurement as the term
would outwardly conveywould outwardly convey
Its aboutIts about ValueValue
creation -Execution ofcreation -Execution of
StrategyStrategy

8. BALANCED SCORED

9. BALANCED SCORED

10. Balanced Scorecard Links Vision &
Strategy to Personal Objectives
VISION
What we want to be
STRATEGY
Our game plan
STRATEGIC OUTCOMESSTRATEGIC OUTCOMES
Satisfied
SHAREHOLDERS
Satisfied
SHAREHOLDERS
Delighted
CUSTOMERS
Delighted
CUSTOMERS
Efficient and Effective
PROCESSES
Efficient and Effective
PROCESSES
Motivated & Prepared
WORKFORCE
Motivated & Prepared
WORKFORCE
PERSONAL OBJECTIVES
What I need to do
BALANCED SCORECARD
Translate, Focus and Align
TRANSFORMATION OBJECTIVES
What we must improve

11. Strategy Implementation ProcessStrategy Implementation Process
Sustained StrategySustained StrategyStrategic DirectionStrategic Direction
Strategic
Guidelines
Strategic
Guidelines
StrategyStrategy
Stage
Output
Institutionalization
of the process
Institutionalization
of the process
Identification &
definition of areas of
improvement
Identification &
definition of areas of
improvement
Development of
solution and
testing
Development of
solution and
testing
Implementation of
solution across all
units
Implementation of
solution across all
units
Activity
Business
Health Check
Business
Health Check
Design
Process
Design
Process
RolloutRollout InstitutionalizationInstitutionalization

12. Business Audit AreasBusiness Audit Areas
Business Health CheckBusiness Health Check
Depending on the critical needsDepending on the critical needs
of a business , at a point ofof a business , at a point of
time, the Business Health Checktime, the Business Health Check
will focus on some or all of thewill focus on some or all of the
following areas:following areas:

13. Business Audit AreasBusiness Audit Areas

14. Business Audit AreasBusiness Audit Areas

15. Business Audit AreasBusiness Audit Areas

16. Scorecard Design & RolloutScorecard Design & Rollout
BALANCED
SCORECARD
S T R A T E G Y
Mobilize change
through executive
leadership
Change people,
make strategy
everyone’s
everyday job
Align the
organization
to create
synergies
Translate the
strategy to
operational
terms
Integrate
improvement
programmes
with scorecard

17. Scorecard Design & RolloutScorecard Design & Rollout
BALANCED
SCORECARD
S T R A T E G Y
Translate the
strategy to
operational
terms

18. Brand / product development, sales, service, operations, logistics..
Activities needed to create the required customer value proposition
and differentiation and the desired financial outcomes
Organization infrastructure, skills, capabilities, knowledge
of employees, working climate..
The ability to execute internal business processes in new
differentiated ways
Organization infrastructure, skills, capabilities, knowledge
of employees, working climate..
The ability to execute internal business processes in new
differentiated ways
Who are the target customers that will generate the revenue growth?
What are the objectives and how do we measure success with them?
Who are the target customers that will generate the revenue growth?
What are the objectives and how do we measure success with them?
What are the financial objectives for growth and productivity?
What are the major sources of growth?
What are the financial objectives for growth and productivity?
What are the major sources of growth?
Translate : Strategy into 4 ComponentsTranslate : Strategy into 4 Components
Vision and
Strategy
Vision and
Strategy
Financial
Perspective
Financial
Perspective
Customer
Perspective
Customer
Perspective
Internal
Perspective
Internal
Perspective
Learning and
growth
Perspective
Learning and
growth
Perspective

19. •Patent Score for Process Improvements
•SWIFT Training to Branches, Terminator Workshops
•Performance within TATs
•Quality
•Productivity
•% Complaints to Transactions
•Branch Contacts with Customers, Delivery Success Rate %
Research, Education & Teaching
Translate : Terminator Zero UnhappinessTranslate : Terminator Zero Unhappiness
Internal Processes
MissionMission
To ensure that the all causes of Unhappiness for Customer are
Terminated in order for the bank to vie for Service Leadership
•Customer Complaints
•Customer Feedback Scores
•Repeat Contacts
•Request Closure beyond 24 Hours
CustomerCustomer
•Cost of Complaints
•% of Business through Cross Selling
•Average Revenue Per Customer
FinancialFinancial

20. LeadingLeading
Definition
LaggingLagging
InputInput
OutputOutput
OutcomeOutcome
Objective /Objective /
QuantitativeQuantitative
Example
Intermediate outcomes that
predicts or drive bottom-line
performance results
Measure Type
Bottom-line performance results
resulting from actions taken
Amount of Investments, assets,
equipment, labor hours, or budget
dollars used
Units of a product or service
rendered - a measure of yield
Resulting effect (benefit) of the
use or application of an output
Empirical indicators of
performance
Subjective /Subjective /
QualitativeQualitative
Perceptions and evaluations of
major customers and stakeholders
Employee turnover rate
Employee satisfaction rating
Number of Value Meal orders
fulfilled
Customer satisfaction rating
Wait time
Customer complaints received as
a % of total customers served
Number of cashiers
Translate: Types of MeasurementsTranslate: Types of Measurements

