Robert Kaplan And David Norton Balanced Scorecard Pdf

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A short look at the development of the balanced scorecard - "one of the most significant management ideas of the past 75 years". The balanced scorecard is a concept that has become deeply embedded in organisations of all kinds around the world - and yet, remarkably, it has only existed for fifteen years. By , the editors of the Harvard Business Review were naming the balanced scorecard as one of the most significant management ideas of the past 75 years, and a survey has found that around half the Fortune companies in the USA and 40 percent of those in Europe use balanced scorecards.

The Balanced Scorecard BSC translates an organization's mission and strategy into a comprehensive set of performance measures that provides the framework for a strategic measurement and management system. The scorecard measures organizational performance across four linked perspectives: financial, customer, internal business process, and learning and growth. See Exhibit 1 on page Kaplan, R.

Putting the Balanced Scorecard to Work

By contrast, the measures most companies track are bottom-up: deriving from local activities or ad hoc processes, they are often irrelevant to the overall strategy. It is forward-looking. It addresses current and future success. Traditional financial measures describe how the company performed during the last reporting period—without indicating how managers can improve performance during the next.

It integrates external and internal measures. This helps managers see where they have made trade-offs between performance measures in the past, and helps ensure that future success on one measure does not come at the expense of another.

It helps you focus. Many companies track more measures than they can possibly use. Fifteen to twenty distinct measures are usually enough, each measure custom-designed for the unit to which it applies. Linking measurements to strategy is the heart of a successful scorecard development process. The three key questions to ask here:. The balanced scorecard also brings an organizational focus to the variety of local change programs under way in a company at any given time. As the benchmark against which all new projects are evaluated, the scorecard functions as more than just a measurement system.

In the words of FMC Corp. But they rarely think of measurement as an essential part of their strategy. For example, executives may introduce new strategies and innovative operating processes intended to achieve breakthrough performance, then continue to use the same short-term financial indicators they have used for decades, measures like return-on-investment, sales growth, and operating income.

These managers fail not only to introduce new measures to monitor new goals and processes but also to question whether or not their old measures are relevant to the new initiatives. Effective measurement, however, must be an integral part of the management process. Much more than a measurement exercise, the balanced scorecard is a management system that can motivate breakthrough improvements in such critical areas as product, process, customer, and market development.

The scorecard presents managers with four different perspectives from which to choose measures. It complements traditional financial indicators with measures of performance for customers, internal processes, and innovation and improvement activities. These measures differ from those traditionally used by companies in a few important ways:. Clearly, many companies already have myriad operational and physical measures for local activities. But these local measures are bottom-up and derived from ad hoc processes.

And, by requiring managers to select a limited number of critical indicators within each of the four perspectives, the scorecard helps focus this strategic vision. Moreover, unlike conventional metrics, the information from the four perspectives provides balance between external measures like operating income and internal measures like new product development.

This balanced set of measures both reveals the trade-offs that managers have already made among performance measures and encourages them to achieve their goals in the future without making trade-offs among key success factors. Finally, many companies that are now attempting to implement local improvement programs such as process reengineering, total quality, and employee empowerment lack a sense of integration.

The balanced scorecard is now used as the language, the benchmark against which all new projects and businesses are evaluated. The balanced scorecard is not a template that can be applied to businesses in general or even industry-wide.

Different market situations, product strategies, and competitive environments require different scorecards. Business units devise customized scorecards to fit their mission, strategy, technology, and culture. A few examples will illustrate how the scorecard uniquely combines management and measurement in different companies.

Each organization is unique and so follows its own path for building a balanced scorecard. At Apple and AMD, for instance, a senior finance or business development executive, intimately familiar with the strategic thinking of the top management group, constructed the initial scorecard without extensive deliberations.

Companies like Rockwater can follow a systematic development plan to create the balanced scorecard and encourage commitment to the scorecard among senior and mid-level managers. What follows is a typical project profile:. The organization must first define the business unit for which a top-level scorecard is appropriate.

