Agenda:

What is mean by Vision?

What is mean by strategy?
Why is it difficult to implement
strategy?
A new approach to strategy
implementation
Foundation of the Balanced Scorecard
BSC as a Performance Management
System
BSC as a Business Management
System
How does BSC benefit organisations?
Success stories
Conclusions
 “TheDay you don’t face any
problem/Challenges, Think and
You will realize that ur walking on
the wrong path.”
 By: Swami Vivekanand
VISION, MISSION AND VALUES

 Vision: Defines the desired or intended future state of

a specific organization or enterprise in terms of its
fundamental objective and/or strategic direction.

 Mission: Defines the fundamental purpose of an

organization or an enterprise, basically describing why
it exists.

 Values: Beliefs that are shared among the

stakeholders of an organization. Values drive an
organization's culture and priorities.
What is mean by strategy?

“Developing and communicating the

company’s unique position, making
trade offs and forging fit among
activities”
-----Michael E Porter

“A unified, comprehensive and

integrated plan designed to assure
that the basic objectives of the
enterprise are achieved”
----William F Glueck
 Why is it difficult to implement strategy?
Strategy implementation becomes difficult as organizations face
one or more of these challenges…

Findings of a Survey of 200 major companies, by a consultancy firm Renaissance Worldwide and CFO Magazine
 Why is it difficult to implement strategy?

•Thus organization gets in to a trap

where ………
•Visions Are Not Actionable
• Goals and Rewards Are Not Linked to
Strategy
•Resource Allocation Is Not Linked to
Strategy
•Feedback Is Tactical, Not Strategic

Conclusion –
You cannot manage strategy
with a system designed for
tactics.

Findings of a Survey of 200 major companies, by a consultancy firm Renaissance Worldwide and CFO Magazine
Because of “Thought – Action” Gap

Balanced Scorecard
Strategic Initiative – What doACTION
we needPLAN
to do?
GAP between STRATEGY and
Personal Objectives – What do I need to do?

Strategic Outcome
Motivated &
Satisfied Delighted Effective
Prepared
Shareholder Customer Processes
Workforce

?????????
 A new approach to strategy
implementation - BSC

What is the Balanced Scorecard?

The Balanced Scorecard (BSC) is a

comprehensive management performance control tool
with a strong focus on vision and strategy.

The strategy is translated into specific tactical

performance-driving activities.

Measures are established for each activity.

USE
Implementing Balanced Scorecards typically
includes four processes:
 Translating the vision into operational goals;

 Communicating the vision and link it to individual

performance;
 Business planning;

 Feedback and learning, and adjusting the strategy

accordingly.
 WHY NEED A BALANCED
SCORECARD?
The Source of Value Has Shifted From Tangible to
Intangible Assets
percentage of market value related to…

Intangible
Assets 38% 62% 85%

Tangible
Assets 62% 38%

15%

1982 19921 20002

1. Brookings Institute
2. Baruch Lev analysis of S&P500
companies
VALUE CREATION: INTANGIBLE
ASSETS

Training

Service Customer Customer

Revenue
Quality Confidence Retention

Information
Technology

 Intangible Assets Do Not Have A Direct Impact on Financial Results —

They Have Second- or Third-Order Impacts
 Conventional approach to managing financial & operational indicators
insufficient
 Balanced Approach to Strategy Implementation should includes focus
on customer/stakeholder & learning, growth & innovation
 Understanding & managing/leveraging inter-relationships between the
above areas necessary for value creation
BALANCED SCORECARD

Balanced Scorecard’s key theme is not about

Measurement as the term would outwardly
convey
Its about
“Value creation -Execution of Strategy”

Year 1992, Robert S. Kaplan and David P. Norton.

Balanced Scorecard

Company’s
dashboard
The Balanced Scorecard provides a four perspective framework
to formulate strategy and translate it into operational terms
BSC as a Performance
Measurement Tool

VISIONThe

STRATEGY
Balanced Scorecard
Performance Measures
THE BALANCED SCORECARD -
INDICATORS

1. The Learning and Innovation

This perspective includes
employee training and
corporate cultural attitudes
related to both individual and
corporate self-improvement.
2. The Internal Business
Process
This perspective allow the
managers to know how well
their business is running, is
there any scope to improve
anyfurther
THE BALANCED SCORECARD -
INDICATORS

3. The Customer Perspective

This perspective emphasises
customer focus and customer
satisfaction.

