1. Strategic Performance Measurement: the Balanced Scorecard
Shelle Poole, Ph.D., PMP, MBB

2. Strategic Performance Measurement: the Balanced Scorecard
12:30 Introductions
12:45 BSC Perspectives
1:30 Break
1:45 The strategic management framework
2:30 Break
2:45 Building the BSC
3:30 Post-Session Assignment

3. Personal Checklist X Do I need a Balanced Score card? ‘gut check’
1) Is your team achieving planned results ?
2) Are you encouraging the behavior that generates the results your business needs?
3) Have you thought through what specifically you want each level of your organization to accomplish?
4) Is your personal compensation tied to your performance results?
5) At the end of the quarter/FY are you surprised by your results?
6) Are you benchmarking the best in your industry/business?
7) Is your vision for your organization understood by all?
You have this worksheet in your workbook, I will read a brief definition for each of these as we go one by one.
1) Is your team achieving planned results ?: Do you have a plan or record or projections at the beginning of the year and your organization knows what they need to do to ensure they hit the target?
2) Are you encouraging the behavior that generates the results your business needs? Do you have metrics in place that serve your customers the way you planned? Or drive innovation at the levels you want to see? Etc…
3) Have you thought through what specifically you want each level of your organization to accomplish? Do individuals in the organization understand how their day to day actions drive the organization to top performance?
4) Is your personal compensation tied to your performance results? Often Executives perks and pay are tied to organizational performance. Are you getting the results you want?
5) At the end of the quarter/FY are you surprised by your results? Are you able to randomly check your performance measure to know how you are doing OR are you getting your performance report at the end of the reporting cycle and you are just waiting to hear how you did?
6) Are you benchmarking the best in your industry/business? Are you learning from the ‘best in your business’ are you out performing them? Are you setting goals to be the best and differentiate your organization?
7) Is your vision for your organization understood by all? : Do you have a well articulated vision that is easy for individual to remember and use as a guide for the daily tradeoff decisions that they need to make?
This should give you some idea about the value of including a Balanced Scorecard within your organization----this can be a differentiator for you as a leader.

4. Post session assignment for Strategic Performance Measurement Session
EMBA 512
Assignment: Develop a balanced scorecard for your organization. You should follow the principles discussed in our session with the goal of improving the strategic performance of your organization. The scorecard will be due by October 31, and should be submitted by to
Please include the following:
Introduction. Provide a brief description of the organization and its industry, overriding strategic focus, markets served, and competitive position.
Existing performance measures. Describe the existing performance measurement controls and/or practices in the organization.
Strategic vision. Describe the long-term goals of the organization and the basis of competitive advantage. What is the organization trying to do and how does it intend to win?
Balanced scorecard Identify the firm’s strategic objectives as they relate to the four traditional BSC perspectives. You can alter the traditional perspectives if more appropriate for your organization.
Choose performance measures for each of the four major scorecard perspectives. The performance measures should link as closely to the strategic objectives as possible.
Rationalize why you chose these measures.
Conclusions and recommendations. Summarize your conclusions and make specific recommendations relating to your proposed set of performance measures for your organization. How would you implement the measures (e.g., how would you deal with the more challenging ones, order of implementation, etc.)? Will there be difficulties collecting the measurement data? If so, how would you address these difficulties?
For this assignment, choose an “organization” that is meaningful to you and your responsibilities. It may be the company, it may be a division of a company, or it may be a functional operating unit within a division. Choose the “organization” such that the exercise is potentially applicable, especially if BSC is not currently used by the organization and you may have the opportunity to pilot the tool within a division.

