Professional Documents
Culture Documents
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What Is a Balanced Scorecard?
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Balanced Scorecard History
Measurement Enterprise-wide
Alignment and
and Strategic
Communication
Reporting Management
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The Premise Behind the Balanced Scorecard Is that
Measurement Motivates Behavior
The Premise
Measurement Communicates
Values, Priorities And Direction
The Conclusion
Measurement Must Be Linked To Strategy
Strategy
Balanced
Scorecard
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We Use the Scorecard to Articulate Strategic
Hypotheses in Cause-effect Terms
And Realize
the Vision
Financial
To Drive Financial
Results Success...
Customer
Benefits Needed to Deliver Unique
Sets of Benefits to Customers...
Internal
To Build the Strategic Capabilities..
Capabilities
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BSC Terminology
Strategy Map: Diagram of the
cause-and-effect relationships
between strategic objectives
Customer
Flight Lowest
Is on time prices
Learning
Ground crew
alignment
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Balanced Scorecard Example
Strategic Theme:
Objectives Measurement Target Initiative
Operating Efficiency
Financial
Profitability • Profitability • Market Value • 30% CAGR
• More • Seat Revenue • 20% CAGR
More Customers
Fewer Planes
Customers • Plane Lease • 5% CAGR
• Fewer planes Cost
Customer • Flight is on - • FAA On Time • #1 • Quality
Flight Lowest time Arrival Rating management
Is on Time Prices • Lowest prices • Customer • #1 • Customer
Ranking (Market loyalty
Survey) program
Internal • Fast ground • On Ground Time • 30 Minutes • Cycle time
Fast Ground turnaround • On-Time • 90% optimization
Turnaround Departure program
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Some of the Indicators of Good Balanced Scorecard
1. Executive Involvement
Strategic decision makers must validate and own
the strategy and related measures
2. Cause-and-Effect Relationships
Every objective selected should be part of a chain of
A good Balanced cause and effect linkages that represent the
Scorecard will strategy
“tell the story” of
3. Balance between outcome and leading
your strategy in measures There should be a balance of outcome
actionable terms. measures and leading measures to facilitate
anticipatory management
4. Financial Linkage
Every objective can ultimately be related to financial
results
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Some Goals of the Balanced Scorecard
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How Does the Scorecard Benefit Your Organization?
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Some Results of Balanced Scorecard Users
CIGNA Property & Casualty Mobil USM&R
1993 – $275 loss 1993 – #6 in Profitability
1998 – Top Quartile 1995 – #1 in Profitability
1999 – $3b spin-off 1998 – #1 in Profitability
1999 -- Acquired by Exxon
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Balanced Scorecard Six Step Development Process
Step 3
Step 1 Step 5
Draft a
Develop a Strategy Map Select Strategic
Project Plan With Linkages Initiatives
And Themes
Step 2
Step 4 Step 6
Build a
Determine Plan for
Strategic
Measures and implementation
Architecture
Targets of the SFO
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Typical Balanced Scorecard Project Schedule
Week 1 2 3 4 5 6 7 8 9 10 11 12
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Steps 1 to 3 Are the Basis for the BSC
Step 3
Steps 1 Uncover Step 5
Strategic
Develop a Linkages Select Priority
Project Plan and Key Initiatives
Themes
Step 2 Step 4
Step 6
Build a Determine
Plan for SFO
Strategic Measures and
Implementation
Architecture Targets
Work/Inputs Outputs:
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Step 4: Measures Development
Steps 1 Step 3
Step 5
Define Build the
Select Priority
Strategic Strategic
Initiatives
Destination Linkages
Step 2
Step 4
Step 6
Identify Key
Determine
Themes Plan for SFO
Measures and
Driving the Implementation
Targets
Strategy
Work/Inputs Outputs:
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Steps 5 & 6: Initiative Prioritization and
Implementation Planning
Steps 1 Step 3
Step 5
Define Build the
Select Priority
Strategic Strategic
Initiatives
Destination Linkages
Step 2
Step 4
Step 6
Identify Key
Determine
Themes Plan for SFO
Measures and
Driving the Implementation
Targets
Strategy
Outputs:
Work/Inputs:
Review and
• Refined linkages Align/ • “Locked in” on
and measures validate Review Brainstorm objectives and linkages
rationalize
• Inventory of linkages existing new • Measures defined
initiatives
existing initiatives and initiatives initiatives • Initiatives defined
• Proposed new to themes • Plan for initiatives
measures
initiatives review established
• Plan for implementation
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Review/Summary
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