Building Strategy Focused Organizations
with the Balanced Scorecard
Dr. Robert S. Kaplan
Marvin Bower Professor of Leadership Development
HARVARD BUSINESS SCHOOL
and
Chairman
BALANCED SCORECARD COLLABORATIVE
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
1
The Balanced Scorecard:
A Good Idea in 1992
Balanced Scorecard in 1992
“The Balanced Scorecard –
Measures that Drive
Performance”
Harvard Business Review,
1992
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
2
The Balanced Scorecard:
A Great Idea by 2002
Balanced Scorecard by 2002
21 translations
17
translations
50% usage in Fortune 500
Harvard Business Review “Hall of Fame”
50,000+ BSC on-line members
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
3
Balanced Scorecard Hall of Fame Implemented
Strategies and Achieved Breakthrough Results… Fast
Mobil
3 years
Saatchi & Saatchi
+ $2b
• Last to first
• Cash flow +$1.2b
• ROI 6% --> 16%
ATT Canada
3 years
+ $7b
2-5 years
Cigna
Brown & Root
2-5 years
3 years
• #1 in growth &
profitability
+ $3b
City of Charlotte
3 years
Duke Children’s
• Customer Satisfaction = 70%
• Public Official Award
• Customer Satisfaction #1
• Cost/Case
33%
3 years
Wells Fargo
Southern Garden
3-5 years
• # Customers 450%
• Best Online Bank
• Least Cost Producer
3 years
2 years
Chemical Bank
3 years
• 99% Merged Target
Asset Retention
UPS
Hilton Hotels
• Customer Satisfaction
• Market Revenue Index
• Revenues
• Net Income
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
9%
33%
2 years
4
Question:
Answer:
How can complex organizations
achieve results like this in such
short periods of time?
Alignment!
The Balanced Scorecard process allows an organization
to align and focus all its resources on its strategy
BUSINESS UNITS
EXECUTIVE TEAM
STRATEGY
INFORMATION
TECHNOLOGY
HUMAN RESOURCES
BUDGETS AND CAPITAL
INVESTMENTS
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
5
A Gap Exists Between Mission-Vision-Strategy and
Employees’ Everyday Actions
MISSION
Why we exist
VALUES
What’s important to us
VISION
What we want to be
STRATEGY
Our game plan
TOTAL QUALITY MANAGEMENT
What we must improve
EMPOWERMENT / PERSONAL OBJECTIVES
What I need to do
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
6
The Balanced Scorecard Links Vision and Strategy to
Employees’ Everyday Actions
MISSION
Why we exist
VALUES
What’s important to us
VISION
What we want to be
STRATEGY
Our game plan
BALANCED SCORECARD
Translate, Focus and Align
STRATEGIC INITIATIVES
What are the priorities
TOTAL QUALITY MANAGEMENT
What we must improve
EMPOWERMENT / PERSONAL OBJECTIVES
What I need to do
STRATEGIC OUTCOMES
Satisfied
SHAREHOLDERS
Delighted
CUSTOMERS
Efficient and Effective
PROCESSES
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
Motivated & Prepared
WORKFORCE
7
The Principles of a Strategy-Focused Organization
TRANSLATE
STRATEGY
EXECUTIVE
LEADERSHIP
• Mission / Vision
• Strategy Maps
• Balanced
Scorecard
• Targets
• Initiatives
ORGANIZATION
ALIGNMENT
•
•
•
•
BALANCED
SCORECARD
•
•
•
•
•
CEO Sponsorship
Executive Team Engaged
“New Way of Managing”
Accountable for Strategy
A Performance Culture
CONTINUAL
PROCESS
Corporate Role
Corporate - SBU
SBU - Shared Services
External Partners
EVERYONE’S
JOB
•
•
•
•
•
Linked to Budgeting
Linked to Ops. Mgmt.
Management Meetings
Feedback System
Learning Process
• Strategic Awareness
• Goal Alignment
• Linked Incentives
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
8
#1
Principles of the Strategy Focused Organization:
TRANSLATE THE STRATEGY TO OPERATIONAL TERMS
The Strategy
Financial Perspective
 Measurement is the
language that gives clarity
to vague concepts.
"If we succeed, how will
we look to our
shareholders?”
Customer Perspective
 Measurement is used to
communicate, not to
control.
"To achieve my vision,
how must I look to my
customers?”
 Building the scorecard
develops consensus and
teamwork throughout the
organization
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
Internal Perspective
"To satisfy my customer,
at which processes must
I excel?”
Organization Learning
"To achieve my vision, how
must my organization learn
and improve?”
