Balanced scorecard

The Balanced Scorecard Strategy Program : 

The Balanced Scorecard Strategy Program Rohit Prasad

Table of Contents : 

Table of Contents Case Study Overview of BSC Roadmap for implementation

Island Inc : 

Island Inc British software services company Acquired Indian IT services and BPO company Inpro in 1998 Re-branded as Island in 2002 Services largely managed from the UK But by 2004 it was clear offshoring a basic requirement of an IT services vendor’s value proposition Initiatives – New CEO, structural change, Global Delivery Program, Balanced Scorecard

‘Its all about execution’: Larry Bossidy, CEO Honeywell : 

‘Its all about execution’: Larry Bossidy, CEO Honeywell print An organisation is a directed combination of moving parts Strategy is the continuous process of giving direction and alignment to the organisational engine The success of an organisation requires the formulation of the right direction and its successful implementation

The Strategy Payoff Matrix : 

The Strategy Payoff Matrix

Why alignment : 

Why alignment Internal change External change Organic growth M&A Organizational complexity

Did you know… : 

Did you know… Only 10% of the strategies that are effectively created get effectively implemented. Only 5% of the workforce understands their company strategy. Only 25% of managers have incentives linked to strategy. 60% of organizations don’t link budgets to strategy. 86% of executive teams spend less than one hour per month discussing strategy. – Balanced Scorecard Collaborative

Barriers to strategic implementation : 

Barriers to strategic implementation Definition Barrier: Strategy is limited to financial and market goals The identification of end goals must be accompanied by the identification of differentiating activities at all levels/functions of the organisation Management Barrier: You cannot measure/manage something you cannot define People do not know how to define strategy and therefore lack a way of measuring it effectively. The measurement and review of strategic performance must become a standard business process as in the case of financial performance People Barrier: Strategy stays within the closed confines of the boardroom . People’s objectives are not connected to strategy Strategy must be communicated to everyone and people’s every day jobs must be linked to strategy Resource Barrier : Time, energy, and money are not allocated to those things that are critical to the organization. Budgets, marketing plans, organisational design etc. should be linked to strategy

The Key Questions : 

The Key Questions How do you define strategy comprehensively? How do you measure and manage it on a regular basis? How do you cascade strategic objectives to all the BU’s, functions/people? How do you make strategy drive all major organisational processes and change initiatives?

Defining Strategy: Perspectives : 

Defining Strategy: Perspectives Vision & Strategy Financial Perspective Customer Perspective Learning & Growth Internal Processes A comprehensive (operational)definition of strategy necessarily identifies an integrated plan along each of these perspectives: Financial : How must I appear to my shareholders – growth, productivity, value Customer: In order to achieve the desired shareholder positioning what must my customer value proposition be? - customer satisfaction, brand etc. 3. Internal Process: In order to deliver my customer value proposition what must my internal (and partner) processes achieve?( product quality, morale etc.) 4. In order to sustain my competitive advantage, what investments must I make in learning and growth? (IT investments, strategic competencies etc.)

Slide 11: 

Customer Learning & Growth (Growth) (Productivity) Financial Customer goals Process Value Proposition Long term investment Financial Goals Customer Intimacy Operational Excellence Product leadership Defining Strategy: Strategy Map People Customers Supply Chain Governance Method/ R&D Organisational climate Strategic Competencies Strategic Technologies A cause and effect diagram that links financial outcomes to customer goals, process goals, and learning and development goals It is a definition/description of strategy that is both comprehensive and easy to comprehend Internal Process

A Cause Effect Example : 

A Cause Effect Example Learning & Growth Financial Customer goals Process goals Learning goals Financial goals 40% revenue growth Internal brand re-positioning Development of shared service Centre for mid market customers Addition of 5 new mid market customers Customer Internal Process

Slide 13: 

Strategic Process Customer Learning & Growth Growth Productivity Financial Margins above peers Rapidly Growing valuation Revenue growing faster than peers with quantum offshore leap Domain / Product/ Process expert Successful opportunity management Effective Account Management Aligned Support & systems Delivery consistent, Best shore, integrated Satisfied, aligned employee Global IT infrastructure And systems De-risked Business model Niche service Offerings/ practice development Brand building Knowledge Capital Integrated IT and BPO Global delivery expertise New business Repeat Business Timely, good quality service Niche Leader Long term partner Right Resource at right time Fuel Growth Attain Growth Sustain Growth Efficient Asset Utilization Leadership dev Capability development Sound financial management People Infrastructure Organization A Strategy Map Sample

Techniques for creating Strategy Map : 

Techniques for creating Strategy Map Fishbone diagrams Pareto charts Statistical correlation Management workshops All based on strategic plans

Measuring Strategy : An Example : 

Measuring Strategy : An Example Objective: To Reduce Time to Market for a New Product Measures: Cycle Time, Process Time Targets: 60 Days for Cycle Time and 40 Days for Process Time Initiatives: Form a Total Quality Improvement Team

Measuring & Implementing Strategy: The Strategic Matrix : 

Measuring & Implementing Strategy: The Strategic Matrix Step 1: Establish Measurements: For each strategic objective, there needs to be at least one measurement. Measurement provides the feedback on whether or not we are meeting our strategic objectives. Step 2: Set Targets for each measurement: For each measurement in your scorecard, establish a corresponding target. Step 3: Launch Programs: Things will not happen unless the organization undertakes formal programs, initiatives or projects. This effectively closes the loop and links us back to where we started – driving the strategy that was formulated in the strategy map Step 4: Calibrate strategy: Check the achievement of targets actually achieves the desired financial goals

Balanced Scorecard- Business Performance Cycle - : 

Balanced Scorecard- Business Performance Cycle - Strategy Business Planning Process Company Business Unit Individual Balanced Scorecard Performance Review VISION Change Initiatives

Benefits of the BSC Program : 

Benefits of the BSC Program Strategy comprehensively defined and measured Alignment of management with strategy Alignment of key organisational processes initiatives with strategy Alignment of key change initiatives with strategy

Is the BSC for me? : 

Is the BSC for me? Organisations that are complex in terms of Services Geographies Scale Customer relationships Partner relationships and are gearing up for a change to Stop the bleeding Go for leadership position Anticipate paradigm shifts or wanting to develop a core adaptive competency Big organisations wanting to be nimble Nimble organisations wanting to be big

Structural readiness : 

Structural readiness

Process readiness : 

Process readiness

Managerial Readiness : 

Managerial Readiness Does it increase my work? Will it make my targets harder? Do I need to do it given my reporting structure?

Technology Readiness : 

Technology Readiness ERP MIS BSC system

Phase wise approach : 

Phase wise approach CEO’s Score card Business Unit/Department/Program scorecard HR and Finance Alignment Company Rollout

Phase Breakdown : 

Phase Breakdown Study Training Communication Rollout Control

Programme Timeline : 

CEO Scorecard Leadership Event q3 q2 q1 Management Events q4 Org study q5 Creation of BSC Program Office Sales Awareness BSC Roadshows Corporate media Programme Timeline BU/Dept./Program Scorecard(s) Finance alignment HR alignment People Poll & Customer Survey

Program Office : 

Program Office

Questions : 

Questions