5. EMBA 512 Coursework Titles
Financial Reporting
Demand (Sales) Forecasting
Differences in Thinking Styles
Microeconomics: Producer and Consumer Decisions
Customer Choice Behavior and Segmentation
Pre-Market Forecasting
Budgeting, Forecasting, and Planning
Financial Reporting Strategies and Measurement
ABC Costing and Transfer Pricing
Microeconomics: Market Outcomes
Taxation Issues
Model Building
Business Intelligence and Data Mining
Internal Performance Measurement: Cost Allocations
Scenario Planning and Competitive Intelligence
Theory of Constraints
Strategic Performance Measurement: the Balanced Scorecard
Return Drivers
Macroeconomics: Aggregate Economies and Government Policy

6. Competency & Competitive Advantage
“Good governance mechanism recognize the truth”   

7. “Good Governance mechanisms recognize the truth”
"If you don’t measure results, you can’t tell success from failure and thus you can’t claim or reward success or avoid unintentionally rewarding failure”
"If you can’t recognize success, you can’t learn from it; if you can’t recognize failure, you can’t correct it“
“If you can’t measure it, you can neither manage it nor improve it“

8. What gets measured is what gets done?
Lord Kelvin (1883)-
I often say that when you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot express it in numbers, your knowledge is of
a meagre and unsatisfactory kind; …..
Peter Drucker -
“Work implies not only that somebody is supposed to do the job, but also accountability, a deadline and, finally, the measurement of results —that is, feedback from results on the work and on the planning process itself.”
So far, the most likely source of this idea, if not in any of these popular forms, is William Thomson, the Scottish physicist also known as Lord Kelvin. According to the Encyclopaedia of Occupational Health and Safety, by Jeanne Mager Stellman (page 1992), Kelvin said in his May 3, 1883, lecture on “Electrical Units of Measurement” (Popular Lectures, Vol. 1, page 73):

9. History of the Balanced Scorecard
Developed in the 1990’s by Robert Kaplan and David Norton at Harvard Business School
WHY/benefits:
Historical Financial emphasis
Need for evaluating strategy within the organization
Need to Balance shareholder objectives with customer & operational objectives
Connect organizational strategies to the Vision
Historical Financial emphasis: flip to next slide about St Elsewhere….
BSC takes into account things like:
Customer service
Employee morale
Product quality
Pollution abatement
Business ethics
Social responsibility
Community involvement
The 4 key areas can be added to, changed, modified…based on your specific business—but these are the original standards. (next slide)

10. The BSC Perspectives
Financial Perspective: ROIC, cash flow, and revenue growth
Customer Perspective: satisfaction, product reliability, on-time delivery, and service level
Internal Business Process OR Internal Perspective: efficiency, timeliness, and employee satisfaction
Learning & Growth OR Innovation and Learning: # of NPI’s, the % of revenue generated from NPI, the time taken to develop a new product, the $$ R & D is spending.
from new products, etc.
Provides a more holistic look at the organization ….

11. The Balanced Scorecard - Who's Doing It?
By 2015 about 65% of Fortune 500 companies were working with the balanced scorecard
The most comprehensive study to date (Bernard Marr) finds that 1/5 of companies use the latest version of BSC that includes Strategy Maps.

12. What can the BSC do?
Establish standards & targets against which performance can be monitored
Create a system for measuring and monitoring performance on a regular basis
Compare actual performance against planned performance
Evaluate results and take corrective actions
Incentivize employees to make decisions that contribute to success.
Four key areas of the traditional BSC:
Financial performance
Customers
Internal business processes
Learning & growth

13. Benefits of using the BSC
Better Strategic planning
Improved Strategy Communication & Execution
Better Management Information
Improved Performance Reporting
Better Strategic Alignment
What is most important is they tell the story of your organization –and customize to make it tell your story

14. HP’s Integrated Approach to Total Customer Experience & Quality Performance Improvement
HP Business Performance Chain
Employees
Operational Excellence
Customers
Business
Employee engagement and experience
Customer perception
Business results
Process & system Performance
Employee Attitudes & Actions
Efficiency & Effectiveness
Customer Loyalty
Profitable Growth
HP SigmaPlus is a customer-driven
improvement method designed to
help HP deliver timely, high-impact,
sustainable improvements in
products, processes, and services.
SigmaPlus Improvement Method
Industry Standards (ISO, CMMi, ITIL)
Foundation
Critical Related Disciplines
Customer and Business Requirements

15. Financial Controls and Strategic Controls
Perspective
Strategic Objective
Responsibility
Key Performance Indicator
Review Milestones
Financial
F1_Sales Revenue
F2_per unit costs
F3_expenses
Functional Unit
Department
Team
Individual
F1/KPI 1
F1/KPI 2
F2/KPI 1
F3/KPI 1
F3/KPI 2
F3/KPI 3
Yearly
Quarterly
Monthly
Project Critical Path dates
Customer C1 C2 C3 C4
Internal Process P1 P2 P3 P4
Learning & Growth L1 L2 L3

