The Balanced Scorecard (BSC) is a strategic planning and management system that was created in 1992 by Robert Kaplan and David Norton of the Harvard Business School. The BSC helps clarify an organization's vision and strategy, and translates them into measurable objectives in four important perspectives: financial, customer, internal business processes, and learning and growth. It provides a framework for aligning business activities to the organization's strategic goals. The BSC also allows organizations to monitor performance against strategic goals through appropriate metrics and strategic initiatives. The execution of a BSC involves six stages: developing the strategy, planning the strategy, aligning the organization, planning operations, monitoring and learning, and testing and adapting.
3. Balanced Scorecard is..
Management system
• Clarifies mission & vision
• Translates mission & vision into
measurable and actionable
measures
• Helps provide feedback and
meaningful information
• Pioneered by Robert Kaplan
and David Norton of Harvard
Business School in 1992
6. Advantages of Having Balanced Scorecard
Strategic Alignment
Transparency
Manageable Performance
Clarity of Management Direction
7. Why the name Balanced Scorecard?
Signifies balance between
• Short and long-term objectives
• Financial and Non-Financial measures
• Lagging and Leading indicators
• Internal and External Perspectives
14. BSC Execution Stages
1. Develop the Strategy
2. Plan the Strategy
3. Align the Organization
4. Plan the Operations
5. Monitor (Execution) and Learn
6. Test and Adapt
15. 1. Develop the Strategy
1. Clarify mission, vision, values
• What business are we in and why?
2. Conduct strategic analysis of
key issues
• What are the key issues?
3. Formulate strategy to compete
• How can we best compete?
16. 2. Plan the Strategy
1. Create strategy maps
• How do we define our strategy?
2. Select and measures and targets
• How do we measure our plan / objectives?
3. Choose strategic initiatives
• What action programs does our strategy need?
4. Establish STRATEX
• How do we fund our initiatives?
5. Create theme project teams
• Who will lead the execution of the strategy?
19. 3. Align the Organization
1. Align business units
• How do we ensure that all units are on
the same page?
2. Align support units
• How do we align support units with
business units and corporate
strategies?
3. Align employees
• How do we motivate employees to
help us execute the strategy?
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22. 4. Plan the Operations
1. Improve key processes
• Which process improvements are
critical for executing the strategy?
2. Develop resource capacity plan
• How do we link strategy with operating
plans, sales forecast and budgets?
23. 5. Monitor and Learn
1. Hold operational review meetings
• Are our operations under control?
2. Hold operational review meetings
• Are we executing our strategy
well?
24.
25. 6. Test and Adapt
1. Hold a review meeting for the strategy
testing and adapting
• Is our strategy working?
Update the plans and scorecard for the
next cycle
26. References:
• "Balanced Scorecard", www.lassib.org
• "Performance Measurement with Balanced Scorecard",
Stefano Biazzo and Patricia Gareno, Springer - Verlag Berlin
Heidelberg 2012
• "Execution Premium", Robert S. Kaplan and David P.
Norton, Harvard Business School Publishing, 2008