In general, a scorecard is appropriate for a business unit that has its own customers, distribution channels, production facilities, and financial performance measures. During the workshop, the group debates the proposed mission and strategy statements until a consensus is reached. Videotapes of interviews with shareholder and customer representatives can be shown to provide an external perspective to the deliberations.

After defining the key success factors, the group formulates a preliminary balanced scorecard containing operational measures for the strategic objectives. Frequently, the group proposes far more than four or five measures for each perspective. At this time, narrowing the choices is not critical, though straw votes can be taken to see whether or not some of the proposed measures are viewed as low priority by the group.

The facilitator reviews, consolidates, and documents the output from the executive workshop and interviews each senior executive about the tentative balanced scorecard. The facilitator also seeks opinions about issues involved in implementing the scorecard. The participants, working in groups, comment on the proposed measures, link the various change programs under way to the measures, and start to develop an implementation plan. At the end of the workshop, participants are asked to formulate stretch objectives for each of the proposed measures, including targeted rates of improvement.

The senior executive team meets to come to a final consensus on the vision, objectives, and measurements developed in the first two workshops; to develop stretch targets for each measure on the scorecard; and to identify preliminary action programs to achieve the targets. The team must agree on an implementation program, including communicating the scorecard to employees, integrating the scorecard into a management philosophy, and developing an information system to support the scorecard.

A newly formed team develops an implementation plan for the scorecard, including linking the measures to databases and information systems, communicating the balanced scorecard throughout the organization, and encouraging and facilitating the development of second-level metrics for decentralized units.

As a result of this process, for instance, an entirely new executive information system that links top-level business unit metrics down through shop floor and site-specific operational measures could be developed. Each quarter or month, a blue book of information on the balanced scorecard measures is prepared for both top management review and discussion with managers of decentralized divisions and departments.

The balanced scorecard metrics are revisited annually as part of the strategic planning, goal setting, and resource allocation processes. But competition in the subsea contracting business had become keener in the s, and many smaller companies left the industry. In addition, the focus of competition had shifted. Several leading oil companies wanted to develop long-term partnerships with their suppliers rather than choose suppliers based on low-price competition. If, however, the strategic objectives were to create value for the company, they had to be translated into tangible goals and actions.

The financial perspective included three measures of importance to the shareholder. Rockwater management added two financial measures. Project profitability provided focus on the project as the basic unit for planning and control, and sales backlog helped reduce uncertainty of performance. Rockwater wanted to recognize the distinction between its two types of customers: Tier I customers, oil companies that wanted a high value-added relationship, and Tier II customers, those that chose suppliers solely on the basis of price.

In addition, Tier I customers were asked to supply monthly satisfaction and performance ratings. Rockwater executives felt that implementing these ratings gave them a direct tie to their customers and a level of market feedback unsurpassed in most industries.

Finally, market share by key accounts provided objective evidence that improvements in customer satisfaction were being translated into tangible benefits.

To develop measures of internal processes, Rockwater executives defined the life cycle of a project from launch when a customer need was recognized to completion when the customer need had been satisfied. Formerly, the company stressed performance for each functional department. The new focus emphasized measures that integrated key business processes. The development of a comprehensive and timely index of project performance effectiveness was viewed as a key core competency for the company.

Rockwater felt that safety was also a major competitive factor. Internal studies had revealed that the indirect costs from an accident could be 5 to 50 times the direct costs. The scorecard included a safety index, derived from a comprehensive safety measurement system, that could identify and classify all undesired events with the potential for harm to people, property, or process.

The Rockwater team deliberated about the choice of metric for the identification stage. It recognized that hours spent with key prospects discussing new work was an input or process measure rather than an output measure.

The management team wanted a metric that would clearly communicate to all members of the organization the importance of building relationships with and satisfying customers.

The team believed that spending quality time with key customers was a prerequisite for influencing results. This input measure was deliberately chosen to educate employees about the importance of working closely to identify and satisfy customer needs.

The innovation and learning objectives are intended to drive improvement in financial, customer, and internal process performance. At Rockwater, such improvements came from product and service innovation that would create new sources of revenue and market expansion, as well as from continuous improvement in internal work processes.

