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Balanced Scorecard Quick Guide April, 2010. Basics & Best Practices Terminologies Balanced Scorecard Quick Guide.

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Presentation on theme: "Balanced Scorecard Quick Guide April, 2010. Basics & Best Practices Terminologies Balanced Scorecard Quick Guide."— Presentation transcript:

1 Balanced Scorecard Quick Guide April, 2010

2 Basics & Best Practices Terminologies Balanced Scorecard Quick Guide

3 Booz & Company 28 March 2009 In addition, Strategic & Business Planning relies on well-defined, best practice terminology Strategic & Business Planning Process Key Terminology Units Key Performance Indicators (KPI) Goal Objective Strategy Initiative Any Business or Functional Unit. According to the new organization structure, GACA has five Business Units (KKIA, KAIA, KFIA, Domestic Airports and ANS) and five Functional Units (Corporate Core, IT, Finance, Human Resources, Internal Audit) and a Safety and Economic Regulation function 1 A measure used to monitor how well a business is achieving its quantifiable objectives. KPIs are found at both the strategic (assets turnover, customer satisfaction index) or operational levels (e.g. traffic volume) Long-term target value (a number) of KPI; set to be attained after five years Short-term target value (a number) of KPI; set to be attained in one year A means or action that will lead to the achievement of a goal (five years ahead) A means or action that will lead to the achievement of the objective (one years ahead). A set of initiatives form a strategy Balanced Scorecard Quick Guide

4 Contents BSC general work flow Internal Scanning Summary External Analysis Summary SWOT Analysis Summary Strategy Mapping Summary KPIs Setting Summary Targets Setting Summary Initiatives Setting Summary BSC Dashboard Summary Performance Assessment Summary Balanced Scorecard Quick Guide

5 Now BSC general work flow Internal Scanning Summary External Analysis Summary SWOT Analysis Summary Strategy Mapping Summary KPIs Setting Summary Targets Setting Summary Initiatives Setting Summary BSC Dashboard Summary Performance Assessment Summary Balanced Scorecard Quick Guide

6 One Of The Best Practices For BSC Work Flow 1. Internal Scanning 2. External Scanning 3. SWOT Analysis 4. Strategy Mapping 6. Targets Setting 5. KPIs Setting 7. Initiatives Setting 9. Performance Monitoring 8. BSC Dashboard Balanced Scorecard Quick Guide

7 Now BSC general work flow Internal Scanning Summary External Analysis Summary SWOT Analysis Summary Strategy Mapping Summary KPIs Setting Summary Targets Setting Summary Initiatives Setting Summary BSC Dashboard Summary Performance Assessment Summary Balanced Scorecard Quick Guide

8 Internal Scanning Summary Introduction Internal scanning is a strategic planning technique that helps in determining the firms strengths and weaknesses and any related issues inside the firm Purpose Knowing firms strengths and weaknesses Getting exposed to the firms processes and chain of commands Suitable Techniques The following techniques are suitable to serve the internal scanning purpose: Value Chain Analysis Capability Assessment Expected Outcomes Once the internal scanning is done, it is expected to have: Firms strengths Firms weaknesses Firms processes and value transferred from each process to another potentials for improvements Balanced Scorecard Quick Guide

9 Now BSC general work flow Internal Scanning Summary – Related Templates External Analysis Summary SWOT Analysis Summary Strategy Mapping Summary KPIs Setting Summary Targets Setting Summary Initiatives Setting Summary BSC Dashboard Summary Performance Assessment Summary Balanced Scorecard Quick Guide

10 Value Chain Analysis Activity A Key Responsibilities Key Responsibilities Key Responsibilities Activity BActivity CActivity D Value transferred Template Balanced Scorecard Quick Guide

11 Capability Assessment Organization Readiness (%) People Readiness (%) Process Readiness (%) System Readiness (%) Evidence and Comments Activity A Activity B Activity C Activity D Template Balanced Scorecard Quick Guide

12 Now BSC general work flow Internal Scanning Summary External Analysis Summary SWOT Analysis Summary Strategy Mapping Summary KPIs Setting Summary Targets Setting Summary Initiatives Setting Summary BSC Dashboard Summary Performance Assessment Summary Balanced Scorecard Quick Guide

13 External Scanning Summary Introduction External scanning is a strategic planning technique that helps in determining the firms opportunities and threats and any related issues outside the firm Purpose Knowing firms opportunities and threats Getting exposed to the firms competitors and market changes Suitable Techniques The following techniques are suitable to serve the external scanning purpose: Industry Trends Porter 5 Forces Model Expected Outcomes Once the external scanning is done, it is expected to have: Firms opportunities Firms threats New trends and demands potentials for investments and competitive advantages Balanced Scorecard Quick Guide

14 Now BSC general work flow Internal Scanning Summary External Analysis Summary – Related Templates SWOT Analysis Summary Strategy Mapping Summary KPIs Setting Summary Targets Setting Summary Initiatives Setting Summary BSC Dashboard Summary Performance Assessment Summary Balanced Scorecard Quick Guide