9
The Complete Balanced Scorecard Strategy Map
Improve Shareholder Value
Financial
Perspective:
the drivers of
shareholder
value
Shareholder Value
ROCE
Productivity Strategy
Improve Cost
Structure
Increase Asset
Utilization
 Cost per Unit
Internal
Perspective:
how value is
created and
sustained
Learning & Growth
Perspective: role for
intangible assets –
people, systems,
climate and culture
Enhance Customer
Value
 Customer
Profitability
 Asset Turnover
•Market and Account Share 
Customer
Perspective:
the
differentiating
value
proposition
Revenue Growth Strategy

Customer Acquisition
Customer Retention

Create Value from
New Products &
Services
 New Revenue
Sources
Customer Satisfaction
Product Leader
Customer Solutions
Customer Value Proposition
Product/Service Attributes
Price
Quality
Time
Operations Theme
(Processes that Produce
and Deliver Products
& Services)
Low Total Cost
Relationship
Function
Service
Customer
Management
Theme
(Processes that
Enhance Customer
Value)
Image
Relations
Brand
Innovation Theme
(Processes that
Create New
Products and
Services)
Regulatory and
Society Theme
(Processes that
Improve the
Environment
and
Communities)
Human, Information, and Organizational Capital
Strategic
Competencies
Strategic
Technologies
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
Climate for
Action
10
Mobil NAM&R Strategy Map
Increase ROCE to 12%
Financial
Perspective
Revenue Growth Strategy
Increase Customer
Profitability Through
Premium Brands
New Sources of NonGasoline Revenue
Customer
Perspective
 Share of
Targeted
Segment
 Mystery
Shopper
Score
 Non-Gasoline
Revenue & Margin
Become Industry
Cost Leader
 Volume vs. Industry
 Premium Ratio
 Cash Flow
“Win-Win Dealer Relations”
Basic




Maximize Use of
Existing Assets
 Cash Expense (cpg)
vs. Industry
“Delight the Consumer”
Differentiators
Clean
Safe
Quality Product
Trusted Brand
Speedy
Purchase
“Build the Franchise”
Internal
Perspective
Productivity Strategy
ROCE
Net Margin (vs. industry)
Friendly Helpful
Employees
“Increase Customer Value”
Understand
Consumer
Segments
Create NonGasoline
Products &
Services
“Achieve Operational Excellence”
Improve
Hardware
Performance
 Yield Gap
 Unplanned
Downtime
Best-In-Class
Franchise
Teams
 New Product
Acceptance Rate
More
Consumer
Products
Recognize
Loyalty
On-Spec
On-Time
Improve
Inventory
Management
“Be a Good Neighbor”
Improve
Environmental,
Health and
Safety
 Inventory
Levels
 Run-Out Rate
Industry Cost
Leader
 Activity Cost
vs. Competition
 Dealer Quality
Rating
Help Develop
Business
Skills
 Dealer Profit
Growth
 Dealer
Satisfaction
 Environment
Incidents
 Safety Incidents
A Motivated and Prepared Workforce
Climate for Action
Learning &
Growth
Perspective
• Aligned
• Personal Growth
 Personal BSC
 Employee Feedback
Competencies
• Functional Excellence
• Leadership Skills
• Integrated View
 Strategic Skill
Coverage Ratio
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
Technology
• Process Improvement
 Systems Milestones
11
New Source of Revenues and Customer Loyalty
Attractive Convenience Store
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
12
The Balanced Scorecard Framework Is Readily Adapted to
Non-Profit and Government Organizations
The Mission
"If we succeed, how will
we look to our
taxpayers (or donors)?”
”To achieve our vision,
how must we look to
our customers?”
“To satisfy our customers,
financial donors and mission,
what business processes
must we excel at?"
“To achieve our vision, how
must our people learn,
communicate, and work
together?”
The Mission, rather than the financial / shareholder objectives,
drives the organization’s strategy
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
13
Boston Lyric Opera Strategy Map
Our mission is to ensure the long-term future of opera in Boston and New England by (1) producing the highest quality professional productions of diverse opera
repertoire that are artistically excellent as well as musically and theatrically innovative; (2) developing the next generation of opera talent; (3) engaging and educating
a diverse community about opera to become enthusiastic audience members, educators, supporters, and volunteers.
(HBS Case #9-101-111)
National/International Opera Scene
Supporters/Subscribers
CUSTOMER
Target
Generous and Loyal
Contributors/
Prospects
Focus on
Board
Investment and
Recruitment
Build Artistic
Reputation
for High
Standards
Launch Unique
Residency
Program for
Artists
Enhance Customer Relationships
INTERNAL
BUSINESS
PROCESSES
Streamline
Ticketing/Gift
Acknowledgement
Processes
Increase
One-on-One
Contact
Improve
Board Support
Systems
Provide
Staff with
Skill
Training
Promote
Collaborations
Insure Operational Excellence
Develop
Web-based
Service/
Products
Contract
“Best”
Talent
Develop Strategic Job Competencies
LEARNING
AND
GROWTH
Present
Diverse
Repertory
Community
Leverage Board
Effectiveness with
Education and
Fundraising Training
Develop
Innovation
Review
Process
Increase Brand Awareness
Increase Cost
Efficiency/Quality
Assurance
Increase
Revenue
Systematize
Financial
Processes
Launch
Comprehensive
PR Campaign
Develop
New
Products/
Program
Strengthen Strategic Alignment
Build Growth-Enabling Infrastructure
Develop
Strategic
Communications
Plan
Create
HR Plan
Incorporate
Milestone
Evaluations
Fiscal Health
FINANCIAL
Focus on
Educ./Comm.
Programs for
Greater Boston
Build
Community
Support
Build
Multi-Year
Support
Invest in
Strategic
Technologies
Develop
Administrative
Residency
Program
Growth Planning
Create
Long-Term
Investment
Strategy
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
Develop
Realistic
Pro Formas
Institutionalize
Multi-Year
Budgeting
14
Resources
Learning & Growth
Internal Process
Stakeholder
Mission
Medical Readiness for the Transformed Army
Core Competencies
Protect and Sustain A Healthy and Medically Protected Force
Deploy a Trained and Equipped Medical Force that Supports Army Transformation
Manage the Care of the Soldier and Military Family
Battlefield
Performing Our
Mission in Any
Environment
Home
Station
Focus on Customers / Sound Business Practices
Enable Mission Readiness
Achieve Fiscal Accountability
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
15
Army Medical Command Strategy Map
Project and Sustain A Healthy and Medically Protected Force
Mission
Healthy soldiers
C-1
DoD/Army/Soldiers
Lower Army’s medically
related costs F-1
Protected from
disease and injury
C-2
Stakeholder
Trained Medics
C-3
Manage the Care of the Soldier and the Military Family
Passion for
Eliminating
Wasted Time C-9
Quality,
Compassionate
Healthcare C-8
Healthy Patients
and Families are #1
C-7
Internal Process
Products to Market to
Support the Transforming
Army
Monitor Medical
Threats and the
Fitness of the Force
IP - 4
Battlefield
Return Soldiers to
Duty
IP-6
Leverage
Capabilities of
Institutional
AMEDD
Develop Fast Accurate
Analysis, Forecasting,
Modeling and Planning
& Growth
Align Resources with
Population
Requirements
Optimize Total
(MCSC+ Direct)
System Efficiency F-3
IP1
Expedient,
Compassionate
Disposition of Medically
Unfit Soldiers
Home
IP-13
Safe Patient
Care
Station
IP-7
Streamline
Access to Care
IP 10
Integrate Direct
and Network Care
Market the Army
Healthcare System
IP- 9
IP- 14
Maintain a Reliable
Facility and
Installation
Infrastructure
IP-11
IP- 12
IP- 8
Achieve Fiscal
Responsibility
Eliminate the
Hassle Factor
C-10
IP - 5
IP- 3
Enable Mission
Readiness
Beneficiary/DoD/Army
IP- 2
Leverage Science
& Technology
Learning
Reduce cost of
ownership of the
deployable force F-2
Smaller Footprint C5
Flexible Medical
Forces C-4
Provide State of the Art
Health Risk Assessments
and Countermeasures
Resources
DoD/Army
Deploy a Trained and Equipped Medical Force that Supports Army Transformation
Focus on Our Customers / Sound Business Practices
Recruit & Retain a
Quality AMEDD Force
Develop
Leaders
L1
Train the Medical
Force
L-3
L-4
Predict and Secure Levels
Operate Within Budget
of Funding
Required
F-4
©2002
Balanced Scorecard Collaborative,
Inc and Robert S. Kaplan. All rights reserved.
