© 2009 Factory Strategies Group LLC. All rights reserved. The Balanced Scorecard Enterprise Excellence Series (Sample Slides)

2 © 2009 Factory Strategies Group LLC. All rights reserved. Outline 1.Introduction to the Balanced Scorecard a.What is it? b.Why do it? 2.Balanced Scorecard Fundamentals a.The Four Perspectives b.Measures, Targets and Initiatives c.Roles and Responsibilities 3.Using the Balanced Scorecard as a Management System 4.Issues and Challenges with the Balanced Scorecard 5.Implementing the Balanced Scorecard

3 © 2009 Factory Strategies Group LLC. All rights reserved. Strategy vs Operational Excellence Strategy creates fit among a firms activities The success of strategy depends on doing many things well, not just a few All things that are done well must operate within a close knit system If there is no fit, there is no strategy Without fit management becomes the search for operational excellence Improving operational excellence is necessary but it is not the same as strategy Managing fit is “strategic management”

4 © 2009 Factory Strategies Group LLC. All rights reserved. The Increasing Sophistication of Corporate Performance Measurement Time Sophistication of Measurement Systems Operating measures Traditional accounting measures Quality-related operating measures Activity-based costing Balanced scorecard Economic value added Value-linked measurements for business strategy, stakeholder needs, process attributes and the business environment

5 © 2009 Factory Strategies Group LLC. All rights reserved. The Balanced Scorecard Ties performance measures to corporate strategy “Balance” includes ▫ short & long term objectives ▫ financial and non-financial measures ▫ external & internal measures ▫ various perspectives Purposes of the balanced scorecard include ▫ clarify & translate vision & strategy ▫ communicate & link strategic objectives & measures ▫ plan, set targets & align strategic initiatives ▫ enhance strategic feedback & learning

6 © 2009 Factory Strategies Group LLC. All rights reserved. The Balanced Scorecard and The Big Picture Activity Based Costing Economic Value Added Forecasting Benchmarking Market Research Best Practices Six Sigma Statistical Process Control Reengineering ISO 9000 Total Quality Management Empowerment Learning Organization Self-Directed Work Teams Change Management

7 © 2009 Factory Strategies Group LLC. All rights reserved. Potential Problems with the BSC Lack of time for the decision makers to focus on strategy ▫ Having strategy sessions on a continuous basis is difficult ▫ Running the business seems to come first Confusion between operational efficiency and strategy ▫ This is a continual problem ▫ Always ask “do I have options?” if so then it’s strategy Difficulty in creating well defined metrics and connecting them to deliverables ▫ Scalar metrics with defined “units of measure” Cascading the objectives down to the staff that can deliver the results ▫ This is the hardest and where there is the most resistance