Using the Balanced Scorecard for
Ranch Planning and Management:
Setting Strategy and
Measuring Performance
Jack Davis, Area Management Specialist – SDSU CES
Agustin Arzeno, Area Management Specialist – SDSU CES
What is it?
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A strategic management tool that provides
ranch managers with a clear, concise
picture of the health and progress of the
business in reaching the ranch goals.
Where Developed?
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Harvard Business School
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Dr. Robert Kaplan
Dr. David Norton
Utilized by industry
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General Electric
Ford Motor Company
IBM
Walt Disney World
What is it?
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The BSC translates mission and strategy
into objectives and measures, organized
into four different perspectives: financial,
customer, internal business process, and
learning and growth.
The BSC provides a framework, a language,
to communicate mission and strategy.
The four perspectives of the BSC permit a
balance of ST and LT objectives, between
desired outcomes and performance.
Why Developed?
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Financial Measures are no longer the only
measure responsible for success of a
company.
Others include
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Customer Satisfaction
Better Internal Process
Learning and Growth
All of these should work together (in Balance)
for the success of the company
All systems are part of a whole and every
action taken affects the sum of the parts
Financial
Customer
Vision and
Strategy
Learning
and Growth
Internal
Business
Process
Ranch Wheel
What is the Driving Factor?

The Vision

It gives you direction
“I am here and I need
to get to there, how
do I do that?”
The Vision
“Good business leaders create a vision,
articulate the vision, passionately own the
vision, and relentlessly drive it to completion.”
Jack Welch, former GE CEO
The Vision
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Statement of values and reasons that are the
basis for business.
Envisioned future if goals are achieved.
Recognizes how the business serves the
stakeholders.
It should guide the business through
challenges and opportunities and provide a
framework on which to base decisions.
3 steps in creating the VISION:
a) Scenarios for your Industry
b) Place business in context
c) Develop strategies to adapt
The Vision
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“ To pursue excellence and growth in sustainable
agriculture, thereby providing for diversification,
succession, and a continuity improving the standard
of living for all shareholders in the business.”
“To have a farm business that is growing, is
financially profitable, and is environmentally
sustainable, while enabling us to maintain our
lifestyle and enjoy time with our children and friends
and continue our involvement in the community.”
“To grow the family farm business by profitably
marketing quality products to ensure that the future
generation has a viable farming business.”
Nicola M. Shadbolt, Massey University, NZ
The Strategies
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Set after Vision is developed
Limited to those that directly correlate
with vision statement.
Action plan that will close “gap” between
vision and reality.
Strategies may involve major changes or
just fine-tune existing ones.
What is involved in your Ranch?
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Livestock Resources
Natural Resources
Financial
Human
Ag commodities/production
Perspectives
What is a Perspective?
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The capacity to view things in their true relation
or relative importance.
Go back to the Ranch Wheel and look at the
spokes of the wheel. These are your
perspectives.
View the business from each perspective.
Develop strategies.
Evaluate outcomes relative to each perspective.
Perspectives have to be Measured!
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Need to set goals under each perspective
The BSC forces goals to be linked to the
vision and actions to be linked to goals
Ask yourself 3 questions
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What are the most important measures of
performance?
How should these measures relate to one
another?
What measurements truly predict long-term
success?
What else to consider with your
perspectives?
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Links between goals of different perspectives
should be examined.
Leading (drivers) and Lagging (outcomes)
indicators should be included.
Needs to be measurable, relevant and easy to
measure.
3 to 8 goals per perspective. Easy indicator
of balance.
Leading or Lagging?
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Lagging Indicators have already happened.
 Measure past performance.
 Things you cannot change.
Leading Indicators are in the future.
 Future performance
 Drivers
Is it leading or lagging?
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Weaning Weight
Potential cattle buyer
inquiry
ROA
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Lagging
Leading
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Lagging
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Ranch Wheel
Lifestyle
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The 5 perspectives all build to this one.
Key indicators
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Stress
Sense of security
Healthy, happy and content.