4. The Financial Perspective

Kaplan and Norton do not
disregard the traditional need
for financial data. Timely and
accurate financial data will
always be a priority
EVERY MEASURE IN BS CULMINATES
IN TO FINANCIAL OUTCOME -

FINANCIAL
STRENGTH
Product Profitability,
EBIT

CUSTOMER SATISFACTION
Market Share, Survey Scores, Complaints

BUSINESS PROCESS IMPROVEMENT

Cycle Time, Defects, Activity Costs

ORGANIZATIONAL LEARNING
Training Time, Turnover, Staff Satisfaction Score
 BALANCED SCORECARD –
CAUSE EFFECT RELATIONSHIP AMONG
INDICATORS
Indicators -
Innovative Internal Customer Financial
and Business
Learning Process

Examples-

Employee Productivity Cost Growth in

training effective revenue.
product

Test Better Assured Growth in

marketing production acceptance market
planning

Customer
R& D New product retention Assured
Achieveme line (gets market share
nt hooked to
the Co).
 How does BSC benefit organizations?

BSC acts as a Strategic Management/ Implementation Tool

Which Helps in ……
Validation/Enhancement of Strategy
Getting clear consensus on the same
Articulation and Communication of Vision & Mission into key
strategic objectives
Creation of Strategic Maps at corporate and SBU level
Alignment of the entire organization to the strategy
Brings in Clarity and Transparency – enhanced
understanding of strategic objectives down to operating
level
Make customer focused organization
Provides unambiguous measures for performance control
Consensus on ownership of objectives at all levels of
management
Prioritization of strategic action plans
Makes strategic planning a continuous process
How does BSC benefit organizations?

Provides a “BALANCED” Performance Management Tool –

Adequate balance between lead and lag measures/indicators

Help organization remain pro-active
Provides macro perspective to senior management –
no more longer working in “silos”
Clear linkage and alignment of individual and enterprise
performance
Flexible KRA’s depending on the business needs of the organization
Helps achieve financial results by managing simultaneously non
financial measures
STRATEGY MAPS TO INDIVIDUAL
SCORECARD
SCORECARD DESIGN &
ROLLOUT
Mobilize change
through executive
leadership
Integrate
Translate the
improvement
strategy to BALANCED programmes
operational
with scorecard
terms
STRATEGY

SCORECARD

Align the Change people,

organization make strategy
to create everyone’s
synergies everyday job
SCORECARD DESIGN &
ROLLOUT

Translate the
strategy to BALANCED
operational
terms
STRATEGY

SCORECARD
 TRANSLATE : STRATEGY INTO 4
COMPONENTS

Vision and Strategy

What are the financial objectives for growth and productivity? Financial
What are the major sources of growth? Perspective

Who are the target customers that will generate the revenue growth? Customer
What are the objectives and how do we measure success with them? Perspective

Brand / product development, sales, service, operations, logistics..

Internal
Activities needed to create the required customer value proposition Perspective
and differentiation and the desired financial outcomes

Organization infrastructure, skills, capabilities, knowledge

of employees, working climate.. Learning and
The ability to execute internal business processes in new growth Perspective
differentiated ways
SCORECARD DESIGN &
ROLLOUT

BALANCED

STRATEGY

SCORECARD

Align the
organization
to create
synergies
ALIGN: USE STRATEGY MAP TO BUILD
CAUSE & EFFECT RELATIONSHIPS
Improve ROCE
Financial Revenue Growth Strategy Productivity Strategy
Perspective
Increase Customer Improve Cost Improve Asset
Build the Franchise
Value Structure Utilization

 New Revenue Sources  Customer  Cost per Unit  Asset Utilization

Profitability

 Customer Acquisition  Customer Retention  Market Share

Product Leadership

Customer Customer Value Proposition Operational Excellence

Perspective
Product/Service Attributes Relationship Image
Functio
Price Quality Time Service Relations Brand
n

 Customer Satisfaction

“Build the Franchise” “Increase “Achieve Operational

Customer Value” Excellence”
Internal
Perspectiv (Innovation (Customer (Operations &
Processes) Management Logistics Processes)
e Processes)

Learning & A Motivated and Prepared Workforce

Growth
Perspectiv Strategic Strategic Climate for
Competencies Technologies Action
e
ALIGN : FLOW OF THE SCORECARD ALONG
THE ORGANIZATION
Plant Head :Weekly Value Loss Scorecard & Analysis

Department Maintenance PC/QC Weekly

Weekly Weekly Scorecard
Scorecard Scorecard

Review Review Review

Production Packing Daily Maintenance PC/QC Daily

Daily Scorecard Daily Scorecard Scorecard
Scorecard

Review Review Review Review

Production Packing Shift

Shift Scorecard
Scorecard

Review Review
SCORECARD DESIGN & ROLLOUT

BALANCED

STRATEGY

SCORECARD

Change people,
make strategy
everyone’s
everyday job
CHANGE : MINDS PATH MATRIX
…No shortcuts possible...