The first objective was measured by percent revenue from new services and the second objective by a continuous improvement index that represented the rate of improvement of several key operational measures, such as safety and rework. A staff attitude survey and a metric for the number of employee suggestions measured whether or not such a climate was being created. Finally, revenue per employee measured the outcomes of employee commitment and training programs.

It developed a consensus on the necessity of creating partnerships with key customers, the importance of order-of-magnitude reductions in safety-related incidents, and the need for improved management at every phase of multiyear projects.

Chambers sees the scorecard as an invaluable tool to help his company ultimately achieve its mission: to be number one in the industry. Apple Computer developed a balanced scorecard to focus senior management on a strategy that would expand discussions beyond gross margin, return on equity, and market share.

For the financial perspective, Apple emphasized shareholder value; for the customer perspective, market share and customer satisfaction; for the internal process perspective, core competencies; and, finally, for the innovation and improvement perspective, employee attitudes.

Historically, Apple had been a technology- and product-focused company that competed by designing better computers. Customer satisfaction metrics are just being introduced to orient employees toward becoming a customer-driven company. However, because it recognized that its customer base was not homogeneous, Apple felt that it had to go beyond J.

Once a technology- and product-focused company, Apple has introduced measures that shift the emphasis toward customers. Company executives wanted employees to be highly focused on a few key competencies: for example, user-friendly interfaces, powerful software architectures, and effective distribution systems.

However, senior executives recognized that measuring performance along these competency dimensions could be difficult. As a result, the company is currently experimenting with obtaining quantitative measures of these hard-to-measure competencies. Apple conducts a comprehensive employee survey in each of its organizations every two years; surveys of randomly selected employees are performed more frequently.

The results of the survey are displayed in terms of both the actual level of employee responses and the overall trend of responses. Achieving a critical threshold of market share was important to senior management not only for the obvious sales growth benefits but also to attract and retain software developers to Apple platforms. Shareholder value is included as a performance indicator, even though this measure is a result—not a driver—of performance.

The measure is included to offset the previous emphasis on gross margin and sales growth, measures that ignored the investments required today to generate growth for tomorrow. In contrast, the shareholder value metric quantifies the impact of proposed investments for business creation and development.

alignment: using the balanced scorecard to create corporate synergies pdf

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By contrast, the measures most companies track are bottom-up: deriving from local activities or ad hoc processes, they are often irrelevant to the overall strategy. It is forward-looking. It addresses current and future success. Traditional financial measures describe how the company performed during the last reporting period—without indicating how managers can improve performance during the next. It integrates external and internal measures. This helps managers see where they have made trade-offs between performance measures in the past, and helps ensure that future success on one measure does not come at the expense of another. It helps you focus.

alignment: using the balanced scorecard to create corporate synergies pdf

Simply select your manager software from the list below and click on download. Download it once and read it on your Kindle device, PC, phones or tablets. Alignment Using The Balanced Scorecard To Create Corporate Synergies This is likewise one of the factors by obtaining the soft documents of this alignment using the balanced scorecard to create corporate synergies by online.

What you measure is what you get. The traditional financial performance measures worked well […]. Think of a balanced scorecard as the instrument panel in the cockpit of an airplane.

strategic learning & the balanced scorecard

 Стратмор был вне. Он заставил Джаббу вмонтировать в ТРАНСТЕКСТ переключатель системы Сквозь строй, чтобы отключить фильтры в случае, если такое повторится. - Господи Иисусе.

 У них там прямо-таки дискотека! - пролопотал Бринкерхофф. Фонтейн смотрел в окно, пытаясь понять, что происходит. За несколько лет работы ТРАНСТЕКСТА ничего подобного не случалось.

 Как прикажете это понимать. На лице Стратмора тут же появилось виноватое выражение. Он улыбнулся, стараясь ее успокоить. - С Дэвидом все в порядке.

strategic learning & the balanced scorecard

Росио покачала головой: - Не могу.