Factors that influence the implementation of Balanced Scorecard.

1. Balanced Scorecard
Henry Hirschel
H.Hirschel@comcast.net
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Sunday, May 9, 2010

2. A framework of growth
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3. Practices to consider
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4. Continuous Improvement
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5. Continuous Improvement
Small improvements in processes and
products, with the objective of increasing
quality and reducing waste.
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6. Williams Edwards Deming
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7. Williams Edwards Deming
When people and organizations focus primarily on quality,
quality tends to increase and costs fall over time.
Results of work efforts
Quality =
Total costs
When people and organizations focus primarily on costs,
costs tend to rise and quality declines over time.
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8. More is better...
The more process improvement methods that are
incorporated into the organization the higher the
overall quality improvement trends (Sun, 1999).
– This supports the concept that companies that
implemented TQM achieved higher levels of
improvement than those that do not.
– The improvement is the result of an increase learning
effect as quality improvement methods are applied to
the organization.
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9. Start with life issues...
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10. Reactions...
• Process improvement recommendations
• What did you learn?
• What was the experience like?
• Is this a form of training?
• Was language a problem?
• Do you know of anyone that folds like this?
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11. From budget focus to strategy focus
Steady, Continuous Change Unpredictable, Discontinuous Change
Shareholders demand incremental
improvements
Financial capital is dominant Shareholders demand “best-in-class”
Innovation is steady performance
Uncertainty
Prices reflect costs Intellectual capital is dominant
Customers are loyal Innovation is rapid
Investors and regulators ignore Globalization is driving prices down
ethical standards Customers are fickle
Investors and regulators are demanding
higher ethical standards
1960 1970 1980 1990 2000 2010 2020 2030
Beyond Budgeting – Hope and Fraser (2003) 17
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12. Adaptive and decentralized
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13. Performance contract...
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14. Holistic...
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15. Holistic...
“Relating to or concerned with wholes or
with complete systems rather than with the
analysis of, treatment of, or dissection into
parts”
(Merriam-Webster Dictionary)
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16. What is holistic integration?
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17. WHAT DID WE LEARN?
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18. WHAT DID WE LEARN?
• Synchronicity of movement
• WOW the audience
• Feel passion during performance
• Connection to each individual
• Never disappointed
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19. Leadership through emotions
• Emotional quality of chief executive officer sets the level
of importance of TQM organizations (Wiele, Williams,
Brown, Dale, 2001)
– Higher the level of importance placed on implementation
the more likely companies were able to apply TQM
principles
– Executive team was more likely to support implementation
of TQM
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20. Tips from learning organizations…
When there is a genuine vision (as opposed to the all-too-familiar
‘vision statement’), people excel and learn, not because they are told
to, but because they want to.
The practice of shared vision involves the skills of unearthing shared
‘pictures of the future’ that foster genuine commitment and involvement
rather than compliance.
Visions spread because of a reinforcing process.
Increased clarity, enthusiasm and commitment rub off on others in the
organization. ‘As people talk, the vision grows clearer. As it gets
clearer, enthusiasm for its benefits grows’
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21. Welcome to transparency
North
South
West East
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22. Welcome to transparency
North
South
West East
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23. Welcome to transparency
Up
Down
North
South
West East
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24. Strategy-Focused Organization
1. Translate the strategy to operational terms
2. Align the organization to the strategy.
3. Make strategy everyone’s everyday job.
4. Make strategy a continual process.
5. Mobilize change through executive leadership.
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25. Steps to value creation
Mission Why We Exist
Values What’s Important to Us
Vision What We Want to Be
Strategy Our Game Plan
Translate the Strategy
Map Strategy
Measurement Measure and Focus
Targets and Initiatives What We Need to Do
Personal Objectives What I Need to Do
Strategy Outcomes
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26. On Communication
“The greatest problem with communication
is the illusion that it has been
accomplished.”
George Bernard Shaw
Just because a message has been sent, it does not
mean that it has been received
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27. What is a Balanced Scorecard
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28. What is a Balanced Scorecard
• Balanced Scorecard (BSC) is built upon an organization’s vision
and strategy that measures transitions through four key
perspectives: Financial, Customer, Internal Business Process,
Learning and Growth (Kaplan & Norton, 1992)
• BSC is a strategy-focused management methodology used to
manage organizational performance (Kristensen, Juhl, &
Eskildsen, 2003)
• BSC is structured to measure a company’s actions in building
capabilities to acquire the assets necessary for future growth
(Kaplan & Norton, 2006)
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29. Four Perspectives of Balanced Scorecard
Financial
Objectives Measures Targets Initiatives
“To succeed
financially,
how should we
appear to our
shareholders?”
Customer Internal Business Process
Objectives Measures Targets Initiatives Objectives Measures Targets Initiatives
“To achieve “To satisfy our
our vision, Vision and shareholders
how should we Strategy and customers,
appear to our what business
customers?” processes must
we excel at?”
Learning and Growth
“To achieve Objectives Measures Targets Initiatives
our vision,
how will
we sustain our
ability to
change and
improve?”
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30. Success Comes From Alignment
Strategy/Vision Executive Leadership
What business are we in? Behavior
How will we compete? Information
What’s our vision? Symbolic action
Key Success Factors
What specific tasks
have to get done to
implement the strategy?
Human Resources Culture
Do people have the What are the norms,
necessary competencies? Values, attitudes, and
Are they motivated? Behaviors needed?
Formal Organization
Structure? Controls?
Rewards? Careers?
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31. Cascading of measurement
Customer Objective
Financial Objective
Level “Increase customer
“Decrease cost of materials”
satisfaction”
Corporate Customer satisfaction rating Operating margin
Operating Division Customer retention Operating margin
Cascaded
Variable costs
VP of Operations On-time delivery
Period expenses
Schedule adherence Manufacturing overhead
Plant Manager Returns and rejects Variable costs
Line availability Scrap rate
Shift Supervisor First pass yield Labor per unit
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32. Cascading of measurement
Customer Objective
Financial Objective
Level “Increase customer
“Decrease cost of materials”
satisfaction”
Corporate Customer satisfaction rating Operating margin
Operating Division Customer retention Operating margin
Cascaded
Variable costs
VP of Operations On-time delivery
Period expenses
Schedule adherence Manufacturing overhead
Plant Manager Returns and rejects Variable costs
Line availability Scrap rate
Shift Supervisor First pass yield Labor per unit
24
Sunday, May 9, 2010