16. This is the one I will most often reference in our workshop today….
Financial Perspective: ROIC, cash flow, and revenue growth
Customer Perspective: satisfaction, product reliability, on-time delivery, and service level
Internal Perspective: efficiency, timeliness, and employee satisfaction
Innovation and Learning: # of NPI’s, the % of revenue generated from NPI, the time taken to develop a new product, the $$ R & D is spending.
The first step in creating a BSC is looking at your business through the lens Strategic planning process framework…..

17. Strategic Planning process
Existing Business Model
Mission, Vision, Values, and Goals
External Analysis: Opportunities and Threats
SWOT Strategic Choice
Strategies: Functional, Business, Global, and Corporate-Level
Governance and Ethics
Designing Organization Structure
Designing Organization Culture
Designing Organization Controls
Internal Analysis: Strengths and Weaknesses
Feedback
Strategic Formulation
Strategic Implementation

18. The Power of Vision Leaders with STRONG visionary skills
Leaders with GOOD management skills but WITHOUT vision
Leaders who were WEAK in vision and management skills
Have the highest performing teams
Had average team performance
Had poor performing teams

19. The Power of Vision
“The vision provides guidance for daily decisions so that people are aiming at the right target, not working at cross- purpose”

20. Effective Vision Statements
Does is provide a significant purpose?
What business are you in?
Does is provide a picture of the future
What the future will look like if the vision is successful?
Does is provide clear values?
Does it provides guidance for daily decisions and behaviors?
Significant purpose: the reason for your organizations existence.
Like Walt Disney “ we are in the happiness business”.
Picture of the future: mental imagery enhances performance and it enhances intrinsic motivation as well.
Wal Disney on Disneyland: The happiest place on earth
Clear values: Values need to be consistently acted upon. They need to resonate with the personal values of the members of the organization
Need to keep the number of values to 3-4
ie… Walt Disney VALUES: p. 246: “Disneyland will be based upon and dedicated the to the ideals, the dreams, and the hard facts that have created America.” p. 247 “Disneyland will be filled with the accomplishments, the joys, and the hopes of the world we live in”

21. Some of the ‘top’ vision statements
Feeding America: “A hunger-free America.”
San Diego Zoo: “To become a world leader at connecting people to wildlife and conservation.”
Boeing: “People working together as a global enterprise for aerospace leadership.”
Harley Davidson: “To fulfil dreams through the experiences of motorcycling.”
UPS: “The enablers of global e-commerce.”
Harvard University: “To develop leaders who will one day make a global difference.”
Disney: “To make people happy”
Netflix: “Helping content creators around the world to find a global audience.” ?

24. Strategies Corporate-level strategies - Determine:
The businesses a company should be in to maximize profitability and profit growth
How to gain a competitive edge
Global strategies - Address how to expand operations outside the home country
Since competitive advantage is determined at a global level

25. Strategies
Business-level strategies - Encompass the business’s overall competitive theme
How it positions itself in the marketplace to gain a competitive advantage
Different position strategies that can be used in different industry settings
Functional-level strategies - Directed at improving the effectiveness of operations within a company

26. Strategy Cost Leadership Differentiation Low cost position
Tied to operational performance
Differentiation
Distinguishing yourself from your rivals
Superior reliability
Better service & support
Better branding
Better design
Tied to innovation and focus on the customer

27. Strategy
Spend 5 minutes writing down some key strategies you see for your organization
1-3 strategies
Then partner with someone to refine/validate your strategies based on your vision, SWOT, and strategy type (cost leadership or differentiation) (5-7 minutes)
In reviewing your SWOT, What do you see as your competitive advantage? What strategies should you be focusing on? Cost Leadership or Differentiation?

28. Hoshin Taken from 2 Chinese characters Ho: method or form
Shin: Shiny needle or compass
Taken together the term hoshin means a methodology for strategic directions setting
The Big Idea – Align company goals (Strategy) with the plans of middle management (Tactics) and work performed by employees (Operations) to ensure that everyone is pulling in the same direction at the same time
Around 1645, the concept of Hoshin was to provide a guide for samurai warriors thinking of “putting principles into practice.” 
This concept can be applied to a strategy map and a scorecard…because the purpose of this thinking…is to get all our employees headed the same direction for a shared purpose.

