The Balanced Scorecard

Metro-North Roundtable PMI Mass Bay Chapter

November 25, 2009A. John Morrison, PMP

Its Purpose, Application & Adaptation to PM

The VisionThe VisionBe the leading provider of oil-based products in the world.

Run the most efficient and safely operated oil production facilities in our industry.

Introduction• The Balance Scorecard (BSC)

– phrase coined in the early 1990s.

• Originated by Drs. Robert Kaplan and David Norton.

Translating Strategy into

Action

How BSC Companies Thrive in the New

Business Environment

Converting Intangible Assets into Tangible

Outcomes

Using the Balanced Scorecard to Create Corporate Synergies

Definition

The Balance Scorecard (BSC)

• Strategic planning and management system.

• Aligns business activities to the vision and strategy of the organization.

• Adds strategic, non-financial performance measures to traditional financial metrics to give executives a more 'balanced' view of organizational performance. 

Four Perspectives Balance Scorecard (BSC)

Financial

Resources

• Cash Flow• ROI• Savings Captured

• New Customers• Customer Activity• Market Share

• New Patents• Employee Growth / Retention• Degrees / Credential Holders

• Orders Processed• Error / Failure Rate• Process Speed

Customer

Stake Holder Intimacy

BSC

Internal Business Process

Learning & Growth

Innovation

Culture & Capabilities

BSC Implementation

• Translating– the vision into operational goals.

• Communicating– the vision and linking it to individual

performance. – strategy mapping

• Measuring– performance indexing (metrics, KPI’s).

• Feedback & Learning– reviewing and adjusting the strategy as

necessary.

Examples of Businesses

• Wang Computer– Hubris

• Polaroid– Lacking Innovation • IBM

• Raytheon

Very Tall Building Corp.

• Software Developer• Navigation Devices • Competitor of Garmin, Magellan

Tom Tom and others.

Reception Area Very Tall Building Corp.To

Elevators

Joanne

Mission Statement

• The Very Tall Building Company aims to be the most customer centric, innovative provider of GPS Navigational devices on the market.

• We aim to make it easy for consumers to know who we are and what we do.

• Our customer intimacy will be our competitive advantage.

• We will strive to capitalize on the creativity of our workforce to bring Wow inspiring products to market.

Very Tall Building Corp.

• Profits• Cash Flow• Savings• Revenue Growth

FINANCIAL• Cust. Relationship Mgm’t• Service Level• Customer Intimacy• Product Awareness

• Process Flow & Efficiency• Muda Reduction• Kaizen• Ease of Use

• Creativity• Learning Environment• Newly Discovered Wows'!• Inspiring

CUSTOMER

LEARNINGS PROCESS

Reception Area Very Tall Building Corp.

To Elevators

Reception Area Very Tall Building Corp.

To Elevators

Newly Opened Product Display Gallery

Very Tall Building Corp.

• Profits• Cash Flow• Savings• Revenue Growth

FINANCIAL• Cust. Relationship Mgm’t• Service Level• Customer Intimacy• Product Awareness

• Process Flow & Efficiency• Muda Reduction• Kaizen (customer input)• Ease of Use

• Creativity• Learning Environment• Newly Discovered Wows'!• Inspiring

CUSTOMER

LEARNINGS PROCESS

Mission Statement

• Revisited

Mission Statement

The Very Tall Building Company aims to be the most customer centric, innovative provider of GPS Navigational devices on the market.

• Grand Galley opening, and business analysts reports created a media buzz

• Interviews for WSJ, Business Week, Jim Gramer• Awesome product line demonstrated on Oprah.

Mission Statement

We will strive to capitalize on the creativity of our workforce to bring Wow inspiring products to market.

• Receptionist job has been transformed• Job sharing increases moral. • Educational channel for new associates• $ Bonus and recognition received

Mission Statement

Our customer intimacy will be our competitive advantage.

• Success of this gallery has spurred the opening of others.

• Being called the Apple Store of …• Competitors are now visiting gallery

Mission Statement

We aim to make it easy for consumers to know who we are and what we do.

• Reports of market share on up-tick.• Positive response from visitors, customers

and employees.• During new product launch, galleries

experiences over crowding (details at 5 on 5)

Results (1st year)

• Financial– Captured 3 major business accounts– 2/5 visitors purchased – TYD Revenues of $225,000

• Customer– Existing customers brought new ones– Obtained positive press reports in two prestigious

journals from two major investment analysts.

• Process– Customers love the convenience– Visitors no longer just wait– Very positive survey results

• Learning & Growth– Receptions role switches to Gallery Rep.– Greater product awareness – Gallery is play area as well as sales

Conclusion (lessons learned)

• The actions at the lowest level can and does influence decisions made at the highest level.

• Alignment of goals, objectives and tasks offer the greatest impact on performance.

• Strategy Mapping - activities and outcomes that feed the next level up

Results

Impact

Links

Conclusion (Take-a-ways)

• Understand where your project or department fits into the company’s Mission or Vision.

• If you can demonstrate that what you do contributes to the company mission – you’ve just created alignment and added value.

Thank you.John MorrisonMetro-North Roundtable PMI Mass Bay Chapter

The Balanced ScorecardNovember 25, 2009