33. Cascading of measurement
Customer Objective
Financial Objective
Level “Increase customer
“Decrease cost of materials”
satisfaction”
Corporate Customer satisfaction rating Operating margin
Operating Division Customer retention Operating margin
Cascaded
Variable costs
VP of Operations On-time delivery
Period expenses
Schedule adherence Manufacturing overhead
Plant Manager Returns and rejects Variable costs
Line availability Scrap rate
Shift Supervisor First pass yield Labor per unit
24
Sunday, May 9, 2010

34. Cascading of measurement
Customer Objective
Financial Objective
Level “Increase customer
“Decrease cost of materials”
satisfaction”
Corporate Customer satisfaction rating Operating margin
Operating Division Customer retention Operating margin
Cascaded
Variable costs
VP of Operations On-time delivery
Period expenses
Schedule adherence Manufacturing overhead
Plant Manager Returns and rejects Variable costs
Line availability Scrap rate
Shift Supervisor First pass yield Labor per unit
24
Sunday, May 9, 2010

35. Cascading of measurement
Customer Objective
Financial Objective
Level “Increase customer
“Decrease cost of materials”
satisfaction”
Corporate Customer satisfaction rating Operating margin
Operating Division Customer retention Operating margin
Cascaded
Variable costs
VP of Operations On-time delivery
Period expenses
Schedule adherence Manufacturing overhead
Plant Manager Returns and rejects Variable costs
Line availability Scrap rate
Shift Supervisor First pass yield Labor per unit
24
Sunday, May 9, 2010

36. Cascading of measurement
Customer Objective
Financial Objective
Level “Increase customer
“Decrease cost of materials”
satisfaction”
Corporate Customer satisfaction rating Operating margin
Operating Division Customer retention Operating margin
Cascaded
Variable costs
VP of Operations On-time delivery
Period expenses
Schedule adherence Manufacturing overhead
Plant Manager Returns and rejects Variable costs
Line availability Scrap rate
Shift Supervisor First pass yield Labor per unit
24
Sunday, May 9, 2010

