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Balanced Scorecard
Balanced Scorecard
and
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BALANCED SCORECARD COLLABORATIVE
The Balanced Scorecard:
A Good Idea in 1992
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 2
The Balanced Scorecard:
A Great Idea by 2002
Balanced Scorecard by 2002
21 translations
17
translations
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 3
Balanced Scorecard Hall of Fame Implemented
Strategies and Achieved Breakthrough Results… Fast
Mobil
Saatchi & Saatchi • Last to first ATT Canada
3 years • Cash flow +$1.2b 3 years
• ROI 6% --> 16%
+ $2b + $7b
2-5 years
2 years
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 4
Question:
Question:
How Answer:
Answer:
Howcan
cancomplex
complexorganizations
organizations
achieve
achieve results likethis
results like thisininsuch
short periods of time?
short periods of time?
such Alignment!
Alignment!
The Balanced Scorecard process allows an organization
to align and focus all its resources on its strategy
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 5
A Gap Exists Between Mission-Vision-Strategy and
Employees’ Everyday Actions
MISSION
Why we exist
VALUES
What’s important to us
VISION
What we want to be
STRATEGY
Our game plan
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 6
The Balanced Scorecard Links Vision and Strategy to
Employees’ Everyday Actions
MISSION
Why we exist
VALUES
What’s important to us
VISION
What we want to be
STRATEGY
Our game plan
BALANCED SCORECARD
Translate, Focus and Align
STRATEGIC INITIATIVES
What are the priorities
TOTAL QUALITY MANAGEMENT
What we must improve
EMPOWERMENT / PERSONAL OBJECTIVES
What I need to do
STRATEGIC OUTCOMES
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 7
The Principles of a Strategy-Focused Organization
TRANSLATE EXECUTIVE
STRATEGY LEADERSHIP
ORGANIZATION CONTINUAL
ALIGNMENT PROCESS
• Corporate Role • Linked to Budgeting
• Corporate - SBU • Linked to Ops. Mgmt.
• SBU - Shared Services • Management Meetings
• External Partners EVERYONE’S • Feedback System
JOB • Learning Process
• Strategic Awareness
• Goal Alignment
• Linked Incentives
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 8
#1 Principles of the Strategy Focused Organization:
TRANSLATE THE STRATEGY TO OPERATIONAL TERMS
The Strategy
Financial Perspective
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 9
The Complete Balanced Scorecard Strategy Map
Improve Shareholder Value
Financial Productivity Strategy Shareholder Value Revenue Growth Strategy
ROCE
Perspective:
the drivers of Improve Cost Create Value from
Increase Asset Enhance Customer
shareholder Structure Utilization Value New Products &
Services
value Customer
Cost per Unit Asset Turnover New Revenue
Profitability Sources
Market and Account Share Customer Acquisition Customer Retention Customer Satisfaction
Customer Product Leader
Perspective: Customer Solutions
the
Customer Value Proposition Low Total Cost
differentiating
Product/Service Attributes Relationship Image
value
proposition Price Quality Time Function Service Relations Brand
Internal Customer
Perspective: Operations Theme Innovation Theme Regulatory and
Management Society Theme
how value is Theme (Processes that (Processes that
Create New
created and (Processes that Produce (Processes that
Products and
Improve the
and Deliver Products Enhance Customer Environment
sustained & Services) Value) Services) and
Communities)
“Build the Franchise” “Increase Customer Value” “Achieve Operational Excellence” “Be a Good Neighbor”
Understand Improve Improve
Create Consumer Hardware Inventory
Non-Gasoline Segments Performance Management Improve
Products & Environmental,
Internal Services T Yield Gap T Inventory Health and
T Unplanned Levels
Perspective Downtime T Run-Out Rate
Safety
Best-In-Class
T New Product Franchise On-Spec Industry Cost
Acceptance Rate Teams On-Time Leader T Environment
Incidents
T Dealer Quality T Activity Cost T Safety Incidents
Rating vs. Competition
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 11
New Source of Revenues and Customer Loyalty
Attractive Convenience Store
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 12
The Balanced Scorecard Framework Is Readily Adapted to
Non-Profit and Government Organizations
The Mission
“To
“To satisfy
satisfy our
our customers,
customers,
financial
financial donors
donors and
and mission,
mission,
what
what business
business processes
processes
must
must we
we excel
excel at?"
at?"