21. Scorecard Design & RolloutScorecard Design & Rollout
BALANCED
SCORECARD
S T R A T E G Y
Align the
organization
to create
synergies

22. Align: Use Strategy Map to Build Cause & EffectAlign: Use Strategy Map to Build Cause & Effect
RelationshipsRelationships
Improve ROCE
Revenue Growth Strategy Productivity Strategy
Build the
Franchise
Increase
Customer Value
Improve Cost
Structure
Improve Asset
Utilization
A Motivated and Prepared Workforce
 New Revenue
Sources
 Customer
Profitability
 Cost per Unit  Asset
Utilization
Price
Financial
Perspective
Customer
Perspectiv
e
Internal
Perspective
Learning &
Growth
Perspective
Product/Service
Attributes
Strategic
Competencies
Strategic
Technologies
Climate for
Action
“Build the
Franchise”
“Increase
Customer Value”
“Achieve Operational
Excellence”
(Innovation
Processes)
(Customer
Management
Processes)
(Operations &
Logistics
Processes)
Customer Value Proposition
Quality
Operational
Excellence
Product Leadership
 Customer
Satisfaction
 Customer
Acquisition
 Customer
Retention
Time Function Service Relations
Bran
d
Relationship Image
 Market Share

23. ReviewReview
ReviewReview
ReviewReview
ReviewReviewReviewReview
ReviewReview ReviewReview
ReviewReview
ReviewReview
Align : Flow of the Scorecard AlongAlign : Flow of the Scorecard Along
The OrganizationThe Organization
Production
Shift
Scorecard
Packing Shift
Scorecard
Production
Daily
Scorecard
Maintenance
Daily Scorecard
Department
Weekly
Scorecard
Packing Daily
Scorecard
PC/QC Daily
Scorecard
Maintenance
Weekly
Scorecard
PC/QC Weekly
Scorecard
Plant Head :Weekly Value Loss Scorecard &
Analysis

24. Manpower
Index (SMI)
Non Energy Cash
Costs (NECC)
Maintenance
Index (MI)
Man Hours
Unit of Hardware
Unit of
Hardware is
a constraint
Man Hours
is not a
constraint
Man Hour
Categories
Standard Hours
Turnaround Hours (Outside
of current scope)
Other Hours (Outside of
Maintenance Engineering
Services)
Contractor
Hours
Shell Hours
Skills constraint
Risk constraint
Profit constraint
Equipment constraint
Shell hours constraint
Response Time = Sigma [Job Time Raised – Job Time Closed]
No. of Jobs
Availability = (Total m/c hrs) - (m/c downtime hrs) x 100
(Total m/c hrs)
Reliability (MTBF) = (Total m/c hrs) - (m/c downtime hrs)
No. of Breakdowns
Maintainability (MTTR) = (m/c downtime hrs)
No. of Breakdowns
PM Index = No. of m/c for which PM is carried out
No. of m/c due for PM
Crew Utilization = Total earned hrs x 100
Actual available hrs
MMTR = Mean Time To RepairMTBF = Mean Time Between Failures Versus
MTBM = Mean Time Between Maintenance?
Backlog Hours = Sigma [Job in queue x standard time]
Cost = Actual Job Cost +
Lost Opportunity
Routine Index (MI)
Turnaround Index (MI)
Maintenance
Capex
Maintenance
Costs
Inspection Costs
Routine
Costs
Plant
transforma
tions
Extraordinary Costs
Operating
Costs
Contractor
Costs
Turnaround Cost
(Outside of
current scope)
Equipment Constraint Hours
Risk Constraint Hours
Skills Constraint Hours
Profit Constraint Hours
Non Constraint Hours
RCA Design %
RCA
Installation/
Repair %
RCA
Utilization %
RCA
Preventative %
RCA Planned %
Maintenance Schedule Adherence
Planning Accuracy =
Actual Hours/Estimated
Hours
Align :KPI Roll Down – Oil RefineryAlign :KPI Roll Down – Oil Refinery

25. Align : Lowest Organism in the FoodAlign : Lowest Organism in the Food
ChainChain
 Mobil – Truck DriversMobil – Truck Drivers
 Truck drivers were initially skeptical about how they couldTruck drivers were initially skeptical about how they could
affect any of the corporate strategic themes.affect any of the corporate strategic themes.
 They knew that their job was to deliver to customersThey knew that their job was to deliver to customers
 By driving safely and avoiding accidents truck drivers couldBy driving safely and avoiding accidents truck drivers could
improve performance on all internal measures that wereimprove performance on all internal measures that were
identified… lower costs, reliable, on time, environmentallyidentified… lower costs, reliable, on time, environmentally
friendlyfriendly
 ICICI-Fire in the BranchICICI-Fire in the Branch
 Every single mistake by a branch added up to a lot of failuresEvery single mistake by a branch added up to a lot of failures
countrywidecountrywide
 Single complaint in a branch will bring the branch to aSingle complaint in a branch will bring the branch to a
standstillstandstill
 Would track to one activity not being done by a single personWould track to one activity not being done by a single person
 Refer to Drawer syndromeRefer to Drawer syndrome