15 Corporate Industry Trends Trend DescriptionSupporting EvidenceImplications Trend A Trend B Trend A Trend B Trend A Trend B Trend A Trend B Trend A Trend B Competitive Trends Market Trends Regulatory Trends Technology Trends Other Trends Template Balanced Scorecard Quick Guide

16 Focal Firm Buyers Suppliers Entry Rivalry Substitutes Complementors Demographic Trends Technological Change Cultural Trends Economic Climate Legal/Political Conditions Specific International Events Industry General External Environment Template Balanced Scorecard Quick Guide

17 Now BSC general work flow Internal Scanning Summary External Analysis Summary SWOT Analysis Summary Strategy Mapping Summary KPIs Setting Summary Targets Setting Summary Initiatives Setting Summary BSC Dashboard Summary Performance Assessment Summary Balanced Scorecard Quick Guide

18 SWOT Summary Introduction SWOT is a strategic planning technique that helps in determining the firms strategic directions and priories Purpose Knowing what strategies will sustain the growth of the firm and what will be done in order to extract advantaged over the competitors Suitable Techniques The following techniques are suitable to serve the SWOT purpose: SWOT Matching Expected Outcomes Once the SWOT is done, it is expected to have: Firms strategic directions and priorities Balanced Scorecard Quick Guide

19 Now BSC general work flow Internal Scanning Summary External Analysis Summary SWOT Analysis Summary – Related Templates Strategy Mapping Summary KPIs Setting Summary Targets Setting Summary Initiatives Setting Summary BSC Dashboard Summary Performance Assessment Summary Balanced Scorecard Quick Guide

20 SWOT Summary External Factors Opportunities Threats Internal Factors StrengthsWeaknesses 1.Internal Strengths Matched with External Opportunities … 2.Internal Weaknesses Relative to External Opportunities … 3.Internal Strengths Matched with External Threats … 4.Internal Weaknesses Relative to External Threats … Template Balanced Scorecard Quick Guide

21 Leverage the planned expansion for Jeddah airport to attract the growing charter market in the region SO1 SO2 SO1 WO1 WO2 WO3 WT2 SWOT Analysis Explore New Market Segments to Expand Revenue Base Strategic Priorities SO ST WOWT WO4 WO5 WO6 Template Balanced Scorecard Quick Guide

22 Now BSC general work flow Internal Scanning Summary External Analysis Summary SWOT Analysis Summary Strategy Mapping Summary KPIs Setting Summary Targets Setting Summary Initiatives Setting Summary BSC Dashboard Summary Performance Assessment Summary Balanced Scorecard Quick Guide

23 Strategy Mapping Summary Introduction Strategy mapping is a strategic planning technique that helps in representing the firms strategies in such a way that shows the cause and effect of each strategy Purpose To ensure that each strategy does really serve a specific other strategy, and the overall strategies serve and feed the firm's vision Suitable Techniques The following techniques are suitable to serve the strategy mapping purpose: Strategy Map Expected Outcomes Once the strategy mapping is done, it is expected to have: Firms strategy map Balanced Scorecard Quick Guide

24 Now BSC general work flow Internal Scanning Summary External Analysis Summary SWOT Analysis Summary Strategy Mapping Summary – Related Templates KPIs Setting Summary Targets Setting Summary Initiatives Setting Summary BSC Dashboard Summary Performance Assessment Summary Balanced Scorecard Quick Guide

25 Template Balanced Scorecard Quick Guide

26 Now BSC general work flow Internal Scanning Summary External Analysis Summary SWOT Analysis Summary Strategy Mapping Summary KPIs Setting Summary Targets Setting Summary Initiatives Setting Summary BSC Dashboard Summary Performance Assessment Summary Balanced Scorecard Quick Guide

27 KPIs Setting Summary Introduction KPIs (Key Performance Indicators) are measures that indicate how is the progress of strategic objectives and targets achievements Purpose To indicate and alarm the management for strategy and targets achievements or deviations Suitable Techniques KPIs Profile Benchmarking KPIs Libraries Expected Outcomes Once the KPIs setting is done, it is expected to have: Firms KPIs KPIs definitions & frequency of review KPIs formulas Strategic objectives that are measures by specific KPIs KPIs owners Balanced Scorecard Quick Guide

28 Now BSC general work flow Internal Scanning Summary External Analysis Summary SWOT Analysis Summary Strategy Mapping Summary KPIs Setting Summary – Related Templates Targets Setting Summary Initiatives Setting Summary BSC Dashboard Summary Performance Assessment Summary Balanced Scorecard Quick Guide

29 Definition KPI Definition X+Y = Z KPI Formula W/M/Q/S/A Frequency Name / Dept. Owner Template Balanced Scorecard Quick Guide

30 Now BSC general work flow Internal Scanning Summary External Analysis Summary SWOT Analysis Summary Strategy Mapping Summary KPIs Setting Summary Targets Setting Summary Initiatives Setting Summary BSC Dashboard Summary Performance Assessment Summary Balanced Scorecard Quick Guide

