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2002 ClaritasAsia Pte Ltd2002 ClaritasAsia Pte Ltd..

AIM Presentation - March 2007

A fast practical physical approach to the basicmechanics of Implementing a Balanced

Scorecard (BSC) on a Personal Computer System.

Phil Best BSc(Elec) CertEng(Elec)

Director Applied PC Systems P/L ABN: 64.056.607.713Strategy Map Software System Architect

t: +61.7.3871.0011

e: [email protected]

w: www.strategymap.com.au

www.StrategyMap.com.au

www.StrategyMap.com.auThe worlds most popular Strategy Map Balanced

Scorecard Software System

Mentors:

Paul Arveson, BSC InstituteNigel Penny, Claritas Asia


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Welcome!As a Guest Speaker my goal is to leave you with a simple methodology that you can

immediately apply.

We describe BSC basic concepts within a framework relevant to Computer Screen

Tables & Relational Data Structure.

W

hilst it is essential that you understandStrategic Planning Concepts, it is also

necessary that you be able to practically

implement an automated solution using

some sort of software framework and

avoid the PTCLP (Office Dust) problem.

Ok, I have heard all the theory, but how

can I actually physically start? - NOW!

PTCLP = Post Training Course Latency ProblemStrategic Framework -> Data (automation) Framework


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Presentation Agenda

The BSC Spectrum

Balanced Scorecard (BSC) & Evolution

BSC Performance Grid or Table a Golf Game?

Where is the Strategy in a BSC Table?

Where is the How andWhy?

How can we be Right on the Money?

HTDI Converging Starting Points

Tools you can use.

Types of Software Systems.

Platforms and Development Systems.

Mission > StrategyMap > BSC > Implementation

Strategic Plan

Static Components Strategic Components

Scorecard Components

Cross Referencing

Strategy Map WYSIWYG


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The BSC Spectrum & Package

Harvard BS, Kaplan & Norton, BSCol - USA

Cranfield CBP Performance Prism - UK

Various Other Systems

KRA or KPI Based

Project Based

Almost anything imaginable is possible

Every implementation is different

Software Scene & Flow Charts

Software Variability and Setups

Our new Version 3 has > 150 setup options

Harvard or Cranfield

Strategic

BSC/HR

Collaboration

Budget


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The Strategy Map is the most strategic part

and now drives the more HR based BSC

MeasurementSystem

StrategyImplementation

Total StrategyManagement

Articles in Harvard BusinessReview:

The Balanced Scorecard Measures that Drive PerformanceJanuary - February 1992

Putting the Balanced Scorecard to

Work September - October 1993

Using the Balanced Scorecard asStrategic Management SystemJanuary - February 1996

1996 2000 2004

1992 1996 2000 2004

Books are pre-Internet and mainly for Reference Only


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A BSC is a HR (QA style)Collaboration Tool where

associates can work

together to establish their

quality and makeimprovements to their work.

The BSC & Initiatives Grid (not a starting point)

Implemented using a

SuccessiveApproximation

refinement process

where you improve the

Quality of your

Scorecard Quality.

Obj Kra Meas Score Wt

Init Date Status Money

Note

Use Cell Merging to display grid

One-to-Many relationship.


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BSC Grid Objectives and Initiatives

Everything is written down and refined and checked

Can be Cross Referenced, targeted and collaborated

A Measurement & Status Device

Why, How and When stored in Initiatives

HR rather than Strategic

The Work Specification

Each Objective can have many Initiatives

Engage the employees through Change Management

Line Managers do the lower levels -> Their New Budget

An Aligned strategic means to obtain funding

(for everyone)


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Strategic Planning:

The tool we use to establish our direction

SM Goal: Define and Align Objectives. Refine until correct.Define BSC Col1. (Sits nice)

SM Vision: Have every employee carry it in their heads

(engage & think strategically).

SM Objective: Look concise but sit perfectly. Not too heavy

not too light. A Recursive Development Process.

SM Structure: Inter-related Objectives categorized by View-

ports (Perspectives)

SM Mission: Provide the structural focus to answer the

questions: Where are we going, Why do we come to work?

