BSC Guide12 (V.5)

BALANCED SCORECARD
Overview
2. Evolution of Performance Management
According to the performance management literature no one
knows precisely when formal methods of reviewing
performance were first introduced.
The first formal monitoring systems, however, evolved out of

the work of Fredric Taylor and his followers before World War
I.
The history of performance management goes in such a way
that from trait oriented to strategic performance management
(BSC).
Assessment
3. Cascading team:
This team is responsible to adapt and develop the scorecard at sub-city
and kebele level in their respective organization:
Members:
o Process owners
o Performers (Subject matter specialists)
Responsibilities:
 Reviews the sector BSC

 Conducts organizational assessment
 Develops and adapt sector scorecards at sub-city, kebele,
 Finally, cascades to core and support processes at sub-city, and kebele,
Assessment
BSC Team charter:

It is essential that the steering team provide a
clear charter for the BSC development
process. The charter clarifies the senior
leaders’ expectation for the BSC development,
and can be used at each BSC development
level.
Assessment
1.2. BSC program plan, and schedule and resource
Organization should have solid plan. It should help them and others
anticipate land mines, points people in a common direction, and answers
BSC teams’ needs for information and guidance, but are flexible enough to
allow for revisions as conditions change and surprises occur. In order to
prepare the BSC program plan, use worksheet No.2
No Activities to be done when By whom Resource
Getting started
•Establish teams
•Develop schedule and identify resources
•Develop change management and
communication strategies
•Conduct training
Assessment
Understand strategic foundations
•Review strategic documents
•Conduct organizational assessment
•Identify organization’s enablers & pains
•Develop/redefine Mission, Vision, Values
•Conduct seminars & workshops to approve the
above process
Develop organization strategic maps and scorecard
•Develop:
strategic themes
strategy results
Objectives
Strategy map
Metrics/ measures
Targets
Strategic initiatives
Budget
Assessment
Cascade
Design scorecard template for
core and support processes
Develop strategic management system

•Design evaluation system
•Develop information system
/automation/
•Write final report
•Recommend next steps
Assessment
1.3. Team members time

commitment
1.4. Team initial training

Assessment
2. Conduct organization assessment (Environmental Scan)

comprises:
Developing clear mission (our purpose), vision (our future),
and core values (our principles) to provide direction for the
organization’s success
Performing a SWOT analysis to recognize the
organization’s position, both internal and in the external
environment
Identifying organizational pains and enablers from the
SWOT analysis
Considering who the customers and stakeholders are, and
Assessment
2.1. Mission and vision

Mission and vision statements set the general goals and
direction for the organization. They help stakeholders,
customers, and employees understand what the
organization is about and what it intends to achieve.
Assessment
A. Mission:
Mission is a concise, internally focused statement of

the reason for the organization’s existence, the basic
purpose toward which its activities are directed, and
the values that guide employees’ activities. The
mission should also describe how the organization
expects to compete and deliver value to customers.
Below are some examples of the mission

statements:
Assessment
City of Charlotte
The mission of the city of Charlotte is to ensure the delivery of quality
public services that promote the safety, health and quality of life of its
citizens. Charlotte attempts to identify and respond to community needs
and focus on the customer through:
 Creating and maintaining effective partnership
 Attracting and retaining skilled motivated employees
 Using strategic business planning
Nature Conservancy:
Preserve the plants, animals and natural communities that represent the
diversity of life on earth, by protecting the lands and waters they need to
survive
Assessment
Effective mission statement

 Is clear and understandable to all personnel, including rank-
and file employees.
 Is brief enough for most people to keep it in mind. This
typically means one hundred words or less, which is possible
or few sentences in length –no more than one paragraph
 Clearly specifies the organization; basic functions. In other
words it incorporates features of our organization (e.g.,
products or services, markets or community served, functions
performed, uniqueness)
Assessment
 Should serve as a template and be the means by

which officials and others in the organization can
make decisions.
 should help it serve as an energy source and
rallying point for the organization
 Expresses who we are and what we are about
–“Our Mission is to provide (serve) …”
Assessment
The team should answer the following questions to check

whether an appropriate mission statement is developed or
not
1. What function/s/ does the organization perform?
2. For whom does the organization perform this function?
3. Where does the organization operate? (Geographical

domain)
4. How does the organization go about filling this

function? (Methods)
5. Why this organization does exist?

Assessment
B. Organizational Core values
 Values define as the philosophy of operation and the

organizational culture being practiced by the organization.
 Values are the timeless principles that guide an organization.
 They represent the deeply held beliefs with in an organization and

are demonstrated through the day-to-day behavior of all
employees.
Assessment
Types of Values
1. Individual values: examination of personal values
of the organization manager and staff.
Example: Risk taking
2. Strategic values: values related to strategic logic

of the organization.
Examples:
 Commitment to excellence
 Empowerment
Assessment
3. Operational values: Related to day to day operation of
different parts of the organization. They define how
things are done.
Examples:
Quality is our work and value for money is
our goal
We use resources to the fullest, waste
nothing and do only what can do best.
Assessment
Purpose of value:
 Is glue which binds together participants
 Move people’s heart
 Genuinely knit together individuals and organization
 Values are determinant success factor for

organizations especially, in today’s knowledge age
economy, success lies on basing strategy on
intangible assets.
 Visionary& leading organizations deliberately identify
& establish kind of value needed for their success.
Assessment
Steps in Building Values:

1. Consider the organization’s mission
2. use a brainstorming process,
3. The groups can tape their /all the

possible core values/
4. Similar items can be combined to

reduce the total list
Assessment
5. Choose the top 10 to 12 core values on which

they can agree.
6. When the 10-12 core values have been

identified, the list can be developed by the
leaders or a small committee into a core
values statement that explains the meaning
and significance of each core value.
7. Finally the identified values will be presented to

the entire employees for their formal
acceptance.
Assessment
Examples of values:
Nordstrom
 Service to the customers above all else
 Never being satisfied.
 Excellence in reputation
Nature Conservancy:
 Respect for people, /communities, and cultures
 Commitment to diversity
Assessment
C. Vision:
Vision is a concise statement that defines the mid –to

long –term (3 to 10 years) goals of the organization.
The vision should be external and market-oriented and

should express _ often in colorful or “visionary” terms
_how the organization wants to be perceived by the
world.
Assessment
Examples:
 Starbucks 1998 Vision: “2000 Stores in the Year 2000”
 Vision of Ethiopia: A country of middle income… by 2020.
 The university of Leeds( united kingdom): “by 2015, our

distinctive ability to integrate world class research,
scholarship, and education will have secured as a place
among the top 50 university in the world”
Assessment
This example contains each of the three critical

components:
1. Stretch goal: to be ranked among the top50
universities
2. Definition of niche: to integrate world-class

research, scholarship, and education.
3. Time horizon: by 2015

Assessment
Benefits of vision:
 Shared vision is an initial force that bring people together
 Inspires stakeholders
 Serves as a life blood of an organization
 Helps to see what you are working towards
 Clearly articulated vision can provide energy, momentum

and strength to individuals
 Provides bases for partnership
 Binds an organization together in times of crisis
 Provides incentive to work through internal conflict

Assessment
Characteristics of good vision:
Describes where we want our Compact-can be used to guide decision

organization to be in the future -“picture making
of the future” , typically 3-10 years from Can be felt (experienced) gives people
now goose pumps when they hear it
Brief, easy to understand and Is perceived as achievable and at the
communicates message, usually one same time is challenging and compelling,
stretching as beyond what is comfortable.
sentence
Keeps the organization moving forward
Success can be easily measured and
even against discouraging odds.
progress tracked.
Vision statement should be an
The vision statement can be written as
emotionally inspiring picture of future
a goal and target in a single statement,
success
Dynamically incomplete so people can
fill the pieces
Assessment
D. SWOT Analysis:
SWOT (Strength, Weakness, Opportunities and

Threats) is the most basic technique for
analyzing organizational conditions.
The strength and weakness portion of SWOT

refers to the internal condition of an organization
Opportunities and threats are environmental

conditions external to the organization.
Assessment
Strengths:
 Positive internal factors that occur at present
 Are within the control of the organization (they are not just
potential)
Examples: appropriate technology, dedicated staff, management

experience etc…
Weaknesses:
 Are the “lack of, missing or weak” points.
 Are also within the control of the organization; they also

occur at present and not just potential.
Examples: shortage of qualified staff, inadequate finance, poor