“To
“To achieve
achieve our
our vision,
vision, how
how
must
must our
our people
people learn,
learn,
communicate,
communicate, and
and work
work
together?”
together?”
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 13
Boston Lyric Opera Strategy Map
Our mission is to ensure the long-term future of opera in Boston and New England by (1) producing the highest quality professional productions of diverse opera
repertoire that are artistically excellent as well as musically and theatrically innovative; (2) developing the next generation of opera talent; (3) engaging and educating
a diverse community about opera to become enthusiastic audience members, educators, supporters, and volunteers.
(HBS Case #9-101-111)
Develop Strategic Job Competencies Strengthen Strategic Alignment Build Growth-Enabling Infrastructure
LEARNING
AND Provide Leverage Board Develop
Incorporate Invest in
Develop
GROWTH Staff with Effectiveness with Strategic Create Administrative
Milestone Strategic
Skill Education and Communications HR Plan Residency
Evaluations Technologies
Training Fundraising Training Plan Program
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 14
Medical Readiness for the Transformed Army
Mission
Core Competencies
Protect and Sustain A Healthy and Medically Protected Force
Deploy a Trained and Equipped Medical Force that Supports Army Transformation
Stakeholder
Mission in Any
Environment Station
Learning & Growth
Financial
Healthy soldiers Protected from Lower Army’s medically
C-1 disease and injury related costs F-1
C-2
Mission
Deploy a Trained and Equipped Medical Force that Supports Army Transformation DoD/Army
Financial
Trained Medics Smaller Footprint Reduce cost of
Flexible Medical ownership of the
C-3 Forces C-4 C-5
deployable force F-2
Stakeholder
Manage the Care of the Soldier and the Military Family Beneficiary/DoD/Army
Financial
Quality, Passion for Healthy Patients Eliminate the Optimize Total
Compassionate Eliminating and Families are #1 Hassle Factor (MCSC+ Direct)
Healthcare C-8 Wasted Time C-9 C-7 C-10 System Efficiency F-3
Monitor Medical
IP - 4
Threats and the
IP-13 Home
Battlefield Return Soldiers Fitness of the Force Safe Patient
to Duty IP- 2 Care Station
IP-6 Leverage IP-7
Capabilities of Streamline
Institutional Access to Care
AMEDD IP 10
IP - 5
Leverage Science Integrate Direct
& Technology and Network Care
IP- 3 Develop Fast Accurate Market the Army Maintain a Reliable
IP-11
Analysis, Forecasting, Healthcare System Facility and
Modeling and Planning Installation Implement Clinical
Align Resources with IP- 9 Infrastructure and Business Best
Population IP- 14
Requirements IP- 12 Practices
IP- 8 Focus on Our Customers / Sound Business Practices IP- 15
& Growth
Learning
Leverage Information
Enable Mission Recruit & Retain a Develop Train the Medical
Management and
Quality AMEDD Force Leaders Force
Readiness L1 L-3 L-4
Information Technology L-2
Resources
C-1 Improve and sustain the general health C-1 Percent of units reporting medical readiness.
Mission/ Customer
IP-1 Enhance health and performance IP-1 Percent of threats (Infectious Disease,
through strategies, tools, products and chemical and biological warfare) on the validated,
Internal
the health status of units and individuals. commanders and their staffs.
F-1 Identify, Target & Reduce the Army’s F-1a Number of injury/illness driven claims (Rate
Lower Army’s Medically-Related Costs and Increase per 100 employees);
Medically Related Return to Duty Rates Through Improved
Costs
F-1
Management
F-1b Cost of injury/illness driven claims.
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 17
Several Different Types of “Balanced Scorecards”
Have Emerged in Practice
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 18
A KPI Scorecard: The Four “P’s”
• Profits
• People (diversity)
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 19
What’s missing from the 4P’s KPI scorecard?
• Where are the customers?
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 20
A Good Balanced Scorecard Tells the Story of
Your Strategy
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 21
The Principles of a Strategy-Focused Organization
TRANSLATE EXECUTIVE
STRATEGY LEADERSHIP
ORGANIZATION CONTINUAL
ALIGNMENT PROCESS
• Corporate Role • Linked to Budgeting
• Corporate - SBU • Linked to Ops. Mgmt.
