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Can libraries benefit from the use of Balanced Scorecard? Snjólfur Ólafsson University of Iceland Faculty of Economics and Business Administration 8 th.

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Presentation on theme: "Can libraries benefit from the use of Balanced Scorecard? Snjólfur Ólafsson University of Iceland Faculty of Economics and Business Administration 8 th."— Presentation transcript:

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2 Can libraries benefit from the use of Balanced Scorecard? Snjólfur Ólafsson University of Iceland Faculty of Economics and Business Administration 8 th June 2004

3 2 Snjólfur Ólafsson, 8 th June ‘04 Aim of my talk  To provide the participants with an understanding of  what Balanced Scorecard is,  how it works and what it delivers  and thereby allowing them to evaluate whether Balanced Scorecard is something that could be a helpful tool for their libraries. (A presentation at the NVBFs forårskonference I Island, Reykjavik 7. – 8. juni 2004 Abstract written by Hrönn Pétursdóttir)

4 3 Snjólfur Ólafsson, 8 th June ‘04 Structure of my talk  The Balanced Scorecard in a nutshell  The development of the Balanced Scorecard  Implementing strategy  The two main tools of the Balanced Scorecard –Strategy maps –Scorecards  Implementing and using the Balanced Scorecard

5 4 Snjólfur Ólafsson, 8 th June ‘04 The Balanced Scorecard (BSC)  BSC developed from being –a measurement system to be –a methodology for implementing strategy  BSC offers two tools  Strategy maps  Scorecards

6 5 Snjólfur Ólafsson, 8 th June ‘04 Litterature  Kaplan & Norton (1992): The Balanced Scorecard – Measures That Drive Performance. Harvard Business Review, 70 (1),  Kaplan & Norton (1996): The Balanced Scorecard: Translating strategy into action. Harvard Business School Publishing Corporation.  Kaplan & Norton (2001): The Strategy Focused Organization: How balanced scorecard companies thrive in the new business environment. Harvard Business School Publishing Corporation.  Niven (2003): Balanced Scorecard step by step for Government and Nonprofit Agencies. New York: John Wiley & Sons.

7 6 Snjólfur Ólafsson, 8 th June ‘04 Snapshots from history 195x:General Electric developes the first scorecard 1983:Eden et al. presents cognitive maps to analyse issues 1989:Eden calles the cognitive maps strategic maps when the issue is a strategy ________________________________________________________________________________________________________________________ 1990:Research project (KPMG...) 1992:Kaplan & Norton write a paper about scorecards 1996:Kaplan & Norton write a book about scorecards 2000:Kaplan & Norton write a paper about strategy maps 2001:Kaplan & Norton write a book about strategy maps and scorecards

8 7 Snjólfur Ólafsson, 8 th June ‘04 Balanced Scorecard  Describe the strategy –with strategy maps (with objectives) –in more details than is usally done –translate the strategy into operational terms  Define measures –which are put on scorecards –and tell what is stratically important –and measure how the implementation goes

9 8 Snjólfur Ólafsson, 8 th June ‘04 The balance – the four perspectives Financial perspectiveIn order to get financial results Customer perspective you must keep the customers satisfied, and thus you need to Internal business process perspective have effective and efficient processes, and thus you need Learning and growth perspective good people in a learning organization

10 9 Snjólfur Ólafsson, 8 th June ‘04 Put in other words  To succeed financially, how must we look to our shareholders?  To achieve our mission, how should we appear to our customers?  To satisfy our customers, which business processes must we excel at?  To achieve our vision, how will we sustain our ability to change and improve?

11 10 Snjólfur Ólafsson, 8 th June ‘04 Implementing “strategy” Definition by Quinn (1980), (see Grant 2002): A strategy is the pattern or plan that integrates an organization’s main goals, policies and actions sequences into a cohesive whole Definition by Olafsson (2003) – translation from Icelandic: Strategy is a description of the results that are sought after and how they are to be optained/accomplished Usually, only a part of the description exists in writing

12 11 Snjólfur Ólafsson, 8 th June ‘04 The two tools of BSC  Strategy map is –“a logical and comprehensive architecture for describing strategy” –If you want to implement a strategy it is important to have a clear desciption of your strategy  Scorecard (balanced scorecard) –Measures are the pillars but objectives the foundation –Other information on the scorecards, e.g. MeasurementsTargetsProjects  Use the strategy maps to find out what is important and measure it in the scorecards