Assessment
Opportunities:
Are positive/ favorable factors in the external
environment which the organization should take
advantage of or which make the ideal potential viable.
Are beyond the control of the organization.
Examples:
existence of willing donors, favorable donor
polices, availability of training programs etc.
Assessment
Threats:
Threats are negatives/ unfavorable external factors in
the environment and are normally beyond the control
of the organization.
They adversely affect the business of the organization
if not overcome.
The purpose of analyzing threats is to look for ways of
heeding against them or lessening their negative
impact making counter balancing action.
Examples: worsening economic conditions, fast growing population,
shrinking resources, etc
Assessment
Factors to be considered when assessing the internal

environment:
Governance Financial Resource

Leadership Financial control and budgeting
Stability Budget utilization
Vision, mission, goal Adequacy of financial resources
Monitoring and evaluation (M&E)
Management Physical Facility
Structure Office
Existing strategy Furniture and equipment
Processes, systems and strategies Vehicle
(planning, M&E, reporting, MIS) Communications
Assessment
Human Resource Service delivery

Skill Adequacy
Availability of qualified manpower Service users satisfaction
Values attitudes and culture Efficiency
Work environment Complaint handling system
Staff development Innovation for improvement
Personnel management
Performance appraisal
Salary and benefits
Staff stability
Assessment
Factors to be considered when assessing the external environment:
Demographic: Technological:
Aging population Genetic engineering
Raising affluence Emergence of internet technology
Change in ethnic composition Wireless communication
Geographic distribution of population Pollution / global warming
Greater disparities in income levels
Socio-cultural: Economic conditions:

More women in the work force Interest rate
Increase in temporary workers Unemployment rates
Greater concern for fitness Consumer price index
Greater concern for environment Trend in GDP
Postponement of family formation
Political/Legal: Global conditions:

Tort reform/act/ Increasing global trade
Deregulation utility and other industries Currency exchange rate
Taxation at local, state, federal levels Trade agreements among regional blocks (e.g.
NAFTA, EU, Asian)
Creation of WTO (leading to decreasing
tariffs/free trade in services)
Assessment
Consider the following questions when conducting a SWOT Analysis
Strengths Weaknesses
Internal What do you do well? --------------------- What could you improve?---------
What unique resources can you draw Where do you have fewer
on?----------- resources than others?---------
What do others see as your strengths?--- What are others likely to see as
weaknesses?---------
Opportunities Threats
External What good opportunities are open to What trends could harm you?-----
you?----------- What is your competition doing?-
What trends could you take advantage Looking at your weaknesses,
of?----------- what threats do these expose you
Looking at your strengths, how can you to?------
turn these into opportunities? -------------
Assessment
• E. Enablers and Pains
– After conducting the SWOT analysis,

the organization should summarize the
critical strategic points in to two
categories (pains and enablers)
Assessment
Strengths + Opportunities=
Weaknesses + Threats= Enablers
Organization
Pains
These are actions, technology,
These are actions, technology, processes, skills, etc., that provide
processes, skills, etc., that competitive advantage.
prevent business growth.
Assessment
F. Stakeholders and Customers

Stakeholders: Are individuals, groups and organizations who are in
a position to influence your work or place demand on
you; who are affected by/who can affect your work,
who have an interest in your work or who can lay
claim to your work.
Customers: Are a direct beneficiaries of your organization’s products
or services…..customers are stakeholders who benefit
directly
Identify Customer And Stakeholder: The first step in any stakeholder
analysis is to identify specifically
who your key stakeholders are.

Assessment
Customers: Are a direct beneficiaries of your organization’s
products or services…..customers are stakeholders
who benefit directly
Identify Customer And Stakeholder: The first step in any
stakeholder analysis is to identify specifically

who your key stakeholders are.
Assessment
The team could identify primary customers and

stakeholders considering the following criteria፡
 revenue impact
 influence
 services offered
 size
 critical role concerning your mission
 Relative importance of their needs and other related

criteria can be identified and used based on their own
situation.
Assessment
3. Manage change
Is an essential tool in organizations

today, where change is the new status
quo and organizations have to adapt
quickly to rapid changes in the
environment.
Assessment
• Ineffectively managing the people involved in

changes leads to the failure of projects and
programs that otherwise deliver technically
excellent result.
Managing change is a team effort, requiring

business as usual and those instigating change
to work together before, during and often long
after the change has been implemented.
Assessment
The four key factors for success when implementing change within an organization
are:
1. Pressure for change – demonstrated senior management

commitment is essential
2. A clear, shared vision – you must take everyone with you. This is a
shared agenda that benefits the
whole
organization
3. Capacity for change – you need to provide the resources: time and
finance
4. Action – and performance – “plan, do, check, act” – and keep
communication channels open
Assessment
Before looking at the four factors for success, recognizing
the four factors for failure in managing change can help
identify problems more rapidly, and can show where initial
action should be concentrated:
1. Lack of consistent leadership
2. Demotivated staff kept in the dark
3. Lack of capacity: budget cuts, no spend-to-save policy,

short-term approach to investment, stressed out staff
working hard just to stand still
4. Lack of initiative to “do something different”.

Assessment
These four factors for failure then lead to the ‘tread-

mill effect’, setting up a vicious circle:
1. No time for reflection, planning and learning
2. No improvement in design and implementation
3. Increasing need to do something
4. Increasing failure and unplanned consequences

Assessment
3.1. Readiness assessment

Readiness assessment provides an analytical
framework to assess organizational capacity and
political willingness to develop and implement
Balanced Scorecard.
Assessment
Three Main Parts of the Readiness Assessment:

The readiness assessment is a diagnostic aid that will help
determine where a given organization stands in relation to
the requirements for establishing a BSC system. It is
composed of three main parts.
Assessment
1. Initiatives and Demands for Designing and Building BSC

System
It is important to determine whether initiatives exist—political,
institutional, or personal—before beginning to design and build BSC
system. There are five key questions to be considered:
 What is deriving the need for building BSC system—legislative

or legal requirements, citizen demand, donor requirements
(National Development Plan, National Poverty Reduction
Strategy, or others), or political or public sector reform?
Assessment
 Who are the champions for building and using BSC system—City
Government, City Council, Civil society, Donors, others?
 What is motivating those who champion building BSC system?-political
reform agenda, pressures from donors, or political directive?
 Who will benefit and not benefit from developing BSC system—
politicians, administrators, civil society, donors, citizens, employees?
 Are there counter reformers inside or outside the political system?
Assessment
2. Roles and Responsibilities and Existing Structures for

Assessing BSC
A readiness assessment will enable one to gauge the roles and

responsibilities and existing structures available to assess BSC.
 What are the roles of legislatives, executives/leaders/ in BSC?
 What is the role of bureau of capacity building?
 Do bureaus and agencies/authorities/commissions/institutions…

share information with one another?
 What is the role of civil society?
Assessment
3. Capacity Building Requirements for BSC development
The readiness assessment also includes a review of a

city’s/organizations current capacity to build and implement BSC
along the following dimensions:
 Technical skills;
 Managerial skills;
 Existence and quality of data systems;
 Available technology;
 Available fiscal resources; and
 Institutional experience.
Assessment
3.2.Organization change management strategy

and plan
Change management is a structured

approach to transitioning individuals,
teams, and organizations from a current
state to a desired future state.
Assessment
The organizational change management

strategy could incorporate the following
contents:
Introduction
Importance and significance of BSC

Assessment
The strategic issues in

implementing BSC
 Leadership
 Human resource management
 Communication issues
 Legal framework
 Information and logistic service
 Monitoring, evaluation and feedback system

Assessment
 Means of implementing the strategy
 Managing resistance to change
 Governance structure
 Action plan
Assessment
3.3. Communications strategy and plan
The BSC development team or other responsible body

should consider the next seven points when preparing BSC
communication strategy:
 Introduction
 Importance of communication
 What major activities are to be performed?
 Who is responsible to perform the strategy?
 How to put in to practice this strategy?
 When to communicate?
 Expected results
 Action plan
Strategy development
Step 2. Strategy development

Objectives:
understand the concepts of strategy
 understand and use strategic perspectives
 develop customer value proposition
 develop strategic themes and results