• SBU - Shared Services • Management Meetings
• External Partners EVERYONE’S • Feedback System
JOB • Learning Process
• Strategic Awareness
• Goal Alignment
• Linked Incentives
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 22
Principles of the Strategy-Focused Organization:
LINK AND ALIGN THE ORGANIZATION AROUND ITS
STRATEGY
#3.
#1. Each Support Unit develops a
A Corporate Scorecard defines plan and BSC for “best
overall strategic priorities. practice” sharing to create
synergies across SBUs.
CORPORATE
#2. #4.
Each SBU develops a Plans and BSC’s define
long-range plan and BSC relationships with external
consistent with corporate partners consistent with
strategic agenda. SBU strategy.
Strategies Are Executed Through Business Units. The Strategies of the Business
Units Must Be Integrated If Organization Purpose and Synergies Are to Be Achieved.
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 23
Principles of the Strategy-Focused Organization:
LINK AND ALIGN THE ORGANIZATION AROUND ITS
STRATEGY
#3.
#1. Each Support Unit develops a
A Corporate Scorecard defines plan and BSC for “best
overall strategic priorities. practice” sharing to create
synergies across SBUs.
CORPORATE
#2. #4.
Each SBU develops a Plans and BSC’s define
long-range plan and BSC relationships with external
consistent with corporate partners consistent with
strategic agenda. SBU strategy.
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 24
Washington State: The
Salmon Recovery Problem
• Endangered Species Listing of 18 Species
• Federal Approval of Recovery Plans -- or
– no government or private entity make “take” any salmon - - thus
– forestry, agriculture, hydro power production, transportation
improvements and land use changes stopped or curtailed
– i.e.. A train wreck
• Fractured governance
– six states, another country (Canada) and 27 Indian tribes
– eight US agencies, 12 state agencies, 39 counties, 277 cities
– 300 water and sewer districts, 170 local water suppliers
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 25
Many Regulations and Constituents Influence Salmon
Recovery Projects
U.S. & State NMFS Salmon
NMFS
Agencies Independent “Evolutionarily
Recovery Team
Science Panel Significant Units”
Water
Legislation
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 26
Salmon Recovery Scorecard
Goal: Restore salmon, steelhead, and trout populations to healthy and harvestable levels
and improve habitats on which fish rely.
Customer: To protect an important element of Washington’s quality of life
• We will have productive and diverse wild salmon populations.
• We will meet the requirements of the Endangered Species Act/Clean Water Act.
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 27
Summary: Top-to-Bottom Strategy Alignment
Unleashes Full Organization Potential
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 28
The Principles of a Strategy-Focused Organization
TRANSLATE EXECUTIVE
STRATEGY LEADERSHIP
ORGANIZATION CONTINUAL
ALIGNMENT PROCESS
• Corporate Role • Linked to Budgeting
• Corporate - SBU • Linked to Ops. Mgmt.
• SBU - Shared Services • Management Meetings
• External Partners EVERYONE’S • Feedback System
JOB • Learning Process
• Strategic Awareness
• Goal Alignment
• Linked Incentives
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 29
#3 Principles of the Strategy Focused Organization:
MAKE STRATEGY EVERYONE’S EVERYDAY JOB
HR Processes Are Essential for Moving Strategy From the Top to the Bottom
CORP
SBU
• BALANCED PAYCHECKS
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 30
Making Strategy Everyone’s Job
Creating a Climate
to Support
Strategic Change
2
Align Personal • Insure that each individual knows where they fit
Objectives into the overall game plan
3
Align Incentive • Reinforce desired behavior and increase
Compensation intensity of awareness
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 31
USM&R Strategic Themes ... Win/Win Relationship Good Neighbor
Improve Dealer/Wholesale Marketer Protect the health and safety of our people,
will guide us to our vision and are profitability through customer-driven the communities in which we work, and the
defined above each graph. products and services and by developing environment we all share.
their business competencies.
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 33
Making Strategy Everyone’s Job
Creating a Climate
to Support
Strategic Change
2
Align Personal • Insure that each individual knows where he
Objectives or she fits into the overall game plan
3
Align Incentive • Reinforce desired behavior and increase
Compensation intensity of awareness
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 34
Ultimately, Team and Individual Goals and
Objectives Are Aligned to the Strategy
• Customer Division • Operating Margin 100 450 200 210 225 • Net Cash Flow
• Overhead & Operating Expense
Satisfaction 100 85 80 75 70
Targets Operating Targets 2.
retention
(Indexed: 1993=100)
3.
