1. UCL/APM Principles of Project Management Balanced Scorecard Graham Collins, UCL graham.collins@ucl.ac.uk

2. ©Graham Collins 2003 The Balance Scorecard - Kaplan and Norton  Why- managers do not want to select between financial and operational- they want a balanced perspective  4 measures, one financial and three operational (customer satisfaction, internal processes, and the organisation’s ability to learn) i.e. drivers behind financial performance. Slides based on The Balanced Scorecard, Robert Kaplan & David Norton, Harvard Business School Press,1996

3. ©Graham Collins 2003 Financial Perspective GoalsMeasures Customer Perspective GoalsMeasures Internal Business Perspective GoalsMeasures Innovation and Learning Perspective GoalsMeasures What must we excel at? How do customers see us? Can we continue to improve and create value? How do we look to shareholders? The Balanced Scorecard Links Performance Measures

4. ©Graham Collins 2003 Financial Perspective GoalsMeasures SurviveCash flow SucceedQuarterly sales growth and operating income by division ProsperIncreased market share and ROE Balanced Business Scorecard

5. ©Graham Collins 2003 Customer Perspective GoalsMeasures New productsPercentage of sales from new products Percentage of sales from proprietary products Responsive supplyOn-time delivery (defined by customer) Preferred supplierShare of key accounts’ purchases Balanced Business Scorecard

6. ©Graham Collins 2003 The vision ‘As our customers’ preferred provider, we shall be the industry leader’ Strategy Services that surpass needs customer satisfaction Continuous improvement... Financial Return on Capital, Cash flow, project profitability Customer Value for money, competitive price, innovation Internal Shape customer requirement, tender effectiveness Growth Continuous improvement, product and service innovation, empowered work force Strategic Objectives

7. ©Graham Collins 2003 What is my vision of the future? If my vision succeeds, how will I differ? (perspectives) To my Shareholders To my Customers With my Internal Management Processes The Balanced Scorecard The critical success factors What are the critical measurements? With my ability to innovate and grow Begin by Linking Measurement to Strategy Statement of vision

8. ©Graham Collins 2003 Building a Balanced Scorecard  Preparation  Interviews: First round  Executive workshop: First round  Interviews: Second round  Executive workshop: Second and third round  Implementation  Periodic reviews

9. ©Graham Collins 2003 Vision and Strategy Financial Customer Internal Business Process Learning and Growth Financial Objectives Measures Targets Initiatives To succeed financially, how should we appear to our shareholders? Translating Vision and Strategy: Four Perspectives

10. ©Graham Collins 2003 Balanced Scorecard Translating the vision Clarifying the vision Gaining consensus Feedback and Learning Articulating the shared vision, supplying strategic feedback Facilitating strategy review and learning Business Planning Setting targets Aligning strategic initiatives Allocating resources Communicating and Linking Communicating and educating Setting goals Linking rewards to performance measures Managing Strategy: Four Processes

11. ©Graham Collins 2003 1. Clarify the vision 2. Communicate to middle managers 3. Develop business unit scorecards 4. Eliminate non-strategic investments 5. Launch corporate change programmes 6. Review business unit scorecards 7. Refine vision Building a strategic management system 8. Communicate the Balanced Scorecard to the entire company 9. Establish individual performance objectives 10. Update Long-range plan and budget 11. Conduct monthly and quarterly reviews 12. Conduct annual strategy review, link everyone’s performance to the balanced scorecard

12. ©Graham Collins 2003 Further reading The Balanced Scorecard Robert Kaplan & David Norton Harvard Business School Press 1996 ISBN 0-87584-651-3