The Four States of Mind! Minds Path Matrix

Incompetent Competent Incompetent Competent
Conscious

Conscious
Support Coach Understanding Usage
Unconscious

Unconscious
Direct Delegate Compliance Culture
 CHANGE : MINDS PATH MATRIX

Understanding Usage

Compliance Culture

•••Recording
People
Peoplestart thisrealising
understand why
new orthat the
they
extra data
are
data recorded
“being
and in
told”
working the
into system
a do
new way might
something be become
new.
has now of use toa them
fact of
and the business in the future. Process transformation begin to inspire confidence
•life.
GodProcess
knows compliance
why becauseistheyhighdon’t see the use of it !!
• •They
Thisnow start using
isis normally (read : extra
viewed analyzing) the scorecards.
• There some light at theasend non-value
of the tunnel.added responsibility.
• •Meetings
If you arechecking,
held to review the stop
data. The wheel starts turning!
• You stillstop
need they will
to keep them on close trying.
track however.
 CHANGE: MINDS PATH MATRIX

Understanding Usage

Compliance Culture

• People don’t think about the new system& processes anymore. It is THEIR system
•• • Recording
People understand
People this new orthat they
extra areand
data “being told” in
working to adonew
something
way hasnew.
now become a fact of
now. start realising why the data recorded in the system might be of use to them and
• life.
the
God Process
knows compliance
business in thebecause
why is Process
future. high transformation
they don’t see the use of begin
it !! to inspire confidence
• They fully optimize the usage of data gathered at all levels.
•• • They
Thisnow
There is start light
is normally
some using at(read
viewedtheas : analyzing)
end of the
extra the scorecards.
tunnel.
non-value added responsibility.
• They use the Scorecards to drive improvements in business performance.
•• • Meetings
You arechecking,
stillstop
If you need held to review
to keep them the data.trying.
on close
they will stop The wheel
track however. starts turning!
• They improve details of the systems as per the requirements.
CHANGE MANAGEMENT
The Mind’s Path To Success

Success

Hope

Pain

Problem Solution Solution Culture

Definition Development Implementation Change
SCORECARD DESIGN & ROLLOUT

Integrate
improvement
BALANCED programmes
with scorecard
STRATEGY

SCORECARD
SCORECARD’S ROLE IN
TRANSFORMATION
 Scorecard is an indispensable tool to manage
& monitor a transformation/business
performance improvement programme
 Scorecard Implementation needs to be
supported by functional/departmental
initiatives
 Scorecard supported by a Transformation
Initiative drives Business Results
INTEGRATE : GOALS, MEASUREMENT &
IMPROVEMENT INITIATIVES
INTEGRATE :GOING FROM OUTPUT
TO OUTCOME
When you first launch your Initiative, you probably want to use an
Initiative Output
Output Measurement. Once the Initiative isOutcome Measurement
up and running, integrate
your measurement toMeasurement
an Outcome to see if the Initiative is really
having strategic impact.

Lean Process / Number of Projects Overall reductions in

Six Sigma Defined by Region errors, reworks, and
cycle times

Employee % of Employees Higher skill levels of

Competency who have a employees using the
Models Competency Model models
in place
SCORECARD DESIGN & ROLLOUT
Mobilize change
through executive
leadership

BALANCED

STRATEGY

SCORECARD
MOBILIZE : TOP MANAGEMENT COMMITMENT

1.Creating the Climate for Change

Unfreeze the organization
Show the need for change
2. Creating the Leadership Team
Breaking down functional bias
3. Creating the Vision and Strategy
BSC as a “visioning process”
BSC to clarify the strategy
4. Creating Team Accountability
Accountability for cross-functional strategic themes at Executive Team level

A successful Balanced Scorecard program starts with a

recognition that it is not a “metrics” project, it’s a
“change” process.
 MOBILIZE :TIGHT FOCUS & EXTENSIVE
REVIEW

85% of
STRATEGY
management teams
60% of organizations don’t
update the test the
spend less than one
link strategy & budgets
strategy hypotheses hour per month on
Strategic Learning Loop
strategy issues