Plant Manager • Variable Costs •
Corporate Objectives
Double our value in 10 years.
Individual Measures
1.
• Mfg Overhead
• Increase our earnings by an average of 20% a
• On time •
year
Achieve an internal rate of return 2% above the
2.
3.
cost of capital.
delivery • Reduce our overhead & operating costs by a
4. 4.
Shift Supervisor 5.
further 30% by 1997.
• Reduce our 5-year average finding &
• Scrap •
development costs by 20%.
Reach the top quartile of industry profitability by
• Line
Availability
• Schedule
adherence
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 35
Making Strategy Everyone’s Job
Creating a Climate
to Support
Strategic Change
2
Align Personal • Insure that each individual knows where he or
Objectives she fits into the overall game plan
3
Align Incentive • Reinforce desired behavior and increase
Compensation intensity of awareness
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 36
Mobil USM&R Incentive Plan
USM&R/SBU
M&R (30%) 0 5-8 20
SBU (70%)
Total Pay 91% 98-104% 120%
(% of Market)
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 37
Linking Compensation to the Balanced Scorecard
Experience with successful BSC users indicates that linking the
BSC to incentive compensation is essential to success
“People got that scorecard out and did Mercer survey of compensation
the calculations to see how much practices in 214 companies (1999)
money they were going to get. We
could not have got the same focus on • 88% of responding companies
the scorecard if we didn’t have the link consider the use of balanced
to pay.” scorecard measures linked to
Brian Baker, Mobil reward systems to be effective.
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 38
The Principles of a Strategy-Focused Organization
TRANSLATE EXECUTIVE
STRATEGY LEADERSHIP
ORGANIZATION CONTINUAL
ALIGNMENT PROCESS
• Corporate Role • Linked to Budgeting
• Corporate - SBU • Linked to Operational
• SBU - Shared Services Improvements
• External Partners • Management
EVERYONE’S
Meetings
JOB
• Feedback System
• Strategic Awareness • Learning Process
• Goal Alignment
• Linked Incentives
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 39
Making Strategy a Continual Process
Imbed the Strategy
in Ongoing
Management
Processes
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 40
Mobil NAM&R: Setting Targets and Performance
Factors
Variable
Pay Performance
Percent Factor Qualitative
20 1.25 BEST IN CLASS
1.20 Well How to think about
1.15 Average performance factors:
1.12 " Objective:
1.09
External Benchmark
1.06 Above Average
1.00 means target equals
1.03 the average of competition
7 1.00 Average
1.25 means target equals the
0.90 top of the competitive group
0.80
" Subjective:
1 0.75 Below Average
Internal Benchmark
1.00 means the difficulty
of the dive is average
- 13
©2002 Balanced Scorecard Collaborative, Inc -and Robert S. Kaplan. All rights reserved. 41
Achieving Stretch Target Performance May
Require
• Strategic Initiatives
• Capital Investments
• New Products/Services
• New Customers
• New Regions
• New Partners
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 42
The Scorecard Process Provides Rigor for
Selecting and Managing Initiatives
—1—
Identify All Potential
Candidates for Development
Strategic Initiative OFS Projects, Projects,
Consideration Activities, etc. Activities, etc.
Marketing
Projects, Other Projects,
Activities, etc. Activities, etc.