Why an I doing this? How will our careers improve? Will weexpand or downsize?

Project Map or extra Project Perspective

Child Maps with inherited Objectives

Arrows pointing upwards if possible with optional goalsrow.

StrategyMap

Needs

Design

Strategies


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Objectives

Fast groundturnaround

Statement ofwhat strategymust achieve

and whats

critical to itssuccess

Target

30 Minutes 90%

The level ofperformance or

rate of

improvementneeded

Cycle timeoptimization

Key actionprogramsrequired to

achieveobjectives

InitiativeMeasurement

On Ground Time On-Time Departure

How success inachieving the

strategy will bemeasured and

tracked

Strategic Theme:Operating Efficiency

ProfitabilityFinancial

Learning

Morecustomers

Ground crewalignment

Lowestprices

Fewer planes

Customer

Internal


Strategy Map: Diagram of the

cause-and-effect relationshipsbetween strategic objectives

FlightIs on time

Balanced Scorecard terminology

South-West Airlines

Non KRA example (an early SM/BSC)

Possible Grid Conflict now with automation


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% Ground crewtrained

% Ground crewstockholders

Objectives Measurement

Market Value

Seat Revenue

Plane Lease Cost

FAA On TimeArrival Rating

Customer Ranking(Market Survey)

On Ground Time On-Time Departure

Strategic Theme:Operating Efficiency

Initiative

Cycle timeoptimization

program

ESOP

Ground crewtraining

Qualitymanagement

Customerloyalty

program

Target

30% CAGR

20% CAGR

5% CAGR

#1

#1

30 Minutes 90%

yr. 1 70%yr. 3 90%yr. 5 100%

ProfitabilityFinancial

Learning

MoreCustomers

Ground CrewAlignment

LowestPrices

Fewer Planes

Customer

Internal

Fast GroundTurnaround

FlightIs on Time

Profitability

More Customers

Fewer planes

Flight is on -time Lowest prices


Ground crewalignment

BSC Needs to be aligned (driven by) the

Strategy MapHarvard K&N Southwest Airlines Example

Stylised SM->BSC no clear responsibility or one-to-many structure


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Profitability Growth Shareholder

Value

Organisation Vision

Price Service Quality

Market Innovation Continuous Learning Intellectual Assets

Strategy is described usingfour perspectives

Cause and effect is a keyelement

Measures are developed tomonitor performance

If we succeed, howwill we look to ourshareholders?

To achieve our vision,how must we look toour customers?

To satisfy ourcustomers, whatmanagement processesmust we excel at?

To achieve ourvision, how must ourorganisation learnand improve?

Cycle Time Productivity Cost

Financial Perspective

Customer Perspective

Internal Perspective

Organization Learning

Perspectives as view-ports or windowsBalanced Scorecard provides the framework to translate strategy into

operational terms.

Commit this Framework to your memory!


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With Forward Planning, New Strategies kick-in to take us to thenext level of growth

..

Needs Collaboration & Alignment: Vision, Persps, Objectives, Inits. & BudgetsNeeds Collaboration & Alignment: Vision, Persps, Objectives, Inits. & Budgets

T1T1 T2 T2S1S1

S2S2

Plan for T2 before reaching the top of T1Plan for T2 before reaching the top of T1 Especially in IT and Share TradingEspecially in IT and Share Trading


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Successful Balanced Scorecards start with a StrategyMap Example Mobil (US Marketing & Refining)

Growth Theme

Improve quality of revenue by understanding customer needs anddifferentiating ourselves accordingly.

Productivity Theme

Maximize utilization of existing assets and integrate thebusiness to reduce total delivered cost.