Implement Clinical
and Business Best
Practices
IP- 15
Leverage Information
Management and
Information Technology
F-5
L-2
16
Financial
Internal
Mission/ Customer
Goal 1: Project and Sustain a Healthy and Medically Protected Force
Strategic Theme:
Objective Statement
Healthy Soldiers
C-1
C-1 Improve and sustain the general health
of soldiers to ensure medically-ready
deployable forces.
Protected From
Disease and Injury
C-2
Provide State of the Art
Health Risk
Assessments and
Countermeasures
IP-1
Monitor Medical Threats
and the Fitness of the
Force
IP-2
Lower Army’s
Medically Related
Costs
F-1
C-2 Sustain the health and fitness of the
deployed forces, preventing casualties from
disease, injuries, and stress reactions.
Measures
C-1 Percent of units reporting medical readiness.
C-2 Number of Man-Years Lost Due to Disease,
Injury, Stress Reactions.
IP-1 Enhance health and performance
through strategies, tools, products and
other countermeasures to reduce risks of
disease, non-battle injury, chemical and
biological warfare casualties, and stress
reactions. Promote the use and assess
the effectiveness of these
countermeasures throughout their life
cycle.
IP-2 Improve monitoring and reporting on
demand the medical risk assessments and
the health status of units and individuals.
IP-1 Percent of threats (Infectious Disease,
chemical and biological warfare) on the validated,
prioritized threat lists for which effective
countermeasures are available to deployable and
deployed forces .
F-1 Identify, Target & Reduce the Army’s
Medically-Related Costs and Increase
Return to Duty Rates Through Improved
Management
F-1a Number of injury/illness driven claims (Rate
per 100 employees);
IP-2 Percent of requested medical threat/risk
assessments and health status reports delivered
electronically on demand to operational
commanders and their staffs.
F-1b Cost of injury/illness driven claims.
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
17
Several Different Types of “Balanced Scorecards”
Have Emerged in Practice
Strategy
Card
Stakeholder
Card
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
KPI
Card
18
A KPI Scorecard: The Four “P’s”
•
Profits
•
Portfolio (loan volume)
•
Process (ISO certification)
•
People (diversity)
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
19
What’s missing from the 4P’s KPI scorecard?
•
Where are the customers?
•
What is the value proposition?
•
How does ISO certification lead to increases in loan
volume?
•
How does a more diverse work force lead to ISO
certification?
•
Is there no role for information technology?
•
Is innovation not important?
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
20
A Good Balanced Scorecard Tells the Story of
Your Strategy
•
Every measure is part of a chain of cause and effect
linkages
•
All measures eventually link to organizational outcomes
•
A balance exists between outcome measures (financial,
customer) and performance drivers (value proposition,
internal processes, learning & growth)
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
21
The Principles of a Strategy-Focused Organization
TRANSLATE
STRATEGY
•
•
•
•
•
EXECUTIVE
LEADERSHIP
Mission / Vision
Strategy Maps
Balanced Scorecard
Targets
Initiatives
BALANCED
SCORECARD
•
•
•
•
•
ORGANIZATION
ALIGNMENT
•
•
•
•
CEO Sponsorship
Executive Team Engaged
“New Way of Managing”
Accountable for Strategy
A Performance Culture
CONTINUAL
PROCESS
Corporate Role
Corporate - SBU
SBU - Shared Services
External Partners
EVERYONE’S
JOB
•
•
•
•
•
Linked to Budgeting
Linked to Ops. Mgmt.
Management Meetings
Feedback System
Learning Process
• Strategic Awareness
• Goal Alignment
• Linked Incentives
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
22
Principles of the Strategy-Focused Organization:
LINK AND ALIGN THE ORGANIZATION AROUND ITS
STRATEGY
#3.
#1.
Each Support Unit develops a
plan and BSC for “best
practice” sharing to create
synergies across SBUs.
A Corporate Scorecard defines
overall strategic priorities.
CORPORATE
LINE BUSINESSES
CORPORATE SCORECARD
(Shared Strategic Agenda)
Themes
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-Win Relationships
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
•
Human Resources
•
Outsourcer Scorecard
8. Quality
xxx
•
Information Technology
xx
xx
xx
xx
#2.
#4.
Each SBU develops a
long-range plan and BSC
consistent with corporate
strategic agenda.
Plans and BSC’s 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.
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
23
Principles of the Strategy-Focused Organization:
LINK AND ALIGN THE ORGANIZATION AROUND ITS
STRATEGY
#3.
#1.
Each Support Unit develops a
plan and BSC for “best
practice” sharing to create
synergies across SBUs.
A Corporate Scorecard defines
overall strategic priorities.
CORPORATE
LINE BUSINESSES
CORPORATE SCORECARD
(Shared Strategic Agenda)
Themes
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-Win Relationships
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
•
Human Resources
•
Outsourcer Scorecard
8. Quality
xxx
•
Information Technology
xx
xx
xx
xx
#2.
