1. Balance Scorecard Eng. Murhaf AshiCascading to Details 10 March , 2010

2. Strategic point of view Do not repeat the tactics which have gained you one victory, but let your methods be regulated by theinfinite variety of circumstances Sun Tzu c. 490 BC, Chinese military strategist Eng. Murhaf Ashi 3. Balance ScorecardCompany currentsituationBSCTarget StrategyEng. Murhaf Ashi 4. AgendaIntroduction to BSC Measure Performance BSC history Stake Holder analysis S.W.O.T Analysis BSC four perspective Key Performance Indicators (KPI) Initiatives Matrix BSC strategy map examples References Eng. Murhaf Ashi 5. Dose it work By 2004, the balanced scorecard has been at least partially implemented in about 57% of global corporations, according to a survey by Bain. This site contains some examples of companies and government organizations that have reported their use of the balanced scorecard. We have prepared a database of over 130 of these organizations. For details please see our examples of balanced scorecard usage. Eng. Murhaf Ashi 6. Success Stories AMEDD Finds Direction in Strategic PlanningThe Army Surgeon General and Commander of the US Army MedicalCommand champion the use of the balanced scorecard as "the principal toolby which they improve operational and fiscal effectiveness and better meetthe needs of patients and stakeholders. Award for ExcellenceThe Institute honors Mecklenburg County, NC with an Award for Excellencefor successfully transforming the county government and positioning it fortough times. Scorecard Driving Strategy at Veolia Water North AmericaWith a new CEO and ambitious revenue goals, Veolia NA first successfullyimplemented a balanced scorecard and then integrated the scorecarddeeper into its organization using an e-learning toolEng. Murhaf Ashi 7. AgendaIntroduction to BSC Measure Performance BSC history Stake Holder analysis S.W.O.T Analysis BSC four perspective Key Performance Indicators (KPI) Initiatives Matrix BSC strategy map examples References Eng. Murhaf Ashi 8. Why We Should Measure Performance ? Performance measurement improves communications internallyamong employees, as well as externally between the organization andas customers and stakeholders.The emphasis on measuring and improving performance (i.e.,"results- oriented management") has created a new climate, affectingall government agencies, and most private sector and nonprofitinstitutions as well. Eng. Murhaf Ashi 9. Good Performance Measures Provide a way to see if our strategy is working Focus employees' attention on what matters most to success Allow measurement of accomplishments, not just of the work that is performed Provide a common language for communication Are explicitly defined in terms of owner, unit of measure, collection frequency, data quality, expected value(targets), and thresholds Are valid, to ensure measurement of the right things Are verifiable, to ensure data collection accuracyEng. Murhaf Ashi 10. AgendaIntroduction to BSC Measure Performance BSC history Stake Holder analysis S.W.O.T Analysis BSC four perspective Key Performance Indicators (KPI) Initiatives Matrix BSC strategy map examples References Eng. Murhaf Ashi 11. What is the balanced scorecard? The balanced scorecard is a strategic planning and management system that is widely applicable to organizations regardless of size or type of business. The system, extensively used in business and industry, government, and nonprofit organizations worldwide, provides a method of aligning business activities to the vision and strategy of the organization, improving internal and external communications, and monitoring organization performance against strategic goals Eng. Murhaf Ashi 12. BSC historyIt was originated by Robert Kaplan and David Norton of Harvard University inabout 1990, but the roots of the balanced scorecard are deep, and include thepioneering work of General Electric on performance measurement reporting in the1950s and the work of French process engineers in the early part of the 20thcentury in France. David NortonRobert KaplanEng. Murhaf Ashi 13. Basic Concepts Balanced Scorecard views the organization from 4 distinct perspectives: Learning and Growth Perspective What do we excel at? Business Process Perspective How do we continue to grow and create value? Customer Perspective How do our customers see us? Financial Perspective How do we achieve the lowest cost?Eng. Murhaf Ashi 14. Basic ConceptsBalanced Scorecard views the organization from 4 distinct perspectives:Learning and Growth Perspective What do we excel at?Business Process Perspective How do we continue to grow and create value?Customer Perspective How do our customers see us?Financial Perspective How do we achieve the lowest cost?Eng. Murhaf Ashi 15. AgendaIntroduction to BSC Measure Performance BSC history Stake Holder analysis S.W.O.T Analysis BSC four perspective Key Performance Indicators (KPI) Initiatives Matrix BSC strategy map examples References Eng. Murhaf Ashi 16. Stake Holder analysisKeep