What is strategy?
It is the science or art of planning and

directing an organization specifically of
applying resources to the most
advantageous position performing
successfully, for a while.
Porter argues that the strategy is about selecting

the set of activities in which an organization will
excel to create a sustainable difference in the
market place. In brief, strategy:
Is about broad business options and

choices that have organization-wide impact.
There is always more than one way to
achieve a vision or support a mission
 Is a hypothesis of the best way for the organization to

achieve its vision and mission
 Requires selection among alternative ways of doing
things, focusing on a few things, and deferring or
rejecting the rest
 Can be long-term (e.g., “What must we do to achieve
our vision?”), or short-term (e.g., “What should we do to
achieve our short-term business goals?”)
 Answer the broad question “What approach (es)

should we pursue to get the results we want?”
 Is different from tactics; tactics answer more
narrow questions, such as: “What specific
actions should we take at our levels that are
consistent with the organization’s overall
strategy?”
• The uplifting words contained in a

mission ,values and vision represents
nothing but wishful thinking unless
accompanied by a strategy.
• A strategy directs the energies of all

employee towards what is truly important
within your organization.
Figure: Translating a mission into desired outcomes, Kaplan and Norton, The
Strategy Focused organization, 2001
Mission
why we exist
Core values
• What we believe in
Vision
 What we want to be
Word picture of the future
Strategy
 Our game plan
Differentiating activities
Balanced scorecard
 Implementation and focus
Strategic initiatives
 What we need to do
Personal objectives
 What I need to do
Strategic Outcomes
Satisfied Delighted Effective Motivated and
Shareholders customers processes prepared workforce
How to Develop a Good Strategy:

• Do we really have a strategy?
• What is our strategy?
• Is our strategy actionable?
• Has our strategy been validated? How?
• Will it pay off financially? How do we
know?
• How will customers respond?
When we answer the following questions

in detail, it is easy to formulate the
strategy
• Where are we now?
• Where do we want to go?
• How do we create value for the citizens of
Addis Ababa?
• How do we intend to get there?
• When will we arrive?
• Who is responsible?
• How much will it cost?
Originally, BSC is strategy implementing

tool.
• Organization can use different Strategy
Creating tools such us, SWOT analysis,
Pest analysis Model, Porter V force
Competition analysis, etc or the BSC
framework itself for creating strategy.
• Now, we will see/use BSC Frame work
for creating strategy as follows
In Developing Strategy by BSC

framework, tasks to be done by the
following three steps.
1. Develop the customer value proposition
Identifying target customers and customer
value proposition is the foundation of
strategy
i. Strategy selects target customer
segment/s to serve
ii. Strategy selects the Value proposition at
which it will excel
2. Name strategic Themes and Develop

Strategic Results.
• Strategic themes represent the major
focuses areas of the organization to
succeed the vision.
– They are the ‘’Pillars of Excellence’’
3. Name Perspectives
Strategic
altitude What is our purpose? What do we
30,000 Mission
do?
Customer/
Stakeholder
Stakeholder
Needs What is our picture of the future?
Vission
Strategic
What performance lenses should we
perspectives use to evaluate results?
25,000
Strategic themes & What are our main focus areas (“Pillars of
Excellence”)? What results do we want to satisfy
results our5 customers
What continuous improvement activities are

Objectives needed to get results?
How do we create and improve value

15,000 Strategic Map for customers?
How will we know if we are

Performance measures and target achieving the results we want?
Specifically, what projects and

Strategic initiatives programs will contribute to the
desired results?
Ground
1. Strategic Perspectives
The etymology of the word perspective is from
the Latin perspectus “to look through” or “see
clearly” which precisely what Kaplan and
Norton aim to do with BSC-examine the
strategy, making it clearer through the lens of
different view points.
When developing a balanced scorecard we usually use

the following four perspectives: citizen/customer, financial,
internal process, and capacity building/learning and
growth/.
These four perspectives of the scorecard permit a

balance between short and long-term objectives, between
outcomes desired and the performance drivers of those
outcomes, and between hard objectives measures and
softer, more subjective measures.
public sector perspectives
Mission
Citizens/Customers
Who do we define as our
Citizens/customers? How do we
create value for our customers?
Economic Internal business process

development/Financial To satisfy citizens /customers
How do we add value for while meeting budgetary
citizens/customers while Strategy constraints, at what business
controlling costs? process must we excel?
Capacity building/Learning and

growth
How do we enable our services to
grow and change meeting on going
demands
A. Citizen/Customer: This perspective captures the ability of the

organization to provide quality goods and services, the
effectiveness of their delivery, and overall customer service and
satisfaction.
In the governmental model, the principal driver of performance is

different from the strictly commercial environment.
In general, public organizations have a different, perhaps greater,

stewardship /fiduciary responsibility and focus than do private
sector entities.
B. Economic development/Financial: Financial

considerations for public organizations have an
enabling or a constraining role, but will rarely be
the primary objective for business systems.
Success for public organizations should be

measured by how effectively and efficiently they
meet the needs of their constituencies.
C. Internal Business Process: This perspective focuses on the internal
business results that lead to financial success and satisfied customers.
To meet organizational objectives and customers’ expectations,

organizations must identify the key business processes at which they
must excel.
Key processes are monitored to ensure that outcomes will be

satisfactory.
Internal business processes are the mechanisms through which

performance expectations are achieved.
Kaplan and Norton group organization’s numerous internal processes in

to four clusters;
1. Operations management processes.
Operations management processes are the basic day-

today processes by which companies produce their
existing products and services and deliver them to
customers.
Operations processes for service organization produce

and deliver the services used by customers.
2. Customer management processes
Customer management processes expand and deepen

relationships with targeted customers. We can identify a set of
activities in customer management processes.
Example:
Public organization:
Asses/identify customer needs
Handling customer complaint
public participation
Build citizen trust

3. Innovations processes
Innovations processes develop new products, processes, and
services, often enabling the company to penetrate new
markets and customer segments.
Managing innovation for both private and public organization

includes the following processes:
Identify opportunities for new products and services
Manage the research and development portfolio
Design and develop the new products and services

4. Regulatory and social processes

Regulatory and social processes help organizations continually earn
the right to operate in the communities and countries. Regulatory
and social processes for both private and public organization
include:
Environment regulation
Safety and health
Employment practices and related regulation
Community investment
D. Capacity building/Learning and Growth: Learning and growth

perspective describes the organization’s intangible assets and
their role in strategy. The intangible assets are organized in to
three categories:
 Human capital: The availability of skills, talent, and know-

how required to support strategy
 Information capital: The availability of information system
networks and infrastructure required to support the strategy.
 Organization capital: The ability of organization to mobilize
and sustain the process of change such as: culture,
leadership, alignment, and team work required to execute the
strategy.
In addition to the four perspectives described in

the above, organizations can identify additional or
redevelop perspectives pertinent to their
circumstances.
More interestingly organizations might have 3 to 5

perspectives based on their own condition and
they can rename the existing perspectives in their
organizational context.
2. Customer Value Proposition
The core of any business strategy-connecting an organization’s

internal processes to improve outcome with customers-is the “value
proposition” delivered to the customer.
The value proposition describes the unique mix of product, price,

service, relationship, and image that the provider offers its
customers.
A clearly stated value proposition provides the ultimate target on

which the strategic themes of critical internal business processes
and infrastructures are focused.
Customer value proposition specifically:
Aligns an organization’s product or service with the

values and needs of customers
Identifies how the organization’s product or service
will provide a unique benefit to the customer
Distinguishes an organization’s product or service
from the competition
Strategy is based on a differentiated customer

value proposition.
Satisfying customers is the source of sustainable
value creation.
Strategy requires a clear articulation of targeted
customer segments and the value proposition
required to please them.
Clarity of this value proposition is the single most important
dimension of strategy.
We can see the four major value propositions and customer
strategies that organizations are using in practice.
These are:
product leadership,
customer intimacy,
operational excellence and
system lock-in.
Each of these value propositions clearly defines the attributes that must be
delivered if the customer is to be satisfied.
steps to develop customer value proposition:
1.For your organization, identify your primary

stakeholders and customers
2.Differentiate their needs from wants.
Needs are based on what products or services
the organization can or intends to deliver to its
customers, whereas a want is simply something
that a person would like to have.
3.Choose a way of learning about stakeholders’ needs

and expectations
4. Interview or survey stakeholders to determine their
need
5. Finally the team should communicate the result to
key stakeholders
6. For the primary customer, identify the functional
product or service attributes, the image, and the
relationship components of your organization’s
value proposition
3. Strategic Theme and strategic result
3.1 Strategic Theme
Strategic Themes represent the major focus areas of
the organization; they are the “Pillars of Excellence.”
Strategic Themes broadly define the business and

allow the organization's vision to be decomposed into
operational effort; typically three to seven in number.
The strategic themes reflect the executives’ view

of what must be done internally to achieve
strategic outcomes.
The themes typically relate to internal business
process.
Most strategic themes are vertical combinations
of objectives that originate in the process
perspective, where the strategy is executed.
A process-based strategic theme can

connect upward to customer and financial
outcomes, as well as downward to the
enabling objectives in the learning and
growth perspective.
Strategic themes, however, can be also
defined across BSC perspectives.
Steps to Develop Strategic Themes
1. Thinking,
Since strategic themes are about strategies, so, thinking

is critical. Follow the following main areas for thinking and
developing themes.
Vision =what must be done to meet the vision?
SWOT analysis - Critical strategic issues and strategy options
Customer Value proposition