26. Align : Balanced Scorecard withAlign : Balanced Scorecard with
Organizational DesignOrganizational Design

27. Balanced ScorecardBalanced Scorecard

28. All complaints to be resolved with root fix ComplaintsComplaints
Get it right first time.
Call up a customer if
error is noticed
TransactionsTransactions
Ensure First Contact
Resolution ContactsContacts
Good Closure Quality
Service RequestsService Requests
Root Cause Analysis & Review
Reduce Service Failure Flow Delivery FailureDelivery Failure
Align :Mission Zero UnhappinessAlign :Mission Zero Unhappiness

29. Scorecard Design & RolloutScorecard Design & Rollout
BALANCED
SCORECARD
S T R A T E G Y
Change people,
make strategy
everyone’s
everyday job

30. ConsciousUnconscious
Incompetent Competent
Direct Delegate
Support Coach
The Four States of Mind!
ConsciousUnconscious
Incompetent Competent
Compliance Culture
Understanding Usage
Minds Path Matrix
……No shortcuts possible...No shortcuts possible...
Change : Minds Path MatrixChange : Minds Path Matrix

31. Change : Minds Path MatrixChange : Minds Path Matrix
Compliance Culture
Understanding Usage
• People understand that they are “being told” to do something
new.
• Why because they don’t see the use of it !!
• This is normally viewed as extra non-value added responsibility.
• If you stop checking, they will stop trying.

32. Change: Minds Path MatrixChange: Minds Path Matrix
Compliance Culture
Understanding Usage
• People don’t think about the new system& processes anymore. It is THEIR
system now.
• They fully optimize the usage of data gathered at all levels.
• They use the Scorecards to drive improvements in business performance.
• They improve details of the systems as per the requirements.

33. Success
Hope
Problem
Definition
Solution
Development
Solution
Implementation
Culture
Change
Pain
The Mind’s Path To Success
Change ManagementChange Management

34. Change : Keep Scorecards FocusedChange : Keep Scorecards Focused
 At least one objective/measure per perspectiveAt least one objective/measure per perspective
 No more than 15 measuresNo more than 15 measures
 Personal scorecard must support supervisor’sPersonal scorecard must support supervisor’s
scorecardscorecard
 Every supervisor must have an objective andEvery supervisor must have an objective and
measure for coaching and employee developmentmeasure for coaching and employee development
 Scorecard must include an objective and measureScorecard must include an objective and measure
thatthat supports another part of the businesssupports another part of the business
•

35. •Key Issue: RTO returns would sit at the
branches, waiting for customer to collect
them
•Solution: Outbound Calling
•Every deliverable cleared resulted
in a happy customer, lesser rework &
cost savings
•Average Contact Ratio:65%
Data :Nov04-Jun 05
Change : RCA Deliverables Not ReceivedChange : RCA Deliverables Not Received

36. Change Management : Link to IncentivesChange Management : Link to Incentives
ICICIICICI
 Zero Unhappiness BranchesZero Unhappiness Branches
VNCVNC
 Incremental Performance over Base Performance isIncremental Performance over Base Performance is
rewardedrewarded
 Sales Reps often make incentive over and aboveSales Reps often make incentive over and above
salarysalary
 Performance observed over a quarterly period toPerformance observed over a quarterly period to
avoid monthly manipulationsavoid monthly manipulations

37. Change : Assessment Management SystemChange : Assessment Management System
““ If you can’tIf you can’t
measure it, youmeasure it, you
can’t manage it.”can’t manage it.”
The secret to successful change management is to be able to assessThe secret to successful change management is to be able to assess
and measure your progress through the ‘minds path’and measure your progress through the ‘minds path’
 Change Management Assessment SystemChange Management Assessment System
The four mindsets must be measured by Auditing.The four mindsets must be measured by Auditing.Auditing is aAuditing is a
quantitative measure of a qualitativequantitative measure of a qualitative

38. • Audit questionnaires are developed to assess the mindset levels using a
structured approach:
1. Closed ended questions for compliance.
2. Open ended questions for understanding.
3. Demonstrative questions for usage.
• The audit questionnaire answers get converted into a scoring scheme…
• 0 for wrong or not done.
• 1 for partially right or partly done.
• 3 for correct or demonstrated.
• The percentages of each system performance category are plotted
• The target is 100%.
Change :Assessment ManagementChange :Assessment Management
System (CAMS)System (CAMS)

39. Installation Status
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
-5 -4 -3 -2 -1 0 Current
Period
Achievement
Installed Partially Installed Not Installed System Utilization Status
0%
20%
40%
60%
80%
100%
-5 -4 -3 -2 -1 Current
Period
Achievement
Mechanical Understanding Usage
Installation StatusInstallation Status
Change : Assessment ManagementChange : Assessment Management
System(CAMS)System(CAMS)