SatisfiedManage Closely This tool should beHigh GM- Peter applied at the early Mngr- H.Q stages of the BSC to CEO- John identified all Mngr- Vector .S stakeholder who will benefit from the BSCVP- David. A strategy.Power Identifying the nature Monitor MinimumKeep Informed of each stakeholder Effort Blocker, Neutral andpress contractor Supporter will help to understand their demand and to findCoworker- Government sector what the new strategylow could promises themlow InterestHigh 17. AgendaIntroduction to BSC Measure Performance BSC history Stake Holder analysis S.W.O.T Analysis BSC four perspective Key Performance Indicators (KPI) Initiatives Matrix BSC strategy map examples References Eng. Murhaf Ashi 18. S.W.O.T Analysis SWOT analysis is a tool for auditing an organization and its environment. It is the first stage of planning Strengths Weaknesses SWOTstandsforstrengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors. Opportunities and threats are external factors. OpportunitiesThreats 19. AgendaIntroduction to BSC Measure Performance BSC history Stake Holder analysis S.W.O.T Analysis BSC four perspective Key Performance Indicators (KPI) Initiatives Matrix BSC strategy map examples References Eng. Murhaf Ashi 20. BSC four perspectiveProduct qualityCustomer & quantity satisfaction Branch and leafs strength Process Employees Quality of SoilSkills and education 21. BSC four perspectiveCustomer Perspective Business Process Perspective Learning and Growth PerspectiveFinancial Perspective 22. Customer PerspectiveCustomer focus, orientation, and satisfaction are keycomponentsCustomer will find other suppliers if they are not satisfied ortheir requirements are not being met Poor customer satisfaction is a leading indicator of futurefinancial decline. Even if the current financial picture is good Developing metrics in this area requires that customerprofiles be done as well as the processes that provide theproducts and services to them 23. Business Process Perspective This refers to internal business processes.Metrics are used in this perspective to determine how well theorganizations businesses are running.Determine whether the businesses products and services conformto customer requirements (the Mission).Metrics must be carefully designed by those who know thebusiness processes best.Typically there are 2 types of business processes relative to BSC: 1) Mission Oriented Processes that are special functions of major lines ofbusiness. Typically this requires specialized metrics. 2) Support Processes that are the day-to-day processes that support thebusiness and organization. Typically they can be measured and benchmarkedwith generic metrics. 24. Learning and Growth Perspective Employee training.Corporate culture attitudes on individual and corporate self-improvement.Knowledge worker organization with people as the repository ofknowledge.Continuous learning mode of operation driven by rapid technologyadvancements.Learning is more than training (for example, it includes mentors andtutors, ease of communication, etc.).Utilization of technology tools, high technology work systems (forexample, the intranet). 25. Financial PerspectiveBased on financial data that is timely and accurate fundingdataImplementation of a corporate financial database is keyCentralization and processing, accessibility, and automation offinancial data is keySpecial attention must be paid to any possible skewing ofthe Financial PerspectiveRisk Assessment and Cost/Benefit Analysis should be includedin thisperspective 26. Two type of structures (Depend on organization nature)Profitable organizationNon profitable organizationStakeholder MissionFinancial Perspective Customer PerspectiveCustomer Perspective Business Process Perspective Business Process PerspectiveLearning and Growth Perspective Learning and Growth PerspectiveFinancial PerspectiveEng. Murhaf Ashi 27. BSC objective exampleOperate in the black with 5% margin by increasing Financial Perspective revenues Customer PerspectiveIncrease utilization of servicesBusiness Process PerspectiveProvide high quality services Learning and Growth PerspectiveMotivate, recognize and retain staffEng. Murhaf Ashi 28. Cause & Effect relationship Increase theannualFinancial Perspectiveprofit Increaseutilizationof services Customer Perspective Provide high quality Business Process Perspective servicesIncreaseIncrease employers employers computerMarketingLearning and Growth Perspectiveskillsskills 29. AgendaIntroduction to BSC Measure Performance BSC history Stake Holder analysis S.W.O.T Analysis BSC four perspective Key Performance Indicators (KPI) Initiatives Matrix BSC strategy map examples References Eng. Murhaf Ashi 30. Key Performance Indicators (KPI)Key performance indicators (KPI) are quantifiable measures ofprogress toward an organizations goals.For example, the timely collection of receivables is a KPI forthe goal of maintaining healthy cash flow, and value addedper factory payroll hour is a KPI for the goal of maximizingfactory