 At which customer value proposition must we excel?
Core Business processes:

 Themes are related to business processes
 Think –what must be done in the business processes
to achieve the vision
Ways of thinking and discussion:

Lead questions:
 In what areas must we excel in delivering value to our
customers?
 In what areas must we excel to achieve our vision?
 Think the main focus areas to succeed
2. Brainstorming and in depth discussion.

The Affinity Process (or Affinity Diagram) is an excellent tool
for developing Strategy in a team setting.
To apply the Affinity process:

3. Determine the “Altitude” Of Strategic Themes

 We need to find the correct “altitude” of Strategic Themes; ask
the question "Why do we want to do this?"
 If there are too many themes identified initially, try to combine
them and raise their strategic altitude to a more general theme
 Try thinking bottom-up: what will be the results if we are
successful in achieving our strategy?
 Apply “filters” to candidate themes
4. Apply Filters to Candidate strategic themes
Filters to reject candidate themes include these

questions:
 Is this just a functional description of what we do?
 Is this just a description of what one process does?
 Is this something that we must do really well, or is it

merely something that must be done in the course
of business?
 Is most of the activity in only one perspective?
A good strategic theme statement, what

ever its source, should contain three
fundamental elements:
1.Strategic result:
2.Advantage:
3.Scope:
3.2. Strategic Results

Strategic result describes what will occur if
the organization successfully executes its
strategic theme.
Characteristics of Good Strategic Results:

 Lead question: what will be the result (outcome) if we successfully
implement this strategic theme?
 Describe the outcome that the strategies and objectives within a
strategic theme are intended to produce –these may be outcomes that
we can influence, but not control
 Keep the focus of strategic thinking on “end states” rather than specific
activities or tasks
 Taken together, the set of strategic results should translate into success
in achieving the mission and vision
 The set of strategic results should aggregate upward to the next
strategic level –the overarching strategic result developed for the vision
Examples of strategic themes and strategic results:
Strategic themes Strategic results
Administrative Support Organization
 Customer-Focused Ø Provide what the customers need when

Operational Excellence
 Compelling place to work they need it
 Support any where, any time Ø Highly qualified and motivated people
come to work is with the CAO
organization, and choose to stay
Ø Our customers can function from
School district’s Strategic themes and regular work places or remote
strategic results locations, and can operate outside of
usual business hours
 Excellence in learning and
educational delivery  More students will graduate and be well
 Excellence in facilities and prepared to undertake further life
learning environment opportunities
 Excellence in business  Facilities and learning environments that
operations are safe, welcoming and technology-rich
which promote maximum student
achievement
 Seamless, effective, align services to
maximize time and resources for instruction
four barriers to implementing strategy;
Only 10% of
organizations execute
strategy
Barriers to strategy execution
Vision Barrier People Barrier Management Resource Barrier

Barrier 60% of
Only 5% of the Only 25% of
85% of executive
work force managers have organizations do
teams spend less
understands the incentives linked not link budgets to
than 1 hour per
strategy to strategy strategy
month discussing
strategy
Strategic objectives
Step 3. Strategic objectives
Objectives of this step:
understand the concepts of strategic objectives
develop strategic objectives/CSF/ for each strategic

theme
level strategic objectives across each perspectives
prepare objective commentary

Objective is defined as a concise

statement describing the specific things an
organization must do well in order to
execute its strategy.
Objectives could be common, shared, and

unique (you can read the details of these
objectives in step 8)
3.1 Strategic objectives:
Are the building blocks of strategy
Translate strategic priorities that are often vague and

nebulous in to directional and action- oriented statements of
what must be done to execute the strategy.
Make up the detailed game plans that describe what is to be
done to accomplish strategic results
Are used to break strategic themes into the more actionable
activities that lead to the strategic result
Are essential to identify what the organization must do well in
order to attain the identified vision.
Steps to Develop Strategic Objectives/CSF/
1.Start from one of the strategic theme and

results identified:
2.Work downward from the top asking “What do

we have to do (Objectives) to achieve desired
results?”
3.List (brainstorm) ways in which the Strategic

Result could be accomplished on a continuous
improvement basis
4. Choose which Perspective the objectives should be
placed
5. Check by looking across each perspective for a

balanced set of Objectives
6. Capture commentaries for all objectives that are

selected (e.g. what is included / not included,
assumptions, risks, etc.) strategic objectives need
explanation and documentation_ we call this the
“objective commentary”/. See CSF factor worksheet
3.2. Approaches to develop strategic objectives
The objectives we choose should be directly

translated from our distinctive strategy, i.e. from
strategic themes.
strategic objectives can be developed under each

strategic theme and level across each perspective.
A. Objectives for the customer Perspective

The approach when developing objectives for the
customer perspective is based on thinking on
customer value proposition. The value proposition
you select will guide the objectives you choose.
B. Objectives for financial Perspective
Objectives in the financial perspective

demonstrate how you are providing your services
in a manner that balances effectiveness with
efficiency and cost consciousness. Here are
some elements to consider:
C. Objectives for internal business processes

perspective
Once an organization has a clear picture of financial
and customer objectives, the objectives in the
internal business process perspectives describe how
the strategy will be accomplished.
D. Objectives for learning and growth perspective

Learning and growth perspective is the foundation of all
above three perspectives.
The learning and growth strategy defines the intangible
assets needed to enable the organization to achieve the
strategies in all the three perspectives.
Human capital
1. Strategic competence: The availability of skills,
talent, and know-how to perform activities required
by the strategy
Information capital
2. Strategic information: the availability of information
systems and knowledge applications and
infrastructure required to support the strategy
Organization capital
3. Culture: awareness and internalizations of the shared

mission, vision, and values needed to execute the
strategy.
4. Leadership: the availability of qualified leaders at all

levels to mobilize the organizations toward their
strategies
5. Alignment: alignment of goals and incentives with the

strategy at all organization levels
6. Team work: the sharing of knowledge and

staff assets with strategic potential
These objectives describe important intangible

assets and provide a powerful framework for
aligning and integrating them to the
organization’s strategy.
Characteristics of Good Strategic Objectives
Good Objectives are:

 building blocks of strategy
 action oriented activities (what must be done to be successful)
 continuous improvement potential
 easy to understand; simple statement of intent
 include commentary to capture the deliberations of BSC teams
 provide a bridge among strategies and performance measures
 not projects or activities; no “on-off” switches

Good objectives could start with imperative verbs like”

Improve, Increase, Optimize,
Reduce, Initiate, Maintain,
Develop, Excel, Build, Achieve, Accelerate, Sustain,
Encourage, Modify, Produce, Facilitate, Reach, Supply,

Allocate, Invent, Coordinate, Maximize,”); continuous
improvement potential (no projects, or on/off activities;
show innovation & creativity; tied to desired behaviors)
Strategic mapping
Step 4. strategic mapping
Objectives:
understand the concept of strategy map
and mapping
link the objectives across perspectives
develop organization wide strategy map