40. Ask the Head
THE PUNY
PAYOFF FROM
OFFICE COMPUTERS
ED IT O RIAL
H
S pecial Repo rt
MA N AGEM EN T'S
NE W EST STEP
C ove r Story
THE COMPUTER
SLUMP
Sp eci al Re po rt
MA NAG E MEN T D IS C OV ER S
THE HU M A N SID E OF A U TO M ATION
Bulletin Boards
Newsletters
Classes Training Workshops
Company
Intranet
Change : Training & CommunicationChange : Training & Communication

41. Change : Training in Problem Solving –Change : Training in Problem Solving –
Decision MakingDecision Making
 Objective: Objective:
 The Program intends to provide an insight to theThe Program intends to provide an insight to the
participants in to the techniques for confrontingparticipants in to the techniques for confronting
the issues and arrive at alternatives to resolvethe issues and arrive at alternatives to resolve
them effectively using various tools andthem effectively using various tools and
techniques.techniques.
 The program is structured to provide an exposureThe program is structured to provide an exposure
to the systematic approach to logical decisionto the systematic approach to logical decision
making for attaining most optimal use ofmaking for attaining most optimal use of
resources and enhanceresources and enhance
effectiveness.effectiveness.

42. Change : Training in Problem Solving –Change : Training in Problem Solving –
Decision MakingDecision Making
Proposed Program Contents: Proposed Program Contents:
Problem SolvingProblem Solving
A conscious, systematic approach forA conscious, systematic approach for
analyzing situations and articulatinganalyzing situations and articulating
problems, underlying assumptions andproblems, underlying assumptions and
expected outcomesexpected outcomes
Root Cause AnalysisRoot Cause Analysis: A structured: A structured
investigation that aims to identify the trueinvestigation that aims to identify the true
cause of a problem and the actionscause of a problem and the actions
necessary to eliminate it.necessary to eliminate it.
Covers tools & techniques for problemCovers tools & techniques for problem
understanding, cause generation, dataunderstanding, cause generation, data
collection, cause-and-effect analysiscollection, cause-and-effect analysis

43. Change : Training in Problem Solving –Change : Training in Problem Solving –
Decision MakingDecision Making
Six Hat Thinking:Six Hat Thinking: Harness lateralHarness lateral
thinking capabilities to unearth thethinking capabilities to unearth the
resources available and make optimalresources available and make optimal
use of them to gain expecteduse of them to gain expected
outcomes. Avoiding ten mentaloutcomes. Avoiding ten mental
creative lockscreative locks
Force Field AnalysisForce Field Analysis: Identifying: Identifying
potential risks and opportunitiespotential risks and opportunities
inherent in the situationsinherent in the situations
80-20 Analysis or Pareto Principle:80-20 Analysis or Pareto Principle:
Prioritizing & focusing problemPrioritizing & focusing problem
solving exercise on key issuessolving exercise on key issues

44. Change : Training in Problem Solving –Change : Training in Problem Solving –
Decision MakingDecision Making
Decision MakingDecision Making
Even SwapsEven Swaps : A rational method for: A rational method for
analyzing decision options & making swapsanalyzing decision options & making swaps
Hidden Traps of Decision MakingHidden Traps of Decision Making & how& how
to avoid themto avoid them
Group Decision Making:Group Decision Making: Using groupUsing group
decision making techniques like consensusdecision making techniques like consensus
& NGT. Avoiding usual traps of decision& NGT. Avoiding usual traps of decision
making like Groupthinkmaking like Groupthink
Decision Implementation:Decision Implementation: DecisionDecision
implementation plan, monitoring,implementation plan, monitoring,
feedback & change managementfeedback & change management

45. Scorecard Design & RolloutScorecard Design & Rollout
BALANCED
SCORECARD
S T R A T E G Y
Integrate
improvement
programmes
with scorecard

46. Scorecard’s Role in TransformationScorecard’s Role in Transformation
 Scorecard is an indispensable tool toScorecard is an indispensable tool to
manage & monitor amanage & monitor a
transformation/business performancetransformation/business performance
improvement programmeimprovement programme
 Scorecard Implementation needs to beScorecard Implementation needs to be
supported by functional/departmentalsupported by functional/departmental
initiativesinitiatives
 Scorecard supported by a TransformationScorecard supported by a Transformation
Initiative drives Business ResultsInitiative drives Business Results

47. Goal Objective Measurement Target Initiative
Achieve
operational
efficiencies
with best
practices in
Reduce
Operational
Service Costs by
50% over the next
5 years
Cost per Outlet
Office, Cost per
Region, Cost per
FTE
5% - Year 1
10% - Year 2
15% - Year 3
Activity Based
Costing /
Management
Reduce identified
re-activities within
primary processes
by 80% over the
next 3 years
Waste Volume
Charts, Rework
Tracking, Cycle
Time End to End
in S-LX (5 of 7
Regions)
Waste stream
reductions of 5%
each year,
Reworks cut in half
for next 3 years,
cycle time cut by
75%
Lean / Six Sigma
Integrate : Goals, Measurement &Integrate : Goals, Measurement &
Improvement InitiativesImprovement Initiatives

