From Vision to Action Plan The Balanced Scorecard Approach

What is a Balanced Scorecard? “A Balanced Scorecard is a framework that focuses on shareholder, customer, internal and learning requirements of a business in order to create a system of linked objectives, measures, targets and initiatives which collectively describe the strategy of an organization and how that strategy can be achieved.”

What is a BSC? BSC is not a dash-board of financial and non-financial indicators. new/re-hashed measurement system. BSC is a tool to convert a strategy into action.

FINANCIAL PERSPECTIVE Balanced Scorecard - Concept FINANCIAL PERSPECTIVE To succeed financially, how should we appear to our shareholders (Corporate Management)? CUSTOMER PERSPECTIVE (EXT.) BUSINESS PROCESS PERSPECTIVE (INT.) To achieve our mission, how should we appear to our customers? To satisfy our shareholders & customers, what business processes must we excel at? RENEWAL, LEARNING, GROWTH PERSPECTIVE To achieve our mission, how will we sustain our ability to change & improve?

Balanced Scorecard - Concept Vision & Strategy

BSC & Strategy? -Hope is not a strategy A strategy is a set of hypotheses about cause and effect. Any system such as BSC should tell the story of the BU’s strategy. It should make explicit the sequence of hypotheses about the cause-and-effect relationships between various action the BU proposes to take. Every element selected for a BSC should be an element in a chain of cause & effect relationship that communicates the meaning of the BU’s strategy. -Hope is not a strategy

Financial ROCE Customer Loyalty Customer On-time Delivery Internal/ Business Process Process Quality Process Cycle Time Learning and Growth Employee Skills

Illustrative Strategy Map - Software Services Company Become a leading software solutions company by 2003 Financial Reduce resource costs and improve margins F5 F2 Improve onsite project profitability F3 F4 Develop new customer / market revenues Develop offshore revenues Customer C3 C1 SoftCo understands my specific needs and provides appropriate services C2 SoftCo provides solutions globally Softco delivers on time & provides high quality services Internal I5 I1 I2 Expand product/ services portfolio & develop a roadmap I4 I3 Develop lead generation capability Optimize business processes Implement resource utilization processes Mange customer relationship Learning & Growth L1 L2 Clearly define Organization Structure Roles & responsibilities Improve manpower quality by training, redundancy and recruitment L3 Implement performance management system

Financial Customer Internal Learning & Growth

BSC Organisation Vision Mission 4 Perspectives Themes Objectives Initiatives Initiatives are the lifeline of any organization, as they are born out of clearly spelt out strategic needs. We can not take any initiative in isolation to organizational or Business Goals as the very purpose is to enable DESIRED PERFORMANCE LEVELS of an organization through them. Here we have made an attempt to visit what it takes to make every initiative a success and how VisionCompass fits the bill in this space. The five areas that we will touch upon are – What are Key Initiatives and their linkage to Business Goals What mandates that organizations take up Initiatives Look at how VisionCompass fits the requirements bill Finally we will look at a live demo of VisionCompass, built on a real life Case Study Measures Feedback & Learning

Echo Engineering – Linking Measurements from Four Perspectives Accounts Receivable Return on Capital employed FINANCIAL Operating expenses Customer Satisfaction CUSTOMER INTERNAL BUSINESS PROCESS rework Employees’ Suggestions LEARNING AND GROWTH Employees’ Morale Echo Engineering – Linking Measurements from Four Perspectives

BSC Components Objective Measure Target Initiatives Statement of what strategy must achieve and what is critical to its success How success in achieving the strategy will be measured and tracked The level of performance or rate of improvement needed Key action programs required to achieve objectives Objective Measure Target Initiatives Broaden revenue mix Revenue mix 10% Product X 40% Product Y 50% Product Z Financial Increase customer satisfaction Customer retention 95% Frequent Buyers Club Initiatives are the lifeline of any organization, as they are born out of clearly spelt out strategic needs. We can not take any initiative in isolation to organizational or Business Goals as the very purpose is to enable DESIRED PERFORMANCE LEVELS of an organization through them. Here we have made an attempt to visit what it takes to make every initiative a success and how VisionCompass fits the bill in this space. The five areas that we will touch upon are – What are Key Initiatives and their linkage to Business Goals What mandates that organizations take up Initiatives Look at how VisionCompass fits the requirements bill Finally we will look at a live demo of VisionCompass, built on a real life Case Study Customer Customer Mailing Segmentation Cross-sell our products % Revenue from new products 2001 15% 2002 50% Internal Develop strategic skills Skill coverage 90% Learning & Growth Product Training

Business Execution – 1 – Identify Initiatives – 2 – Screen Initiatives Development Projects, Activities, etc. Quality Projects, Activities, etc. – 1 – Identify Initiatives Corporate Projects, Activities, etc. Marketing Projects, Activities, etc. Financial Perspective Initiatives are the lifeline of any organization, as they are born out of clearly spelt out strategic needs. We can not take any initiative in isolation to organizational or Business Goals as the very purpose is to enable DESIRED PERFORMANCE LEVELS of an organization through them. Here we have made an attempt to visit what it takes to make every initiative a success and how VisionCompass fits the bill in this space. The five areas that we will touch upon are – What are Key Initiatives and their linkage to Business Goals What mandates that organizations take up Initiatives Look at how VisionCompass fits the requirements bill Finally we will look at a live demo of VisionCompass, built on a real life Case Study Customer Perspective – 2 – Screen Initiatives Internal Perspective Organization Learning Output: Short List of Strategically Aligned Initiatives