Strategic mapping
What are strategy maps?
“MAP”:
A map provides graphical representation
of the whole or part of an area.
Strategy implies the movement of an
organization from its present position to a
desirable but uncertain future position.
Strategic mapping
A strategy map is a one-page graphical representation of what

you must do well in each of the four perspectives in order to
execute your strategy successfully.
We are not taking any measurements in the Strategy Map;

there’s no tallying of results here.
Instead we’re communicating to all audiences, internal and

external, what we must do well if we hope to achieve our
ultimate goals.
Strategic mapping
• Hence the description of the Strategy Map as a

powerful communication tool.
• Niven (2002) defined strategy map as causal

pathways (objectives) weaving through the four
perspectives that will lead us to the
implementation of our strategy.
• The objectives appearing in the map should not

be viewed as isolated elements but should be
woven together, taking you on a journey that
leads to the execution of your strategy.
Strategic mapping
Similarly strategy map is:
Communicates and educates the

workforce, constituents, support
authorities, and the public about
the organization’s strategy
Strategic mapping
A graphical picture of the customers/stakeholders value
chain
Links strategic objectives and shows how value is
created through the four perspectives of strategy
A tool for creating organization alignment

Each part of the organization and each individual link
their strategic objectives to the strategy map
Contains a balanced set of objectives, representing
each of the perspectives
Strategic mapping
The strategy map provides a powerful tool for

visualizing the strategy as a chain of cause-and-
effect relationships among strategic objectives.
Is constructed by if-then logic
A tool for creating executive consensus and employee

accountability
Building the strategy map eliminates ambiguity and
clarifies responsibility.
Strategic mapping
When you develop strategy map follow the

next two stages
A. The first one is developing the map in
line with each strategic theme,

B. Constructing organization-wide
strategy map from strategic theme
objectives
Strategic mapping
A. Strategy mapping steps

1. Select highest-level “customer” objectives; identify
those that lead directly to the “Strategic Result
2. Select one “customer” objective and, as a group
identify cause-effect linkages of that objective to
others
3. Continue to identify cause-effect linkages among
other objectives with finance, internal process, and
learning and growth perspectives
Strategic mapping
4. Rearrange and create objectives as needed

5. Place objectives on map in appropriate
Balanced Scorecard Perspectives
6. Review logic by reading the map “from the
“bottom up”
7. Agree on final Strategy Map
Strategic mapping
Theme Strategy Map first stage
Theme 1: Theme 2: Theme 3:

Strategic result Strategic result Strategic result
Customer
Finance
Internal
business
processes
Learning &
growth
strategic mapping
B. Constructing organization-wide strategy

map from strategic theme objectives
The overall (corporate; enterprise; agency-wide)

strategy map is constructed from objectives .
These theme objectives must be “integrated”

into a single overall map.
strategic mapping
Example: link objectives to create a corporate strategy map
Theme 1 Theme 2 Theme 3
Customer
Finance
Internal
business
processes
Learning
&
Growth
Performance measures and Targets
Step .5. Performance measures and Targets
Objectives;
 Understand the concepts of strategic performance
measures and targets
 Help to understand clearly the types of measure
 Guide to develop strategic performance measures across

perspectives
 Guide how to set target for each measure
 Help to understand how performance measures will be

used, managed, & reviewed
5.1 Performance measures
Most of us have heard some version of the standard

performance measurement clichés:
“what gets measured gets done,”
“if you don’t measure results, you can’t tell success from failure
and thus you can’t claim or reward success or avoid an
intentionally rewarding failure,”
“ if you can’t recognize success, you can’t learn from it; if

you can’t recognize failure, you can’t correct it,”
“if you can’t measure it, you can neither manage it nor
improve it,” but what eludes many of us is the easy path
to identifying truly strategic measurements without falling
back on things that are easier to measure such as input,
project or operational process measurements.
• Strategic performance measures monitor
the implementation and effectiveness of
an organization’s strategies, determine
the gap between actual and targeted
performance and determine organization
effectiveness and operational efficiency.
• Importance of strategic measures
 Will help to motivate all managers and employees to
implement successfully the strategy.
 Enable to execute the strategy
 Communicate objectives and targets.
 Help managers and employees enable to focus on
their critical drivers.
 Enabling managers and employees to align
investment, initiatives and actions with accomplishing
strategic objectives
Principles to link scorecard measures to strategy
1. Cause- and -effect relationship
A strategy is a set of hypotheses about cause and effect.

Cause- and –effect relationships can be expressed by a
sequence of if-then statements.
A properly constructed scorecard should tell the story of the

business unit’s strategy through such a sequence of cause-
and –effect relationships.
2. Outcomes and performance drivers
A good BSC should have an appropriate mix of

outcomes / lagging indicators/ and
performance drivers /leading indicators/ that
has been customized to the business unit’s
strategy.
The performance drivers, the lead indicators, are

the ones that tend to be unique for a particular
business unit.
Outcome measures with out performance drivers

do not communicate how the outcomes are to be
achieved.
5.1.1. Types of measures

Outcome: A results measure that defines what is
accomplished
e.g., Customer satisfaction…
Output: a results measure that defines what is produced.
e.g., Number of presentations delivered
Input: a performance driver that measures attributes
(amount, type, and quality) of resources consumed in
processes that produce outputs
e.g., Budgeted amount, Number of computers…
Leading and lagging indicators

Leading measure:
an indicator of performance that is a precursor of
future success.
Lead measures tell you how you are doing along
the way and allow you to adjust performance so
that you can be more successful in achieving your
goal.
e.g., Grants written, absenteeism
• Lagging measure: an indicator of past

performance which shown how successful we
were in achieving our goals. Lag measures tell
you basically weather or not you have met your
target.
e.g., Revenue obtained, employee satisfaction

5.1.2. Measurement Approaches

Measure directly –How to assess success when
we can measure the result directly,
e.g.:
Services are delivered in a timely manner
Measure Indirectly –How to assess success when we

measure the result indirectly
e.g.:
 Quality services are delivered in a timely manner:
 We know the products were delivered on time, and we received no
returns or complaints on our products; thus, we can infer from “no
bad news” (or no decrease in customer satisfaction score) that our
quality was acceptable to the client
 Policy decisions are better researched and integrated
5.1.3. Steps to Develop Meaningful

Measures
1. The BSC development team reviews and
discusses on their objective and the objective
commentary
2. Team identifies desired objective results and

brainstorms possible intermediate and end
outcome measures (direct measurement
preferred)
3. Team brainstorms possible output measures, process
and input measures
4. For each possible measure, team discusses:

o availability of relevance performance data and
baseline data,
o relevance to desired behavior changes,
o Benchmarking
5. Team chooses one to three measures for each objective
6. Team fills in the performance measures data definition table.

Key Performance Indicator “Data” Dictionary
Key Performance Number: _____ Owner: Person responsible for improvement

Behavior to Deliver: Scorecard Perspective: Strategic Theme:
What behavior must we have to achieve this What perspective is the Which theme does
KPI? CSF most focused on? this KPI support? Or
is it an orphan?
Lagging Indicators: What are the indicators Leading Indicators: What are the indicators
that tell us that we have moved towards are that tells us we are driving performance in the
goals? direction we desire?
Data Source: What is the Data Quality: What is the quality Data Update Rate: How
source of the data to of the data stated as a % or often is the data updated?
develop the KPI? rating?
Functional Linkage: What Computation: What is the Users: Identify the users of
functional departments does formula for calculating the this KPI information.
this KPI link to? KPI?
Alignment to other KPIs Starting Performance: Identify Target Performance: Identify

and CSFs: Identify all the starting performance and the targeted performance
effects this KPI might have improvement made since the from inception to present.
on any other KPI or CSF. organization included this KPI
as a Balanced Scorecard item.
1011709 004 ©2009 Value Creation Group, Inc. All rights reserved. 46
5.1.4. Developing measures for each

perspective
The measures appearing in each of the four

perspectives of your balanced scorecard are not
plucked randomly from thin air, nor are they chosen
based on the seniority of the person advancing them.
• The measures selected to populate your scorecard serve

as direct translations of the objectives comprising your
strategy map, which were also faithfully translated from
your strategy.
• Measures provide insight in to whether we are achieving

our stated objectives and foster accountability for results,
ensuring we maintain the course of implementing our
strategy.
A. Measures for the Citizens/customer perspective:
When composing objectives for the customer

perspective of the strategy map, we tossed around the
following question:
What do our customers demand or expect from us?
Each customer group may produce different answers.
To the question, requiring different measurements, they
will often fall under one of the following categories:
 Access: metrics relating to the ease with which customers can
avail themselves of your products/ services.
 Timeliness: time expended, or saved by clients has a result of
your offerings.
 Selection: depending on the nature of your organization, you
may be in a position to offer more than one product or service.
 Efficiency: customers of public sector organizations especially
value a transaction that can be completed easily and
accurately in one stop.
A. Examples of Measures(KPI) for the Citizens/customer
perspective
Objective Lagging Leading

