1. STRATEGIC MANAGEMENT ACCOUNTING The Balanced Scoreboard Companies must mobilize and deploy intangible assets to create and sustain competitive advantage. Intangible assets:  Product and service franchises  Motivated and skilled employees  Distinctive internal capabilities  Satisfied and loyal customers It is often difficult, if at all possible, to place an accurate value on the above assets. Yet these are critical values for success.

2. STRATEGIC MANAGEMENT ACCOUNTING The Balanced Scoreboard The Balanced Scoreboard communicates the multiple, linked objectives that companies must achieve to compete based on their intangible capabilities and innovation. It translates mission and strategy into goals and measures organized into four perspectives:  Financial  Customer  Internal business process  Learning and growth

3. STRATEGIC MANAGEMENT ACCOUNTING The Balanced Scoreboard Building a Balanced Scoreboard Step 1: Develop goals and measures for Critical FINANCIAL Performance Variables  Revenue  Cost  Operating Profit  Growth  ROCE  ROE

4. STRATEGIC MANAGEMENT ACCOUNTING The Balanced Scoreboard Building a Balanced Scoreboard Step 2: Develop goals and measures for Critical CUSTOMER Performance Variables. Identify target customer and market segments. Develop measures and tracks of the business’ ability to create satisfied and loyal customers. Measures can include:  Customer satisfaction  Customer Retention  Customer Loyalty

5. STRATEGIC MANAGEMENT ACCOUNTING The Balanced Scoreboard Building a Balanced Scoreboard Step 2: (continued) Attributes that organize the value proposition: Product/service attributes (product features, price, quality) Customer relationship ( distribution, delivery, customer buying experience-assessed through mystery shopping) Image and reputation ( strength of brand name, price premiums, retailers willingness to stock)

6. STRATEGIC MANAGEMENT ACCOUNTING The Balanced Scoreboard Building a Balanced Scoreboard Step 3: Attributes that organize the value proposition: Product/service attributes (product features, price, quality) Customer relationship ( distribution, delivery, customer buying experience-assessed through mystery shopping) Image and reputation ( strength of brand name, price premiums, retailers willingness to stock)

7. STRATEGIC MANAGEMENT ACCOUNTING The Balanced Scoreboard Building a Balanced Scoreboard Step 3: Develop goals and measures for Critical INTERNAL PROCESS PERFORMANCE Performance Variables. These ensure that:  Deliver values that will attract and retain customers  Satisfy shareholder expectations Each business has a unique set of processes for creating value for customers.

8. STRATEGIC MANAGEMENT ACCOUNTING The Balanced Scoreboard Building a Balanced Scoreboard Step 3 (continued): The internal VALUE CHAIN encompasses three principal business process:  Innovation process (research the needs of customers and create suitable products/services)  Operations process (which produce and deliver these existing products and services to customers)  Post-sales service process (customer services after the original sale or delivery of service)

9. STRATEGIC MANAGEMENT ACCOUNTING The Balanced Scoreboard Building a Balanced Scoreboard Step 4: Develop goals and measures for Critical LEARNING AND GROWTH Performance Variables. The infrastructure that the organization must build to create long-term growth and improvement.  People  Systems  Organizational Procedures

10. STRATEGIC MANAGEMENT ACCOUNTING The Balanced Scoreboard