BALANCED
SCORECARD

BUDGET

78% of organizations lock

budgets to an annual cycle funding Management Control Loop reporting
20% of organizations take 92% of organizations do not
more than 16 weeks to report on lead indicators
prepare a budget PERFORMANCE

Input Initiatives &

Output
(Resources) Programs (Results)
MOBILIZE : RED BUTTONS TO AVOID

 Middle Management Team: Lack of Senior

Management Commitment
 Done 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”
 Treating the Balanced Scorecard as a Systems
Project
 Done Only for Compensation
 Not Treated as a Change Management Project
CONTEXT
 Focus on Top line. ICICI Bank perceived to be very
aggressive on sales , very poor on service.
 For bottom-line to improves it was important for the bank to
be a service leader.
 Improved Service
 Leads to improved productivity & profit
 Generates a positive word of mouth. Attracts new customers
 Provides a competitive advantage.
 More difficult and slower for a competitor to respond to service

improvement than to price change.

 Help us retain customers.
 Cheaper to retain customers than to acquire new ones
TERMINATOR : ZERO UNHAPPINESS
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 Financial
•Customer Complaints •Cost of Complaints
•Customer Feedback Scores •% of Business through Cross Selling
•Repeat Contacts •Average Revenue Per Customer
•Request Closure beyond 24 Hours

Internal Processes
•Performance within TATs
•Quality
•Productivity
•% Complaints to Transactions
•Branch Contacts with Customers, Delivery Success Rate %

Research, Education & Teaching

•Patent Score for Process Improvements
•SWIFT Training to Branches, Terminator Workshops
 ZERO UNHAPPINESS SCORECARD BRANCHES-
SAMPLE
Zero Unhappiness Scorecard -Deposits - Branches

Feb Feb Varian

Sample Scorecard
Top Branch CRs# Budget Actual ce J an '05 Dec '04 Nov '04
 Scorecard presented &
reviewed in fortnightly
Ikit not activated 125 50 75 169 245 422

Instruction for A/c closure not executed 120 80 40 242 139 182

Cash Deposited At Branch Not Credited 90 86 4 121 209 188

reviews
Address change not done 140 137 3 183 187 189  All variances are linked to
Transfer Of Accounts related issues

A/c Not Opened

65

20
55

4
10

16
88

37
169

131
168

101
RCA
Outstation collection - Dispute in Amt 20 2 18 50 64 66
 Comparison of Monthly
FD Renewal not done - deposits 10 9 1 8 32 23 Performance Vs. Budget
TDS Amount Deducted Disputed 5 5 0 11 13 10
 Focus on Top Service
Fixed deposit not linked to account 5 0 5 6 10 6

Form 15 H Not Entered 0 0 0 0 0 1

Failures
Cash Deposit In Atm Not Crdited 12 4 8 21 35 56  Key Indicators Focused
Fixed Deposit Interest Chq Not Received 2 0 2 3 3 8
On : Number of Service
Local Outwrd chq returned physical chq not recd
TOTAL
5
619
3
435
2 11
950
17
1254
24
1444
Failures, Quality, Service
Total Quality Budget Feb 1-15
Variance J an Dec Nov Request Closed within TAT
Quality -North 90% 90% 0% 45% 55% 58%
Quality -East 90% 83% -7% 69% 58% 70%
Quality -West 90% 95% 5% 65% 59% 59%
Quality -South 90% 79% -11% 60% 58% 58%
Overall Branch Banking 90% 87% -3% 60% 58% 61%
Total TAT Budget Feb 1-15
Variance J an
Total CR beyond 24 hours 0 51 -51 82
 ZeroUnhappiness Scorecard-Deposits - Branches

