Leadership Perspectives Balanced Score Card

Balanced Score Card The first stage in business transformation is to build an architecture for the change program, complete with objectives, measures and a management process including executive accountabilities for the various initiatives launched. The Balanced Scorecard is the conceptual structure Leadership Perspectives uses to build this architecture for change.

Prioritize initiatives The Balanced Scorecard Drives Rapid Strategy Implementation 1 Translate the Strategy Into Operational Terms 2 5 Align the Organization to the Strategy Make Strategy a Continual Process Executive Team Alignment Strategy Map Balanced Scorecards SCORECARD STRATEGY Corporate Role Business Unit Synergies Support Unit Synergies Governance Process Strategic Management Analytics & Information Systems 3 4 Prioritize initiatives and Align Resources Make Strategy Everyone’s Job Strategic initiatives are clearly identified Investments are rationalized by the strategy Link Budgets and Strategy Strategic Awareness Personal Scorecard Balanced Paychecks / Link to Compensation

The Balanced Scorecard Provides a Framework to Translate the Vision and Strategy Into Operational Terms The Vision Measurement is the language that gives clarity to vague concepts. Measurement is used to communicate, not to control. Building the scorecard develops consensus and teamwork throughout the organization. Financial Perspective "If we succeed, how will we look to our shareholders?” Profit- ability Growth Share- holder Value Customer Perspective "To achieve my vision, how must we look to my customers?” Cycle Time Quality Service Price/Cost Internal Perspective "To satisfy my customers, what business processes must we excel at?” Cycle Time Quality Productivity Organization Learning " To achieve our vision, how must our organization learn and improve?” Market Innovation Continuous Learning Intellectual Assets

We Use the Balanced Scorecard to Clarify Strategy and Translate it into Focused, Actionable Objectives Financial Perspective Return on Investment Revenue Strategy Productivity Strategy Sources of Growth Sources of Productivity Customer Perspective The Balanced Scorecard Is Based on an Understanding of the Cause and Effect Relationships on Which the Strategy Is Based Value Proposition Price Quality Time Function Image Relation Internal Process Perspective Pathways to Performance “Build the Brand” “Make the Sale” “Deliver the Product” “Service Exceptionally” Learning & Growth Perspective Staff Awareness + Goal Alignment + Staff Competencies + Technology Infrastructure

The Balanced Scorecard Is Used to Tell the Story of Your Strategy The Revenue Growth Strategy The Productivity Strategy “Improve stability by broadening the sources of revenue from current customers” “Improve operating efficiency by shifting customers to more cost-effective channels of distribution” Improve Returns Financial Perspective Improve Operating Efficiency Broaden Revenue Mix Example Metro Bank Vision Increase Customer Confidence in Our Financial Advice Increase Customer Satisfaction Through Superior Execution “To be the best broad-based financial institution, a leader in our chosen markets” Customer Perspective Internal Perspective Understand Customer Segments Develop New Products Cross-Sell the Product Line Shift to Appropriate Channel Minimize Problems Provide Rapid Response Increase Employee Productivity Learning Perspective Develop Strategic Skills Access to Strategic Information Align Personal Goals

Long-Term Strategic Pathways Near-Term Tactical This Begins With Developing the Key Strategic Themes or Pathways – These Form the Strategy Stairway Case Example: Odessa Computers Long-Term Strategic 5. Redesigning Our Customers’ Business Pathways 4. Solution Delivery 3. Sales Excellence 2. Service Excellence 1. Leverage Resources Near-Term Tactical

For Each Pathway, We Develop a Cause and Effect Model Across the Four Perspectives of the Balanced Scorecard Case Example: Odessa Computers 5. Customer Partnering 4. Solution Delivery 3. Sales Excellence 2. Service Excellence 1. Leverage Resources 1. Financial 2. Customer 3. Internal 4. Learning/ Growth

Build a Cause and Effect Model for Each Pathway: An Example Odessa Computers Pathway 3: Sales Excellence Financial Shift Revenue Mix to Higher Margin Products/Services to Improve Margins Customer Solve High Value Business Problems Qualify Opportunities Process Discover & Analyze Customer Needs Deploy Business Unit Offerings Put Right Sales Team Together Learning / Growth Increase Consultative Selling Skills

