Description of how the balanced scorecard can be used for small businesses on the run, using one page business plan, by Warren Rutherford, Owner, The Executive Suite.

1. Balanced Scorecards
for the Busy Business
Person
Presented by
Warren J. Rutherford
The Executive Suite

2. What is a Balanced
Scorecard?
 A strategic planning & management system.
 Used to align business activities to -
 business vision and strategy,
 improve internal and external communication,
 monitor performance against goals.
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3. Why is it used?
 1978 NYU Stern School
of Business Study
(5,000 companies)
 95% correlation
between balance sheet Balance Sheet
and business value
Intangible
95%
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4. Why is it used?
 2005 NYU Stern School of
Business Study
 28% correlation between
balance sheet and business
value
 Intangibles – the 72% 28%
Balance Sheet
 Intellectual Property Intangible
 Strategy
 Brand
 Systems 72%
 Processes
 Access to Capital
 Off balance sheet items
 Customer reputation
 Executive Team
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5. Why is it used?
 Financial measures not
enough
 Need to measure value
from knowledge -
centric activities and
perspectives
*Balanced Scorecard Institute
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6. What does it measure?
Perspectives in each company concerning –
 Learning & Growth,
 Business Process,
 Customer, &
 Financial.
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7. Why is that important to
you?
 Only 5% of a workforce understands their
company’s strategy.
 Only 15% of senior management spends more
than 1 hour a month defining strategy and
aligning operations to it.
 Only 25% have their operations aligned to the
strategy.
 Only 40% align company from budget to
strategy.
David Norton, Balanced Scorecard Report, Vol. 3, No. 5 (Sep/Oct 2001)
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8. The Questions companies have
to ask themselves today are:
 What is it that makes us valuable and
profitable?
 How can we identify, quantify, and measure
the intangible assets so that we can increase
value and our performance?
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9. Learning & Growth
Perspective
 Employee training.
 Company cultural attitudes toward individual &
corporate self-improvement.
 Workforce alignment -
 Person/future fit (selecting for the long-term
contributions of a person to the business’ long-term
strategy).
 Formal processes and procedures and professional
standards created the best, long-term workforce
alignment
 Family-like community created the best, long-term
workforce alignment.
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10. Business Process Perspective
 Internal processes w/ metrics looking at -
 How well is the business running?
 Do products conform to customer requirements
(mission)?
 What are your major processes?
 Are they optimized – tasks, time, money?
 Who has participated in their review?
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11. Customer Perspective
 Customer focus.
 Customer satisfaction.
 Analyze by kinds of customers.
 Analyze the kinds of processes that we use
to provide our products & services to those
different customer groups.
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12. Financial Perspective
 Look at change from prior year & objective for
following year.
 Analyze significant indicators -
 Revenues,
 Profit,
 COGS,
 Gross Margin,
 Operating Expense,
 Inventory, &
 Return on Assets, etc.
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13. What do you put in the
Scorecard?
 Objectives,
 Measures,
 Targets, &
 Initiatives.
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14. What are some ways to
start?
 There are many ways to start, and there are
programs available to assist.
 Develop your vision for a multi-year period .
 Ensure your mission is in alignment with
customer needs.
 Develop strategies that complement your
vision and mission.
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15. What are some ways to
start?
 Develop objectives that seek annual
achievement of these strategies.
 Develop action plans that set and track
targets for accomplishment of your
initiatives.
 These can be developed by project, by
section, division, department, by company.
 Report and discuss monthly to reinforce
accountability.
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16. Example
 The following illustrate an approach by The
One Page® Business Plan to illustrate -
 Development of a Strategy,
 Objectives by the 4 perspectives, and
 Action plans for 1 quarter.
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23. Summary
 Establish benchmarks that are manageable.
 Manage the data.
 Use the data to improve collaboration,
communication, & accountability toward
vision, mission, and strategy.
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24. Thank you!
For more information -
Warren J. Rutherford
Owner
The Executive Suite
129 Airport Road
Hyannis, MA 02601
wjr@theexecutivesuite.com
www.theexecutivesuite.com
508-778-7700
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