Strategy Simulation:

THE BALANCED
SCORECARD

by V.G. Narayanan, Harvard Business School

FOR COURSES IN:

Strategy

Implementing Strategy
Managerial Accounting

Strategy Simulation: The Balanced Scorecard

In this multi-player simulation, students experience
the benefits and challenges of using a scorecard
to implement strategic initiatives and monitor firm
performance. Students work together in small teams
to choose a strategy for their company, create a strategy
map, develop a balanced scorecard, choose initiatives to

implement their strategy, and use feedback from the

balanced scorecard to adjust their implementation
approach over time. At the conclusion of the simulation,
each teams company will be purchased by a private
investor. The goal of the simulation is to maximize firm value.

Students must select initiatives that support their companys strategy.

PREREQUISITES AND PLAY

Students should be familiar with the
balanced scorecard concept before
playing the simulation. Although it
can be played by individuals, the
author recommends dividing students
into small teams. Each team will have

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1 Data Entry role and 1, 2, or 3 Data

Analyst roles. The Data Entry player
is responsible for submitting
the teams decisions. Due to the
breadth and complexity of the
simulation, the author recommends

allowing students to play 1 or more

practice rounds before making their
final selections. Instructors can do
this by enabling the practice mode.

CREATING A SCORECARD
Students prepare by reading the
Delta/Signal Corp case to learn the
company background. Each team
then creates a unique stock ticker
symbol, chooses a market segment,
and selects 1 of the 4 possible
strategies for their company:
Customer Integration, Product
Innovation, Low Initial Cost, or
Low Lifetime Cost. Students select
objectives and metrics that will
match their chosen strategy and
then create a strategy map.

FUNDING INITIATIVES
The simulation consists of 8 rounds,
each representing 6 months of
elapsed time. In each round, teams
decide which initiatives to fund in
order to achieve their strategic
objectives. Students review the
different options and fund as many
initiatives as they would like, up to
a $25 million maximum budget.
While the initiative choices from the
previous round automatically carry
over, students can make adjustments based on their analysis of
the results. At the conclusion of the
simulation, the teams company will
be purchased by a private investor.
The buyout price will be based on
the companys financial position and
future prospects.

The Strategy Map shows the cause-and-effect relationships between objectives.

FINANCIAL AND
SCORECARD DATA
Financial and scorecard metric data is
updated after each simulation round.
Students should analyze this data so
they can determine which initiatives
are creating the desired performance
improvements and which are not.
Students can review the Metric
Dashboard, History, and Graphs
screens to perform their analysis.

The Analyze screens allow students to determine the success of their initiatives.

ADMINISTRATION TOOLS ON NEXT PAGE

Administration Tools for Faculty

A comprehensive Teaching Note covers

key learning objectives. Students will:

 xplore how a good balanced

E
scorecard can help companies take
midcourse corrective actions.
 ecognize that financial metrics
R
are often lagging, volatile, and
noncontrollable measures of firm
performance.
 xamine the advantages and
E
disadvantages of measuring a
small or large number of metrics.
 nderstand how using the
U
balanced scorecard is like financial
variance analysis extended to
nonfinancials.
 earn how a well-designed strategy
L
map can help managers think
about and communicate strategy.

The Private Equity Valuation debrief screen shows the various buyout prices for the class.

PRACTICE MODE
Setting the simulation to practice
mode allows students to play through
the first 4 rounds repeatedly. Practice
rounds allow students to experiment
with possible choices prior to making
permanent decisions for their company.
CONTROL GROUP
Instructors can assign certain student
teams to be part of a control group.

Control group players will not

select objectives or see a balanced
scorecard, but they will see the
financial metrics, and all other aspects
of simulation play will be the same.
RESULTS SECTION
The instructor results section
provides key statistics and graphs
that summarize student performance.

Product #114701 | Multi-player | Seat Time: 75 minutes | Developed by Harvard Business School and Forio Online Simulations

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entire simulation and is available to
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 earn how firms use the balanced

L
scorecard to define strategy,
implement strategy, and measure
strategy execution.

Printed on recycled paper.