Criteria
Primary Strategic Objective
Initiative: Strategic Thrust(s):
Continue Leadership in Su
E-Bill Presentment AC/IR/RC Products
Overall Score 9 •X
AC/IR/RC
—3—
E-Bill
1 Cont. Leadership in 9
Presentment Superior Products
2 A 9
Select Strategic
3
4
B
C
8
8
Prioritized List of
Initiatives Strategic Initiatives
5 D 7
6 E 7
7 F 7
N G X
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 43
The Principles of a Strategy-Focused Organization
TRANSLATE EXECUTIVE
STRATEGY LEADERSHIP
ORGANIZATION CONTINUAL
ALIGNMENT PROCESS
• Corporate Role • Linked to Budgeting
• Corporate - SBU • Linked to Operational
• SBU - Shared Services Improvements
• External Partners • Management Meetings
EVERYONE’S
JOB • Feedback System
• Learning Process
• Strategic Awareness
• Goal Alignment
• Linked Incentives
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 44
Using the BSC to Link Strategy to Operational
Management
Activity-Based Costing
• Cost of Internal Processes
• Customer Profitability
Shareholder Value
• Explicit Value Proposition
• Path for Revenue Growth Strategy
Quality Programs
• Link to Customer and Financial Outcomes
• Identify New Processes; Set Priorities
• Integrated Strategic Management Approach
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 45
BSC Adds to Total Quality Programs
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 46
The Principles of a Strategy-Focused Organization
TRANSLATE EXECUTIVE
STRATEGY LEADERSHIP
ORGANIZATION CONTINUAL
ALIGNMENT PROCESS
• Corporate Role • Linked to Budgeting
• Corporate - SBU • Linked to Operational
• SBU - Shared Services Improvements
• External Partners • Management
EVERYONE’S
Meetings
JOB
• Feedback System
• Strategic Awareness • Learning Process
• Goal Alignment
• Linked Incentives
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 47
Reporting and Feedback:
Monthly Scorecard Summary
Maximize Shareholder
Financial
Value
and Loyalty
Competitive
Service Quality Price
Reputation,
Brand and
Priority On Safety
Trust
Reliability and Cost Retain Profitable Success in a Competitive Retain and Manage
Excellence Supply Positions Environment Customers
Legend
Above target
Priority on Safety Effectively Manage On Track (within limits)
and Environmental Risks Significantly below target
Excellence Data Not Available
Learning & Growth
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 48
The New Management Meeting:
Strategic Learning Replaces Control
The Shift In Focus (At City of Charlotte)
Control Learning
What is the impact of
Is the project… the project on…
on-time? – neighborhoods
– jobs
on-budget?
– transportation
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 49
Effective Strategic Management Is Based Upon a
“Double Loop” Learning Approach
The Strategy
Financial
Perspective
Customer
Perspective
Strategic Feedback That
Encourages Learning
Internal
Perspective
corrections result
Internal
Gross
Profit
Gross Profit Growth*
New New Asset
Concepts Customers Contribution
Utilization
Net gross profit Growth in core Contribution $ Inventory turns*
from concepts <2 categories* And % change* Hurdle rate on
years old* Customer count* projects*
Learning &
Growth Competencies Climate for Action
Technology
Perspective Required competencies are Ability to implement
Focus on technology is on
built on tenure and capability relies heavily on
information systems use
rating employee satisfaction
* Measures
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 51
Testing the Strategy in Real Time Leads to
Strategic Learning
Updated Strategy: “Cause You Just
Can’t Wait”
ROCD*
Financial ROI
Perspective
EBITA*
EBITDA
Gross
Profit
Gross Profit Growth*
New New Asset
Contribution
Items Customers Utilization
Net sales from Growth in core Contribution $ Inventory turns*
new items* categories* And % change* Hurdle rate on
Customer count* projects*
Learning &
Growth Competencies Climate for Action
Technology
Perspective Required competencies are Ability to implement
Focus on technology is on
built on tenure and relies heavily on
information systems use
capability rating employee satisfaction
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 52
The Principles of a Strategy-Focused Organization
TRANSLATE EXECUTIVE
STRATEGY LEADERSHIP
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 53
To Succeed, the Executive Leader Must be Engaged in
the Strategic Change Process…
Breakthrough
Unfreeze Change
and Sustain
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 54
Pitfalls
• Middle Management Team: Lack of Senior
Management Commitment (“Bacon and Eggs
Breakfast”)
• Done Only by One or Two Individuals
• Held at the Top: For Senior Management Only
• Too Long a Development Process: “Best Becomes the
Enemy of the Good”
“Just Do It!”