29. 1)Mission and strategy measure: patient census in the hospice unit.
2) To get the desired results on the patient census they determined they needed to get referrals and retain their patients.
3) It was determined that patient satisfaction would important in getting referrals and keep the patients
4) An indicator of satisfaction is the number of patient complaints
5) To reduce the # of complaints the hospice unit needed to have employees that stayed
6) An indicator of IF an employee would stay is Employee satisfaction
7) It was determined that employees would be more satisfied if they received appropriate training and a reduced patient load
Give myself the script here of walking through the slide
So you can see that Hoshin has been applied all the way through the organization to ensure Positive Patient census.

30. Connecting Competitive Advantage to BSC
we can map the 4 dimensions of competitive advantage to the BSC framework.
Customer responsiveness to customer satisfaction
Innovation to Knowledge & innovation or on your scorecard template: Learning and Growth
Efficiency to Internal business processes
Quality as defect rates to IBP, quality as reliability to Customer
All translate to financial results and to ROIC.
In your workbook is two templates for a BSC….go ahead and take those out now. (show them the one I favor) lets get a head-start on part the home work assignment…..

31. Building a Balanced Scorecard
List the Organization
The Vision for the Organization
Strategic Objectives/Strategies
Critical Success Factors (CSFs) Or Performance metric (1 to 3 of them)

32. Performance vs. Outcome Metric
Performance Metric/Critical Success Factor (CSF):
how well the activities are performing that have been determined as the most likely to positively impact the outcome
“lead measures,” because they are driving the outcome in advance of the measurement of that outcome
Measured less frequently than a KPI
Key Performance Indicator (KPI):
Periodically measured to see the progress towards the strategic goals
Typically measures a process

33. CSF’s = RED circles
KPI’s = GREEN circles
When we are trying to establish CSF’s one of the approaches to consider is benchmarking….

34. Benchmarking
Benchmarking has been classified into two distinct categories:
Technical benchmarking — 
capabilities of products or services, especially in comparison to the products or services of leading competitors.
how do designers rank the properties of your organization’s products or services?  
Competitive benchmarking — 
Compares how well (or poorly) an organization is doing with respect to the leading competition, especially with respect to critically important attributes, functions, or values associated with the organization’s products or services.  
how do customers rank your organization’s products or services compared to those of the leading competition?

35. Building a Balanced Scorecard
List the Organization
The Vision for the Organization
Strategic Objectives
Critical Success Factors (CSFs) Or Performance metric (1 to 3 of them)
Key Performance Indicators (KPI)/Outcome metrics
Map them both to the framework (lines 1 & 2) in the scorecard.

36. The Balanced Scorecard
S1: Be the benchmark for GBS process teams
S2: Highest ROI per GBS Process teams
S3: Be masters at results & loyalty
Statement of Vision
1)Marketing Process Excellence Dept
2) Be Masters of our tools and never leave a negative trace
If my vision succeeds how will I differ?
To my Shareholders
To my Customers
With my internal Management Processes
With my ability to innovate & Grow
Financial Perspective
Customer Perspective
Internal Perspective
Innovation & Learning
What are my critical success factors?
$1M min. savings per client per yr.
Cust & Client. Loyalty (85%)
Employee Loyalty (90%)
100% Masters
What are the critical measurements?
-Per project cost savings (25K+)
-Cust. Sat. (95%)
-Cust. Retention (75%)
-Employee. Sat. (95%)
-Employee LOS (5+yrs)
100% BB
100% PMP
For example………………
How will these be connected to feedback and rewards?
-100% team recognition for $1M prj’s
-Productivity (83% utilization)
-Employee career tree utilization (85%)
-LOS award (100% eligible)
-Employee promotions (3% of all top performers)
BB training (1X qtr)
100% PMP exam fees per employee
250 stock awards per PMP/ BB
-1st time fix (98%)
-Cust. Response time (4hrs)
-Customer service awards (1 per dept. per quarter)

