Building the

Balanced Scorecard

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Matt H. Evans, CPA, CMA, CFM 12/09/21
Introduction
 Balanced Scorecards provide a framework
for communicating strategy in operating
terms (measurements and targets).
 You must communicate strategy in
operating terms if you expect people to
execute on your strategy.
 When people are asked about strategy,
they reach for their balanced scorecard.

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Matt H. Evans, CPA, CMA, CFM 12/09/21
Agenda
 This slide presentation will outline the
major steps for building a balanced
scorecard.
 How you execute these steps will depend
upon many factors: Company culture,
tolerance for change, leadership, etc.
 However, please try to follow the same
sequence, focusing on the strategic maps.

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Matt H. Evans, CPA, CMA, CFM 12/09/21
Overview
 Balanced Scorecards are constructed from
strategic maps
 Throughout the process, we will refer back
to these maps, making sure everything is
linked. This is very important since we
want to capture a “cause and effect”
relationship in building the scorecard.

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Matt H. Evans, CPA, CMA, CFM 12/09/21
Why the Balanced Scorecard
 Improves how you communicate strategy
 Superimposes a discipline whereby you
capture cause-effect; otherwise you create
pockets of under-performance.
 Also forces you to think about strategic
measurement as opposed to tactical or
operating type measurements

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Matt H. Evans, CPA, CMA, CFM 12/09/21
Start with Strategy
 Begin with your strategic plan – what
things are critical to future success?
 Focus on customers – what values will we
add to our customers
 Define the processes – how will we deliver
these services to our customers
 Build the organization – what capabilities
must we put in place
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Matt H. Evans, CPA, CMA, CFM 12/09/21
Strategic Goals
 The first components of your strategy are
goals.
 Strategic goals establish direction in
concrete terms.
 Strategic goals anchor the rest of the
process.
 Strategic goals should fit with the vision
and mission of the organization.
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Matt H. Evans, CPA, CMA, CFM 12/09/21
Goal Attributes
 Very short statement
 Directly relates to the mission
 Broad in scope
 Covers long time period (such as 3 years)
 Examples:
- Improve Customer Service
- Leverage Core Competencies
- Develop more innovative products
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Matt H. Evans, CPA, CMA, CFM 12/09/21
Strategic Objectives
 Once we establish our first anchor (goals),
we can develop a set of strategic
objectives.
 Strategic objectives define what actions
must be taken to reach the strategic goals.
 Objectives are critical to future success.
For example, in order to grow revenues,
we must introduce new products and
expand our market share.

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Matt H. Evans, CPA, CMA, CFM 12/09/21
Objective Attributes
 Longer statement than goal statement
 More specific than goal statement
 Indirect relationship to mission
 Covers shorter time period than goal (such
as 6 months or 1 year)
 Example:
- We will expand call center services to
include technical support
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Matt H. Evans, CPA, CMA, CFM 12/09/21
Strategic Themes
 Based on strategic goals, three to five
strategic themes should emerge.
 From these themes, we will develop a
strategic map.
 Four common strategic themes are:
Operating Efficiencies, Customer
Relations, Product Innovation, and
Growing the Business.

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Matt H. Evans, CPA, CMA, CFM 12/09/21
Strategic Model
 Strategic Models can emerge from four
principles:
1. Translate strategies into operating terms.
2. Link strategies throughout the entire
organization.
3. Commit everyone to implementing
strategy.
4. Make strategizing a continuous process of
learning and adjusting to change.
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Matt H. Evans, CPA, CMA, CFM 12/09/21
Four Perspectives
 Before we build strategic maps, we need to
define four perspectives:
Financial: Top layer in the map, represents
financial outcomes (profits, revenues, etc.)
Customer: Next layer down, enables financial
results (service, image, price, quality, etc.)
Internal Processes: The values added to customers,
such as delivery, production, distribution, etc.
Learning & Growth: The people, systems, and
organization that enable processes.

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Matt H. Evans, CPA, CMA, CFM 12/09/21
Strategic Mapping
 Strategic Maps are the foundation of the
Balanced Scorecard.
 You will need one strategic map for each
strategic theme.
 Maps are constructed over four
perspectives.
 Strategic objectives are mapped over the
four perspectives, linked together.
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Matt H. Evans, CPA, CMA, CFM 12/09/21
Linking
 Strategic objectives need to be placed in
the Strategic Map according to which
perspective fits with the objective.
 Objectives may cross over more than one
perspective.
 We usually start at the top with outcomes
and work our way down, looking at what
enables (drives) the outcome.

