1. Balanced Scorecard & Its Applications

2. The Balanced Scorecard: Great Idea by 2002
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3. BSC Hall of Frame: Success Story One
Bob McCool became head of Mobil NAM&R in 1992 when the past performance was not acceptable. Mobil launched its Balanced Scorecard project in 1994.
From 1994 to The productivity strategy created a 20-percent reduction in the cost of refining, marketing, and delivering a gallon of gasoline.
The growth strategy, with its new value proposition for targeted segments, produced increased customer satisfaction led to increased revenue that exceeded industry averages by more than 2 percent per year.
Kaplan and Norton, 2001

4. BSC Hall of Frame: Success Story Two
Chrysler Group, the US automobile division of DaimlerChrysler, which faced a forecast loss of $5.1 billion in 2001.
The division brought in a new CEO, who used the BSC to communicate a turnaround strategy.
Despite continued weakness in the US automobile market, Chrysler generated $1.9 billion in profits in 2004.
Kaplan and Norton, 2006

5. Balanced Scorecard (BSC)
Initiated by Robert S. Kaplan, a Professor at HBS and David P. Norton, President of Balanced Scorecard Collaborative/Palladium.
They did research by belief that existing performance measurement approaches, primarily relying on financial accounting measures, were becoming obsolete.
Research finding  Balanced Scorecard—Strategic Measures That Drive Performance

6. BSC: Strategic Measuring for Performance
Four Management Functions :
Planning, Organizing, Leading, Controlling
If you can’t measure, you can’t managed
If you can’t measure, you can’t improved
What gets measure, gets done
 Measurement is core of the Balanced Scorecard

7. Balanced Scorecard (BSC)
The Balanced Scorecard expands the set of business unit objective beyond summary financial measures.
A set of cause-and-effect performance measures linkage among four distinct perspectives—finance, customer, internal business process, and learning & growth—used to translate strategy into desired results.
The main focus of initial Balanced Scorecard is as an innovative strategic measurement tool, delivering strategy by emphasising control and communication.
Balanced Scorecard has been evolving from a measurement system to a comprehensive strategy management system.

8. Balance Scorecard Perspectives
Financial
Perspective
Objectives
Key Performance Indicators
Targets
Initiatives
STRAEGY
Learning & Growth Perspective
Customer
Internal Process Perspective
Kaplan and Norton, 1996

9. Four Perspectives of BSC
Financial: What are our shareholders expectations for financial performance?
Customer: To each our financial objective, how create value for our customers?
Internal Process: What processes must we excel at to satisfy our customers and shareholders?
Learning & Growth: How do we align out intangible assets—people, systems, and culture—to improve the critical processes?
Kaplan and Norton, 2006

10. Financial Perspective
What is Financial Strategy? [to satisfy shareholders]
Productivity strategy
Improve cost structure/yields
Increase asset utilization
Growth strategy
Expand revenue opportunities
Enhance customer Value
How to reach the financial goals?

11. Performance Measures in Financial Perspective
Return on investment
Economic value added
Sales growth rate by segment
Percentage revenue from new product, service, or customer
Share targeted customer an account
Cross-selling
Cross-selling
Customer and product line profitability
Revenue/employee
Cost reduction rate
Unit cost
Payback
Return on Capital Employed
Working capital ratios (cash-to-cash cycle)

12. Customer Perspective
Information about market & customer
Customer selection, acquisition, retention & growth
Who are profitable customers?
— Target Segmentations
What do they need? [same as the thing we serve them]
— Customer Values Propositions (e.g. QSC&V – quality, services, cleanliness, and value)

13. Customer Value Propositions
Best buy or Low total cost: Affordable prices, reliable quality, quick service.
Product leadership and Innovation: The cutting edge products or industry leaders.
Customer complete solutions: Tailor made for the customer's individual needs and preferences.
Lock in or System platform: Lock in strategies exploit high switching costs / industrial standard for the customers making them stick to the organization.

14. Performance Measures in Customer Perspective
Market Share: Reflects the proportion of business in a given market (in term of number of customer, dollar spent, or unit volume sold) that a business unit sells.
Customer Acquisition: Measures, in absolute or relative, the rate at which a business unit attracts wins new customers or business.
Customer Retention: Measures, in absolute or relative, the rate at which a business unit retains or maintains ongoing relationships with its customers.
Customer Satisfaction: Assesses the satisfaction level of customers along specific performance criteria within the value proposition.
Customer Profitability: Measures the net profit of a customer, after allowing for the unique expenses required to support customer.

