1. 1
Dr.L.Prakash Sai
#1 REASON WHY LEADERS FAIL?
70% of strategic failures are due to poor
execution of leadership.....
It’s rarely for lack of
smarts or vision.
Source: Charan, R. and Colvin, G. “Why CEOs
Fail”, Fortune, June 21, 1999.

2. 2
“Today the difference between a company and its
competitor is the ability to execute.
If your competitors are executing better than you
are, they’re beating you in the here and now, and the
financial markets won’t wait to see if your elaborate
strategy plays out.
So leaders who can’t execute don’t get free runs….
Execution is the great unaddressed issue in the
business world today.”
Execution Drives Results
Know your people and your business
Insist on realism
Set clear goals and priorities
Follow through
Reward the doers
Expand people’s capabilities
Know yourself
The
Leader’s
Seven
Essential
Behaviors
“Leaders get the behaviors they exhibit and tolerate.”
- Larry Bossidy and Ram Charan - Execution

3. 3
There are generally accepted tools to manage finances,
customers, processes, and people. But what about strategy?
The Balanced Scorecard is the vehicle that fills the
Strategy Management Gap
Financial Management Tools
EVA
Balance Sheets
Income Statements
Shareholder Value Analysis
Customer Management Tools
Customer Satisfaction Measurement
Customer Relationship Management
Segmentation Analysis
One-to-One Marketing
Process Management Tools
Six Sigma
Supply Chain Integration
Cycle Time Reduction
TQM
People Management Tools
Core Competencies
Knowledge Management
Pay for Performance
HRIS
Strategy Management Tools
?
Strategy Execution Challenge

4. 4
Why Do Organizations Struggle So Hard With Strategy?
1 in 10 organizations
execute their strategies
successfully
72% of CEOs believe that
executing their chosen
strategy is more difficult
than developing a good
strategy
Fortune Magazine, 1998
Malcolm Baldrige CEO Survey, 2002
Strategy Development or Strategy Execution?
Organizations Need Both
Strategic
Success
At Risk
Doomed From
The Start
Missed
Opportunity
StrategyFormulation
Flawed Sound
FlawedSound
Strategic success requires going beyond successful strategy
formulation to successful strategy execution
Strategy Execution

5. 5
MISSION
Why We Exist
VALUES
What’s Important To Us
VISION
What We Want To Be
STRATEGY MAP
Translate The Strategy
BALANCED SCORECARD
Measure and Focus
TARGETS & INITIATIVES
What We Need To Do
PERSONAL OBJECTIVES
What I Need To Do
STRATEGIC OUTCOMES
Satisfied
Shareholders
Delighted
Customers
Efficient & Effective
Processes
Motivated &
Prepared Workforce
STRATEGY
Our Game Plan
THE FRAMEWORK

6. 6
What is the Balanced Scorecard
(BSC)?
 The balanced scorecard is a management system (not only a
measurement system) that enables organizations to clarify their vision
and strategy and translate them into action.
 It provides feedback around both the internal business processes and
external outcomes in order to continuously improve strategic
performance and results.
 When fully deployed, the balanced scorecard transforms strategic
planning from an academic exercise into the nerve center of an
enterprise.

7. 7
FINANCIAL PERSPECTIVE
"TO SATISFY OUR SHAREHOLDERS,
WHAT FINANCIAL OBJECTIVES MUST
WE ACCOMPLISH?”
"TO SATISFY OUR CUSTOMERS, AND
SHAREHOLDERS, IN WHICH INTERNAL
BUSINESS PROCESSES MUST WE
EXCEL?”
INTERNAL PERSPECTIVE
"TO ACHIEVE OUR FINANCIAL
OBJECTIVES, WHAT CUSTOMER
NEEDS MUST WE SERVE?”
CUSTOMER PERSPECTIVE
Balanced Scorecard – Strategic Alignment
Measurement gives
clarity to vague concepts
Strategy can be described
as a series of cause effect linkages
LEARNING PERSPECTIVE
"TO ACHIEVE OUR GOALS, HOW
MUST OUR ORGANIZATION
LEARN AND INNOVATE?”

8. 8
LAG MEASURES (Outcome)
Purpose
Focus on the performance results at
the end of a time period or activity
Examples
“year-end-budget expense”
“client satisfaction”
“cases per caseworker”
Strengths
Usually objective and easily captured
Issues
Outcome measures reflect success of
past, not current, activities and
decisions
LEAD MEASURES (Driver)
Purpose
Measure intermediate processes and
activities
Examples
“hours spent with clients”
“$ spent on automation”.
Strengths
More predictive in nature
Allows organisations to adjust
behaviors for performance
Issues
Based on hypotheses of strategic
“cause and effect”
Often difficult to collect supporting data
Strategic Measures
Balanced Scorecard – The Idea
Financial Perspective
GOALS MEASURES
Customer Perspective
GOALS MEASURES
Learning & Growth Perspective
GOALS MEASURES
Internal
Process Perspective
GOALS MEASURES
The Balanced Scorecard Links Performance
Measures
How Do We Look to
Shareholders?
How Do
Customers See
Us?
Can We Continue to
Improve and Create
Value?
What Must We
Excel At?
Harvard Business Review January-February 1992
Accounts
Receivable
Operating
Expense
Return on
Capital Employed
Customer
Satisfaction
Rework
Employees’
Suggestions
Employees’
Morale (+)
(+)
Financial
Customer
Internal
Business
Process
Learning
and
Growth
Harvard Business Review January-February 1996
How One Company Linked Measures
from the Four Perspectives
(-)
(-)
(+)
(+)
(-)

