1. Balanced Scorecard & Strategic Management

2. Strategic Planning Model
1. Where are we now?
2. Where do we want to be?
3. How do we measure our progress?
4. How do we get there?
AND
5. How do we track our progress?

3. Strategic Planning Model
Vision & Mission
SWOT Analysis
Balanced Scorecard
Strategic Objectives
Key Performance Indicators
Budgets & Resources
Initiatives
Objectives & Measures
Outputs and Outcome

4. Strategy Map (Logic Model)
Strategic Plan
Perspective
Strategy Map (Logic Model)
Corporate Scorecard
Action Plan
Strategy Map
Objective
Measure
Target
Initiative
Budget
Financial
Run the Business
Customer
Serve the customer
Internal Process
Manage the process
Learning & Growth
Build capacity

5. Chem-Pro Corporate Scorecard
Objective
Measurement
Target
Initiative
F1:Exceed market growth
F2: Profitable growth
Sales growth
Margin Growth
+2%
+5 points
C1: Perceived value for money
C2: Relationship at multiple levels
Customer survey
#contacts with targeted sponsors
Rated #1 by 75%
100%
Focus group program
Account penetration program
I1: Maximum retention
I2: Develop regional market
I3: Identify profitable new market
Win/loss rate
Potential revenue in sales pipeline
#potential customers arrived first
#surprises
Exceed 60% in targeted segments
Increase by 30%
Double current # in 2 years
Reduce by 50% in 2 years
Critical opportunity sales support
Reference sell program
Pull marketing and image program
Target marketing program
L1: Develop marketing skill
L2: Develop customer database
Percent of strategic skills available
Percent of customers with key attributes known
100% in 2 years
80% in 2 years
Selling skills program
Customer database
Sales learning system
Kaplan and Norton, 1996

6. Strategy Map
A diagram describes how an organization creates value by connecting strategic objectives in explicit cause-and-effect relationship with each other in the four BSC perspectives.
All of the information is contained on one page; this enables relatively easy strategic communication.

7. Strategy Map Max. Profit Inc. Rev. Reduce Cost Inc. rev New Cust
Inc. rev per Cust
Cust Acquisition
Cust Satisfaction
Product Quality
Fast Service
On-time Delivery
Production Process
Cust Mgt. Process
Logistic Process
Skill Personnel
Motivated Culture
Excellent IT/IS
Financial
Perspective
Customer
Internal Process
Learning &
Growth

8. What are the main principles behind Strategy Maps?
Strategy balances contradictory forces.
Strategy is based on a differentiated customer value proposition.
Value is created through internal business processes.
Strategy consists of simultaneous, complementary themes.
Strategic alignment determines the value of intangible assets.

10. Strategy map
Kaplan and Norton, 2004

11. Strategic Alignment

12. Strategic Alignment “Alignment is the essence of management” (Smith, Chairman of Federal Express, cited in Labovitz and Rosansky, 1997)
Strategic Alignment—the process of linking strategy with corporate vision, goals, objectives, and actions—fit and integration
Using Balance Scorecard to create corporate synergies

13. BUDGETS AND CAPITAL INVESTMENTS
Question: How can complex organizations achieve results like this in such short periods of time?
Answer:
Alignment!
The Balanced Scorecard process allows an organization to align and focus all its resources on its strategy
STRATEGY
BUSINESS UNITS
EXECUTIVE TEAM
HUMAN RESOURCES
INFORMATION
TECHNOLOGY
BUDGETS AND CAPITAL INVESTMENTS
Kaplan and Norton, 2001

14. Strategy-focused Organizations
Operationalizing the strategy – use balanced scorecard and strategy to map and identify significant strategies for creating sustainable competitiveness.
Aligning the organization to the strategy – align both strategic units and shared service units with organizational strategy.
Making strategy everyone’s everyday job – facilitate top down communication that helps employees understand how their day-to-day jobs contribute to strategy.
Making strategy a continual process – build double-loop process to manage strategy by (1) linking strategy to the budgeting process, (2) making effective management meeting to reviewing strategy, and (3) learning and adopting strategies as they evolve.
Mobilizing the leadership for change – leaders must enable their staff to understand why change is needed and lead them through the stated vision to its accomplishment.

