1. 1 Balanced Scorecard Conference Nikko Hotel, Kuala Lumpur 13-14 July 2004 Best Practice Implementation: CSFs & Lesson Learned Presenter: Ungku Harun Al’Rashid Ahmad Vice President, Corporate Services Group and Managing Director, Knowledge Worker Exchange Sdn Bhd MULTIMEDIA DEVELOPMENT CORPORATION SDN BHD

2. 2 WHAT MAKES THE IMPLEMENTATION OF THE BALANCED SCORECARD IN THE ORGANISATION SUCCESSFUL?? IS IT THE DESIGN & IMPLEMENTATION ? IS IT THE PEOPLE ? Or, IS IT THE NATURE/CULTURE OF THE ORGANISATION

3. 3 n Balanced Scorecard (BSC) n BSC Guiding Principles n Critical Success Factors While Implementing Scorecards n MDC BSC Lesson Learned – Phase (I) : Planning & Design n MDC BSC Lesson Learned – Phase (II) : Implementation & Carry Through n Summary AGENDA

4. 4 The Premise behind the Balanced Scorecard is that measurement motivates behaviour The Conclusion Measurement Must Be Linked To Strategy Strategy Balanced Scorecard Measurement Communicates Values, Priorities And Direction The Premise Premise Behind Balanced Scorecard

5. 5 The PEOPLE Barrier Personal goals, knowledge building, and competencies are not linked to strategy implementation The VISION Barrier Strategy is not understood by those who must implement it…and not translated into objectives The OPERATIONAL Barrier Key processes are not designed to leverage the drivers of business strategy The MANAGEMENT Barrier Management systems are designed for operational control and tied to budgets, not strategy Strategy BSC Implementation Barriers

6. 6 Strategic Management Phase Migration Phase Components and timeline for making strategy a Continual process Mobilization Phase  Target Setting  Initiative Rationalization  Governance Process Design  Link Strategy & Budgeting  Strategic Initiative Mgt. 3-4 months 2-3 yearsSteady State  Strategy update  Scorecard update  Updates to planning and budgeting  Link strategy to goals and Incentives  Link Strategy to Performance reviews Principles of Strategy Focused Organization

7. 7 n Balanced Scorecard (BSC) n BSC Guiding Principles n Critical Success Factors While Implementing Scorecards n MDC BSC Lesson Learned – Phase (I) : Planning & Design n MDC BSC Lesson Learned – Phase (II) : Implementation & Carry Through n Summary AGENDA

8. 8 WHAT GETS MEASURED GETS DONE People will do what they are measured on and rewarded to People must not be held responsible for what is not measured & reported KEEP IT SIMPLE Need to be simple and easy to understand & communicate Information should be collected honestly MEASURES MUST BE MEANINGFUL To the people who use them Related to business objective & success factors Objective & quantifiable People must be able to visualise and act on it MEASURES MUST BE CONTROLLABLE People being measured must be able to control their outcome Guiding Principles While Scorecarding

9. 9 n Balanced Scorecard (BSC) n BSC Guiding Principles n Critical Success Factors While Implementing Scorecards n MDC BSC Lesson Learned – Phase (I) : Planning & Design n MDC BSC Lesson Learned – Phase (II) : Implementation & Carry Through n Summary AGENDA

10. 10 CSF – Implementing Scorecard Must Be Driven from Top of the Organisation Effective Communication Throughout the Project Require Change of Behaviours Linking Rewards to Performance Measures Design & Implement Change Management Programmes Continuously Managing the Change Empower People to Change

11. 11 n Balanced Scorecard (BSC) n BSC Guiding Principles n Critical Success Factors While Implementing Scorecards n MDC BSC Lesson Learned – Phase (I) : Planning & Design n MDC BSC Lesson Learned – Phase (II) : Implementation & Carry Through n Summary AGENDA

12. 12 BSC Implementation: Lesson Learned (I) Phase I : Major Challenges During Planning & Design (1) Business Planning Process (2) Non Existence of Strategy Paper / Doc. (3) People are Scared to Be Measured (4) Wrong Scorecard Team Or Dept. Champions (5) Too Many Measures Identified

13. 13 BSC Implementation: Lesson Learned (1) Business Planning Process (2) Non Existence of Strategy Paper / Doc. (3) People are Scared to Be Measured (4) Wrong Scorecard Team Or Dept. Champions (5) Too Many Measures Identified Business planning usually underdeveloped, with no owners and takes a long time There is no strategic planning unit / person responsible for the strategy development Too many people involved in developing the strategy thus resulting in too many versions of the strategy documents Problem with strategy implementation and carry through

14. 14 BSC Implementation: Lesson Learned (1) Business Planning Process (2) Non Existence of Strategy Paper / Doc. (3) People are Scared to Be Measured (4) Wrong Scorecard Team Or Dept. Champions (5) Too Many Measures Identified Most of the strategy is not stretchable enough – confusion on the terms i.e. programmes, objectives & strategy. Less focus on customers and financial. Too many initiatives identified. Objectively should focus on key areas / programmes – about 6 – 8. Do we have a strategy ?? Lack of historical data that can be used as a benchmark

