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Balanced Score CardCompilation and Analysis by:Manoj Joshi, Ph.D (Innovation), Chartered Er. (Mech), MBA, PGDFM, M.I.E (Mech), MIMA, Spl CAD/CAE

Professor- Strategy, Entrepreneurship & InnovationEmail: mjoshi@lko.amity.edu / manoj.joshi.m@gmail.com

Editorial Board1. International Journal of Entrepreneurship & Innovation, IP Publishing2. Foundations and Trends in Entrepreneurship, Now Publishing3. Business Strategy & Environment, Interscience Willey4. Journal of Family Business Management, Emerald5. Journal of Small Business Management, Blackwell6. World Review of Entrepreneurship Management and Sustainability Development

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What is Balanced Scorecard?

Balanced Scorecard is a: Strategic planning and management system used to align business activities to the Vision Strategy

Of the organization by monitoring performance against strategic goals.

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Why use a Balance Scorecard?

Improve organizational performance by measuring what matters.

Increase focus on strategy and results.

Align organization strategy with workers on a day to day basis.

Focus on the drivers key to future performance.

Improve communication of the organization’s vision and strategy.

Prioritize projects / initiatives.

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4 Original Business Perspectives

The Balanced Scorecard model suggests that we view the organization from 4 perspectives.

Then develop metrics, collect data and analyze it relative to each of these perspectives.

Financial

Internal Business Process

Learning andGrowth

Customer Vision and Strategy

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4 Business Perspective Questions?

Financial: What must we do to create sustainable economic value?

Internal Business Process: To satisfy our stakeholders, what must be our levels of productivity, efficiency and quality?

Learning and Growth: How does our employee performance management system, including feedback to employees, support high performance?

Customer: What do our customers require from us and how are we doing according to those requirements?

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Balanced Scorecard Measurements

Perspective Generic Measurements

Financial Return of Capital Employed, Economic Value added, Sales growth, Cash flow

Customer Customer Satisfaction, retention, acquisition, profitability, market share

Internal Business Process

Innovation, Operations, Post sales service

Learning and Growth

People learning, training, skills , workshops, morale

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Key Implementation: Success Factors

Obtaining executive sponsorship and commitment.

Involving broad base of leaders, managers and employees in scorecard development.

Choose the right scorecard champion.

Viewing the scorecard as a long term journey rather than a short

term project.

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Managing Strategy: Four Processes

Communi-cating

and linking

Business Planning

Feedback and

Learning

Translating the

Vision

BalancedScorecard

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Time Frame: Strategic Management System

Num. Time Frame (Months)

Strategy Building

1. 0-3 Clarify the Vision: generic vision into strategy2. 4-5 Communication to middle managers3. 6-9 Develop business unit scorecards: strategy into

scorecards4. 6-7 Eliminate nonstrategic investments and Launch

corporate change programs5. 9-11 Review business unit Scorecards: (CEO role

comes into play)6. 12 Refine the vision7. 12- 14 Communicate the balance scorecard and

establish individual performance objectives8. 15-17 Update long term plans: goals are established

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9. 18- ongoing

Conduct Monthly and quarterly reviews: Focus more heavily on strategic issue begins

10. 25-26 Conduct annual strategy review

11. 25-26 Link everyone’s performance to the balanced scorecard

Note: Steps 8, 9 10 and 11 are performed on a regular schedule.

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Scorecard Potential Pitfalls and Criticisms

Lack of well defined strategy

Too much focus on the lagging measures: Loss in leading measures

Use of generic methods

Self serving managers

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Balanced scorecard benefits Recap:

Helps align key performance measures with strategy at all levels of an organization

Communication and understanding of business goals

Best practice methodologies: cascade through the entire organization

Mission into strategic plans into long term targets