9. 9
Learning & Growth
Business Processes
Customer
Financial
“Strategy is a set of hypotheses”
Cause & Effect Relationships
ROCE
Customer Loyalty
On Time Delivery
Process Quality Process Cycle Time
Employee Skills
Strategic Theme:
Operating Efficiency
Profitability
Financial
Learning
More
customers
Ground crew
alignment
Lowest
prices
Fewer planes
Flight
Is on time
Customer
Internal
Fast ground
turnaround
What will drive operating efficiency?”
• More customers on fewer planes
How will we do that?
• Attract targeted customer segments who
value price and on time arrivals
What must the internal focus be?
• Fast turnaround
Will our people do that?
• Educate and compensate ground crew
regarding how they contribute to the firm’s
success
• Employee stockholder program
The BSC Should Tell the Story of the Strategy

10. 10
Objectives
• Fast ground
turnaround
Statement of
what
strategy
must
achieve and
what’s
critical to its
success
Target
• 30 Minutes
• 90%
The level of
performance
or rate of
improvement
needed
Strategic Theme:
Operating Efficiency
Profitability
Financial
Learning
More
customers
Ground crew
alignment
Lowest
prices
Fewer planes
Customer
Internal
Fast ground
turnaround
Diagram of the cause and effect
relationships between strategic
objectives (Strategy Map)
Flight
Is on time
• Cycle time
optimization
Key action
programs
required to
achieve
objectives
InitiativeMeasurement
• On Ground Time
• On-Time
Departure
How success
in achieving
the strategy
will be
measured and
tracked
Some Common Vocabulary
Human capital
 Identify the strategic job families
 Develop the competency profile
 Assess the human capital readiness
 Formulate a plan for improving the human capital
Information capital
 Transaction processing applications: This involves the
day to day, repetitive tasks.
 Analytic applications: This involves statistical analysis
used to understand and improve
 Transformation applications: This involves change in the
nature of business
Organization capital
 Culture: This describes the perception across the
company of its goals, mission, and policies.
 Leadership and accountability
 Alignment: Linking rewards to performance
 Teamwork: A system of global knowledge management
Learning&Growth
Perspective

11. 11
Strategy Map (TATA Steel)
CoC: Code of Conduct (TATA)
CVM: Customer Value Mgmt.
RVM: Revenue Value Mgmt.

12. 12
Top-Down “Bridging
Process” To Share
the Strategy & Align
the Workforce
Bottom-Up Process
to Internalize &
Execute the Strategy
CORP
SBU
The Strategy Focused Workforce
Strategic Education
& Communication
Personal Scorecards
Personal Development
Incentives & Rewards
Principles of the Strategy Focused Organization:
MAKE STRATEGY EVERYONE’S JOB
The Challenge: Moving Strategy from the Top to the Bottom

13. 13
BSC-Based Performance Management
Top Ten Balanced Scorecard Implementation Issues
 Premature links to management processes
 Lack of cascading
 Terminology
 No new measures
 Consistent management practices
 Timing
 No objectives for the Balanced Scorecard program
 No Strategy
 Lack of Balanced Scorecard education and training
 No executive sponsorship

14. 14
STRATEGY
Formulate
NavigateCommunicate
Execute
Summary:
The Balanced Scorecard Provides a Framework to Manage
Organizations That Execute Their Strategies Rapidly and
Reliably
Reengineer
Processes
Comprehensive
Communication to
Create Awareness
Rationalize & Align
the Organization
Translate the Strategy
Align Goals &
Incentives
Align
Resources &
Initiatives
Create
Knowledge
Networks
Strategic
Feedback
Encourages
Learning
Executive Teams
Manage Strategic
Themes
Testing
Hypotheses,
Adapting &
Learning
“The Strategy Focused Organization”
Principles of a
Strategy Focused Organization
1. Translate the Strategy to
Operational Terms
2. Link & Align the
Organization Around It’s
Strategy
3. Make Strategy Everyone’s
Job
4. Make Strategy a Continuous
Process
5. Executive Team Leadership
to Mobilize Strategic
Change
‘90 ‘92 ‘94 ‘96 ‘98 ‘00 ‘02 ‘04 ‘06
The Balanced Scorecard has gone through three distinct
cycles of evolution.
HBS
Books
HBR
Articles
A Measurement
System
(The Balanced
Scorecard)
A Performance
Management System
(Strategy-Focused
Organizations)
A Core Competency
(Strategy Execution)