Managerial Accounting
David Fender
What are you likely to see
earlier?
 Parts not fitting of a car
coming down production line
 Warranty claims
 Are often leading indicators of financial performance
(relevance is high)
 Are often more actionable
Bob Kaplan
Harvard Business School
Financial
Goals Measures
Financial Perspective:
How should we look to our shareholders?
Customer
Internal
Goals Measures
Goals Measures
Internal Business Perspective:
What must we excel at?
Customer Perspective:
How should we look to our customers?
Innovation
Goals Measures
Innovation & Learning Perspective:
How can we continue to improve and create value?
Performance
measures
Strategy
A balanced scorecard should have measures
that are linked together on a cause-and-effect basis.
If we improve
one performance
measure . . .
Then
Another desired
performance measure
will improve.
The balanced scorecard lays out concrete
actions to attain desired outcomes.
*Gates, “Aligning Strategic Performance Measures and Results”
Source: C. Ittner, 2003 AIMA Conference
Profit
Financial
Contribution per car
Number of cars sold
Customer
Customer satisfaction
with options
Internal
Business
Processes
Learning
and Growth
Number of
options available
Time to
install option
Employee skills in
installing options
Profit
Contribution per car
Number of cars sold
Customer satisfaction
with options
Results
Satisfaction
Increases
Strategies
Increase
Options
Increase
Skills
Number of
options available
Time to
install option
Employee skills in
installing options
Time
Decreases
Profit
Contribution per car
Results
Number of cars sold
Customer satisfaction
with options
Number of
options available
Time to
install option
Employee skills in
installing options
Cars sold
Increase
Satisfaction
Increases
Profit
Results
Contribution per car
Contribution
Increases
Number of cars sold
Customer satisfaction
with options
Number of
options available
Time to
install option
Employee skills in
installing options
Satisfaction
Increases
Time
Decreases
Results
Profit
If number
of cars sold
and contribution
per car increase,
profits
increase.
Profits
Increase
Contribution per car
Number of cars sold
Customer satisfaction
with options
Number of
options available
Time to
install option
Employee skills in
installing options
Contribution
Increases
Cars Sold
Increases
“Effective managerial accounting systems must
reflect the value-creating activities of
companies: in operations, in marketing and
sales, and in product and process
development…” (Kaplan, 1985)