48. When you first launch your Initiative, you probably want to
use an Output Measurement.
Once the Initiative is up and running, integrate your
measurement to an Outcome to see if the Initiative is really
having strategic impact.
InitiativeInitiative Output MeasurementOutput Measurement Outcome MeasurementOutcome Measurement
Lean Process / SixLean Process / Six
SigmaSigma
Number of ProjectsNumber of Projects
Defined by RegionDefined by Region
Overall reductions in errors,Overall reductions in errors,
reworks, and cycle timesreworks, and cycle times
Employee CompetencyEmployee Competency
ModelsModels
% of Employees who have a% of Employees who have a
Competency Model in placeCompetency Model in place
Higher skill levels of employeesHigher skill levels of employees
using the modelsusing the models
Integrate :Going from Output to OutcomeIntegrate :Going from Output to Outcome

49. Integrate: Retail ManagementIntegrate: Retail Management
Control SystemControl System
ForecastForecast PlanPlan ControlControl ReportReport
ManagerManager
RetailRetail
DistributorDistributor
DSMDSM
Retailer /
Customer
Sales Plan
Route plan
Contact Plan
Customer /
Retail Card
DSM Daily
Score Card
Territory
Sales Target
Retail
Manager
Contact Plan
Distributor
Coverage
Target
DSM Target
DSM Weekly
Score Card
DSM Monthly
Score Card
Distributor
Weekly
Score Card
Distributor
Monthly
Score Card
Review
Distributor
Sales Target
Market
Intelligence
Retail Mgr
SegmentSegment
ManagerManager
Marketing
Department
Review
Review
Segment
Mgr Monthly
Score Card
Retail Mgr
Ride with
Segment
Mgr Weekly
Score Card
Segment
Sales Target
Review
Distributor
Daily Score
Card
Review
Direct Sales
input
Retail Mgr
Daily Score
Card
Review
Review
Review
Review
Segment
Mgr Daily
Score Card
Review
Review
Review
Distributor
Quarterly
ROI Analysis
Marketing
Ride with
Retail Mgr
Weekly
Score Card
Retail Mgr
Monthly
Score Card

50. Integrate : ICICI Transformation ControlIntegrate : ICICI Transformation Control
SystemSystem
Budget for Key
Metrics for Mar 05
Daily Measurement
of Metrics:Alarm
Express
Daily Review &
Course Correction
Weekly comparison
of Budget vs. Actual
Root Cause Analysis
Fortnightly Review
Zero Unhappiness
Scorecard & RCA
Improvement
Implementation
Plan
Senior
Management
Junior &
Middle
Management
Planning Control
Analysis &
Review
Focus on Short Interval Measurement, Analysis &Review

51. Scorecard Design & RolloutScorecard Design & Rollout
BALANCED
SCORECARD
S T R A T E G Y
Mobilize change
through executive
leadership

52. Mobilize : Top Management CommitmentMobilize : Top Management Commitment
1.Creating the Climate for Change1.Creating the Climate for Change
Unfreeze the organizationUnfreeze the organization
Show the need for changeShow the need for change
2.2. Creating the Leadership TeamCreating the Leadership Team
Breaking down functional biasBreaking down functional bias
3.3. Creating the Vision and StrategyCreating the Vision and Strategy
BSC as a “visioning process”BSC as a “visioning process”
BSC to clarify the strategyBSC to clarify the strategy
4.4. Creating Team AccountabilityCreating Team Accountability
Accountability for cross-functional strategic themes at Executive TeamAccountability for cross-functional strategic themes at Executive Team
levellevel
A successful Balanced Scorecard program starts with aA successful Balanced Scorecard program starts with a
recognition that it is not a “metrics” project, it’s arecognition that it is not a “metrics” project, it’s a
“change” process.“change” process.

53. Strategic Learning Loop
Initiatives &
Programs
test the
hypotheses
Output
(Results)
reportingManagement Control Loopfunding
Input
(Resources)
update the
strategy
PERFORMANCE
85% of management teams
spend less than one hour per
month on strategy issues
92% of organizations do not
report on lead indicators
60% of organizations don’t
link strategy & budgets
78% of organizations lock
budgets to an annual cycle
20% of organizations take
more than 16 weeks to
prepare a budget
STRATEGY
BALANCED
SCORECARD
BUDGET
Mobilize :Tight Focus & Extensive ReviewMobilize :Tight Focus & Extensive Review

54. Mobilize : Red Buttons to AvoidMobilize : Red Buttons to Avoid
 Middle Management Team: Lack of SeniorMiddle Management Team: Lack of Senior
Management CommitmentManagement Commitment
 Done by One or Two IndividualsDone by One or Two Individuals
 Held at the Top: For Senior Management OnlyHeld at the Top: For Senior Management Only
 Too Long a Development Process: “Best BecomesToo Long a Development Process: “Best Becomes
the Enemy of the Good”the Enemy of the Good”
 Treating the Balanced Scorecard as a SystemsTreating the Balanced Scorecard as a Systems
ProjectProject
 Done Only for CompensationDone Only for Compensation
 Not Treated as a Change Management ProjectNot Treated as a Change Management Project