FinancialPerspective

Return on Capital

Increased from 6% to 16%

Competitive Position(profitability)

From last (1993)to first (95, 96, 97, 98)

Volume GrowthExceeds industry by 2-2.5% annually

Reduce Cash ExpensesDown by 20%

Improve Cash FlowFrom -$500 M/Yr to +$700 M/Yr

CustomerPerspective

InternalPerspective

Customer Satisfaction

Continuous improvement for 3consecutive years

Speedpass Active

Increasing at rate of 1Mper year

Dealer Quality Perfect Orders

Continuousimprovement for 4consecutive years

Learning &Growth

Perspective

Quality Capacity Utilization Safety Lost work incidentsdown from 150 to 30

per year

Environmental

Number of incidentsreduced by 63%


Annual value of lostyield reduced from

$175m to $50m

Product Innovation Customer Management

Operational Excellence Good Neighbor

Motivated & PreparedWorkforce


Strategic Awareness

Annual employee survey shows awareness of strategy

increased from 20% to 80%

Source:Source:The Balanced ScorecardThe Balanced ScorecardD. Norton & R. KaplanD. Norton & R. Kaplan


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Back at the BSC Coal-Face Implementation

Assign SM Objective to an employee

Break down each (broad) Objective with related

measurable concepts in one or more columns called

KRA, KPI, CPI, Target, Focus, etc.

How to Measure it and Score it?

Repeat the planning and building process until correct.

Correctness = Alignment = Efficiency = Collaborative

Cross Referencing.

Every Org BSC is different and changes regularly.

New BSC every year for Planning & Budgeting

Comparison between Planned and Actual Income and

Expenses

1.Static Done!2. Strategic Done!

3. Scorecard Components

with SM Alignment


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Choice of Objective Grid ColumnsWhere does the actual strategy live?

KPIKPI Brand ImageBrand Image KPIKPI Value for moneyValue for money

Both these companies make cars but its the strategy that

differentiates


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The SM >> BSC Full Data Structure

Static Components Vision Mission Goals

Perspectives (4 or 5 is common) possible Multiple Goals

Initiatives with Dates,

Gauges, Budgets

Objectives KRAs

Measures & Scores

Monthly Outcomes

Planned Vs Actual

Income Vs Expense

Does not have to be overly complex. Eventually involves a seriesof Tiered One-to-Many relationships

Make itsit justright


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How to do itSM/BSC is not a Tertiary Education Concept (not Rocket Science).It is practical & hands-on and requires your extensive company structural knowledge.

It is a successive approximation process using the industry skills that you already have.The CEO flies Solo with managers as flight attendants.

1. Train CEO and Upper Management.2. Run strategic retreat for managers. Discard current roles. Combine their

industry and company knowledge. Use Strategic Facilitator (Quality >>Outcome).3. Define Static Components: Vision, Mission, Market, SWOT, Values,

Policies, etc.4. Strategic Components: Persps. & Objectives5. Alignment with (KISS) Objectives in Strategy Map6. Build Alignment & Accountability. Define & assign Employee KRAs/KPIs

to Objectives

7. Engage and Train Employees in Your Vision/SM/BSC Framework andhow they can help.

8. Focus on Change Management if needed.9. Train and engage Managers & Employees to complete the picture and

prepare budgets.10. Monitor & Continue to improve the SM&BSC.

The CEO

Leads fromthe front.


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Scorecard Benefits for Your Organisation?

Clarify the vision

Gain consensus and ownership

Align the organisation

Integrate strategic planning

Drive resource allocation

Improve management effectiveness

The journey is not easy or short

Source:The Strategy Focused Organization, D. Norton & R. Kaplan


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Tools you can use

AIM Training,Facilitators to guide you, Case

Studies.

StrategyMap Balanced

ScorecardSoftware BSC SystemsSM front End,Adaptable,

Cross ReferencingStrategy Map WYSIWYG

Avoid the Post-Training-Course Latency Period (The OfficeDust) by using an office automation and collaborative

software product.


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Types of software systems

Word tables with cell merging

Excel with formulas

Old Tech Windows Forms based BSC Products

DedicatedWindows Forms based BSC Products

DedicatedWindows Forms based SM/BSC products

More complex systems that link to Outlook Tasks

Web Browser Based Systems (Insecure or Expensive) Lower usability, sometimes

better availability.

The Strategic Planning system is not an accounting system. (Some finance data maybe duplicated)

It has different users and data entry permissions. It operates in a different time-zone.


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Thankyou

Questions Please

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