37. Implementing the BSC
Pilot the BSC or ‘litmus’ test it with your organization
Edit/change it based on feedback
Discuss who is accountable for what metrics
What function/division or dept. owns the results
Determine measurement intervals
Taking into account the complexity of getting the metric Strategic Objectives
Determine review cycles
Milestone reviews and key target review cycles
Guiding Principals for Culture

38. Organizational Guiding Principals
Nine ninja strengths
Timeliness
Balance
Wisdom
Never leave a negative trace
Super-strength
Masters of our tools
Foresight
Laser focus
Agility

39. Personal Checklist X Do I need a Balanced Score card? ‘gut check’
1) Is your team achieving planned results ?
2) Are you encouraging the behavior that generates the results your business needs?
3) Have you thought through what specifically you want each level of your organization to accomplish?
4) Is your personal compensation tied to your performance results?
5) At the end of the quarter/FY are you surprised by your results?
6) Are you benchmarking the best in your industry/business?
7) Is your vision for your organization understood by all?

40. Learning Objectives Strategic Framework
Relation to a competitive advantage
“Good governance mechanism recognize the truth”
“What gets measured is what gets done”
SWOT to recognize our strategic advantages
Hoshin as a concept for planning
Strategy Mapping (reverse engineering)

41. Learning Objectives Performance Metrics/ CSF’s
Key Performance Indicator’s
Balanced Scorecard
Driving predictable results
Getting all employees headed toward a shared goal

42. Post session assignment for Strategic Performance Measurement Session
EMBA 512
Assignment: Develop a balanced scorecard for your organization. You should follow the principles discussed in our session with the goal of improving the strategic performance of your organization. The scorecard will be due by October 31, and should be submitted by to
Please include the following:
Introduction. Provide a brief description of the organization and its industry, overriding strategic focus, markets served, and competitive position.
Existing performance measures. Describe the existing performance measurement controls and/or practices in the organization.
Strategic vision. Describe the long-term goals of the organization and the basis of competitive advantage. What is the organization trying to do and how does it intend to win?
Balanced scorecard Identify the firm’s strategic objectives as they relate to the four traditional BSC perspectives. You can alter the traditional perspectives if more appropriate for your organization.
Choose performance measures for each of the four major scorecard perspectives. The performance measures should link as closely to the strategic objectives as possible.
Rationalize why you chose these measures.
Conclusions and recommendations. Summarize your conclusions and make specific recommendations relating to your proposed set of performance measures for your organization. How would you implement the measures (e.g., how would you deal with the more challenging ones, order of implementation, etc.)? Will there be difficulties collecting the measurement data? If so, how would you address these difficulties?
For this assignment, choose an “organization” that is meaningful to you and your responsibilities. It may be the company, it may be a division of a company, or it may be a functional operating unit within a division. Choose the “organization” such that the exercise is potentially applicable, especially if BSC is not currently used by the organization and you may have the opportunity to pilot the tool within a division.

43. Reference
and the different benchmarks they do:

44. Reference
David, F., David, F. (2017). Strategic Management: A competitive advantage approach. 16th edition. Pearson Education. Florence, South Carolina.
Strategic Management: An Integrated Approach, 11th Edition, Charles W.L. Hill, Gareth R Jones, and Melissa A Schilling. South-Western Publishing/Cengage ISBN:
Crowley, M.C. (2011). Lead from the heart: Transformational leadership for the 21st century. Balboa Press, Bloomington, IN. ISBN:

45. Figure 1.6 - defining the business
Google Mission statement: “to organize the world’s information and make it universally accessible and useful.”
In order to fully create a Mission statement you need to answer these basic questions first.

46. The Balanced Scorecard
Statement of Vision
1)Definition of SBU
2) Vision Statement
If my vision succeeds how will I differ?
To my Shareholders
To my Customers
With my internal Management Processes
With my ability to innovate & Grow
Financial Perspective
Customer Perspective
Internal Perspective
Innovation & Learning
What are my critical success factors?
What are the critical measurements?
Check in on Status: How we doing? Do we will feel we are getting there?
Ok—set your scorecard aside and lets discuss what typical implantation of the BSC looks like….(next slide)
How will these be connected to feedback and rewards?