• Treating the Balanced Scorecard as a Systems Project
• Just a “checklist” for compensation purposes (the 4
P’s)
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 55
Typical Balanced Scorecard Project Schedule
Week 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Task 4: Develop
Implementation Plan 2 Wks
Workshop III
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 56
An Effective Balanced Scorecard Development Process
Encourages Focused Participation by Leadership Team and
Leverages Knowledge Within the Organization
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 57
Balanced Scorecard Project Team
BSCol • Overall project ownership
Executive • Consultations/pre-presents
Engagement
Sponsor/ as needed
Officer/
Steering
Principal
Committee
(part-time)
• 2 days/week
BSCol • 3 half- to full-day
Client Executive workshops
Project
Project Leadership • One 90-minute
Leader
Leader Team briefing/
(full-time)
interview
• Consultations/
pre-presents
as needed
Client • 1-2 staff
BSCol Core • 2-3 days/week
Project Team • Briefings with others
Team as needed
Staff
1-2 knowledgeable
Consultants of business
(full-time) strategies and
organization
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 58
BSCol’s Framework for Building the SFO
12-16 Weeks
4 –6 Weeks
Assessment Phase I: BSC
Phase 0 Design and
Mobilization
1 - 2 Years
•Rapid BSC Cascading and Deployment
Phase II: Build the SFO •Planning and Budgeting
•Governance
•Feedback and Learning
•Performance Management
0.5 - 2 Years
Stream 4 Infrastructure
• HR
• IT
• Etc
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 59
How are Organizations Doing on the Journey?
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 60
What Separates the Winners from the Losers?
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 61
Based On What You Have Learned in This Conference, Rate
Your Organization’s Readiness to Execute Its Strategy
EXECUTIVE ORGANIZATION
LEADERSHIP ALIGNMENT
• Corporate
• CEO Sponsor TRANSLATE • Corporate – SBU
• Executive Team Engages STRATEGY
• SBU – Shared Services
• “New Way of Managing”
• Mission / Vision
• Accountable for Strategy
• Strategy Maps
• A Performance Culture
• Balanced Scorecard
• Targets
• Initiatives
EVERYONE’S CONTINUAL
JOB PROCESS
Rate Yourself
• Strategic • Linked to Budgeting
E “Best Practice”
Awareness • Linked to Ops. Mgmt.
D We’re OK
• Goal Alignment • Management Meetings
Moving Slowly
• Linked Incentives C
• Feedback System
B Thinking About It
• Learning Process
A Clueless
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 62
The SFO Readiness Profile: Plot Yourself
TRANSLATE E EXECUTIVE
STRATEGY LEADERSHIP
D
Develop strategy Mobilize the
maps and Balanced C organization
Scorecards
B
A
tings
Corp
Mee
.
ORGANIZATION CONTINUAL
Corp
ALIGNMENT PROCESS
.
IT
- SB
U
t.
Mgm
Sup
e
Budg
rtpo
EVERYONE’S
A B C D E
JOB
Thinking OK
Mobilize Change through
Moving Best
Executive Leadership Clueless
Slowly Practice
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 63
Building the SFO: Some Thoughts on Priority
and Sequence
TRANSLATE EXECUTIVE
STRATEGY LEADERSHIP
#1
tings
Corp
Mee
.
ORGANIZATION CONTINUAL
Corp
ALIGNMENT PROCESS
.
IT
- SB
U
t.
Mgm
Sup
e
Budg
rtpo
A B C D E
EVERYONE’S
JOB Thinking OK
Moving Best
Clueless
Slowly Practice
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 64
Building the SFO: Some Thoughts on Priority
and Sequence
TRANSLATE EXECUTIVE
STRATEGY LEADERSHIP
Top-down #2 #1
First Wave of
Results
tings
#2
Corp
Mee
.
ORGANIZATION #2 CONTINUAL
Corp
ALIGNMENT PROCESS
.
IT
- SB
U
t.
Mgm
Sup
e
Budg
rtpo
A B C D E
EVERYONE’S
JOB Thinking OK
Moving Best
Clueless
Slowly Practice
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 65
Building the SFO: Some Thoughts on Priority
and Sequence
TRANSLATE EXECUTIVE
STRATEGY LEADERSHIP
Top-down #2 #1
First Wave of
Results
tings
#2
Corp
Mee
.
ORGANIZATION #2 #4 CONTINUAL
Corp
ALIGNMENT PROCESS
.
IT
- SB
#5
U
#3 #4 #4
t.
Mgm
Sup
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Budg
Bottoms-up
rtpo
A B C D E
EVERYONE’S
JOB Thinking OK
Moving Best
Clueless
Slowly Practice
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