WELCOME
BALANCED SCORECARD A NEW MEASURE OF ENHANCING ENTERPRISE EFFECTIVENESS Prof. Ranjan K. Bal Former President, Indian Accounting Association
INTRODUCTION HBR: One of the most influential management ideas of the past 75 years. New tool for measurement of overall / holistic corporate performance. Shift from lopsided approach to a balanced one Translate companies vision and strategy into tangible objectives and measures. Enhances Enterprise Effectiveness
KPMG study On “Measuring Performance of the Organizations of the Future” FINDING: “Over-reliance on summary financial performance measures (Viz. ROI) was hindering an organization’s abilities to create future economic value.”
BSC Robert Kaplan & David Norton HBR : “The Balanced Scorecard : Measures that Drive Performance” 1996 – BOOK : “ The Balanced Scorecard :Translating Strategy into Action”
BSC Balances:Financial and Non-financial performance measures Evaluates: Short-run and long-run performance in a single report.
APPLICATION OF BSC Many Fortune 500 Companies More than 50 Indian Companies Tata Group Companies Dr. Reddy’s Lab Bharati Tele RPG Godrej
PERSPECTIVE OF BSC VISION & STRATEGY INTERNAL BUSINESS PROCESS CUSTOMER FINANCIAL LEARNING & GROWTH
BSC Enables an Organization to answer the following questions: How should it appear to its shareholders ? How should it appear to its customers ? What business processes must it excel at ? How will it sustain its ability to change & improve ?
FINANCIAL PERSPECTIVE REVENUE / INCOME GROWTH COST MANAGEMENT ASSET UTILISATION ROI
CUSTOMER PERSPECTIVE CUSTOMER RETENTION CUSTOMER ACQUISITION CUSTOMER SATISFACTION MARKET SHARE
Customer is the only valid reason for the existence of a business. Peter F. Drucker
INTERNAL BUSINESS PROCESS PERSPECTIVES VALUE CHAIN: R & D DESIGN PROD. MARKETING DISTRIBUTION CUSTOMER SERVICE
Process Innovation Product Reengineering: Quality Operational Efficiency - IT HUL & INFOSYS “Reengineering is the fundamental rethinking and redesign of business processes & products.”
Marketing and innovation should come before worries about finances. Peter F. Drucker
LEARNING & GROWTH PERSPECTIVE EMPLOYEE CAPABILITIES INFORMATION SYSTEM CAPABILITIES MOTIVATION, EMPOWERMENT
LEARNING & GROWTH Arun Moira: Member, Planning Commission, GOI To be a leader: - Continuous Learning - Bigger Dream Stephen Covey:Sharpening the Saw Ajim Premji on JRD: JRD was a life-long learner. “ Knowledge is being doubled in every 18 months.”
Dedicated employees are key to the success of any corporation. Peter F. Drucker
IMPLEMENTING A BSC PROCESS Identify Vision Identify Strategies Identify Perspectives Identify Measures Create Action Plan Evaluate Follow Up
ENVIRONMENT OF SAIL Steel industry witnessing a boom Increased steel consumption: 30 Kg Vs. 144 Kg High bargaining power of buyers Bargaining power of suppliers Threat of new entrants & competition Threat of substitutes
SAIL’s CORPORATE PLAN 2012 To continue in the business of steel & steel related activities To enhance market share in growth segments To improve profits by cost reduction & high value added products To achieve excellence in quality To secure availability of key raw materials To build customer centric processes,systems & procedures
SAIL’s CORPORATE PLAN: Comments Shows strategic goals, but inter-relationship is absent Comprehensive, but lacks focus Lacks focus on Product Profitability No focus on Operational Excellence No focus on Attracting & Retaining HR To develop a Culture of Accountability & Appreciation
“A manager’s job is to pursue the interests of the society.” Peter F. Drucker The Father of Modern Management
CHANGE “Change is the only constant in to-day’s world.” ISB “A company can not survive without change.” K.V.Kamath
THANK YOU