15. Internal Process Perspective
In order to serve customers’ need and satisfy other stakeholders, what process the organization need to be excellent.
The nature of the customer value proposition determines the kind of internal processes
How to build excellent process to serve customer and other stakeholders.

16. The Internal-Business-Process Value Chain Process for delivering customer value propositions
Customer need
Customer satisfaction
Process for delivery customer values
Innovation process
Operations process
Customer process
Customer satisfaction
Customer need
Design
R&D
Production
Marketing
Services
Kaplan and Norton, 1996

17. Supply Chain A continuous business process from suppliers to customers
~HRM~ ~Procurement ~ ~Finance & Accounting~ ~MIS~ 
Inbound Logistics
Operation
Outbound Logistics
Marketing & Sales
Services

18. Internal Process Perspective
Production Management Processes
Customer Management Processes
Innovation Processes
Regulatory & Social processes

19. Operations management processes
Developing and sustaining supplier relationships
Producing products and services
Distributing and delivering products and services to customers
Managing risks

20. Customer management processes
Customer selection
Customer acquisition
Customer retention
Customer growth

21. Innovation processes
Identifying opportunities for new products and services
Managing the research and development portfolio
Design and developing the new products and services
Delivering the new products and services into the market

22. Regulatory & social processes
Environment: Issues such as energy and resource consumption, and emissions into the air, water and soil
Safety and health: Safety hazards to employees
Employment practices: Diversity of employees
Community investment: Community-based organizations

23. Internal Process Perspective Matching marketing strategies with internal processes
Best buy corresponds to the operations management perspective
Customer complete solutions corresponds to the customer management perspective
Product leadership and innovations corresponds to the innovations perspective

24. Performance Measures in Internal Process Perspective
Quality
Response time
Cost
Yields
Waste
Scrap
Rework
New product introduction
Service error rate
Product development cycle
Hours with customer
Time to market

25. Learning & Growth Perspective
What competencies the organization need in order to obtain or sustain competitiveness?
Competencies’ Gap Analysis
How to fill the gap between ‘what organization what to be’ and ‘its current position’
Competencies, Employee Satisfaction and Retention
Management Information System
Corporate Culture and Motivations

26. Learning & Growth Perspective
Human Capital—Employees' skills, talent, and knowledge.
Organization Capital—Culture, leadership, employee alignment, teamwork, and knowledge management
Information Capital—Databases, information systems, network, and technology infrastructure

27. Performance Measures in Learning & Growth Perspective
Employee satisfaction
Employee retention/turnover rate
Employee productivity
Information system availability
Organizational Climate Index
Personal Goals Alignment Index
Staff development

28. Key Performance Indicators
Derived from strategy
Clearly defined/explicit purpose
Mixed performance driver and outcome measures
Optimum number of measures (from 15 to 25 measures)
Construct Strategy Map (causal model—cause-and-effect relationships)

29. Characteristics of good performance indicators
Relevant
Accurate
Understandable
To measure things that can be measured within certain time.
Comprehensive VS The main things

30. How to set targets Stretch Target Incremental Target Baseline Target
Benchmarking
Stakeholders requirement
Capacity
Incremental Target
Comparing with baseline/last year
Baseline Target
Natural number/Normal rate

31. Balance Scorecard: How is it “balanced”?
Financial VS Non-financial measures
Tangible VS Intangible assets
Long-term VS Short-term Goals
Internal VS External Perspective
Performance Drivers VS Outcomes
Cause-and-effect relationships

32. Contribution of BSC
Provide information to management and create accountability
Influence behaviours
Facilitate development (learn and adapt)
Achieve goal congruence and make a system self-correcting
Encourage continuous improvement

33. How to use the Balanced Scorecard
Strategic Measurement Systems
Framework for Implementing Strategy
Strategic Management System

34. BSC Strategic Measurement Systems
Strategy
Key Performance Indicators
Targets

35. BSC Framework for Implementing Strategy
KPIs & Targets
Initiatives & Resources

36. BSC Strategic Management System
Strategy
BSC & KPIs
Yearly
Strategic
Learning
Strategic Initiatives
& Resources
Quarterly
Implementation
Performance Report

37. Suwit Srimai Faculty of Technology & Management Prince of Songkla University, Thailand