1. Prepared by Group 4: Andrew Molloy Amy Miller Mike Elicker
The Balanced Scorecard: Customer Perspective, Internal Processes, Learning and Growth
Prepared by Group 4:
Andrew Molloy
Amy Miller
Mike Elicker

2. What is the balanced scorecard?
Developed in the early 1990’s by Dr. Robert Kaplan and David Norton
"The balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation."

3. What is the balanced scorecard?
The Balanced scorecard is a management system that enables organizations to clarify their vision and strategy and translate them into action.
Provides an organization with feedback of both the internal business processes and external outcomes, which allows for continuous improvement of strategic performance and results.
Nerve center of an enterprise

4. What is the balanced scorecard?
The balanced scorecard is centered on four performance metrics or perspectives:
Customers
Internal processes
Financial
Learning and growth
When implemented properly, each one of these perspectives contains four subparts consisting of
Objectives
Measures
Targets
Initiatives

5. What is the balanced scorecard?
Objectives - what the strategy is to achieve in that perspective
Measures - how progress for that particular objective will be measured
Targets - refer to the target value that the company seeks to obtain for each measure
Initiatives - what will be done to facilitate the reaching of the target

6. What is the balanced scorecard?
The term “scorecard” signifies quantified performance measures and “balanced” signifies the system is balanced between:
Short-term and long term objectives
Financial and non-financial measures
Lagging and leading indicators
Internal and external performance perspectives

7. What is the balanced scorecard?

8. What is the balanced scorecard?
Kaplan and Norton defined a four-step process that has been used across a wide range of organizations
Defining the measurement architecture
For example will the system be used at the strategic business unit level rather than the corporate level.
Specify strategy objectives.
These should be carefully decided upon and selected as those deemed critical in achieving breakthrough competitive performance and limited in number to 15 to 20, or 3 to 4 in each perspective to avoid information overload.
Choose strategic measures
These measures should be closely related to the actual performance drivers and will later be used for evaluating the progress made toward achieving the objectives
Develop an implementation plan to integrate the scorecard into management.

9. Customer Needs Who is your customer?
What age, gender, group does our product appeal to?
What services or products do they expect from you?
Do we provide personal services, do your products serve as advertised?
How do you listen to and learn from your customers?
Do we provide feedback calls or s?
How do you retain and acquire new customers?
Do we use new advertisement and how do we advertise?
How do you meet customers’ needs?
Do we provide help lines and how can we provide help to customers?
How do you measure customer satisfaction and dis-satisfaction?
Do we use surveys to find out how customers feel about us?

10. Customer Concerns
There are four major categories that managers need to address when concerning their customers.
Quality
Are there often recalls or problems with defects with our products.
Time
Do we save time by limiting defects and do we provide fast on time delivery.
Performance and service
Do we perform up to customers standards and do we provide fast and adequate services.
Cost
Do we try to minimize cost when dealing with ordering, scheduling delivery, and paying for materials in order to lower cost of our products to our consumers.

11. Customer Perspective
With customer perspective managers and companies have to be careful and make sure they are setting up their balance scorecard to help customers.
Examples of things that don’t concern customers are profit per customer, revenue per customer, and improve profit per customer.
These objectives don’t necessarily protean to the customer perspective but rather the companies perspective of the customer.
Managers need to take a step back and look at how customers perceive your company and what they want to get out of your company.

12. Examples of Customers Perspective
Two main questions that a company should ask itself to protean to their customers are:
How should we appear to our customers
Do we show a promising future
Do we show a strong sense of concern
What is our differentiating value proposition to our targeted customers
How are we different from our competitors
What makes us better than our competitors

13. Perspectives of Kaplan and Norton
There are four broad categories that Kaplan and Norton base the customer perspective around.
Best buy
Companies that supply services and products at low prices and fast service.
Product leadership and innovation
Companies that focus on customer that buy the newest and most advanced cutting edge technology.
Customer complete solutions
Companies that try to sell things like computers where customers customize them to their liking.
Lock in
Companies that will make a product then to buy accessories for that product you have to buy the same brand name because other brands out work with that product.

14. Successful balanced Scorecards
When using critical thinking of strategy, objectives, and measures companies can get a feel for who their customers are and what they can offer them.
Strategy gurus, like Michael Porter stress the fact that it is more important to accomplish more with less.
Don’t try to please everyone when setting up your balanced scorecard because you can’t.

15. Internal Processes
Internal business process objectives address the question of which processes are the most critical for satisfying customers and shareholders
A firm must concentrate its efforts to excel in these areas
Metrics based on this prospective allow the managers to know how well their business is running and whether its products and services conform to customer requirements

16. Internal Process Examples
Cost
Throughput
Quality
Objective
Specific Measure
Manufacturing excellence
Cycle time, yield
Increase design productivity
Engineering efficiency
Reduce product launch delays
Actual launch date vs. plan

17. Internal Processes
In addition to the strategic management process two kinds of business processes may be identified, these include:
Mission-oriented processes - special functions of government offices which often involve many unique problems in their processes
Support processes - more repetitive in nature.

18. Financial Performance
The financial performance perspective of the balanced scorecard addresses the question of how shareholders view the firm and which financial goals are desired from the shareholder’s perspective.
These financial goals are dependent on the company’s stage in the business life cycle.

19. Financial Performance: Business Life Cycle
There are three main stages to this cycle which include:
Growth stage -goal of the company is growth
An example of a growth goal would be revenue growth.
Sustain stage - the goal of the firm is profitability
Measures in this stage may include ROE, ROCE, and EVA.
Harvest stage - the goal of the firm is cash flow and reduction in capital requirements.

20. Financial Performance
The table below outlines possible financial performance objectives and their metrics.
Objective
Specific Measure
Growth
Revenue Growth
Profitability
Return on equity
Cost Leadership
Unit Cost

21. Learning & Growth

22. “How much a company must learn, improve, and innovate to meet objectives.”

23. Use of the scorecard: To set objectives To determine measures
To predict outcomes
To determine initiatives
To gain the big picture

24. Key performance indicators include:
Illness rate/days of absence
Employee turnover
Gender/racial ratios
Internal promotion %

25. A learning & growth example:
Objective: increase internal promotions
Measure: bigger % of in house promotions
Target: +10% in 2 years
Additional classes and training

26. “A balanced scorecard system provides a basis for executing good strategy well and managing change.”
-Howard Rohm

27. Learning & growth must focus on measurable outcomes to move the company forward.

28. Scorecard allows for actionable terms derived from company strategy.

29. Makes it easier for management to carry out strategy.
Balanced Scorecard
Makes it easier for management to carry out strategy.

30. 4 step process Define measurement architecture
Specify strategic objectives
Choose strategic measures
Develop implementation plan

31. Potential Benefits Translation of strategy into measurable parameters
Communication of strategy
Alignment of individual goals with strategic objectives
Feedback of implementation results

32. Potential Disadvantages
Lack of a well defined strategy
Use of only lagging measures
Use of generic metrics

33. Conclusion
Balanced scorecard is a performance management system that can be used in any size organization.
Allows management to measure financial and customer results, operations, and organization potential.