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BSC and alignment of Mission and Vision

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Balanced Score Cards and integration into Mission, Vision, and Strategy.
FA19_MBA565_01_Risk Management
Mount Aloysius College
December 11th, 2019
A Balanced scorecard is a management system, that enables organizations to translate the
vision and strategy into a plan with actionable steps. This system provides feedback on internal
business processes and external outcomes. Which are evaluated on a cyclic basis to improve
organizational performance.
Robert Kaplan and David Norton created the balanced scorecard approach in the early
1990s. Traditional management systems focus on the financial performance of an organization
which is unbalanced and has major limitations such as:
1. Financial data typically reflect an organization's past performance. As such, they may
not represent the current state of the organization or what is likely to happen in the future.
2. Sometimes, the current market value of an organization exceeds the market value of its
assets. There are financial ratios that reflect the value of a company's assets relative to its
market value.
Kaplan and Norton recommend a nine-step process for creating and implementing the balanced
scorecard in an organization:
1. Perform an organizational assessment.
2. Identify strategic themes.
3. Define perspectives and strategic objectives.
4. Develop a strategy map.
5. Drive performance metrics.
6. Refine and prioritize strategic initiatives.
7. Automate and communicate.
8. Implement the balanced scorecard throughout the organization.
9. Collect data, evaluate, and revise.
The balanced scorecard brings life to strategy. It also enables employees at all levels of the
organization to focus on important business drivers with clear specific metrics and procedural
reporting.
The Strategy Map is as important as the Balanced Scorecard itself. Executives find the
visual representation of strategy to be natural and powerful. Strategy maps provide a detailed
roadmap at an operational level of detail.
A good strategy map will link together:
1. Productivity and growth outcomes.
2. Customer value precipitation.
3. Outstanding performance in internal processes.
4. the needed outcome by intangible assets.
A KPI scorecard, is a term used to describe a statistical record, that measures progress or
achievement towards a set performance indicator. It gives decision-makers the ability to gain an
overview of a complete performance scorecard.
The difference between the dashboards and scorecards is that a scorecard focuses on a
given metric and compares it to a forecast or target, a dashboard will present multiple numbers in
different ways. Focusing on KPIs is generally a problematic task, because KPI Scorecard focuses
on individual performance metrics, while Balanced Scorecard focuses on the business goals.
A good strategy map will identify key "landmarks", such as financial constraints and
customer expectations. Strategy maps will also highlight areas that may hinder mission success.
Drs. Kaplan and Norton say this about strategy maps: "The key to executing your strategy is to
have people understand it including the crucial processes by which intangible assets will be
converted into tangible outcomes. Strategy maps can help chart this difficult terrain."
Strategy maps are a "communication" tool, so they should never be a complicated roadmap.
Perspectives outline the major goals of the organization which should include the:
1. Financial Perspective "If we succeed, how will we look to our
stakeholders?"
2. Customer Perspective "What do our customers expect from us?"
3. Internal Perspective "To satisfy our customers, at which business
processes must we excel?"
4. Learning and Growth Perspective "To be successful, how must our
organization learn and improve?
Building a strategy map is a team effort that requires time and consensus, especially at the highest
levels of leadership. Supposedly, if the initiative was about creating a "BSC" for a bank, that
scorecard should deal with the following 2 major items as a clear path to success:
1. Expand sources of revenue.
2. Expand cost efficiency.
These 2 goals can be achieved by translating what a bank is all about. Banks would not exist
without the interaction of customers. As such 3 items can be defined as prime drivers for the bankcustomer interaction:
1. Increase customer confidence in the bank services.
2. Understand and serve customer needs.
3. Provide speedy and accurate service.
And these 3 initiatives define the framework for "Revenue- Risk management- Productivity". So,
the detailed frame work should be as the following:
1. Revenue: Identify, target and Strengthen critical partnerships and opportunities: local,
regional and national.
2. Risk Management: Proactive risk management and compliance, and
create if possible,
a predictive fluid plan for crisis management and recovery (Reactive risk management will
never give the company an advantage in sailing the waters with other predators of the
market.)
3. Productivity: Leverage technology to improve efficiency and streamline and fortify
credit approval process.
4. And in the avenue of Learning and Growth Perspective: Provide valuable skills training,
collaborative and high-achieving environment,
understanding of
and clear communication and
organization's strategy.
By focusing on customer management, banks are injecting into their value theorem:
1. A stronger, more vibrant brand image.
2. A win-win expanding customer relationship.
3. Increased levels of customer loyalty.
For a bank to be considered trustworthy by its customers, it should have the internal
capacity to carry out all their services efficiently and effectively, and it should understand the needs
of their clients. When a bank displays its strategy map in a visually appealing and easy simple
format, it will be able to increase internal alignment and identify their goals for improvement
across the board. If a bank puts effort to ensure that they can continue to support their clients and
grow business in a fluctuating modern economy by streamlining effects of strategic planning, it
would capture that niche of the market. an emphasis on maintaining an efficient, fluid and engaging
internal environment, so that the bank's employees are best able to serve their clients. The bank is
concerned not only with their cash revenue, but also offering the best service and price options for
their customers.
Kaplan, R. S. (2003, December 2). Improving Corporate Governance with the Balanced Scorecard.
Retrieved December 11, 2019, from https://www.hbs.edu/faculty/Publication Files/04044_7a4c9c93-f76f-4e14-8918-dfa910c554cd.pdf.
Native, T. J. C.-F. & A. (2019, September 20). What Is A Balanced Scorecard? (A Definition).
Retrieved December 11, 2019, from https://www.clearpointstrategy.com/what-is-a-balancedscorecard-definition/.
Niven, P. R. (2003, March 25). Balanced Scorecard Step-by-step for Government and Nonprofit
Agencies. Retrieved December 11, 2019, from http://hanin.web.id/ebook/management/Balanced
Scorecard Step-by-Step for Government and Nonprofit Agencies.pdf.
Norton, R. S. K. D. P. (2014, August 1). The Balanced Scorecard-Measures that Drive Performance.
Retrieved December 11, 2019, from https://hbr.org/1992/01/the-balanced-scorecard-measuresthat-drive-performance-2.
Vision.
(n.d.).
Retrieved
November
25,
2019,
from
http://www.nextlevelorm.com/VisionMission.htm.
Vliet, V. van. (2019, November 18). Balanced Scorecard model by Kaplan and Norton template.
Retrieved December 11, 2019, from https://www.toolshero.com/strategy/balanced-scorecard/.
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