15. Translate the strategy to operational terms#1
The Strategy
Measurement is the language that gives clarity to vague concepts.
Measurement is used to communicate, not to control.
Building the scorecard develops consensus and teamwork throughout the organization
Financial Perspective
"If we succeed, how will we look to our shareholders?”
Customer Perspective
"To achieve my vision, how must I look to my customers?”
Internal Perspective
"To satisfy my customer, at which processes must I excel?”
Organization Learning
"To achieve my vision, how must my organization learn and improve?”
Kaplan and Norton, 2001

16. Link and align the organization around its strategy#2
#3.
Each Support Unit develops a plan and BSC for “best practice” sharing to create synergies across SBUs.
#1.
A Corporate Scorecard defines overall strategic priorities.
CORPORATE
CORPORATE SCORECARD
(Shared Strategic Agenda)
LINE BUSINESSES
SUPPORT UNITS
EXTERNAL PARTNERS
Themes
Measures
SBU A
SBU B
SBU C
SBU D
1. Financial Growth
2. Delight the Consumer
3. Win-Win Relationships
4. Safe & Reliable
5. Competitive Supplier
6. Good Neighbor
7. Motivated & Prepared
8. Quality
xxx xx xx xx xx
Finance
Marketing
Distribution
Procurement
Purchasing
Safety
Human Resources
Information Technology
Customer Scorecards
Distributor Scorecard
Joint Venture Scorecard
Vendor Scorecard
New Venture Scorecard
Outsourcer Scorecard
#2.
Each SBU develops a long-range plan and BSC consistent with corporate strategic agenda.
#4.
Plans and BSC’s define relationships with external partners consistent with SBU strategy.
Strategies Are Executed Through Business Units. The Strategies of the Business Units Must Be Integrated If Organization Purpose and Synergies Are to Be Achieved.
Kaplan and Norton, 2001

17. Make Strategy Everyone’s Everyday Job#3
Make Strategy Everyone’s Everyday Job
HR Processes Are Essential for Moving Strategy From the Top to the Bottom
CORP
SBU
Top-Down “Bridging Process” To Share the Strategy & Align the Workforce
EDUCATION
PERSONAL GOAL ALIGNMENT
BALANCED PAYCHECKS
Bottom-Up Process to Internalize & Execute the Strategy
The Strategy Focused Workforce
Kaplan and Norton, 2001

18. Strategy Deployment Who are responsible for the targets?
Strategic
Goals
Measures
Unit
Team
Individual

19. Issues on Strategy Deployment
Corporate/Department KPI Matrix
Cascade to department or staff
Mandatory KPI
How to Weight KPIs
Routine/Administrative Job

20. Making Strategy a Continual Process#4
Imbed the Strategy
in Ongoing Management Processes 1
Establish stretch targets; Select initiatives, Align operational improvement programs (TQM, Six Sigma, Activity Based Management); Allocate resources to projects
Integrate Strategy with Planning and Budgeting 2
Introduce the New Reporting System
Develop systems for data collection, analysis, and reporting 3
Conduct the New Management Meeting
Open discussion of performance shortfalls; team problem-solving; adapting and learning
Kaplan and Norton, 2001

21. To Succeed, the Executive Leader Must be Engaged in the Strategic Change Process…#5
Unfreeze
Change
Breakthrough and Sustain
Achieve commitment and momentum at the top
Align and focus the organization on change
Institutionalize capabilities and culture required for breakthrough results
“The Case for Change”
“Early Wins”
“Irreversible Momentum”
“A successful Balanced Scorecard program is a transformation process not a “metrics” project.”
Kaplan and Norton, 2001

22. Strategic Learning

23. Learning as a new paradigm of control
Command & Control
Learn & Adapt
Ultimate intent of managing by measuring is not to control people but to influence them to make decisions and take actions that are likely to be consistent with organizational goals

24. Strategic Learning System
Strategy map
Perspective
Financial
Perspective
Customer
Perspective
Internal
Learning Perspective
Update the Strategy
Test the Hypothesis
2. Strategy Management
Balanced Scorecard
Financial
Strategic Objectives
Financially Strong
Delight the Consumer
Win-Win Relationship
Safe & Reliable
Competitive Supplier
Motivated & Prepared
Strategic Measures
Return of Capital Employed
Mystery Shopper Rating
Dealer/Pioneer Gross Profit Split
Manufacturing Reliability Index
Days Away from Work Rate
Laid Down Cost vs. Best Competitive Ratable Supply
Strategic Competency Availability
Cust
Reporting
Internal
L&G
1. Project Management
Review
Resource
Managing Operations Loop
OPERATIONS
Output
Inputs
Kaplan and Norton, 2001

25. Strategy Map as a Learning Device
Max. Profit
Inc. Rev.
Reduce Cost
Inc. rev New Cust
Inc. rev per Cust
Cust Acquisition
Cust Satisfaction
Product Quality
Fast Service
On-time Delivery
Production Process
Cust Mgt. Process
Logistic Process
Skill Personnel
Motivated Culture
Excellent IT/IS
Financial
Perspective
Customer
Internal Process
Learning &
Growth

26. Double Loop Learning System
Strategic Management: Strategic Planning + Strategy Implementation
Monitoring and Learning
Strategy Content Management
Project Management

27. Management Cockpit
A Dashboard—Management Information System for effective making decision
Information will be updated regularly and presented in the clarity, summary, and predetermined and sequenced basis

28. Management Cockpit
Source: Chulalongkorn University, Thailand

30. Suwit Srimai Faculty of Technology & Management Prince of Songkla University, Thailand