31 Targets Setting Summary Introduction Targets are those values (determined in each KPI) that the management wants to achieve within a certain time Purpose To make the KPIs and the measurement more quantifiable and measureable Suitable Techniques Benchmarking Forecasting Feasibility studies Market Research Expected Outcomes Once the targets setting is done, it is expected to have: KPIs targets Targets values & units Balanced Scorecard Quick Guide

32 Now BSC general work flow Internal Scanning Summary External Analysis Summary SWOT Analysis Summary Strategy Mapping Summary KPIs Setting Summary Targets Setting Summary Initiatives Setting Summary BSC Dashboard Summary Performance Assessment Summary Balanced Scorecard Quick Guide

33 Initiatives Setting Summary Introduction Are those actions that are predesigned and dedicated to achieve the determined targets and to activate specific KPIs Purpose To help the firm achieving strategic objectives Suitable Techniques Benchmarking Feasibility studies Market Research R&D Expected Outcomes Once the initiatives setting is done, it is expected to have: Strategic plan initiatives Owners Balanced Scorecard Quick Guide

34 Now BSC general work flow Internal Scanning Summary External Analysis Summary SWOT Analysis Summary Strategy Mapping Summary KPIs Setting Summary Targets Setting Summary Initiatives Setting Summary – Related Templates BSC Dashboard Summary Performance Assessment Summary Balanced Scorecard Quick Guide

35 Strategic Priority A Strategic Priority B Strategic Priority C Strategic Priority D Strategic Priority 1.KPI1 2.KPI2 3.KPI3 1.KPI1 2.KPI2 3.KPI3 1.KPI1 2.KPI2 3.KPI3 1.KPI1 2.KPI2 3.KPI3 KPI VALUE (unit) Target 1.Action A 2.Action B 3.Action C 1.Action A 2.Action B 3.Action C 1.Action A 2.Action B 3.Action C 1.Action A 2.Action B 3.Action C Initiative Template Balanced Scorecard Quick Guide

36 Now BSC general work flow Internal Scanning Summary External Analysis Summary SWOT Analysis Summary Strategy Mapping Summary KPIs Setting Summary Targets Setting Summary Initiatives Setting Summary BSC Dashboard Summary Performance Assessment Summary Balanced Scorecard Quick Guide

37 BSC Dashboard Summary Introduction It is a simple visualization of the firms performance Purpose To help the management taking decisions and being up to date with the firms overall performance Suitable Techniques MS Power Point Presentation MS Excel other software Expected Outcomes Once the BSC dashboard is done, it is expected to have: Projected BSC perspectives and firm's strategic priorities with notifying designs Balanced Scorecard Quick Guide

38 Now BSC general work flow Internal Scanning Summary External Analysis Summary SWOT Analysis Summary Strategy Mapping Summary KPIs Setting Summary Targets Setting Summary Initiatives Setting Summary BSC Dashboard Summary – Related Templates Performance Assessment Summary Balanced Scorecard Quick Guide

39 Internal Processes Dimension Indicators % (Actual / Target) Learning & Growth Dimension Indicators % (Actual / Target) Financial Dimension Indicators Financial Dimension Indicators Actual < 90% of Target 90% of Target < Actual < 100% of Target Actual >= 100% of Target % (Actual / Target) Internal Processes Dimension Indicators % (Actual / Target) Internal Processes Dimension Indicators % (Actual / Target) Template Balanced Scorecard Quick Guide

40 Now BSC general work flow Internal Scanning Summary External Analysis Summary SWOT Analysis Summary Strategy Mapping Summary KPIs Setting Summary Targets Setting Summary Initiatives Setting Summary BSC Dashboard Summary Performance Assessment Summary Balanced Scorecard Quick Guide

41 Performance Assessment Summary Introduction It is a systematic examination of the whole strategic plan and its achievements and implications Purpose Contiguous learning and improvement Suitable Techniques Cause& Effect systematic inspections and assessment Corrective planning Preventive planning Lessons Learned Expected Outcomes Once the performance assessment is done, it is expected to have: Performance assessment reports Balanced Scorecard Quick Guide

42 Now BSC general work flow Internal Scanning Summary External Analysis Summary SWOT Analysis Summary Strategy Mapping Summary KPIs Setting Summary Targets Setting Summary Initiatives Setting Summary BSC Dashboard Summary Performance Assessment Summary – Related Templates Balanced Scorecard Quick Guide

43 External Factors Description A A X X Internal Factors Operational Lever Root Cause Corrective Action Plan X X % Plan Completed 30% 04/0909/08 33% 01/0911/08 80% w% dd/yy Template Balanced Scorecard Quick Guide

44 KPI(Target Unit) Comments Summary of drivers for performance Summary of actions taken to rectify any variance Summary of drivers for performance Summary of actions taken to rectify any variance Overall Status Based on both current performance and on cumulative-to-date performance Gap =< -10% of Target-10% of Target < Gap < 0% of TargetGap >= 0% of Target Template Balanced Scorecard Quick Guide

45 End of Balanced Scorecard Quick Guide


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