A Corporate Scorecard defines overall strategic priorities and context Strategic Alignment Step 1. A Corporate Scorecard defines overall strategic priorities and context Step 2. Each SBU develops a long-range plan and BSC consistent with the corporate strategic agenda Corporate / Group SBU A SBU B SBU C Support Functions Step 3. Each Support Unit develops a scorecard to support the internal customers Initiatives are the lifeline of any organization, as they are born out of clearly spelt out strategic needs. We can not take any initiative in isolation to organizational or Business Goals as the very purpose is to enable DESIRED PERFORMANCE LEVELS of an organization through them. Here we have made an attempt to visit what it takes to make every initiative a success and how VisionCompass fits the bill in this space. The five areas that we will touch upon are – What are Key Initiatives and their linkage to Business Goals What mandates that organizations take up Initiatives Look at how VisionCompass fits the requirements bill Finally we will look at a live demo of VisionCompass, built on a real life Case Study Step 4. Departments, teams and individuals develop scorecards consistent with their organization’s strategy Teams and Individuals

Digital Scorecard MC Sales/ Delivery HR CIO Quality Technology Excellence Introduction of new Solutions/Services World Class Products TECHNOLOGY Best in Class Organisation Business & Service /Product delivery Excellence Quality Leadership PROCESSES Top 3 preferred employer Learning Organisation Digital way PEOPLE Trusted Partner Reliable & Cost effective Solutions/ services Customer acquisition/expansion CUSTOMER Lead the Industry rate of growth No 1 in profit in Industry Global Thrust BUSINESS MISSION DIMENSION MC Sales/ Delivery HR CIO Quality

TECHNOLOGY BUSINESS PROCESSES PEOPLE CUSTOMER OVERALL MEASURES/GOALS -% of business through new services - patent applications filed Tech up gradation training -% increase in certifications -% increase in Bid/Win ratio Incubate & develop new services based on emerging technologies Develop Solutions based on Standards/Tools/Frameworks/Methodologies Leadership in Technology Forums/Consortiums Strategic Alliances with leading Platform Vendors Product Road Maps for Product success Technology Excellence Introduction of new Solutions/Services World Class Products TECHNOLOGY Overall Revenue PAT Offshore Gross Margins Products & TSCC Minimum- Verticles to be developed Greater offshore delivery/annuity business Ensure success of TSCC & Products Offset pricing pressures through increased productivity Develop Verticles Lead the Industry rate of growth No 1 in profit in Industry Global Thrust BUSINESS New all around quality drive through `Service Excellence’ External Accreditations Automation/tools for enhanced effectiveness Year of the Employee Capability Development/Certifications Employee creativity/innovation & productivity Values as a way of life Increased non parent business Penetrate existing accounts Re-energise Office of the Customer Digital API – 100% of the identified units CMM Level 5/PCMM Process Improvement Plan Implementation Institutionalized use of tools and technologies Best in Class Organisation Business & Service /Product delivery Excellence Quality Leadership PROCESSES Digitell Scores Retention Rate Utilisation Focus on employee creativity/innovation Top 3 preferred employer Learning Organisation Digital way PEOPLE Customer Satisfaction Scores Existing Customer Growth Non-HP Trusted Partner Reliable & Cost effective Solutions/ services Customer acquisition/expansion CUSTOMER OVERALL MEASURES/GOALS STRATEGIC OBJECTIVES ( 2002 – 03 ) MISSION DIMENSION

OVERALL MEASURES/GOALS HR…. e HR – PMS, Leave, ESOP, T&D TECHNOLOGY PCMM Level 5 Inter-linkages with other Quality initiatives Reporting Matrix PROCESSES Employee Satisfaction Digital way Initiatives Training & Development PEOPLE HR Services – Responsiveness – SLAs Communication Matrix Employee welfare initiatives CUSTOMER Non Performers – Identification & Management Utilisation Retention Referral Program Scalability Internal training & learning initiatives BUSINESS OVERALL MEASURES/GOALS DIMENSION

Execution Calendar TARGET DATES RESPONSIBILITY ACTIVITIES All Managers 20th June Goal setting – entire organisation Task Force Jan/Feb Consolidating feedback and seeking inputs Board/MC April/May Final Evaluation/Feedback MC/SMT/Task Force 30th June 30th September 31st December Review for MC/SMT Performance Reviews SMT 1st June SMT Scorecards May/June 15th May 25th April TARGET DATES MC/Task Force Close & Initiate Next Year process MC Team MC Scorecard - Individually Blue Print Finalisation RESPONSIBILITY ACTIVITIES

Different Types of Measures (Targets) Outcome Measures or Lag Indicators Performance Drivers or Lead indicators

Balanced Scorecard at National Insurance