#4.
Each SBU develops a
long-range plan and BSC
consistent with corporate
strategic agenda.
Plans and BSC’s define
relationships with external
partners consistent with
SBU strategy.
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
24
Washington State: The
Salmon Recovery Problem
•
•
Endangered Species Listing of 18 Species
Federal Approval of Recovery Plans -- or
– no government or private entity make “take” any salmon - - thus
– forestry, agriculture, hydro power production, transportation
improvements and land use changes stopped or curtailed
– i.e.. A train wreck
•
Fractured governance
– six states, another country (Canada) and 27 Indian tribes
– eight US agencies, 12 state agencies, 39 counties, 277 cities
– 300 water and sewer districts, 170 local water suppliers
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
25
Many Regulations and Constituents Influence Salmon
Recovery Projects
U.S. & State
Agencies
Independent
Science Panel
NMFS Salmon
“Evolutionarily
Significant Units”
NMFS
Recovery Team
Water
Legislation
HB2514
WRIA
Planning
Watershed
Councils
HB2496
Restoration
Projects
Salmon Sec 7
Consultation
Salmon
Sec 4(d) Rules
Tri-Co
Salmon, Bull Trout,
Environmental Quality, and
Hydropower Development
Early Action
Package
Bull Trout Sec
4(d) Rules
US/Canada
Treaty
Tribes
SRF Board
Bull Trout Sec 7
Consultation
SSHIAP
NGO’s and
Enhancement Groups
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
FWS Bull Trout
“Definable Population
Segments”
26
Salmon Recovery Scorecard
Goal:
Restore salmon, steelhead, and trout populations to healthy and harvestable levels
and improve habitats on which fish rely.
Customer: To protect an important element of Washington’s quality of life
•
We will have productive and diverse wild salmon populations.
•
We will meet the requirements of the Endangered Species Act/Clean Water Act.
Processes:
Our habitat, harvest, hatchery, and hydropower activities
will benefit wild salmon.
•
Freshwater and estuarine habitats are healthy and accessible
•
Rivers and streams have flows to support salmon.
•
Water is clean and cool enough for salmon
•
Harvest management actions protect wild salmon.
•
Enhance compliance with resource protection laws.
Collaboration:
We are engaged with citizens and our salmon recovery
partners.
•
We will reach out to citizens
•
Salmon recovery roles are defined and partnerships strengthened.
Financial and Infrastructure: Our building blocks for success include
•
Achieve cost-effective recovery and efficient use of government resources
•
Use best available science and integrate monitoring and research with planning and implementation
•
Citizens, salmon recovery partners and state employees have timely access to the information, technical assistance, and funding they need to be
successful.
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
27
Summary: Top-to-Bottom Strategy Alignment
Unleashes Full Organization Potential
• The Corporate Strategy is communicated to business
units and agencies through key themes, opportunities
for integration and synergies, and shared measures
• Cooperation and greater synergy between business
units, staff and shared service functions, and across
diverse organizational units becomes formalized
through the Scorecard
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
28
The Principles of a Strategy-Focused Organization
TRANSLATE
STRATEGY
•
•
•
•
•
EXECUTIVE
LEADERSHIP
Mission / Vision
Strategy Maps
Balanced Scorecard
Targets
Initiatives
BALANCED
SCORECARD
•
•
•
•
•
ORGANIZATION
ALIGNMENT
•
•
•
•
CEO Sponsorship
Executive Team Engaged
“New Way of Managing”
Accountable for Strategy
A Performance Culture
CONTINUAL
PROCESS
Corporate Role
Corporate - SBU
SBU - Shared Services
External Partners
EVERYONE’S
JOB
•
•
•
•
•
Linked to Budgeting
Linked to Ops. Mgmt.
Management Meetings
Feedback System
Learning Process
• Strategic Awareness
• Goal Alignment
• Linked Incentives
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
29
#3
Principles of the Strategy Focused Organization:
MAKE STRATEGY EVERYONE’S EVERYDAY JOB
HR Processes Are Essential for Moving Strategy From the Top to the Bottom
CORP
SBU
Top-Down “Bridging
Process” To Share
the Strategy & Align
the Workforce
• EDUCATION
• PERSONAL GOAL
ALIGNMENT
Bottom-Up Process
to Internalize &
Execute the Strategy
• BALANCED PAYCHECKS
The Strategy Focused Workforce
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
30
Making Strategy Everyone’s Job
Creating a Climate
to Support
Strategic Change
1
Create Strategic
Awareness
2
• Insure that each individual has sufficient
understanding of the strategy (You can’t execute
what you don’t understand)
Align Personal
Objectives
• Insure that each individual knows where they fit
into the overall game plan
Align Incentive
Compensation
• Reinforce desired behavior and increase
intensity of awareness
3
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
31
USM&R Strategic Themes ...
Win/Win Relationship
Good Neighbor
will guide us to our vision and are defined above
each graph.
Improve Dealer/Wholesale Marketer profitability through
customer-driven products and services and by
developing their business competencies.
Protect the health and safety of our people, the
communities in which we work, and the environment we
all share.
Dealer/Mobil Gross Profit
USM&R Strategic Measures ...
that will keep us focused on achieving
USM&R’s strategic themes are explained in the
graphs and the bulleted text accompanying
them.
Environmental Index
• Total profit earned at
Mobil outlets and
split between our
dealers/whole-sale
marketers and
Mobil.
• Composite of:
- reportable releases
to air and water
- reportable spills
- community reported
incidents.
1993
1994
Target
1993
1994
Target
Financially Strong
Safe & Reliable
On Spec On Time
Reward our shareholders by providing a superior longterm return which exceeds that of our peers.
Maintain a leadership position in safety while keeping our
refineries fully utilized.
Provide quality products supported by quality business
processes that are on time and done right the first time.
USM&R Days Away
From Work
ROCE
• Income divided by
capital employed
including all
allocations.