Increase Satisfaction Breadth of
Satisfaction Index Product/Ser
vice
Insure % Profitability Product/
Profitability Service Mix
B. Measure for the economic development/financial perspective:
Excellence in operations management has a direct connection to the

productivity theme in the financial perspective, and an indirect link to the
financial perspective’s revenue growth theme.
Reduction in the cost of ownership and in the cost of operations and
distribution processes should lead directly to improvements in the
organizations overall cost structure.
The measures must be direct translations of your objectives:
Example: Net income, gross revenue, net assets, budget variance,
earned income, diversification of income streams, income (or expense)
per employee, budget or forecasting accuracy.
B. Examples of Measure(KPI) for the economic development/financial perspect

Grow the Business % Revenue % of new products
increases in fast time to
market Program
C. Measures for the internal process perspective:

The internal process perspective signals an important
transition in the balanced scorecard, from “what” to “how.”
In the customer perspective, we focus on what customers
expect or demand from us as an organization, and what
our value proposition is in serving them effectively and
efficiently. Answering those questions leads us down the
path of how we will accomplish the outcomes we have set
forth for our customers, which is the domain of the internal
process perspective.
C. Examples of Measures(KPI) for the internal process perspective:

Improve innovation Improvements #of employee
suggestions
Management #of new solution #of new needs

improvement identified
D. Measures for the Learning and Growth
Perspective:
In today’s environment, we rely almost exclusively on the

knowledge of our people, strong systems, and cultures
capable of innovation and change to deliver the result we
expect.
Measures in the employee learning and growth

perspective represent the enabling factors that fuel
efficient processes, and ultimately lead to improved
D. Examples of Measures(KPI) for the Learning and Growth Perspective:
Goals Lagging Leading

Employee # of employees #of PDPs
competencies cross- completed
trained
Information systems Strategic % Growth in new
capabilities Information technology
Ratio Coverage
Motivation, % of all employees % of employees
Empowerment have a personal completing
and scorecard Scorecard training.
Alignment
PDP = Personal Development Programs
5.1.5. Criteria for selecting performance measures
Not all performance measures are created equal.
Effective metrics provide direction, align employees, improve decision

making, and serve as a basis for resource allocation decisions.
Here are some criteria to consider when attempting narrowing your

measures down to the critical few that articulate your strategic story.
- Linked to strategy - Use average with caution
- Easily understand
- Link in a chain of cause and effect
- Quantitative
- Accessible
5.2 Targets
“To understand the heart and mind of a person, look not at
what he has already achieved, but at what he/she aspires
to do.”
In the context of a balanced scorecard, targets represent
the desired result of a performance measure.
Targets are powerful communication tools, informing the
entire organization of the expected level of performance
required to achieve success.
5.2.1. Setting performance Targets
The advice most often associated with setting

targets is keeping the realistic, challenging and not
arbitrary. Setting targets can represent new territory
for some agencies. Often the challenge lies in
knowing where to search for meaningful sources of
target information.
Here are a number of potential areas to consider when

setting your targets:
 They can be based on an analysis of goals,

reasonableness, and desired behaviors
 Based on customer requirements, feedback from
customers and other stake holders, based on a
minimal level of performance (e.g., minimum safety
level)
 They can be derived from the strategy map
 Decide what would be a significant improvement in the
value of a high-level desired outcome based on
Executive interviews (e.g. mission effectiveness,
customer satisfaction, profitability) –this may be a
political decision involving the customers and owners
 Assign weights to each of the links connecting
objectives
 Calculate the number of percentage points
contributed by each objective –these are your targets
 Use existing knowledge of performance - trends

and baselines
 Use “best practices”-benchmarking
o National, states, local, or industry averages
o Employees
o Other agencies
 Internal/ external assessments

Targets are consistent if their achievement will enable the organization

to close its value gap and achieve the outcome specified in its
vision.
There are two techniques which facilitate target setting:
1. Split the overall value gap into target for each strategic theme.
Target setting originates in the vision statement, when the leader
sets a high-level stretch target for the organization.
The target creates a value gap between aspiration and current

reality: what would be achieved by continuing with the status quo,
including the existing strategy.
The strategy must close this value gap.

• Executives can split the value gap in to sub targets for

each strategic theme.
• The theme creates value in different ways, and, in

aggregate, the values created by the individual themes
should sum to the overall value gap.
• The target established for each theme reflects the

theme’s relative impact on helping create and deliver the
various components of the strategy.
2. Set targets within each theme based on the cause- and-effect

logic of the strategy map.
The targets for each strategic theme need to be further sub divided
in to targets for the strategic objectives with in the theme.
The target for objectives within a strategic theme should not be set in
isolation.
Each target should be related to targets for other theme objectives in

a chain of cause- and- effect logic.
5.2.2. Types of performance targets
Targets represent our goals for some period that has yet to elapse.
They may be established by month, quarter, half-year, year, or multi-

years.
In this section, we’ll examine three types of targets, each corresponding

to different time frame.
1. Long-term targets: /Big Hairy Audacious Goals/
They are typically 10 to 30 years in duration, the time frame

synchronizing with the level of difficulty associated with reaching
the finish line.
2. Mid-range Targets: /Stretch goals/

Targets established in the three to five (or
occasionally longer) periods are often termed
“stretch” targets. Their purpose is keeping the
organization focused on midrange goal that is in
alignment with their vision and mission, and the
achievement of which will lead them closer to
their long term targets.
3. Short term Targets / Incremental Targets/ :
Most organizations will develop annual performance targets

for their performance measures.
In keeping with the theme of cause and effect which is so

critical to the balanced scorecard, the achievement of
annual performance targets will help lead to the
accomplishment of longer-term stretch targets.
Note that midrange and short term targets are mostly

Strategic initiatives and budget
Step 6. Strategic initiatives and budget
Objectives:
understand what strategic initiatives mean
develop prioritization criteria
 identify appropriate strategic initiatives
link strategic budget with strategic initiatives

Strategic initiatives represent the how.
Newton’s First Law applied to organizations state that an

organization at rest will remain at rest.
Newton’s Second Law states that a force is needed to

accelerate a mass in to motion.
Strategic initiatives represent the force that accelerates an

organizational mass in to action, overcoming inertia and
resistance to change.
6.1. What Are Strategic Initiatives?
Strategic initiatives are the collection of finite-duration

discretionary projects and programs, outside the
organization’s day-to-day operational activities that are
designed to help the organization achieve its targeted
performance. In other words initiatives:
 Can be short-term or long-term
 Should be in line with the strategic vision and mission of the

organization
Steps to develop Strategic Initiatives
1. Identify potential Strategic Initiatives

 brainstorming
Refined initiatives
Each initiative must be clearly defined before it can

be assessed
2. Develop a selection filter (selection criteria)

Review candidate selection criteria
Choose final criteria (usually 3 –5)
When prioritizing initiatives, consider these potential selection criteria:

Customer requirements Early win
Need/ Effort required Cost-Effectiveness
Feasibility Timeline
Alignment with Probability of success
organizational strategy Urgency
“Low hanging fruit” Results anticipated
Cost/ Budget/ Number of perspectives addressed
Level of risk
3. Analyze candidate strategic initiatives against selection criteria
and choose final initiatives
 Use selection template to ensure “level playing field” for
comparisons
Applying the Selection Filter to Candidate Initiatives
Candidate
Initiatives
1. BPR
2. Training Prioritized
courses Criteria Filter Initiatives
Selection
3. R & D efforts 1.
4. Workflow 2.
5. Improvements
6. 5. Reform
programs etc
4. Resource and manage the selected final Strategic

Initiatives
Organizations use three processes to manage their

portfolios of strategic initiatives:
Select initiatives
Provide resources for them
Assign accountability for executing them