A Strategy Map of Odessa Computers: The Sum of the Pathways PROFITABLE GROWTH Leverage Resources Customer Partnering Service Excellence Sales Excellence Solution Delivery Financial Leverage People and Financial Assets to Achieve Organizational Productivity Grow Revenue Through Customer Retention Shift Revenue Mix to Higher Margin Products/Services to Improve Margins Grow Revenue Through Customer Extension/Expansion Redefine Customers Businesses Customer Easy to Do Business With Solve High Value Business Problems My Partner for Creating High Value Solutions Create Customer Competitive Advantage Improve Customer Awareness Qualify Opportunities New Product Development/Service Opportunities Internal Perform Effective Delivery and Installation Create Centers of Solution Expertise Manage Inventory and Receivable Effectively Provide World-Class Ongoing Support Discover & Analyze Customer Needs Supply Knowledge Infrastructure (System and Tools) Partners/ Alliances Create Customer Driven Marketing Insights Simplify Processes and Enhance Systems Effective Project Management Deploy Business Unit Offerings Localize Business Unit Offerings Capture Product/Customer/ Industry Knowledge Learning & Innovation Create Success-Oriented Culture Shift Resources to High Potential Revenue Generating Roles Deploy Services Resources to Improve Productivity Put Right Sales Team Together Dynamic Deployment of Cross- Functional Resources Just-in-Time Resource Deployment Manage Resources Increase Leadership Skills Share Best Practices Foster Sales/ Marketing Alignment New Product Development Insights/ Raw Creativity Build Skills Increase Consultative Selling Skills Clarify and Communicate Roles & Responsibilities Attract, Retain, and Motivate Associates

From Strategy Map to Implementation: Targets and the Business Case Measures ACCELERATE PROFITABLE GROWTH We will contribute X% increase in GM – and $XXX in bottom line growth by 1998 Shift Revenue Mix to Higher Margin Products/Services F Gross Margin % 1995 impact of $XX 1996 impact of $XX 1997 impact of $XX 1998 impact of $XX Solve High Value Business Problems C Improve Customer Awareness] Qualify Opportunities % Opportunities Through Bid Review Where PS Risk Assessment Performed CSM Relationship Survey - Overall Solutions Provided to you by Odessa I Discover and Analyze Customer Needs Total HV offering $ in the Funnel (Next 12 Months) Deploy Business Unit Offerings Opportunities by Key Marketing Programs - $/# L&G % Associates in Customer-Facing HV Positions Put Right Sales Team Together Manage Resources Associates Certified within Key Job Families Leadership Index Increase Consultative Selling Skills Build/Enhance Set of Skills/ Competencies Clear Roles & Accountabilities Number of Associates with Objectives on File Sales and Pre-Sales Open Position Days Associate Turnover Associate Satisfaction Survey - overall question Attract, Retain, and Motivate Outstanding Associates

From Strategy Map to Implementation: The Alignment of Initiatives and Resources Strategic Pathway Existing Initiatives Initiatives Description Sponsor Shift Revenue Mix to Higher Margin Products/Services to Improve Margins Financial Paper supplies Integration Integrate media products into our computer and self-service offerings Manufacturing -Jim S. Price Realization-II (Outside Study): Localize Americas programs on a regional basis (e.g., The Sales Process, Marketing Programs for Canada, Latin America and US Area). Corporate Marketing - Alice L. Customer Solve High Value Business Problems Lead with Service Bundles Increasing PS and CS service content and enable all 550 salespeople to sell services. Global Sales - Connie C. Internal Qualify Opportunities High Availability Transaction Processing Developing horizontal offerings across industries. Corporate Marketing - Bruce G. Discover and Analyze Customer Needs Global Realization Process (GRP) Define and deploy the GRP in the Americas Region Distribution - Eric S. Deploy Business Unit Offerings Learning Sustain/Execute The Sales Process(TSP) Lg Bus. Sales - Barbara R. Put Right Sales Team Together Increase Consultative Selling Skills Certification Program Expand to Professional Services and other sales industries. HR - Allen V. Clarify and Communicate Roles & Responsibilities Consultative Selling Building consultative selling skills within our sales and services organizations. Training - Bryan D. Attract, Retain, and Motivate Associates

Balanced Scorecard Architecture Aligning the Managing Process and Balanced Scorecard Architecture Balanced Scorecard Architecture Managing Process Strategic Pathways Clear roles and responsibilities in managing initiatives Context For Targets and Measures Executive Meetings Supporting Initiatives and Implementation Plan Balanced Scorecard provides a key communication tool to the entire organization