Manufacturing
Reliability Index
Quality Index
• Composite of incidents
of:
12%
- product off spec
8%
- order shipped late
7%
- business process errors
- customer complaints
- cost of rework.
1993
1994
Target
1993
1994
Target
1993
1994
Target
1993
1994
Target
Delight the Customer
Competitive Supplier
Motivated & Prepared
Understand our consumers’ needs better than anyone
and offer them products and services which exceed their
expectations.
Provide product to our terminals at a cost equal to or better
than the competitive market maker.
Develop and value teamwork and the ability to think Mobil,
act locally.
Mystery Shopper
Laid-down Cost
• The Mystery Shopper
program rates how well
each of our stations is
delivering the “best
buying experience.”
• Our cost to deliver
product to the terminal
vs. lowest cost
provider.
1993
1994
Target
1993
1994
Target
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
Climate Survey
• Survey of employees
to measure how
people perceive the
Mobil workplace
environment.
1993
1994
Target
32
Employee Innovations: Mobil Speedpass™
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
33
Making Strategy Everyone’s Job
Creating a Climate
to Support
Strategic Change
1
Create Strategic
Awareness
• Insure that each individual has sufficient
understanding of the strategy (You can’t execute
what you don’t understand)
Align Personal
Objectives
• Insure that each individual knows where he
or she fits into the overall game plan
2
3
Align Incentive
Compensation
• Reinforce desired behavior and increase
intensity of awareness
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
34
Ultimately, Team and Individual Goals and
Objectives Are Aligned to the Strategy
A performance model provides
the framework for cascading and
aligning personal goals
Customer Example
A personal scorecard focuses individuals
on the part of the performance model they
can impact
Financial Example
Corporate Measures
Corporate
Parent
• Customer
Satisfaction
• Operating Margin
1994
1995
1997
100
120
160
180
250
• Earnings
100
450
200
210
225
• Net Cash Flow
100
85
80
75
70
• Overhead & Operating Expense
64
• Overhead & Operating Costs
• Finding & Development Costs
• Operating Margin
VP of Opns
• Variable Costs
• Period Expenses
100
75
73
1994
Financial
Operating
Targets
70
100
97
93
90
82
100
105
108
109
110
Individual Goals
Business Unit Measures
1993
Targets
Division
• Customer
retention
1996
Balanced Scorecard
1993
1995
1996
1997
And Near Term Action Steps
Targets
1.
Targets
2.
• Total Annual Production
(Indexed: 1993=100)
3.
Plant Manager
• On time
delivery
• Variable Costs
• Mfg Overhead
Shift Supervisor
• First Pass Yield
• Schedule
Adherence
• Scrap
rate
• Labor/
Unit
Corporate Objectives
•
Double our value in 10 years.
•
Increase our earnings by an average of 20% a
year
•
Achieve an internal rate of return 2% above the
cost of capital.
•
Reduce our overhead & operating costs by a
further 30% by 1997.
•
Reduce our 5-year average finding &
development costs by 20%.
•
Reach the top quartile of industry profitability by
1997.
•
Increase production by 10% by 1997.
Individual Measures
1.
2.
3.
4.
4.
5.
If we can achieve all these
business objectives, we will be
a top quartile competitor
Name:
5.
Location:
• Line
Availability
• Schedule
adherence
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
35
Making Strategy Everyone’s Job
Creating a Climate
to Support
Strategic Change
1
• Insure that each individual has sufficient
understanding of the strategy (You can’t execute
what you don’t understand)
Create Strategic
Awareness
2
• Insure that each individual knows where he or
she fits into the overall game plan
Align Personal
Objectives
3
Align Incentive
Compensation
• Reinforce desired behavior and increase
intensity of awareness
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
36
Mobil USM&R Incentive Plan
Poor
Average
Best-in
Industry
Base Pay
90%
90%
90%
Corporate Award
(Return-on-Capital,
Earnings Growth)
0-1
3-6
10
0
5-8
20
91%
98-104%
120%
USM&R/SBU
M&R (30%)
SBU (70%)
Total Pay
(% of Market)
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
37
Linking Compensation to the Balanced Scorecard
Experience with successful BSC users indicates that linking the
BSC to incentive compensation is essential to success
Executive Perspectives
“People got that scorecard out and did
the calculations to see how much
money they were going to get. We
could not have got the same focus on
the scorecard if we didn’t have the link
to pay.”
Brian Baker, Mobil
Supported by Research
Mercer survey of compensation
practices in 214 companies (1999)
• 88% of responding companies
consider the use of balanced
scorecard measures linked to
reward systems to be effective.
“It would be hard to get people to
accept a totally different way of
measurement - which the BSC is - if
you don’t reinforce that change
through incentive compensation.”
Gerry Isom, CIGNA
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
38
The Principles of a Strategy-Focused Organization
TRANSLATE
STRATEGY
•
•
•
•
•
EXECUTIVE
LEADERSHIP
Mission / Vision
Strategy Maps
Balanced Scorecard
Targets
Initiatives
BALANCED
SCORECARD
•
•
•
•
•
ORGANIZATION
ALIGNMENT
•
•
•
•
CEO Sponsorship
Executive Team Engaged
“New Way of Managing”
Accountable for Strategy
A Performance Culture
CONTINUAL
PROCESS
Corporate Role
Corporate - SBU
SBU - Shared Services
External Partners
EVERYONE’S
JOB
• Strategic Awareness
• Goal Alignment
• Linked Incentives
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
• Linked to Budgeting
• Linked to
Operational
Improvements
• Management
Meetings
• Feedback System
• Learning Process
39
Making Strategy a Continual Process
Imbed the Strategy
in Ongoing
Management
Processes
1 Integrate Strategy
with Planning and
Budgeting
2
Introduce the New
Reporting System
3 Conduct the New
Management
Meeting
• Establish stretch targets; Select initiatives, Align
operational improvement programs (TQM, Six
Sigma, Activity Based Management); Allocate
resources to projects
• Develop systems for data collection, analysis,
and reporting
• Open discussion of performance shortfalls;
team problem-solving; adapting and learning
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
40
Mobil NAM&R: Setting Targets and Performance
Factors
Business Group Variable Pay Opportunity . . . . . .