6.2. Budgeting
Linking budgets and balanced scorecard
linkage of budgets to performance measures are well

advised to first create a balanced scorecard system.
initiatives create the bond between scorecards and

budgets.
Quantifying the initiatives will form the basis for

operating, capital and strategic budget requests.
Operational budgeting:
Capital budgeting:
Strategic budgeting: created to

segregate the resources required to
implement initiatives that deliver long term
benefits.
Worksheet No. 13. Strategic action plan

Strategic theme:------------------------------------------
Strategic result:-------------------------------------------
Strategy Balanced Scorecard Action plan

map Measure Target Initiative Strategic
Budget
Total budget $XXXXXXX

Part III
Part III: Implementing the Balanced Scorecard

system
There are three steps in this part:

 Performance management Information
system/Automation/
 Cascading
 Evaluation
Automation
Step 7. Performance management information

system/Automation/
Objectives:
 Concepts about performance
management information system
 the benefit of automation
Choose appropriate software
Automation
The implementation process begins by applying

performance measurement software to get the right
performance information to the right people at the
right time.
Automation adds structure and discipline to

implementing the BSC system, helps transform
disparate organizational data in to information and
knowledge, and helps communicate performance
information.
Automation
Offers quick access to actual performance data. In other words
automation can be defined briefly as follows:
 Using software to automate the collection, reporting,

and visualization of performance data
 Transforming performance measurement data into
useful information and business intelligence
 Presenting performance information to the people
who need it in a visually appealing format
 Using performance information to better inform
decision making
Automation
• Organizations were cascading the scorecard

from top to bottom, linking it to budgeting and in
many cases compensation as well.
The reporting, analysis, and communication
requirements represented by these advances
required new tools.
•
Software providers were quick in their response
and soon developed a number of sophisticated
programs capable of every thing from simple
reporting to strategy mapping and scenario
planning.
Automation
Automating your balanced scorecard provides a number of

benefits:
 Maximizes its use as a measurement system, strategic
management system, and communication tool.
 Allows organizations to perform complicated evaluations
of performance and critically examine the relationship
among their performance measures.
 Supports true organization-wide deployment of the tool.
 Without the use of an automated solution, managing the

process and ensuring alignment can prove difficult.
 Communication and feedback may also be dramatically
improved with scorecard software.
Automation
Three steps in Automation
1. Understand the organization’s architecture and data requirements

Information technology “backbone” and future directions
Operating systems and software requirements
2. Understand software options, including features and limitations

Capabilities
Cost of purchase and ownership
3. Understand user needs for information

Charts, briefing books, reports, other
Analysis
Visualization
Automation
When we select Software to automate we should consider the following:

 Avoid the bleeding edge of technology; well-designed in features and ease of use,
but not extravagant
 Links to existing legacy and desktop databases, and other software
 Highly flexible to accommodate changes in measurement environment (measures will

continue to evolve)
 Accommodates changing information technology systems environment
 Easy integration into work environment
 Displays not just numbers but stories (description; interpretation; actions planned,
etc.) about measures, the business, and performance
 Provides analysis and “what if” capabilities, to allow analysis of trends, forecasts,
correlation, and other capabilities
 Supports multiple level drill-downs into underlying data
 Supports exception reporting

Worksheet No. 13 Software selection
Type of Selection Finally approved

software criteria pros cons selected
software
Cascading
Step 8.
Objectives:
 understand the very concept of cascading
 Understand the importance of cascading
 how to cascade strategy map and scorecard at various

levels
 translate high level strategy into aligned lower level
objective and measures
 link organizational performance with incentives/ reward
systems
Cascading
Cascading the BSC refers to the process of developing

BSC at each and every level of any organization.
Cascading:
 Translates high-level strategy into aligned lower-
level objectives and measures
 Creates alignment around the organization’s
shared vision, to make strategy actionable to
business processes, and down to individuals
Cascading
Cascading:
 Develops business processes scorecards,
aligned to corporate vision and strategy
 Develops individual scorecards, aligned to
business processes and support units
objectives to tie rewards, recognition, and
incentives to results
Cascading
Once defined the corporate strategy map can

be cascaded to divisions, business and
support units, to coordinate the value-
creating activities at all this organizational
units.
Cascading
• In our case for example, once the City

Government strategy map and scorecard is
cascaded to Bureaus and Municipal functions,
next they will cascade to their agencies,
authorities, core processes and support
processes; besides this, they should also
cascade to their respective offices under the
Sub-City.
• The same is true at the Sub-City and Kebele

level (for further understanding look at page
120).
Cascading
Each cascaded map reflected what the unit had to

do locally to create outstanding performance while
still including objective that related to integrating
with other units at the same level (horizontal
integration) and being responsive to business-line
and enterprise strategic priorities (vertical
integration).
Cascading
• Each process unit cascaded its strategy to

business-line, support services /finance
and accounting, human resources,
information resources, legal, and resort
services/ as well as to regional business
units and then to individual sites.
• The strategy maps and scorecards of core

process contain many objectives that are
unique to local operations, but they also
contain several that reflect corporate-level
priorities shared with other processes.
Cascading
• Support units follow the systematic set of

processes to create alignment that helps
the core process and the organization
achieve their strategic objectives.
• First, the support process develops a clear

understanding of organizational and core
process’s strategies, as revealed by the line
organization strategy maps and balanced
scorecards.
Cascading
Next, they align their strategies with business units and

corporate strategies by determining the set of strategic
services to be offered.
Organizations cascade both strategy maps of objectives and

balanced scorecards of measures from top to bottom.
While cascading objectives to the next stage, we need to
consider the behaviors of objectives such as common,
shared and unique.
Cascading
Common objective: is an objective that is
mandatory or common to different organizations/
processes.
Shared objective: is an objective shared by different

organizations/processes that are expected to
cooperate so as to achieve a specific result.
Unique objective: is an objective to be fulfilled

independently by a given organization/processes.
Cascading
Three distinct processes to cascade
1. Communicate and Educate (spiritual

cascading)
Employees must understand the strategy
-an effective communication
process.
-to help implement it

Cascading
Develop an understanding of the strategy

throughout the organization
Develop buy-in to support the organization’s
strategy
Educate the organization about the balanced
scorecard measurement and management
system for implementing the strategy
Provide feedback, via the balanced scorecard,
about the strategy
Cascading
2. Developing process/team and personal

objectives (physical cascading)
Establish teams at each level, to develop their own objectives
and employee buy-in.
 Employees must understand how they can influence the
successful implementation of the strategy.
 Managers must help employees set individual and team
objectives that are consistent with strategic success.
Cascading
3. Incentive and reward system, the “balanced

paycheck’’ (pocket cascading)
Employees should feel that when the organization

becomes successful, they share in the rewards;
conversely, when organization becomes
unsuccessful, they should feel some of the pain.
Incentive and reward systems provide the linkages
between organizational performance and individual
rewards.
Cascading
Steps to cascade
1. Understand city level strategic map and

scorecard
At this stage the members of teams who are expected to
develop Bureaus /Municipality function strategic maps and
scorecards should clearly understand the city level mission,
vision, themes, objectives, measures and targets, and
initiatives so that they can cascade these elements to their
organizational context.
Cascading
2. Develop Bureaus and municipal function strategic map and
scorecard
After viewing city level map and scorecard, each team is expected to
develop bureau/municipal level map and scorecard based on their
own organizational context.
In this step the team should consider the following points.