productivity.Key performance indicators can be financial or non-financial.But they must be quantifiablemeasurableaccurately andconsistently over time.Each objective of the BSC map has a number of KPIs tomeasure the accomplishment of the objective.Eng. Murhaf Ashi 31. Types of KPIs 1234By what is Forward/Backward By Formatmeasured MeasureBy Strategic/Operational NumberInputLagStrategic Measures (KPIs) Ratio ProcessLeadappearing in a BSCPercentageOutputOperational Measuresnot appearing in a BSCRanking OutcomeRatingIndex Eng. Murhaf Ashi 32. AgendaIntroduction to BSC Measure Performance BSC history Stake Holder analysis S.W.O.T Analysis BSC four perspective Key Performance Indicators (KPI) Initiatives Matrix BSC strategy map examples References Eng. Murhaf Ashi 33. Initiatives MatrixThe Initiatives Matrix include all the objectives of the balancescorecard strategy map and all the projects that support eachobjective.The next slide shows an example of the Initiatives Matrix Eng. Murhaf Ashi 34. Tourism Centre F1:Use resources effectively LG2: Align employee to strategy IP1:Foster Cultural Development IP2: Build Effective InfrastructureF2: Maximize return of investments C2: Attain a High Quality of Life for AllLG4: Make effective use of technology C1: Become a Capital of Islamic CultureLG3: Foster innovative and ethical cultureIP5: Advocate Jeddah Vision and StrategyIP3:Offer high quality of integrated services IP4 Plan strategically and build future capacityIP6: Ensure Effective Governance and PartnershipC3: Achieve and Maintain Sustainable Development LG1: Recruit and retain talented and motivated people F3:Ensure diversified and sustained sources of income Initiatives Matrixwith 4without projectsprojects ObjectiveObjectiveC4: Make Jeddah a Dynamic & Resilient International Commercial & Affordable Housing Markets Programme3Area-specific traffic reductionschemes 3 Associated Hajj Institutions located inJeddah1 12 2 3 13 3 3 Bahrah Industrial City 2 1 1 1 -1 -3City Broadband Network 3 11 City Densification City Energy Efficiency21 1 City leisure and entertainment facilities 3 Example of Initiatives Matrix City Produce MarketsCity Public Transport System Project doesn't supportCity wide integrated parkingobjectiveCity Wide Open Space Provision 1 City-wide Street System Upgrade / Public Realm Enhancement 1Communication Strategy / Ongoing3 Public Relations3 3 2 3Comprehensive Planning Policy Framework 1 3 2 2 2Comprehensive Waste Management Programme 1 Corniche Projects 12 11 1 2 11 11 2 2 Creation of a strategic planning team to build capacity 22 222 3 2 12Designation of Protected AreasEastern Hills Reserve 1 1 1Education & Skills Advancement 3 12 3 12 1 Environmental Performance targets for E-government initative33 3 1 public bodies, businesses and the 1Establishment of a Jeddah Environmental Authority 1 2Establishment of an UrbanObservatory ? 1Ground water management1Historic Core 1 1 22 1Jeddah Central Station 3 1 12 2Jeddah Cultural Events/Festivals 12 3 35. AgendaIntroduction to BSC Measure Performance BSC history Stake Holder analysis S.W.O.T Analysis BSC four perspective Key Performance Indicators (KPI) Initiatives Matrix BSC strategy map examples References Eng. Murhaf Ashi 36. BSC strategy map examples Examples of BSC strategy map of global organization BSC STRATEGY MAP EXAMPLES 37. Eng. Murhaf Ashi 38. AgendaIntroduction to BSC Measure Performance BSC history Stake Holder analysis S.W.O.T Analysis BSC four perspective Key Performance Indicators (KPI) Initiatives Matrix BSC strategy map examples References Eng. Murhaf Ashi 39. ReferencesDr. Mohammed Mustafa Mahmoud workshop & material Epstein, Marc, and Jean-Franois Manzoni. "Implementing Corporate Strategy: From Tableaux de Bord to Balanced Scorecards." European Management Journal , April 1998, pp. 190-203. "Harvard Business Review Balanced Scorecard Report." Harvard Business Review, 2002 to present (bimonthly). Kaplan, Robert S., and David P. Norton. Alignment: Using the Balanced Scorecard to Create Corporate Synergies. Harvard Business School Press, 2006. Kaplan, Robert S., and David P. Norton. "The Balanced Scorecard: Measures That Drive Performance." Harvard Business Review, July 2005, pp. 71-79. Kaplan, Robert S., and David P. Norton. The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment. Harvard Business School Press, 2000. Kaplan, Robert S., and David P. Norton. Strategy Maps: Converting Intangible Assets into Tangible Outcomes. Harvard Business School Press, 2004. Niven, Paul R. Balanced Scorecard Diagnostics: Maintaining Maximum Performance. John Wiley & Sons, 2005. Niven, Paul R. Balanced Scorecard Step-by-Step: Maximizing Performance and Maintaining Results, 2d ed. John Wiley & Sons, 2006 2005 Oak Ridge Associated Universities RL Information Consulting LLC http://www.balancedscorecard.org http://www.bain.com NAPAL excellence in business management , http://www.napl.org www.gate2quality.com www.kellen.net purestonepartners.com/tag/strategy-management/