Variable
Pay
Percent
Performance
Factor
Qualitative
20
1.25
BEST IN CLASS
1.20
Well
Above
Average
1.15
How to think about
performance factors:
1.12
 Objective:
1.09
1.06
Above Average
1.03
7
1.00
Average
0.90
External Benchmark
1.00 means target equals
the average of competition
1.25 means target equals the
top of the competitive group
0.80
1
0.75
Below Average
 Subjective:
Internal Benchmark
1.00 means the difficulty
of the dive is average
- 13
- Robert S. Kaplan. All rights reserved.
©2002 Balanced Scorecard Collaborative,
Inc and
41
Achieving Stretch Target Performance May
Require
•
•
•
•
•
•
Strategic Initiatives
Capital Investments
New Products/Services
New Customers
New Regions
New Partners
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
42
The Scorecard Process Provides Rigor for
Selecting and Managing Initiatives
—1—
Identify All Potential
Candidates for
Strategic Initiative
Consideration
Development
Projects,
Activities, etc.
OFS Projects,
Activities, etc.
Marketing
Projects,
Activities, etc.
Other Projects,
Activities, etc.
Criteria
—2—
Screen Candidates to
Identify Those That
Qualify as “Strategic”
—3—
Select Strategic
Initiatives
Initiative:
Strategic Thrust(s):
E-Bill Presentment
AC/IR/RC
Area
Rank ing
Initiiative
1
E-Bill
Pre s e ntm e nt
Strate gic Thrus t(s )
and Obje ctive s (s )
AC/IR/RC
Cont. Leadership in
Superior Products
Strate gic
Im portance
Cos t
Be ne fit
Re quire d for Othe r
Initiative s /
Tim e to Im ple m e nt Ove rall Score
De pe nde ncie s
Score
Primary Strategic Objective:
Continue Leadership in Superior
Products
Points
Comments
Strategic Importance
8
• The “killer” application
•X
Cost
-2
•$
Benefit
4
•$
Required for Other
Initiatives/Dependencies
1
•X
Time to Implement
-2
• # months
Overall Score
9
•X
Ove rall
Points
9
2
A
9
3
B
8
4
C
8
5
D
7
6
E
7
7
F
7
N
G
X
Prioritized List of
Strategic Initiatives
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
43
The Principles of a Strategy-Focused Organization
TRANSLATE
STRATEGY
•
•
•
•
•
EXECUTIVE
LEADERSHIP
Mission / Vision
Strategy Maps
Balanced Scorecard
Targets
Initiatives
BALANCED
SCORECARD
•
•
•
•
•
ORGANIZATION
ALIGNMENT
•
•
•
•
CEO Sponsorship
Executive Team Engaged
“New Way of Managing”
Accountable for Strategy
A Performance Culture
CONTINUAL
PROCESS
Corporate Role
Corporate - SBU
SBU - Shared Services
External Partners
EVERYONE’S
JOB
• Strategic Awareness
• Goal Alignment
• Linked Incentives
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
• Linked to Budgeting
• Linked to
Operational
Improvements
• Management Meetings
• Feedback System
• Learning Process
44
Using the BSC to Link Strategy to Operational
Management
Activity-Based Costing
•
Cost of Internal Processes
•
Customer Profitability
Shareholder Value
•
Explicit Value Proposition
•
Path for Revenue Growth Strategy
Quality Programs
•
Link to Customer and Financial Outcomes
•
Identify New Processes; Set Priorities
•
Integrated Strategic Management Approach
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
45
BSC Adds to Total Quality Programs
• Explicit Causal Links from Operational
Improvements to a Customer-Based Value
Proposition
• Explicit Linkages to Productivity Enhancements
and Financial Outcomes
• Identify Entirely New Processes for Improvement
• Set Priorities among Processes to Improve
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
46
The Principles of a Strategy-Focused Organization
TRANSLATE
STRATEGY
•
•
•
•
•
EXECUTIVE
LEADERSHIP
Mission / Vision
Strategy Maps
Balanced Scorecard
Targets
Initiatives
BALANCED
SCORECARD
•
•
•
•
•
ORGANIZATION
ALIGNMENT
•
•
•
•
CEO Sponsorship
Executive Team Engaged
“New Way of Managing”
Accountable for Strategy
A Performance Culture
CONTINUAL
PROCESS
Corporate Role
Corporate - SBU
SBU - Shared Services
External Partners
EVERYONE’S
JOB
• Strategic Awareness
• Goal Alignment
• Linked Incentives
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
• Linked to Budgeting
• Linked to Operational
Improvements
• Management
Meetings
• Feedback System
• Learning Process
47
Reporting and Feedback:
Monthly Scorecard Summary
Financial
Maximize Shareholder
Value
Meet or Exceed
Commitments
Customer
Satisfaction
and Loyalty
Customer
Competitive
Price
Service Quality
Priority On Safety
Internal Processes
Learning & Growth
Manage Investment
Base
Reputation,
Brand and
Trust
Reliability and
Cost Excellence
Develop, Acquire
and Retain
Profitable Supply
Positions
Favorably Positioned for
Success in a Competitive
Environment
Profitably Acquire,
Retain and
Manage
Customers
Legend
Priority on Safety
and Environmental
Excellence
Develop,
Acquire and
Retain
Needed Skills
Above target
On Track (within limits)
Significantly below target
Data Not Available
Effectively
Manage Risks
Promote
Innovation and
Best Practices
Sharing
Promote
Diversity
Live Co
Values
(common
version)
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
Regulatory
and
Legislative
Compliance
48
The New Management Meeting:
Strategic Learning Replaces Control
The Shift In Focus (At City of Charlotte)
Control
Learning
Is the project…
on-time?
on-budget?
