Implementing a Balanced

Scorecard
- Why Organisations Fail?

For further information please contact:

Nigel S. Penny
Tel: +65 832 8001
+65 9815 7830
email: nspenny@pacific.net.sg
BSCol -SAS -0107

2001 Balanced Scorecard Collaborative, Inc.

Some of the Indicators of Good Balanced Scorecard

1. Executive Involvement
Strategic decision makers must validate and own
the strategy and related measures

2. Cause-and-Effect Relationships

A good Balanced
Scorecard will
tell the story of
your strategy in
actionable terms.

Every objective selected should be part of a chain of

cause and effect linkages that represent the
strategy

3. Balance between outcome and leading

measures There should be a balance of outcome
measures and leading measures to facilitate
anticipatory management

4. Financial Linkage
Every objective can ultimately be related to financial
results

5. Linkage of Initiatives and Measures: Each

initiative should be based on a gap between
baseline and target.
BSCol -SAS -0107

2001 Balanced Scorecard Collaborative, Inc.

A Key Reminder
Golden Rule

A successful Balanced
Scorecard program starts
with a recognition that it
is not a metrics project,
its a change process.

BSCol -SAS -0107

2001 Balanced Scorecard Collaborative, Inc.

Implementing Balanced Scorecard is the Start of a

Journey

STRATEGY:
Strategy is central to the
organizations agenda

FOCUSED:
Organizations are focused on their
strategy

ORGANIZATION:
Organizations mobilize their
employees to act in fundamentally
different ways, guided by the
strategy

The Balanced Scorecard Is a Performance Management

Program That Puts Strategy at the Center of the Process
BSCol -SAS -0107

2001 Balanced Scorecard Collaborative, Inc.

The Purpose of Being a Strategy Focused Organization

The Purpose of Being a Strategy Focused

Organization is to place strategy at the
heart of management systems in order to
achieve significant performance
improvements rapidly, reliably, and in a
sustainable manner.

BSCol -SAS -0107

2001 Balanced Scorecard Collaborative, Inc.

Principles of a Strategy Focused Organization

1

BSCol -SAS -0107

2001 Balanced Scorecard Collaborative, Inc.

Principles of a Strategy Focused Organization:

Translating the Strategy into Operational Terms
The Vision

The Balanced Scorecard

converts strategy into
an integrated system
defined across four
business perspectives

Financial Perspective
Objectives

"To satisfy our

shareholders,
what financial
objectives must
we
accomplish?

Financial

Measures

Targets

Initiatives

Profitability
Growth
Share holder
Value
Customer Perspective
"To achieve our
financial
objectives, what
customer needs
must we serve?

Customer

Objectives

Measures

Targets

Initiatives

Image
Service
Price/Cost

To satisfy our
customers,
and
shareholders, in
which internal
business
processes must
we excel?"

Internal

Internal Perspective
Objectives

Measures

Targets

Initiatives

Cycle
Time
Quality
Productivity
Learning Perspective
" To achieve
our goals, how
must our
organization
learn and
innovate?

Learning
and Growth
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Objectives

Measures

Targets

Initiatives

Market
Innovation
Continuous
Learning
Intellectual
Assets

2001 Balanced Scorecard Collaborative, Inc.

Principles of a Strategy Focused Organization:

Aligning the Organization to the Strategy
#1.

#3.

A Corporate Scorecard
defines overall strategic
priorities.

Each Support Unit develops

a plan and BSC for best
practice sharing to create
synergies across SBUs.
CORPORATE

LINE BUSINESSES

CORPORATE SCORECARD
Strategic Agenda

Measures

SBU
A

SBU
B

SBU
C

SUPPORT UNITS

EXTERNAL PARTNERS

SBU
D

1. Financial Growth

xxx

Finance

2. Delight the Consumer

xxx

Marketing

Customer Scorecards

3. Win-WinRelationships

xxx

Distribution

Distributor Scorecard

4. Safe & Reliable

xxx

Procurement

Joint Venture Scorecard

5. Competitive Supplier

xxx

Purchasing

Vendor Scorecard

6. Good Neighbor

xxx

Safety

New Venture Scorecard

7. Motivated & Prepared

xxx

HumanResources

Outsourcer Scorecard

8. Quality

xxx

xx

xx

xx

xx

Information Technology

#2.

#4.

Each SBU develops a

long-range plan and BSC
consistent with corporate
strategic agenda.

Plans and BSCs define

relationships with external
partners consistent with
SBU strategy.