 Conduct specific organizational assessment
 Redefine mission and vision
 Develop corporate value proposition
 Develop theme, results & objectives
 Develop measures, targets and initiatives

Cascading
3. Develop Agency, Commission, Authority & institution
strategic map and scorecard
At this step the team should consider the strategy maps

and scorecards of respective Bureau/municipal function.
Then the team can carry out the following points step by
step to develop their strategy map and scorecard.
Conduct specific organizational assessment
Redefine mission vision
Develop corporate value proposition
Develop theme, results & objectives
Develop measure, target and initiatives

Cascading
4. Develop process level (Team) strategic map and

scorecard
The strategy maps and scorecards of core process

contain many objectives that are unique to local
operations, but they also contain several that reflect
organizational-level priorities and shared with other
processes.
Cascading
Support units follow the systematic set of processes to

create alignment that helps the core processes and the
organization achieve their strategic objectives.
First, the support processes develop a clear

understanding of organization level strategies, as reveled
by the line organization strategy maps and balanced
scorecards.
Next, they align their strategies with organization

strategies by determining the set of strategic services to
be offered.
Cascading
5. Develop individual level scorecard

Strategy-focused-organizations, in contrast, can choose from
a divers set of methods to bridge from the strategic objectives
that appear on organizational scorecard across to individual
objectives:
1)The “super bowl” approach
2)Alignment with strategic initiatives
3)Integration with existing planning and quality process
4)Integration with human resource process
5)Personal balanced scorecards

Evaluation
Step 9. Evaluation
Objectives:
 understand the concept of evaluation
 review the previous BSC development

steps
Evaluation
What Is Evaluation?
 Evaluation is a review of the strategic components
 Review of organization progress toward its strategic goals
 Review of the balanced scorecard strategic planning and

management system to determine where efficiency and
effectiveness can be improve
 Modification to organization planning assumptions, strategy,
objectives, performance measures and targets, strategic
initiatives, and budget
Evaluation
Here are three important steps in Evaluation
1. Develop an evaluation plan

 What is to be evaluated?
 By whom?
 Evaluation results reported to whom?
 Determine schedule and scope
2. Analyze strategic results

 Review background assumptions
 Evaluate performance results against targets

Evaluation
3. Make any necessary changes to

strategy and rebalance the scorecard
system
 Revise: strategic elements, strategic themes,
strategic objectives, the strategy map,
performance measures and targets
 Identify new strategic initiatives`
Evaluation
Evaluation Planning
 Identify the purpose of the evaluation effort
Refine our strategies
Rebalance our scorecard system
Review the impact on results and

operations of the strategic assumptions
Evaluation
 Identify who the evaluation results are designed to

serve
Leaders and managers, who need to re-
evaluate strategic direction and focus
Key stakeholders who need to be informed
on the organization’s progress
Evaluation
 Identify the key questions
 Why did we get the results we did?
 How do people in the organization feel about the

relevance and timeliness of performance information?
 Where can the use and usefulness of information be
improved?
 What objectives, strategy map linkages, performance
measures and targets, and strategic initiatives are
modified, added, or deleted?
 Lay out the schedule and evaluation team assignments
Evaluation
Evaluation Starts with Purpose

 Typical reform goals for government organizations
 Improve effectiveness and public (member)

accountability
 Improve service delivery
 Improve oversight decision making and visioning
 Improve internal management
 Hold organization accountable for achieving goals
 Initiate reforms to make a dramatic and material

difference in program performance
Evaluation
What Should Be Evaluated?

 Leadership –are leaders (at all levels) engaged?
 Strategic Environment –has the “strategic environment” (technology,

economic situation, political) changed? Has stakeholder influence changed?
 Strategies –are strategies working and producing desired results?
 Workflow and Processes –are they efficient, and are customer-facing

processes working as planned? Are communications interactive (two-way)?
 Results –is our organization aligned around outcomes and accomplishments?
 Organization Capacity –do we have a learning organization?
 Incentives/rewards –are we getting the behavior changes needed?
 Performance Measures and Targets –are the measures being used to

deliver actionable business intelligence, and are targets realistic?
 Strategic Initiatives –did we get the results we wanted from our initiatives?
Sustaining the Balanced Scorecard System
Part IV: Sustaining the Balanced Scorecard

System
Prudent organization will critically examine their

balanced scorecard at list annually to determine
if its core elements are still appropriate in telling
an accurate strategic story.
To sustain the balanced scorecard system, organizations

should consider the following critical points.
 Maintain committed and engaged leadership, and

interactive communications; lead transformation
from the top by living the desired behaviors
 Develop an organization culture based on results
by establishing a strategy management system
 Use the balanced scorecard as the strategic
planning and management framework
 Focus the organization on strategy by holding review meetings

organized around strategy (e.g., Strategic Themes) and
perspectives
 Enhance individual accountability for results through objective
ownership
 Align the organization, systems and employee performance
around strategy through a rewards and recognition program
 Create a performance, results-oriented culture
 Link budget formulation, cost accounting, and performance

results
 Emphasize continual improvement --in processes, in

employee learning and skills development, and in
understanding customer needs and satisfaction, and
in ensuring employee satisfaction
 Link key organizational initiatives into the balanced
scorecard development process
 Leverage technology cost-effectively
 Leverage training cost-effectively (mass training

doesn't work well!)
Ten Challenges to sustain balanced scorecard system

 Sustainable, engaged leadership
 Ignoring the history of strategic planning
 Using more than one sheet of music (definitions)
 Communicating with yourself and the special few
 Thinking it’s a sprint (it’s not, it’s a marathon!)
 Thinking it’s only about performance measures or about what you

are currently doing
 Choosing software too early
 Not rewarding success and desired behaviors
 Not planning for and managing change
 Not following through

Summarize
• A. develop the strategy
What business/ service are we in, and why? Clarify your
mission. Values and vision.
• Teams begin strategy development with an affirmation of
the organization’s purpose/mission
• The internal compass that guides its actions values and
• Its aspiration for future results vision
What are the key issues? Conduct strategic analysis
• SWOT which identifies a set of Strategic analysis
• SWOT matrix organized by balanced scorecard
perspectives
How can we best compete? Formulate the strategy
– Teams create strategy by addressing these issues
– In what niches will be compete
– What customer value proposition will be differentiate us in those
niches?
Summarize
• B. plane the strategy
• the organization plans the strategy using tools such as
strategy maps and balanced scorecard
• Organizations typically addressee questions in this
• How do we describe our strategy? Create strategy maps
– one page
– strategy themes collection
– 15-25 objectives on strategy map
• How do we measure our plane? select measures and
targets
• What actions programs does our strategy need? Choose
initiatives
• How do we fund our initiatives? Establish strategy

expense
Summarize
• C. align the organization with the strategy

Once a high-level strategy map and balanced
scorecard have been articulated the teams align
the organization with the strategy by cascading
linked strategy maps and balanced scorecards
to all organizational units
• A formal communication process
• Link employees’ personal objectives and
• Incentives to strategic objectives
Summarize
• D. monitors and learns

Once the strategy has been determined,
planed, and linked to a comprehensive
operational plan, the organization begins
to execute its strategic and operational
plans, monitor the performance results
and act to improve
• Strategy review meeting
• Test and adopt the strategy, is our
strategy working? Hold a strategy testing
and adopting meeting
Thank you!!!

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BALANCED SCORECARD

The first formal monitoring systems, however, evolved out of

 Reviews the sector BSC

BSC Team charter:

No Activities to be done when By whom Resource

Develop strategic management system

1.3. Team members time

1.4. Team initial training

2. Conduct organization assessment (Environmental Scan)

2.1. Mission and vision

Mission is a concise, internally focused statement of

Below are some examples of the mission

 Creating and maintaining effective partnership

 Attracting and retaining skilled motivated employees

 Using strategic business planning

Effective mission statement

 Should serve as a template and be the means by

The team should answer the following questions to check

1. What function/s/ does the organization perform?

2. For whom does the organization perform this function?

3. Where does the organization operate? (Geographical

4. How does the organization go about filling this

5. Why this organization does exist?

B. Organizational Core values

 Values define as the philosophy of operation and the

 They represent the deeply held beliefs with in an organization and

Example: Risk taking

2. Strategic values: values related to strategic logic

 Move people’s heart

 Genuinely knit together individuals and organization

 Values are determinant success factor for

Steps in Building Values:

2. use a brainstorming process,

3. The groups can tape their /all the

4. Similar items can be combined to

5. Choose the top 10 to 12 core values on which

6. When the 10-12 core values have been

7. Finally the identified values will be presented to

 Never being satisfied.

Vision is a concise statement that defines the mid –to

The vision should be external and market-oriented and

 Vision of Ethiopia: A country of middle income… by 2020.

 The university of Leeds( united kingdom): “by 2015, our

This example contains each of the three critical

2. Definition of niche: to integrate world-class

3. Time horizon: by 2015

 Serves as a life blood of an organization

 Helps to see what you are working towards

 Clearly articulated vision can provide energy, momentum

 Binds an organization together in times of crisis

 Provides incentive to work through internal conflict

Describes where we want our Compact-can be used to guide decision

SWOT (Strength, Weakness, Opportunities and

The strength and weakness portion of SWOT

Opportunities and threats are environmental

Examples: appropriate technology, dedicated staff, management

 Are also within the control of the organization; they also

Examples: shortage of qualified staff, inadequate finance, poor