What is the impact of
the project on…
– neighborhoods
– jobs
– transportation
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
49
Effective Strategic Management Is Based Upon a
“Double Loop” Learning Approach
The Strategy
Financial
Perspective
Strategic Feedback That
Encourages Learning
Customer
Perspective
Internal
Perspective
update the
strategy
Learning
Perspective
incorporate
learning
Strategic Learning Loop
Financial
Cust
Internal
L&G
corrections
Strategic Measures
 Financially Strong
 Return of Capital Employed
 Delight the Consumer
 Mystery Shopper Rating
 Win-Win Relationship
 Dealer/Pioneer Gross Profit Split
 Safe & Reliable
 Manufacturing Reliability Index
 Days Away from Work Rate
 Competitive Supplier
 Laid Down Cost vs. Best
Competitive Ratable Supply
 Motivated & Prepared
 Strategic Competency Availability
about your strategy
• Assess changes in
the environment
• Identify emerging
Balanced Scorecard
Strategic Objectives
• Test hypotheses
strategies
result
Operational Control Loop
Performance
input
Initiatives & Programs
output
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
50
Store 24 Introduced an Innovative Strategy to
Build Customer Intimacy: “Ban Boredom”
GROWTH
Sales Growth*
PRODUCTIVITY
Gross Profit $ / Labor $
Financial
Perspective
ROI
ROCD*
EBITA*
EBITDA
Gross
Profit
Gross Profit Growth*
New
Concepts
Net gross profit
from concepts <2
years old*
Customer
Value
Proposition
Internal
Perspective
New
Customers
Growth in core
categories*
Customer count*
Enjoyable
Experience
Friendly
Build the Franchise
Continually develop and
successfully roll out new
and innovative programs
Competencies
Required competencies are
built on tenure and capability
rating
Tenure*
Capability evaluation*
Inventory turns*
Hurdle rate on
projects*
Differentiators
Roll-out rating (Ban
Boredom Programs)*
Learning &
Growth
Perspective
Contribution $
And % change*
Basic Requirements
Quality, Value, Cleanliness,
Selection
Asset
Utilization
Contribution
Increase Customer Value
Enhance the customer
experience with flawless
implementation
Pride rides*
Mystery shoppers*
Technology
Focus on technology is on
information systems use
Technology evaluation sheet*
Interesting
Promotions
Survey:
Enjoyable
experience
Operational Excellence
Focus on store, in stock,
and associate productivity
In stock average*
Gross profit $ / labor $*
Gross profit $ / labor hour*
Climate for Action
Ability to implement
relies heavily on
employee satisfaction
Gallup poll*
* Measures
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
51
Testing the Strategy in Real Time Leads to
Strategic Learning
Updated Strategy: “Cause You Just
Can’t Wait”
Financial
Perspective
ROI
ROCD*
EBITA*
EBITDA
Gross
Profit
Gross Profit Growth*
New
Items
New
Customers
Net sales from
new items*
Customer
Value
Proposition
Internal
Perspective
Growth in core
categories*
Customer count*
Basic Requirements
Quality, Value, Cleanliness,
Selection
Friendly
Build the Franchise
Rapid rollout of new
merchandise
* Measures
Competencies
Required competencies are
built on tenure and
capability rating
Capability evaluation*
Contribution $
And % change*
Inventory turns*
Hurdle rate on
projects*
Differentiators
New item program rating*
Learning &
Growth
Perspective
Asset
Utilization
Contribution
Fast & Efficient
Increase Customer Value
Enhance the customer
experience of speed and
efficiency
Average in/out time*
Technology
Focus on technology is on
information systems use
Technology evaluation sheet*
Competitive
comparison*
Operational Excellence
Focus on store, in stock,
and associate productivity
In stock average*
Gross profit $ / labor $*
Gross profit $ / labor hour*
Climate for Action
Ability to implement
relies heavily on
employee satisfaction
Gallup poll*
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
52
The Principles of a Strategy-Focused Organization
TRANSLATE
STRATEGY
•
•
•
•
•
EXECUTIVE
LEADERSHIP
Mission / Vision
Strategy Maps
Balanced Scorecard
Targets
Initiatives
BALANCED
SCORECARD
•
•
•
•
•
ORGANIZATION
ALIGNMENT
•
•
•
•
CEO Sponsorship
Executive Team Engaged
“New Way of Managing”
Accountable for Strategy
A Performance Culture
CONTINUAL
PROCESS
Corporate Role
Corporate - SBU
SBU - Shared Services
External Partners
EVERYONE’S
JOB
• Strategic Awareness
• Goal Alignment
• Linked Incentives
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
• Linked to Budgeting
• Linked to Operational
Improvements
• Management Meetings
• Feedback System
• Learning Process
53
To Succeed, the Executive Leader Must be Engaged in
the Strategic Change Process…
Unfreeze
Achieve commitment and
momentum at the top
“The Case for Change”
Breakthrough
and Sustain
Change
Align and focus the
organization on change
“Early Wins”
Institutionalize capabilities
and culture required for
breakthrough results
“Irreversible Momentum”
“A successful Balanced Scorecard program is a
transformation process not a “metrics” project.”
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
54
Pitfalls
• Middle Management Team: Lack of Senior
Management Commitment (“Bacon and Eggs
Breakfast”)
•
•
•
Done Only by One or Two Individuals
Held at the Top: For Senior Management Only
Too Long a Development Process: “Best Becomes the
Enemy of the Good”
“Just Do It!”