15. 15 BSC Implementation: Lesson Learned (1) Business Planning Process (2) Non Existence of Strategy Paper / Doc. (3) People are Scared to Be Measured (4) Wrong Scorecard Team Or Dept. Champions (5) Too Many Measures Identified Individual performance review is not linked to the organisation’s performance Scorecard will clearly define the roles and responsibility for each employee Measures often scares the employee instead of motivating them to succeed Why bother ?? More information = more work – furthermore, it’s not linked to monetary returns

16. 16 BSC Implementation: Lesson Learned (1) Business Planning Process (2) Non Existence of Strategy Paper / Doc. (3) People are Scared to Be Measured (4) Wrong Scorecard Team Or Dept. Champions (5) Too Many Measures Identified Should have 150% support from CEO and top management before implementing BSC Champions must be credible, senior and have a good understanding of the organisation / department Strong analytical and thinking skills BSC Team should comprise of different level of people from different departments and background

17. 17 BSC Implementation: Lesson Learned (1) Business Planning Process (2) Non Existence of Strategy Paper / Doc. (3) People are Scared to Be Measured (4) Wrong Scorecard Team Or Dept. Champions (5) Too Many Measures Identified Ideally 6 – 8 measures per employee 20 – 40 are chosen – for them more is better! Confused with nitty gritty details – i.e. number of meeting attended, hours spent in the meeting Perfect measures don’t exist!

18. 18 n Balanced Scorecard (BSC) n BSC Guiding Principles n Critical Success Factors While Implementing Scorecards n MDC BSC Lesson Learned – Phase (I) : Planning & Design n MDC BSC Lesson Learned – Phase (II) : Implementation & Carry Through n Summary AGENDA

19. 19 BSC Implementation: Lesson Learned (II) Phase II : Major Challenges During Implementation & Carry Through (1) CEO Commitment on the Project (2) Mismatched Number During Data Collation (3) Problems with Owner and Communication (4) Develop a Structured Education Campaign (5) Managing the Change Process

20. 20 BSC Implementation: Lesson Learned Need to show more buy-in and appreciation towards this project Moved to ‘new toys’ Doesn’t act or address the Performance issues Take it as flavour of the week project; and separate it from the strategy discussion / performance monitoring (1) CEO Commitment on the Project (2) Mismatched Number During Data Collation (3) Problems with Owner and Communication (4) Develop a Structured Education Campaign (5) Managing the Change Process

21. 21 BSC Implementation: Lesson Learned Difficulty in aligning scorecard due to different budget cycle / coding Budget initiatives doesn’t work parallel with scorecard implementation Standard template required to ensure monthly data / figures are consistent throughout the whole organisation Data collation / performance tracking is not a practice! (1) CEO Commitment on the Project (2) Mismatched Number during Data Collation (3) Problems with Owner and Communication (4) Develop a Structured Education Campaign (5) Managing the Change Process

22. 22 BSC Implementation: Lesson Learned Scorecard team / champions are expected to perform the job for the staff Owners don’t want to take responsibility for KPIs and project Structured communication plan has to be developed Continuous communication using different mode of communication need to be undertaken (1) CEO Commitment on the Project (2) Mismatched Number During Data Collation (3) Problems with Owner and Communication (4) Develop a Structured Education Campaign (5) Managing the Change Process

23. 23 BSC Implementation: Lesson Learned Clearly explain the terminology and premises behind the Balanced Scorecard Address employee in a small group to initiate discussion and feedback Use laymen terms while explaining and provide them with the manual Education campaign must be continuous (1) CEO Commitment on the Project (2) Mismatched Number During Data Collation (3) Problems with Owner and Communication (4) Develop a Structured Education Campaign (5) Managing the Change Process

24. 24 BSC Implementation: Lesson Learned Address the how-to Inability of the staff to get out of their norm make it hard for change Confused because there are too many steps / forms to be filled up You might need to pamper your staff in order to ensure successful change process – i.e. one-on-one discussion Stress on Strategy Focused Organisation - the employees role (1) CEO Commitment on the Project (2) Mismatched Number During Data Collation (3) Problems with Owner and Communication (4) Develop a Structured Education Campaign (5) Managing the Change Process

25. 25 n Balanced Scorecard (BSC) n BSC Guiding Principles n Critical Success Factors While Implementing Scorecards n MDC BSC Lesson Learned – Phase (I) : Planning & Design n MDC BSC Lesson Learned – Phase (II) : Implementation & Carry Through n Summary AGENDA

26. 26 SUMMARY THE SUCCESS OF THE BALANCED SCORECARD IMPLEMENTATION DEPENDS ON: 1. The Strategic Planning Process 2. The Support and Buy-in from the CEO / Senior Management 3. The BSC Project Team / Champions in Managing the Project 4. The People – To Change Their Attitude, Internalise and Deliver the Targets 5. The Communication Plan – Effectiveness & Structure According to Jim Collins in his book “Good to Great” – To make a breakthrough from a flywheel, all that matters is the culture of discipline - Disciplined people with disciplined thought executing disciplined action, will turn a company from GOOD to GREAT …

27. 27 Thank You