RANCH LIFESTYLE
PERSPECTIVES WITH
STRATEGIC OBJECTIVES
1. Healthy, happy family
2. Sense of security
3. Low stress
GOAL
ACTUAL
Yes
Yes
Yes
Yes
No
No
Financial
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What terms are most encompassing?
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ROA
It measures how efficient the production
system is at taking invested dollars,
regardless of sources and turning them into
income.
Others?
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Breakeven
Free Cash Flow
Record Keeping
FINANCIAL
PERSPECTIVES WITH
STRATEGIC OBJECTIVES
GOAL
ACTUAL
1.
2.
3.
4.
5.
8%
$200,000
$0.75
2:1
$50,000
6%
$180,000
$0.69
1.7:1
$43,000
ROA
$ net income
Breakeven
Current ratio
Free cash flow
The Customer
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Who is your customer?
Are they satisfied with your product?
Do you have repeat customers?
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Does the same person buy your calves year
after year?
Backgrounder/Feeder
Packing plant (get data back)
CUSTOMER
PERSPECTIVES WITH
STRATEGIC OBJECTIVES
1. Feedback
2. Repeat customer
3. Customer inquiry
GOAL
ACTUAL
Yes
Yes
Yes
No
Yes
Yes
Ag Commodities/Production
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Need to focus on skills, competencies and
technology of the business and its ability
to meet the needs of the customer.
Use standardized terms
Have a benchmark as a starting point
Pounds weaned per cow exposed
Preg rate
Actual weaning weight
Record Keeping
AG COMMODITIES/PRODUCTION
PERSPECTIVES WITH STRATEGIC
OBJECTIVES
GOAL
ACTUAL
1. Lb weaned/cow exposed
2. Pregnancy rate
3. Replacement rate
4. Cow BCS at weaning
5. Days fed harvested feed
6. % of calves born in first 21 days
7. $ vet/cwt. weaned calf
8. $ vet/cow pair
9. Cattle ID
500
94%
15%
6
85
65
$0.02
$18
YES
520
91%
12%
5
98
55
$0.04
$23
NO
Natural Resources
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Why is it important?
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Impacts number of animals able to graze.
If conditions improving then you are matching
resources.
How does this impact other perspectives?
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Pounds of product produced
NATURAL RESOURCES
PERSPECTIVES WITH STRATEGIC
OBJECTIVES
GOAL
ACTUAL
1. Stocking rate = carrying capacity
2. Prescribed burn
3. Residual forage adequate
4. Noxious weeds treated
5. Precip. As % of normal
6. Range condition score
7. Photo points compared
8. Grouse count
Yes
Success
Yes
Yes
110
Improving
Improving
Increasing
Yes
Success
Yes
No
90
Steady
No change
Increasing
Learning and Growth
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Why is it important?
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Gives you base to grow from.
Knowledge is power.
Knowing new ways of producing and/or how
to generate more business
Knowledge impacts all the other perspectives.
What is available
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Extension sponsored programs.
Websites
Popular press
Other
LEARNING and GROWTH
PERSPECTIVES WITH
STRATEGIC OBJECTIVES
GOAL
ACTUAL
1. Attend Beef Cow Symposium
2. Attend Farm Management
Conference
3. Training of employees
4. Attend Extension workshops
Yes
No
Yes
Yes
Yes
Yes
No
No
Summary
The process to build a BSC, includes:
1) Establish the vision for the future of the business and
strategies for reaching that vision.
2) Identify “perspectives” critical to your business.
3) Identify measures for tracking progress and/or
success within each perspective (leading/lagging)
4) Create action plans to achieve goals.
5) Evaluate performance and determine if goals have
been met and if progress in reaching the vision has
been made.
Summary
“Think of the BSC as the dials and indicators in an
airplane cockpit. To navigate and fly the plane, pilots
need information on fuel, airspeed, altitude, bearing,
destination, and other indicators. Reliance on one
instrument can be fatal. Similarly, the complexity of
managing a business today requires that managers
be able to view performance in several areas at once.”
Drs. Robert Kaplan and David Norton
Ranch Wheel