55. ContextContext
 Focus on Top line. ICICI Bank perceived to be veryFocus on Top line. ICICI Bank perceived to be very
aggressive on sales , very poor on service.aggressive on sales , very poor on service.
 For bottom-line to improves it was important forFor bottom-line to improves it was important for
the bank to be a service leader.the bank to be a service leader.
 Improved ServiceImproved Service
 Leads to improved productivity & profitLeads to improved productivity & profit
 Generates a positive word of mouth. Attracts newGenerates a positive word of mouth. Attracts new
customerscustomers
 Provides a competitive advantage.Provides a competitive advantage.
 More difficult and slower for a competitor to respond toMore difficult and slower for a competitor to respond to
service improvement than to price change.service improvement than to price change.
 Help us retain customers.Help us retain customers.
 Cheaper to retain customers than to acquire new onesCheaper to retain customers than to acquire new ones

56. •Patent Score for Process Improvements
•SWIFT Training to Branches, Terminator Workshops
•Performance within TATs
•Quality
•Productivity
•% Complaints to Transactions
•Branch Contacts with Customers, Delivery Success Rate %
Research, Education & Teaching
Terminator : Zero UnhappinessTerminator : Zero Unhappiness
Internal Processes
Mission
To ensure that the all causes of Unhappiness for Customer are fully
Terminated in order for the bank to vie for Service Leadership
•Customer Complaints
•Customer Feedback Scores
•Repeat Contacts
•Request Closure beyond 24 Hours
Customer
•Cost of Complaints
•% of Business through Cross Selling
•Average Revenue Per Customer
Financial

57. Zero Unhappiness Scorecard Branches-SampleZero Unhappiness Scorecard Branches-Sample
To p Bran ch CRs #
Fe b
Bu d g e t
Fe b
A ctu al
Varian
ce Jan '05 Dec '04 Nov '04
Ikit not activ ated 125 5 0 7 5 169 245 422
Instruction for A/c closure not executed 120 8 0 4 0 242 139 182
Cash Deposited A t Branch Not Credited 90 8 6 4 121 209 188
A ddress change not done 140 1 3 7 3 183 187 189
Transfer Of A ccounts related issues 65 5 5 1 0 88 169 168
A /c Not Opened 20 4 1 6 37 131 101
Outstation collection - Dispute in Am t 20 2 1 8 50 64 66
FD Renew al not done - deposits 10 9 1 8 32 23
TDS A m ount Deducted Disputed 5 5 0 11 13 10
Fixed deposit not linked to account 5 0 5 6 10 6
Form 15 H Not Entered 0 0 0 0 0 1
Cash Deposit In A tm Not Crdited 12 4 8 21 35 56
Fixed Deposit Interest Chq Not Receiv ed 2 0 2 3 3 8
Local Outw rd chq returned physical chq not recd 5 3 2 11 17 24
TO TA L 6 1 9 4 3 5 950 1254 1444
To tal Q u a lity Bu d g e t Fe b 1 -1 5Varian ce Jan Dec Nov
Quality -North 90% 9 0 % 0% 45% 55% 58%
Quality -East 90% 8 3 % -7% 69% 58% 70%
Quality -West 90% 9 5 % 5% 65% 59% 59%
Quality -South 90% 7 9 % -11% 60% 58% 58%
Overall Branch Banking 90% 8 7 % -3% 60% 58% 61%
To tal TA T Bu d g e t Fe b 1 -1 5Varian ce Jan
Total CR beyond 24 hours 0 51 -51 82
Ze ro U n h ap p in e s s S co re c ard -D e p o s its - Bran ch e s

58. Sample Scorecard
Scorecard presented & reviewed in
fortnightly reviews
All variances are linked to RCA
Comparison of Monthly Performance Vs.
Budget
Focus on Top Service Failures
Key Indicators Focused On : Number of
Service Failures, Quality, Service
Request Closed within TAT

59. Scorecard Related RCA : DeliverablesScorecard Related RCA : Deliverables
Not ReceivedNot Received
Apart from wrong creation, dispatch/delivery related issues
needed focus

60. •Key Issue: RTO returns
would sit at the branches,
waiting for customer to
collect them
•Solution: Outbound Calling
•Every deliverable
cleared resulted in a
happy customer, lesser
rework & cost savings
•Average Contact
Ratio:65%
Data :Nov04-Jun 05
RCA: Deliverables Not ReceivedRCA: Deliverables Not Received

61. RCA : Deliverables Not ReceivedRCA : Deliverables Not Received
 Issue :E-search UpdateIssue :E-search Update
 E-search information for certain deliverables not updated/E-search information for certain deliverables not updated/
available resulting in inadequate /incomplete information toavailable resulting in inadequate /incomplete information to
customers & Service Request creation errorscustomers & Service Request creation errors
 Initiative :E-Search Update (CTD Initiative)Initiative :E-Search Update (CTD Initiative)
 Identified mandatory uploads for First Contact ResolutionIdentified mandatory uploads for First Contact Resolution
related to RPC/ CPC processesrelated to RPC/ CPC processes
 Designed and finalized the file formats for all mandatoryDesigned and finalized the file formats for all mandatory
uploads - easy reading for front enduploads - easy reading for front end
 National Co-ordinator appointed to tracking e-search openNational Co-ordinator appointed to tracking e-search open
cases and timely uploadscases and timely uploads
 I-KIT AOF Rejections,Modification Request Rejections,NominationI-KIT AOF Rejections,Modification Request Rejections,Nomination
Rejection Letters Nomination Registration Request Rejections,NonRejection Letters Nomination Registration Request Rejections,Non
I-Kit SB/FD-RD AOF Rejections,Transfer of Account-I-Kit SB/FD-RD AOF Rejections,Transfer of Account-
Rejections,Transfer Cheque Returns, ATM Retained Cards,TDS -Rejections,Transfer Cheque Returns, ATM Retained Cards,TDS -
Form 15G Rejections etc.Form 15G Rejections etc.