13 12 Snjólfur Ólafsson, 8 th June ‘04 Strategy map  Different variants / look  The strategy map should tell the story of the strategy You make profit Satisfied customers Good processes Learning and growth means “leads to”

14 13 Snjólfur Ólafsson, 8 th June ‘04

15 14 Snjólfur Ólafsson, 8 th June ‘04 Scorecards  Different what information is on scorecards  Next slide shows typical information  Software –Excel –specialised software

16 15 Snjólfur Ólafsson, 8 th June ‘04

17 16 Snjólfur Ólafsson, 8 th June ‘04 Strategy implementation  General management issues –Key managers and structure –The employees must know, want to and be able to  The work of the employees must support the strategy –Cascading strategy (The strategy should be developed clear and detailed) –Change projects vs Business as usual

18 17 Snjólfur Ólafsson, 8 th June ‘04 Cascading strategy  If you want the employees to support the strategy (implementation) it should be clear how their objectives are linked to the strategy  Cascading means building lower order scorecards (or strategy maps)  A sub-objective (or task) in a higher order strategy can be a main objective in a lower order strategy

19 18 Snjólfur Ólafsson, 8 th June ‘04 Change projects vs Business as usual  The employees work can be split in two parts: A.Business as usual B.Change projects (implementation pr., development pr.)  Some write as if strategy is implemented mainly through projects  BSC is more concerned with Business as usual  “Managing continuity and strategic change” (Eden & Ackerman)

20 19 Snjólfur Ólafsson, 8 th June ‘04 Change projects  Project management –How to manage a project  Projects management –(portfolio management, program management) –Projects play now much greater role in business than before Development projects, change projects, implementation projects, … –Managing change  List of change projects in the light of strategy map  List of change projects in the scorecards

21 20 Snjólfur Ólafsson, 8 th June ‘04 Business as usual  Possible effects of BSC on employees –How the employee prioritizes tasks (his time) –Put emphasis on... –Make changes in some processes og behaviour –Make notice of and pass information (because they know that other employees need the information)

22 21 Snjólfur Ólafsson, 8 th June ‘04 The reasons for implementation  E.g.  To clarify the strategy and develop it  To help employees know the strategy –and be able to support it  To improve management information

23 22 Snjólfur Ólafsson, 8 th June ‘04 Non-profit organizations  The BSC can be as useful as for companies  Usually more difficult  The perspectives –Don’t let them be in the way –Finance perspective can be anywhere  Can libraries benefit from the use of Balanced Scorecard?  Yes, most of them, IF it is done professionally

24 23 Snjólfur Ólafsson, 8 th June ‘04 Experience The Balanced Scorecard insures a clear linkage between projects and strategic objectives. In addition, the process of Balanced Scorecard development enforces alignment, transparency and accountability throughout the organization. Dr Bernhardt Gueldner, Senior Process Engineer, Siemens-ICM

25 24 Snjólfur Ólafsson, 8 th June ‘04 Experience - 2 One of the things I like about the Balanced Scorecard is that it ‘turns over the rocks,' if you will. Nothing can hide. If you’re doing well, you see it; if you need improvement in some areas, you see that as well. You get smarter. It is an essential component of our culture and supports ongoing change. Dr. Jon Meliones, Chief Medical Director Duke Children's Hospital

26 25 Snjólfur Ólafsson, 8 th June ‘04 Experience - 3 For me, the most exciting thing about the Balanced Scorecard is that we won’t be allocating resources to non-strategic activities anymore. As soon as I realized that having a Balanced Scorecard will help us with this, it was like a light went off in my head! Joe Verbarro, Private Banking Summit Bank

27 26 Snjólfur Ólafsson, 8 th June ‘04 Experience - 4 The Balanced Scorecard has become an integral part of our change management process, enabling us to look beyond financial measures and concentrate on factors that create economic value: quality, organizational learning, and focusing on customers. The scorecard has delivered on our major goals in communication, teamwork, learning, and commitment. Michael Hegarty, vice chairman Chase Manhattan Bank


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