37. Cascading of measurement
Customer Objective
Financial Objective
Level “Increase customer
“Decrease cost of materials”
satisfaction”
Corporate Customer satisfaction rating Operating margin
Operating Division Customer retention Operating margin
Cascaded
Variable costs
VP of Operations On-time delivery
Period expenses
Schedule adherence Manufacturing overhead
Plant Manager Returns and rejects Variable costs
Line availability Scrap rate
Shift Supervisor First pass yield Labor per unit
24
Sunday, May 9, 2010

38. Balanced Scorecard Strategy Map (Kaplan & Norton, 2000)
Improve Shareholder Value
Financial Revenue Growth Strategy Productivity Strategy
Perspective
Build the Increase value Improve cost Improve use
franchise to customers structure of assets
Revenue from Customer Operating cost Asset utilization
new sources profitability per unit produced
Product Leadership
Customer Customer Intimacy
Perspective √ √
Operational Excellence
Customer Value
Proposition
√ √
Customer acquisition,
retention, and satisfaction
Internal Achieve operational Become a good
Process Increase customer
Build the franchise excellence through corporate citizen
Perspective value through customer
through innovations operations and through regulatory and
management processes
logistics processes environmental processes
Learning and
employee competencies technology corporate culture
Growth Perspective
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39. Information Technology – Strategy Map
Financial Change
Financial
P&L Labor G&A COGS
Consumer Internal Customer Business Partner
Customer Customer
Partners
Operations Franchise Support Center Vendors
Service
Non-Traditional
Internal Sales and Best In Build More
Best People
Process Marketing Class Stores
Learning
and Learning Knowledge Accountability
Growth Organization Management and Achievement
Technology Browser Universal
Business Continuity Reporting POS Security
Based Technology Messaging
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40. Engage in dialogue…
The discipline of team learning starts with ‘dialogue’, the
capacity of members of a team to suspend assumptions and
enter into a genuine ‘thinking together’.
To the Greeks dia-logos meant free-flowing meaning
through a group, allowing the group to discover insights not
attainable individually…. [It] also involves learning how to
recognize the patterns of interaction in teams that
undermine learning.
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41. Transparency of reporting
n
io
at
oc
Function L
Business Channel
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42. Transparency of reporting
n
io
at
oc
Function L
Business Channel
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43. Transparency of reporting
n
io
at
oc
Function L
Business Channel
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44. Transparency of reporting
n
io
at
oc
Function L
Business Channel
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45. Three success factors of Information Technology Management
Business Management
Vision and mission execution
Best practice
Process improvement
Solution evaluation
Manage expectations
Tools to enable business
Customer focus
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46. Three success factors of Information Technology Management
Business Management Technology Management
Vision and mission execution How best to use technology
Best practice Hardware/software/network
Process improvement Technical knowledge
Solution evaluation Manage expectations
Manage expectations Security
Tools to enable business
Customer focus
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47. Three success factors of Information Technology Management
Magic
Informal networks
Serendipity
Education
Humor
Business Management Technology Management
Vision and mission execution How best to use technology
Best practice Hardware/software/network
Process improvement Technical knowledge
Solution evaluation Manage expectations
Manage expectations Security
Tools to enable business
Customer focus
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48. CIO magazine, Dec 2004
“The more closely the IT organization (or other organizations)
participates in business process design, the harder it becomes to
distinguish its contributions. What is the impact of business
process and what is the impact of the tools that enable the
business process.”
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49. The Paradox of Innovation…
2003 Ralph Katz
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50. The Paradox of Innovation…
The dilemma:
Innovation and change require positive energy.
2003 Ralph Katz
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51. The Paradox of Innovation…
The dilemma:
Innovation and change require positive energy.
The paradox:
Creativity creates tension between the generation and
reduction of uncertainty.
2003 Ralph Katz
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52. The Paradox of Innovation…
The dilemma:
Innovation and change require positive energy.
The paradox:
Creativity creates tension between the generation and
reduction of uncertainty.
Organizations are naturally…
Motivated by reducing uncertainty.
2003 Ralph Katz
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53. Thank you...
Henry Hirschel
H.Hirschel@comcast.net
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Sunday, May 9, 2010