Strategies Are Executed Through Business Units. The Strategies of the Business Units
Must Be Integrated If Organization Purpose and Synergies Are to Be Achieved.
BSCol -SAS -0107

2001 Balanced Scorecard Collaborative, Inc.

Principles of a Strategy Focused Organization:

Making Strategy Everyones Job
CORP
SBU

Top-Down
Bridging Process
To Share the
Strategy & Align the
Workforce

Strategic
Awareness
Personal
Scorecard
Balanced
paychecks

Bottom-Up Process
to Internalize &
Execute the
Strategy

The Strategy Focused Workforce

BSCol -SAS -0107

2001 Balanced Scorecard Collaborative, Inc.

Principles of a Strategy Focused Organization:

Making Strategy a Continuous Process
The Problem: The Strategic Management Process Is
Missing in Most Organizations
STRATEGY

60% of organizations
dont link strategy &
budgets

update the
strategy

Strategic Learning Loop

test the
hypotheses

85% of management
teams spend less than
one hour per month on
strategy issues

BALANCED
SCORECARD

BUDGET

78% of organizations lock

budgets to an annual cycle

Management Control Loop

funding

20% of organizations take

more than 16 weeks to
prepare a budget

92% of organizations
do not report on lead
indicators

PERFORMANCE
Input
(Resources)

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reporting

Initiatives &
Programs

2001 Balanced Scorecard Collaborative, Inc.

Output
(Results)

10

Balanced Scorecard Six Step Development Process

Step 3
Step 1

Step 5
Draft a
Strategy Map
With Linkages
And Themes

Develop a
Project Plan

Select Strategic
Initiatives

Step 2
Build a
Strategic
Architecture

Step 4

Step 6

Determine
Measures and
Targets

Plan for
implementation
of the SFO

Typically 8-12 Weeks

BSCol -SAS -0107

2001 Balanced Scorecard Collaborative, Inc.

11

Steps 1 to 3 Are the Basis for the BSC

Step 3
Uncover
Strategic
Linkages
and Key
Themes

Steps 1
Develop a
Project Plan

Step 5
Select
Priority
Initiatives

Step 2

Step 4

Step 6

Build a
Strategic
Architecture

Determine
Measures and
Targets

Plan for SFO

Implementation

Outputs:

Work/Inputs
Strategy Documents
Draft themes and
linkages based on
Strategic Destination

BSCol -SAS -0107

Agree upon
stretch
targets

Review and
refine
themes

Refine and
rework
draft
linkages

2001 Balanced Scorecard Collaborative, Inc.

Discuss
next steps

Agreed upon
stretch targets
Finalized theme(s)
Strategy map

12

Step 4: Measures Development

Steps 1

Step 3

Step 5

Define
Strategic
Destination

Build the
Strategic
Linkages

Select
Priority
Initiatives

Step 2

Step 4

Step 6

Identify Key
Themes
Driving the
Strategy

Determine
Measures and
Targets

Plan for SFO

Implementation

Outputs:

Work/Inputs
Refined strategy
Existing
measures
assigned to
objectives
Draft measures
developed

Refine and
validate
linkages

Review
draft
measures

BSCol -SAS -0107

Design new
measures

Begin
targets
discussion

Plan for
measures
development

90% complete
linkages
Complete
measures
Measures
development
plan in place

2001 Balanced Scorecard Collaborative, Inc.

13

Steps 5 & 6: Initiative Prioritization and

Implementation Planning
Steps 1

Step 3

Step 5

Define
Strategic
Destination

Build the
Strategic
Linkages

Select
Priority
Initiatives

Step 2

Step 4

Identify Key
Themes
Driving the
Strategy

Determine
Measures and
Targets

Step 6
Plan for SFO
Implementation

Outputs:
Work/Inputs:
Refined linkages
and measures
Inventory of
existing initiatives
Proposed new
initiatives

BSCol -SAS -0107

Review and
validate
linkages
and
measures

Review
existing
initiatives

Brainstorm
new
initiatives

2001 Balanced Scorecard Collaborative, Inc.

Align/
rationalize
initiatives
to themes

Locked in on
objectives and linkages
Measures defined
Initiatives defined
Plan for initiatives
review established
Plan for implementation

14

Workshops are Key

Strategic
Architecture

Strategy Maps
And
Interviews

Measures and
Targets

Initiatives

Workshop I

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Workshop II

Implementation

Workshop III

2001 Balanced Scorecard Collaborative, Inc.

15

Review/Summary
The Balanced Scorecard is a framework that helps organizations
translate strategy into operational objectives that drive both
behavior and performance
The Balanced Scorecard is based on the premise that
measurement motivates
Executives must drive the process
Technology is essential to implement
You must want to change

BSCol -SAS -0107

2001 Balanced Scorecard Collaborative, Inc.

16

For more information on the Balanced

Scorecard ...

Visit our website

Or contact Nigel Penny at
+65 9815 7830
BSCol -SAS -0107

2001 Balanced Scorecard Collaborative, Inc.

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