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Matt H. Evans, CPA, CMA, CFM 12/09/21
Approval
 Once you have completed the strategic
maps, you will need to get approval from
executive management. Does this map
accurately tell the “story” of our strategy?
 If management disagrees with the map, go
back and redo the maps. We need to get
this step right since it represents the
foundation for the entire scorecard.

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Matt H. Evans, CPA, CMA, CFM 12/09/21
Measurements
 For each strategic objective, you need one
measurement.
 Measurement provides us with feedback
on meeting the strategic objective.
 Most organizations will use many of their
existing measurements.
 Organizations requiring major change
should include driver type measurements.
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Matt H. Evans, CPA, CMA, CFM 12/09/21
Measurement Criteria
 Measurements should drive change,
providing teeth to our strategy.
 Measurements define objectives in specific
terms. A good measurement should tell
you what your objective is – this is an
indicator of good linkage.
 Measurements should be repeatable,
quantifiable, and verifiable.

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Matt H. Evans, CPA, CMA, CFM 12/09/21
Good Measurements
 Customer satisfaction:
- Response time to service customer
- Satisfaction survey scores
 Process Efficiency:
- Cycle time
- Downtime
- Number of Restarts

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Matt H. Evans, CPA, CMA, CFM 12/09/21
Lead and Lag Measurements
 Leading measurements are drivers behind
performance and provide some
predictability (forward looking)
 Lagging measurements are usually final
outcomes that look back, such as customer
satisfaction or return on investment
 Balanced scorecards should include both
leading and lagging type measurements

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Matt H. Evans, CPA, CMA, CFM 12/09/21
Targets
 Once you establish measurements, you
need to set a target for each measurement.
 Targets push the organization to a required
level of performance.
 Targets put focus on the strategy,
expressing the specifics of the strategy.
 When an organization hits its targets, then
it has successfully implemented its
strategy.
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Matt H. Evans, CPA, CMA, CFM 12/09/21
Examples of Targets
 Total Time to Recruit New Employees:
Less than 40 days by year-end
 Utilization of rental facilities: Increase to
85% during peak summer months
 Growth in top line revenues: 10% increase
over last year
 Improve overall customer satisfaction:
Total scores exceed 90%
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Matt H. Evans, CPA, CMA, CFM 12/09/21
Initiatives
 In order for things to happen in an
organization, you must initiate major
projects or programs. For example,
improving customer service may require a
new customer management system.
 Once you launch appropriate initiatives,
you should be able to meet your strategic
objectives. This closes the loop, everything
is now linked and away we go!

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Matt H. Evans, CPA, CMA, CFM 12/09/21
Initiative Attributes
 Sponsored by senior management
 Designated owners manage project(s)
 Includes deliverables or milestones
 Usually has some time deadlines
 Could be difficult to launch – lack of
support, no funding, poorly defined, etc.

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Matt H. Evans, CPA, CMA, CFM 12/09/21
Templates
Strategic Map for Strategic Theme #1:

Financial
Throughout this
process, we will use

Customer
templates to capture,
analyze and document
data. Templates are
used for strategic
mapping, defining Internal

measurements, etc.
Learning

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Matt H. Evans, CPA, CMA, CFM 12/09/21
Other Important Steps
 Scorecards are built around three teams:
Leadership Team (upper level
management), Core Team (middle level
management) and Measurement Team
(lower level functional personnel).
 Scorecards are built around at least four
group meetings: Kick Off Meeting
followed by at least one meeting for each
of the three teams.

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Matt H. Evans, CPA, CMA, CFM 12/09/21
Implementation
 The minimum time for developing a
balanced scorecard is three months.
 Full deployment of scorecards throughout
the entire organization can take more than
one year.
 The best place to start building a scorecard
is where all components of the value chain
are in place: Customer, Innovation,
Production, Delivery, Services, etc.

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Matt H. Evans, CPA, CMA, CFM 12/09/21
Summary
 Balanced Scorecards are the best way of
communicating strategy.
 Scorecards rely on a fully integrated
approach: Goals, Objectives, Mapping,
Measurements, Targets, and Initiatives.
 The building of a balanced scorecard can
be experimental, whereby you test your
strategies, refine, and make changes as you
get feedback and learn what works.

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Matt H. Evans, CPA, CMA, CFM 12/09/21
Where to Get More Information
 Formal training in balanced scorecards is
available through the Balanced Scorecard
Collaborative (www.bscol.com)
 Consulting services are available. My
training in balanced scorecards comes
directly from the Balanced Scorecard
Collaborative. If you have questions, feel
free to email me.

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Matt H. Evans, CPA, CMA, CFM 12/09/21