Feb Feb Varian

TopBranchCRs# Budget Actual ce Jan'05 Dec'04 Nov'04

Ikitnotactivated 125 50 75 169 245 422

InstructionforA/cclosurenotexecuted 120 80 40 242 139 182

CashDepositedAtBranchNotCredited 90 86 4 121 209 188

Addresschangenotdone 140 137 3 183 187 189

TransferOf Accountsrelatedissues 65 55 10 88 169 168

A/cNotOpened 20 4 16 37 131 101

Outstationcollection- DisputeinAmt 20 2 18 50 64 66

FDRenewal notdone- deposits 10 9 1 8 32 23

TDSAmountDeductedDisputed 5 5 0 11 13 10

Fixeddepositnotlinkedtoaccount 5 0 5 6 10 6

Form15HNotEntered 0 0 0 0 0 1

CashDepositInAtmNotCrdited 12 4 8 21 35 56

FixedDepositInterestChqNotReceived 2 0 2 3 3 8

Local Outwrdchqreturned physical chqnotrecd 5 3 2 11 17 24

TOTAL 619 435 950 1254 1444
Total Quality Budget Feb1-15 Variance Jan Dec Nov
Quality-North 90% 90% 0% 45% 55% 58%
Quality -East 90% 83% -7% 69% 58% 70%
Quality-West 90% 95% 5% 65% 59% 59%
Quality-South 90% 79% -11% 60% 58% 58%
Overall BranchBanking 90% 87% -3% 60% 58% 61%
Total TAT Budget Feb1-15 Variance Jan
Total CRbeyond24hours 0 51 -51 82
SCORECARD RELATED RCA :
DELIVERABLES NOT RECEIVED

Apart from wrong creation, dispatch/delivery related issues

needed focus
RCA: DELIVERABLES NOT
RECEIVED
•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
RECEIVED
 Issue :E-search Update
 E-search information for certain deliverables not updated/ available

resulting in inadequate /incomplete information to customers &

Service Request creation errors
 Initiative :E-Search Update (CTD Initiative)
 Identified mandatory uploads for First Contact Resolution related to

RPC/ CPC processes

 Designed and finalized the file formats for all mandatory uploads -

easy reading for front end

 National Co-ordinator appointed to tracking e-search open cases and

timely uploads
 I-KIT AOF Rejections,Modification Request Rejections,Nomination

Rejection Letters Nomination Registration Request Rejections,Non

I-Kit SB/FD-RD AOF Rejections,Transfer of Account-
Rejections,Transfer Cheque Returns, ATM Retained Cards,TDS -
Form 15G Rejections etc.
TERMINATOR RESULTS- COST SAVING
THROUGH FAILURE REDUCTION
37593205

29187237

21799520

14793313

9037555

4307529

Oct-04 Nov-04 Dec-04 J an-05 Feb-05 Mar-05

 RESULTS - SERVICE FAILURES AS %
OF TRANSACTIONS

120000 0.30%
0.27%
0.26%

100000 0.25%
# of Critical Requests

0.20% 0.20% 0.21%

0.18% 0.17%

% age to Total Transactions

0.17%
80000 108124 0.20%
0.15%
102705
0.12%
0.11% 0.09%

60000 0.15%
86549
85096 47211
84805
71624 62926
40000 79463 80410 76392 0.10%
55161

20000 0.05%

0 0.00%
Apr-04 May-04 Jun-04 Jul-04 Aug-04 Sep-04 Oct-04 Nov-04 Dec-04 Jan-05 Feb-05 Mar-05

Months
# of Critical Requests % Age to Total Transactions (RHS)
 RESULTS – QUALITY OF REQUEST
HANDLING

88% 87%
90%

77%
72%
68% 69% 68%
70%
64% 64%
62% 62%
55%

50%

30%
Apr-04 May- Jun- Jul-04 Aug- Sep- Oct-04 Nov- Dec- Jan-05 Feb- Mar-
04 04 04 04 04 04 05 05
 RESULTS-CUSTOMER FEEDBACK
SCORES

88% 87%
85% 85%
80% 81% 83%
80% 8
78% 80% 80%
77%
75% 74% 75%
76%
70% 72%
67%
65% 64% 63% 62%

55% 56%
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
Some Other Success stories through BSC….
 Conclusion

BSC is highly effective management system to

align company’s vision & mission to strategy
and activities
BSC provides management with a
comprehensive picture of company’s operations
BSC to be used as an integral part of a
company’s planning process in order to realize
its fullest potential
 Conclusion

 Gives the complete picture of the employee as well

as the organizational performance.
 It guides users in determining the critical success
factors and performance indicators.
 Strategic review or analysis of the organizational
capabilities and performance.
 Focusing the whole organization on the few key
things needed to create breakthrough performance.
 Integrating and directing the performance and efforts
from the lowest levels in the organization to achieve
excellent overall performance.
“YOU SEE, ALL THE RIGHT THINGS ARE WRITTEN IN
BOOKS AND RESEARCH PAPERS.

THE TRICK IS TO ENSURE THAT THERE IS NO GAP

BETWEEN WHAT IS WRITTEN IN THE BOOKS AND
YOUR VISION; FROM WHAT IS HAPPENING ON THE
SHOP-FLOOR AND WHAT IS GOING ON IN THE
MARKETPLACE.

THAT IS EXECUTION. THAT IS WHAT MAKES THE

DIFFERENCE”

MUKESH AMBANI