Using the Balanced Score card as a Strategic Management System Based on the article “Using the Balanced Score card as a Strategic Management System” By: Robert S Kaplan & David P Norton Harvard Business Review, July-August 2007

The Balanced Score Card Customers Internal business processes Learning & Growth Financial performance GEN0190n.ppt

Implementing the Score card objectives, measures, targets & Initiatives To achieve our vision, how should we appear to our customers? To satisfy our shareholders and customers, what business processes must we excel at? To achieve our vision, how will we sustain our ability to change & improve? To succeed financially, how should we appear to our shareholders? GEN0190n.ppt

Achieving long term objectives through short term actions Often the linkage between short term financial measures and long term strategic objectives is weak Because of this weak linkage, strategy implementation often is ineffective Using the balanced score card, companies can strengthen the linkage between long term strategy and short term tactics GEN0190n.ppt

Four processes to link long term objectives with short term actions Translating the vision Communicating and linking Business planning Feedback and learning GEN0190n.ppt

Translating the vision Helps build a consensus around the company’s vision and strategy Helps arrive at an integrated set of objectives and measures that describe the long term drivers of success GEN0190n.ppt

Communicating the linkage Helps link strategy to departmental and individual objectives This marks a change in approach from evaluating departments by financial performance and tying individual incentives to short term financial goals GEN0190n.ppt

Business Planning Enables companies to integrate their business and financial plans Helps in aligning diverse initiatives with strategic goals GEN0190n.ppt

Feedback & Learning Builds capacity for strategic learning Short term results can be monitored closely Strategies can be modified to reflect real time learning GEN0190n.ppt

Possible implementation sequence Clarify the vision, build consensus Communicate to middle managers Develop business unit score cards Eliminate non strategic investments Launch corporate change programs Review business unit score cards Refine the vision after re-examining cross business issues Communicate the balanced score card to the entire company Establish individual performance objectives Update long range plan and budget Conduct monthly and quarterly reviews Conduct annual strategy review Link everyone’s performance to the balanced scorecard GEN0190n.ppt

Conclusion Balanced score card can be used to: - clarify and update strategy - communicate strategy throughout the company - align unit and individual goals with the strategy - link strategic objectives to long term targets & annual budgets - identify and align strategic initiatives - conduct periodic performance reviews to learn about and improve strategy GEN0190n.ppt