62. 4307529
9037555
14793313
21799520
29187237
37593205
O ct-04 Nov-04 Dec-04 Jan-05 Feb-05 Mar-05
Terminator Results- Cost SavingTerminator Results- Cost Saving
Through Failure ReductionThrough Failure Reduction

63. Results - Service Failures as % ofResults - Service Failures as % of
TransactionsTransactions
47211
6292671624
76392
102705
108124
84805
85096
86549
79463 80410
55161
0.09%
0.17%
0.26%
0.27%
0.20% 0.20% 0.21% 0.18% 0.17%
0.11%
0.12%
0.15%
0
20000
40000
60000
80000
100000
120000
Apr-04 May-
04
Jun-04 Jul-04 Aug-04 Sep-
04
Oct-04Nov-04 Dec-
04
Jan-05Feb-05 Mar-
05
Months
#ofCriticalRequests
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
%agetoTotalTransactions
# of Critical Requests % Age to Total Transactions (RHS)

64. Results – Quality of Request HandlingResults – Quality of Request Handling
55%
62% 62%
64% 64%
68% 69%
72%
68%
77%
88% 87%
30%
50%
70%
90%
Apr-
04
May-
04
Jun-
04
Jul-04 Aug-
04
Sep-
04
Oct-04 Nov-
04
Dec-
04
Jan-
05
Feb-
05
Mar-
05

65. Results-Customer Feedback ScoresResults-Customer Feedback Scores
74%
78%
80%
64%
70%
85%
88% 87%
63%
67%
75%
83%
56%
62%
77%
80%80%
82%
80% 81%
76%
72%
55%
65%
75%
85%
Q-I '04 Q-II '04 Q-III '04 Jan'05 Feb'05 Mar'05
Phone banking Liability Branches
Asset Branches- Home Loan Asset Branches- Consumer Loan

66. Indonesian Textile Giant CaseletIndonesian Textile Giant Caselet
 The company is one of the largest Textile companyThe company is one of the largest Textile company
in Indonesiain Indonesia
 Company had been hit heavily by currency crashCompany had been hit heavily by currency crash
 In order to improve bottom-lines a plan to reduceIn order to improve bottom-lines a plan to reduce
the various kind of value losses in production,the various kind of value losses in production,
quality, packing, utility etc.quality, packing, utility etc.
 Ambitious target of USD 4 Million in Value LossAmbitious target of USD 4 Million in Value Loss
Reduction was setReduction was set
 Initiatives like TQM, Setting up Management ControlInitiatives like TQM, Setting up Management Control
Systems Organizational re-structuring wereSystems Organizational re-structuring were
pioneeredpioneered
 Balanced Scorecard was used as a strategyBalanced Scorecard was used as a strategy
implementation tool to support Strategyimplementation tool to support Strategy
ImplementationImplementation

67. •Patent Score for Process Improvements
•SWIFT Training to Branches, Terminator Workshops
•Performance within TATs
•Quality
•Productivity
•% Complaints to Transactions
•Branch Contacts with Customers, Delivery Success Rate %
Research, Education & Teaching
Project Zero Value LossProject Zero Value Loss
Internal Processes
Mission
To ensure that the all causes of Unhappiness for Customer are fully
Terminated in order for the bank to vie for Service Leadership
•Customer Complaints
•Customer Feedback Scores
•Repeat Contacts
•Request Closure beyond 24 Hours
Customer
•Cost of Complaints
•% of Business through Cross Selling
•Average Revenue Per Customer
Financial

68. Weekly CEO Scorecard – Value LossWeekly CEO Scorecard – Value Loss
Total Cost USD 47,493 50,132 52,089 -4,596
Maintenance Cost USD 0 0
Steam Cost USD 1,200 1,080 1,140 1,137 -57
Power Cost USD 51,570 46,413 48,992 50,952 -4,539
Total Value Loss USD 45,636 48,314 70,513 -28,559
Reuse Material Savings/Loss USD 7,000 6,000 5,159 -1,841
Complaint Settlement Cost USD 0 0 0 0
Process Chemicals Loss USD 10,065 10,065 13,287 -3,222
Packing Material Loss USD 10,926 10,926 12,500 -1,574
Waste Loss USD 9,636 10,841 19,802 -10,166
Quality Loss USD 4,974 5,495 6,048 -1,074
Throughput Loss USD 3,035 4,988 13,717 -10,682
VarianceBase Target Plan Actual
Financial perspective
KPI U.O.M
Overall This week
Strategy: Reduction of Value Loss became the central agendaStrategy: Reduction of Value Loss became the central agenda

