2. Definition
The Balanced Scorecard is a management tool that
provides stakeholders with a comprehensive measure of
how the organization is progressing towards the
achievement of its strategic goals.
3. The Balanced Scorecard
What is it?
Balances financial and non-financial measures
Balances short and long-term measures
Balances performance drivers with outcome measures
Should contain just enough data to give a complete picture of
organizational performance
Leads to strategic focus and organizational alignment.
4. • Four key Business Perspectives
• Internal & Business process of Organization
• Short Run & Long Run
5. Why do it?
• To achieve strategic objectives.
• To provide quality with fewer resources.
• To eliminate non-value added efforts.
• To align customer priorities and expectations with the customer.
• To track progress.
• To evaluate process changes.
• To continually improve.
• To increase accountability.
6. The Strategy Focused
Organization
Mission – What we do
Vision – What we aspire to be
Strategies – How we accomplish our goals
Measures – Indicators of our progress
7. The Strategy Focused
Organization
The Five Principles
1. Translate the strategy to operational terms.
2. Align the organization to the strategy.
3. Make strategy everyone’s job.
4. Make strategy a continual process.
5. Mobilize change through executive leadership
8. Deming’s 14 Points
1. Constancy of Purpose
2. Adopt the new philosophy
3. Cease dependence on mass
inspection
4. Cease doing business on price tag
alone
5. Continual improvement of process
6. Institute training on the job
7. Institute leadership
8. Drive out fear
9. Break down barriers between
departments
10. Eliminate slogans, exhortations,
and targets
11. Eliminate numerical quotas
12. Allow pride in workmanship
13. Institute a program of self-
improvement
14. Do it
9. Advantages Of BSC
• It is used to align the business activities to vision and strategy
• It improves Internal & External communications
• It is used to monitor organizations performance
• It provides management with comprehensive picture of
operations
• It provides strategic feed back
• It improves decisions & better solutions
10. Disadvantages of bsc
• It Doesn’t provide Recommendations
• It is not fully Efficient
• It takes time
• It is High Implementation of cost
• It can show low profit
13. Four key Business Perspectives
Financial
What must we do to create sustainable economic value?
Internal Business Process
To satisfy our stakeholders, what must be our levels of productivity, efficiency,
and quality?
Learning and Growth
How does our employee performance management system, including feedback
to employees, support high performance?
Customer
What do our customers require from us and how are we doing according to
those requirements?
15. Key Implementation Success Factors
Obtaining executive sponsorship and commitment
Involving a broad base of leaders, managers and employees in
scorecard development
Choose the right Scorecard Champion
Beginning interactive (two-way) communication first
Viewing the scorecard as a long-term journey rather than a short-
term project
Getting outside help if needed
16. How Do They Do It?
The Seven Ingredients of Highly Successful Balanced Scorecard
Programs
1. A Process to Mobilize the Organization and Lead Ongoing Change
2. Scorecards That Describe the Strategy
3. Linking Scorecard to Create an Organization Alignment
4. Continuous Communication to Empower the Workforce
5. Aligning Personal Goals, Incentives, and Competencies With the Strategy
6. Aligning Resources, Budgets and Initiatives With the Strategy
7. A Feedback Process That Encourages Learning and Experience Sharing
17. The Ingredients of Highly Successful Balanced Scorecard
Programs
STRATEGY
Formulate
NavigateCommunicate
Execute
1.Leadership From
the Top
2.Make Strategy
Everyone’s Job
3. Unlock and Focus
Hidden Assets
4. Make Strategy a
Continuous Process
18. Not all Environments are Appropriate for a Balanced Scorecard
Balanced Scorecard must be driven from the top
A clear sense of purpose is required to
The dynamics of the senior executive team will
determine whether the Balanced Scorecard becomes a
strategic management system
19. THE BALANCED SCORECARD MANAGEMENT SYSTEM
Implement a framework to align and focus the organization from
top to bottom on its strategy
Identify the related key change initiatives required to realize the
strategy and mobilize the organization
Create feedback processes at all levels to evaluate progress against
strategy, monitor and manage issues and priorities, and measure
performance and contribution to the business.
20. Key Pitfalls to Avoid
Middle management task force
Not driven by senior executive team
Only one or a few individuals involved
Too long a development process
Delay introduction because of missing
measurements
Static not dynamic process
Treating the BSC as an EIS
Measurement to control; not to
communicate
Management dictating actions vs.
employee improvisation to achieve
desired outcomes
For management only, not shared with
all employees
Process Philosophy