•
•
Treating the Balanced Scorecard as a Systems Project
Just a “checklist” for compensation purposes (the 4
P’s)
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
55
Typical Balanced Scorecard Project Schedule
Week
Task 1: Define Strategic
Architecture
Project Kickoff
Task 2: Draft the Balanced
Scorecard
Workshop I
Task 3: Develop Measures,
High Level Targets &
Initiatives
Workshop II
1
2
3
4
5
6
7
8
9
10
11 12
13 14
15
16
2 Wks
4 Wks
4 Wks
Task 4: Develop
Implementation Plan
Workshop III
2 Wks
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
56
An Effective Balanced Scorecard Development Process
Encourages Focused Participation by Leadership Team and
Leverages Knowledge Within the Organization
The Balanced Scorecard Design Program
Leadership Team
Workshops
Core
Team
Analysis &
Preparation
Workshop No. 1
• Establish executive
consensus on strategic
issues
• Review draft Balanced
Scorecard objectives and
strategy map
Workshop No. 2
• Finalize objectives and
measures
• Review strategic initiatives
and high level targets
Workshop No. 3
• Review implementation
plan
• Discuss implications on
change management
Task 1
Task 2
Task 3
Task 4
Define
Balanced
Scorecard
Architecture
Develop
Objectives
and Strategy
Map
Develop
Measures,
Targets and
Initiatives
Develop
Implementation Plan
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
57
Balanced Scorecard Project Team
BSCol
Engagement
Officer/
Principal
(part-time)
BSCol
Project
Leader
(full-time)
BSCol
Project
Team
1-2
Consultants
(full-time)
Executive
Sponsor/
Steering
Committee
• Overall project ownership
• Consultations/pre-presents
as needed
• 2 days/week
Client
Project
Leader
Client
Core
Team
Executive
Leadership
Team
• 1-2 staff
• 2-3 days/week
• Briefings with others
as needed
• 3 half- to full-day
workshops
• One 90-minute
briefing/
interview
• Consultations/
pre-presents
as needed
Staff
knowledgeable
of business
strategies and
organization
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
58
BSCol’s Framework for Building the SFO
4 –6 Weeks
Assessment
Phase 0
12-16 Weeks
Phase I: BSC
Design and
Mobilization
1 - 2 Years
Phase II: Build the SFO
•Rapid BSC Cascading and Deployment
•Planning and Budgeting
•Governance
•Feedback and Learning
•Performance Management
0.5 - 2 Years
Business Process Improvements
Stream 1
Order Fulfillment
Stream 2
Customer Service/CRM
Stream 3
Product Innovation
Stream 4
Infrastructure
• HR
• IT
• Etc
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
59
How are Organizations Doing on the Journey?
A survey of online members of the BSCol:
500 responses; 250 reported, “Yes, we have BSC.”
50% of these: too early to tell about impact.
Of the 125 who had sufficient experience with the program:
Achieved breakthrough results
Some progress
No or limited results
15%
64%
21%
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
(n = 19)
(n = 80)
(n = 26)
60
What Separates the Winners from the Losers?
Executive Team has created a
sense of urgency
Strategy translated to a strategy
map and Balanced Scorecard
Corporate/Business Unit
measures are linked & aligned
Employees are aware of the
strategy
Individual and team goals are
aligned with the strategy
The BSC is an integral part of the
strategic planning process
The budget is driven by the
strategy
Breakthrough Results
Some Progress
No Results
84%
53%
20%
84%
41%
0%
72%
39%
0%
56%
32%
0%
42%
26%
0%
100%
40%
0%
42%
29%
0%
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
61
Based On What You Have Learned in This Conference, Rate
Your Organization’s Readiness to Execute Its Strategy
EXECUTIVE
LEADERSHIP
•
•
•
•
•
CEO Sponsor
Executive Team Engages
“New Way of Managing”
Accountable for Strategy
A Performance Culture
ORGANIZATION
ALIGNMENT
TRANSLATE
STRATEGY
•
•
•
•
•
•
•
•
Corporate
Corporate – SBU
SBU – Shared Services
Mission / Vision
Strategy Maps
Balanced Scorecard
Targets
Initiatives
EVERYONE’S
JOB
•
•
•
Strategic Awareness
Goal Alignment
Linked Incentives
CONTINUAL
PROCESS
Rate Yourself
E
“Best Practice”
D
We’re OK
C
Moving Slowly
B
Thinking About It
A
Clueless
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
•
•
•
•
•
Linked to Budgeting
Linked to Ops. Mgmt.
Management Meetings
Feedback System
Learning Process
62
The SFO Readiness Profile: Plot Yourself
E
TRANSLATE
STRATEGY
EXECUTIVE
LEADERSHIP
D
Develop strategy
maps and Balanced
Scorecards
Mobilize the
organization
C
B
A
ORGANIZATION
ALIGNMENT
CONTINUAL
PROCESS
Cascade the scorecard
to create linkage
Feedback systems to
facilitate learning
Communicate
Personal
Scorecard
Incentives
EVERYONE’S
JOB
Mobilize Change through
Executive Leadership
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
A
B
C
Thinking
Clueless
D
E
OK
Moving
Slowly
Best
Practice
63
Building the SFO: Some Thoughts on Priority
and Sequence
TRANSLATE
STRATEGY
EXECUTIVE
LEADERSHIP
#1
ORGANIZATION
ALIGNMENT
CONTINUAL
PROCESS
Communicate
Personal
Scorecard
Incentives
EVERYONE’S
JOB
A
B
Thinking
Clueless
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
C
D
E
OK
Moving
Slowly
Best
Practice
64
Building the SFO: Some Thoughts on Priority
and Sequence
TRANSLATE
STRATEGY
EXECUTIVE
LEADERSHIP
Top-down
#2
#1
First Wave of
Results
#2
ORGANIZATION
ALIGNMENT
#2
CONTINUAL
PROCESS
Communicate
Personal
Scorecard
Incentives
EVERYONE’S
JOB
A
B
Thinking
Clueless
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
C
D
E
OK
Moving
Slowly
Best
Practice
65
Building the SFO: Some Thoughts on Priority
and Sequence
TRANSLATE
STRATEGY
EXECUTIVE
LEADERSHIP
Top-down
#2
#1
First Wave of
Results
#2
ORGANIZATION
ALIGNMENT
#2
#4
CONTINUAL
PROCESS
#5
#3
#4
#4
Bottoms-up
Communicate
Sustained Results
Personal
Scorecard
Incentives
EVERYONE’S
JOB
A
B
Thinking
Clueless
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
C
D
E
OK
Moving
Slowly
Best
Practice
66
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©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
67