69. ReviewReview
Review
ReviewReview
Review
ReviewReview
ReviewReview ReviewReview
ReviewReview
Review
Scorecard Reporting Flow- PlantScorecard Reporting Flow- Plant
Production
Shift
Scorecard
Packing
Shift
Scorecard
Packing
Shift
Scorecard
Production
Daily
Scorecard
Maintenance
Daily
Scorecard
Maintenance
Daily
Scorecard
Department
Weekly
Scorecard
Department
Weekly
Scorecard
Packing
Daily
Scorecard
Packing
Daily
Scorecard
PC/QC Daily
Scorecard
PC/QC Daily
Scorecard
Maintenance
Weekly
Scorecard
Maintenance
Weekly
Scorecard
PC/QC
Weekly
Scorecard
PC/QC
Weekly
Scorecard
Weekly Value Loss Scorecard & Analysis
Focused: Incredible focus on “value loss reduction” strategy was created by linking
scorecards of all departments into the CEO ‘ Value Loss Scorecard’
Focused: Incredible focus on “value loss reduction” strategy was created by linking
scorecards of all departments into the CEO ‘ Value Loss Scorecard’

70. Weekly Dept. Manager ScorecardWeekly Dept. Manager Scorecard
Organization: Mobilize employees to act in fundamentally different
ways, guided by ‘value loss’ strategy with each
employee having an individual scorecard &
action plan
Organization: Mobilize employees to act in fundamentally different
ways, guided by ‘value loss’ strategy with each
employee having an individual scorecard &
action plan

71. Packing Superintendent ScorecardPacking Superintendent Scorecard
Superintendents of Departments like Packing had individual
Scorecards. These flowed into Production Manager’s Scorecard

72. Utility Generation ScorecardUtility Generation Scorecard
Support functions like Utilities also were giving cost saving targets which
were monitored through utility scorecard

73. Cumulative Savings : Planned vs Actual
-400,000
-200,000
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
Project Week
USDollars
Planned Actual
Results- Cumulative SavingsResults- Cumulative Savings
The Strategy Implementation Programme supported by the Balanced
Scorecard produced significant Savings for the Company

74. Approach: Retail ManagementApproach: Retail Management
Control SystemControl System
Forecast Plan Control Report
Manage
r Retail
Distributor
DSM
Retailer /
Customer
Sales Plan
Route plan
Contact
Plan
Customer /
Retail Card
DSM Daily
Score Card
Territory
Sales
Target
Retail
Manager
Contact
Plan
Distributor
Coverage
Target
DSM Target
DSM
Weekly
Score Card
DSM
Monthly
Score Card
Distributor
Weekly
Score Card
Distributor
Monthly
Score Card
Review
Distributor
Sales
Target
Market
Intelligence
Retail Mgr
Segment
Manager
Marketing
Department
Review
Review
Segment
Mgr
Monthly
Score Card
Retail Mgr
Ride with
Segment
Mgr Weekly
Score Card
Segment
Sales
Target
Review
Distributor
Daily Score
Card
Review
Direct Sales
input
Retail Mgr
Daily Score
Card
Review
Review
Review
Review
Segment
Mgr Daily
Score Card
Review
Review
Review
Distributor
Quarterly
ROI
Analysis
Marketing
Ride with
Retail Mgr
Weekly
Score Card
Retail Mgr
Monthly
Score Card

75. Distributor Weekly/Monthly ScorecardDistributor Weekly/Monthly Scorecard

76. Retail Manager Weekly/Monthly ScorecardRetail Manager Weekly/Monthly Scorecard

77. Chief of Sales & Marketing- Weekly ScorecardChief of Sales & Marketing- Weekly Scorecard

78. ResultsResults
1.1. GI Contributions increased by Rs. 3 CroresGI Contributions increased by Rs. 3 Crores
 Domestic Net Realization (NR) per ton for GI increased byDomestic Net Realization (NR) per ton for GI increased by
12% (from Rs. 19,233 in Sept. 2001 to Rs. 21,513 in Sept.12% (from Rs. 19,233 in Sept. 2001 to Rs. 21,513 in Sept.
2002)2002)
1.1. Outstanding collection savings of Rs 93 LacsOutstanding collection savings of Rs 93 Lacs
@ 12% interest PA@ 12% interest PA
 Outstanding collection from Rs. 483 Lacs Pre-Renoir to Rs.Outstanding collection from Rs. 483 Lacs Pre-Renoir to Rs.
1337 Lacs post-Renoir period1337 Lacs post-Renoir period
1.1. Incremental contribution of Rs.77 Lacs byIncremental contribution of Rs.77 Lacs by
29% increase in sales in MTB29% increase in sales in MTB
 1125 TPM for the H1 of 2002-03 compared to average1125 TPM for the H1 of 2002-03 compared to average
of 874 TPM for the year 2001-02.of 874 TPM for the year 2001-02.
1.1. Outsourcing Savings targeted at Rs. 6 CroreOutsourcing Savings targeted at Rs. 6 Crore