Balanced Score Card

Compilation and Analysis by:

Manoj Joshi,

Ph.D (Innovation), Chartered Er. (Mech), MBA, PGDFM, M.I.E (Mech), MIMA, Spl CAD/CAE

Professor- Strategy, Entrepreneurship & Innovation

Email: mjoshi@lko.amity.edu / manoj.joshi.m@gmail.com
Editorial Board
1. International Journal of Entrepreneurship & Innovation, IP Publishing
2. Foundations and Trends in Entrepreneurship, Now Publishing
3. Business Strategy & Environment, Interscience Willey
4. Journal of Family Business Management, Emerald
5. Journal of Small Business Management, Blackwell
6. World Review of Entrepreneurship Management and Sustainability Development

What is Balanced Scorecard?

Balanced Scorecard is a:
Strategic planning and management system
used to
align business activities
to the
Vision

Strategy

Of the organization by monitoring performance against

strategic goals.

Why use a Balance Scorecard?

Improve organizational performance by measuring what matters.

Increase focus on strategy and results.

Align organization strategy with workers on a day to day basis.

Focus on the drivers key to future performance.

Improve communication of the organizations vision and strategy.

Prioritize projects / initiatives.

4 Original Business Perspectives

The Balanced Scorecard

model suggests that we view
the organization from 4
perspectives.
Then develop metrics, collect
data and analyze it relative to
each of these perspectives.

Financial

Customer

Vision and
Strategy

Internal
Business
Process

Learning and
Growth

4 Business Perspective Questions?

Financial: What must we do to create sustainable economic value?

Internal Business Process: To satisfy our stakeholders, what must be

our levels of productivity, efficiency and quality?

Learning and Growth: How does our employee performance

management system, including feedback to employees, support high
performance?

Customer: What do our customers require from us and how are we

doing according to those requirements?

Balanced Scorecard Measurements

Perspective

Generic Measurements

Financial

Return of Capital Employed, Economic Value

added, Sales growth, Cash flow

Customer

Customer Satisfaction, retention, acquisition,

profitability, market share

Internal Business
Process

Innovation, Operations, Post sales service

Learning and
Growth

People learning, training, skills , workshops, morale

Key Implementation: Success Factors

Obtaining executive sponsorship and commitment.

Involving broad base of leaders, managers and employees in

scorecard development.

Choose the right scorecard champion.

Viewing the scorecard as a long term journey rather than a short

term project.

Managing Strategy: Four Processes

Translating
the
Vision

Communicating
and linking

Balanced
Scorecard

Feedback
and
Learning

Business
Planning

Time Frame: Strategic Management System

Num. Time Frame
(Months)

Strategy Building

1.

0-3

Clarify the Vision: generic vision into strategy

2.

4-5

Communication to middle managers

3.

6-9

Develop business unit scorecards: strategy into

scorecards

4.

6-7

Eliminate nonstrategic investments and Launch

corporate change programs

5.

9-11

Review business unit Scorecards: (CEO role

comes into play)

6.

12

Refine the vision

7.

12- 14

Communicate the balance scorecard and

establish individual performance objectives

8.

15-17

Update long term plans: goals are established

9.

18ongoing

Conduct Monthly and quarterly reviews:

Focus more heavily on strategic issue begins

10.

25-26

Conduct annual strategy review

11.

25-26

Link everyones performance to the balanced

scorecard

Note:

Steps 8, 9 10 and 11 are performed on a regular

schedule.

10

Scorecard Potential Pitfalls and Criticisms

Lack of well defined strategy

Too much focus on the lagging measures: Loss in leading

measures

Use of generic methods

Self serving managers

11

Balanced scorecard benefits Recap:

Helps align key performance measures with strategy at all levels

of an organization

Communication and understanding of business goals

Best practice methodologies: cascade through the entire

organization

Mission into strategic plans into long term targets

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