Balance Score Cards & Strategy Maps.

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Information about Balance Score Cards & Strategy Maps.

Published on December 18, 2008

Author: afreenali


“ Strategy Implementation through Balanced Scorecards & Strategy Maps ” : “ Strategy Implementation through Balanced Scorecards & Strategy Maps ” Slide 2: “Balanced Scorecard” INTRODUCTION : INTRODUCTION Earlier Financial accounting model focus on financial measures like:: ROC operating Income sales growth cash flow and not on operational measures like: Customer Suppliers Employees Internal Processes Learning & Growth Innovation & Technology The Developers : The Developers Developed in 1992 by Robert Kaplan and David Norton. The balanced scorecard, is a framework for integrating financial measures of past performance and it introduces the drivers of future performance (customer, process, learning). Financial + Operational Measures. Competitive Advantage. Increased focus on strategy & results. Improves Org. Performance. Aligns organization strategy with the work people do on a day-to-day basis. Improve communication of the organization’s Vision and Strategy. Balanced Scorecard Framework : Balanced Scorecard Framework Framework cond… : Framework cond… Retains financial perspectives Relates to profitability Measures – return on capital employed, economic value, rapid sales growth or generation of cash flow. Managers identify customer & market segments. Measures – customer satisfaction, retention, acquisition, profitability etc. Framework cond… : Framework cond… Identify critical internal processes which enable Business units to: Deliver Value proposition that will attract customers & retain them. Satisfy shareholder expectation. Identifies new processes for the organisation to excel. Identifies infrastructure that the organisation must build to create long-term growth & improvement. Measures- reskilling employees, enhancing IT & systems & aligning Org. procedures as per the new competitive environment. Slide 8: Methodology Strategy Implementation using BSC : Strategy Implementation using BSC Summary : Summary Balanced Scorecards tell you the knowledge, skills and systems that your employees will need (learning and growth) to innovate and build the right strategic capabilities and efficiencies (internal processes) that deliver specific value to the market (customer) which will eventually lead to higher shareholder value (financial). – “Having Trouble with Your Strategy? Then Map It” by Robert S. Kaplan and David P. Norton - Harvard Business Review Slide 11: “Strategy Maps” Introduction : Introduction Evolved from the 4-perspective model of Balanced scorecard. Strategy maps add a ‘second layer’ of detail that illustrates the time-based dynamics of a strategy. Represents how an Organization creates “value”. “The Strategy Map” : “The Strategy Map” Key Benefits of Strategy Maps : Articulates how the organization creates value for its constituents and legitimizing authority. Displays key priorities and relationships between outcomes (the "what") and performance enablers or drivers (the "how"). Provides a clear view of "how I fit in" for sub-organizations, teams, and individuals. "Cascading the scorecard throughout the organization, and clearly mapping the various units and functions back to the organization or agency-wide map is critical to leveraging and ensuring alignment". Key Benefits of Strategy Maps Slide 15: Executive consensus and accountability: Building the map eliminates ambiguity and clarifies responsibility. Educate and Communicate: Build awareness and understanding of organization strategy across the workforce. Ensure Alignment: Each sub-unit and individual link their objectives to the map. Promote Transparency: Communicate with and educate constituents, partners, oversight bodies, and the general public. A Better Way to Communicate Strategy Slide 16: Stakeholder Internal Process L&G Investments Extend the Map into Measurements, Targets and Initiatives Two Special Techniquesfor Building Strategy Maps : Two Special Techniquesfor Building Strategy Maps BRINGING IT TOGETHER: “Strategy Map & Balanced Scorecards” : BRINGING IT TOGETHER: “Strategy Map & Balanced Scorecards” The four Balanced Scorecard perspectives determine the objectives and measures that describe the strategy. A strategy map provides a visual representation of the strategy. It provides a single-page view of how objectives in the four perspectives integrate and combine to describe the strategy. Each company customizes the strategy map to its particular set of strategic objectives. The strategy map shows how the multiple measures on a properly constructed Balanced Scorecard provide the instrumentation for a single strategy. Slide 19: “BUSINESS CASE” (Southwest Airlines) Basic Scorecard (Southwest Airlines Example) : Basic Scorecard (Southwest Airlines Example) Strategy Map A Complete Scorecard is a Program for Action : A Complete Scorecard is a Program for Action Ground crew training ESOP Strategy Map References : References The Balanced Scorecard: Translating Strategy into Action. by Robert S. Kaplan and David P. Norton . Strategy Maps: Converting Intangible Assets into Tangible Outcomes. by Robert S. Kaplan and David P. Norton. Slide 23: “THANK YOU”

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