Balanced Scorecard

A new approach to strategic management was developed in the early 1990's by Drs. Robert Kaplan (Harvard Business School) and David Norton. The balanced scorecard approach provides a clear prescription as to what companies should measure in order to 'balance' the financial perspective.

Balanced Scorecard is the Management System that enables organisation to clarify their vision and strategy and translate them into action.It provides feedback on both internal process abd external outcomes in order to continously improve strategic performance and results.

Kaplan and Norton describe Balanced Scorecard as:

“ 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.”

Financial Perspectives

Customer Perspectives

Learning and Growthperspectives

Business ProcessPerspectivesVision and

Strategy

Explanation of the 4 perspectives

Financial Perspectives:

•Revenue Growth, Profit

• Cost Reduction

• Productivity Improvement

• Asset Utilization

• Investments

Learning and Growth perspective

• Learning and growth constitute the essential foundation for success of any knowledge-worker organization.

• Employee training and corporate cultural attitude related to both individual and corporate self-improvement.

• It includes things like mentor and tutors, within the organization as well as ease of communication among workers that allows them to readily get help on a problem when it is needed.

• It includes technological tools “high performance work system”

Learning and growth Perspective

Improving Capabilities for Delivering Values to Customer

• People

• System

• Organization Procedure

Learning and growth Perspective

Core Measurement

Enablers

Staff Competencies

TechnologyInfrastructure

Climate ofAction

Results

EmployeeRetention

EmployeeProductivity

EmployeeSatisfaction

Business Process Perspective

• There are 3 business process that can be identified:

Strategic management process

Mission-oriented process (special function of government offices and unique problems are encountered)

Support-process (repetitive in nature and easier to measure and benchmark)

Business Process Perspective

Critical internal process in which organization must deal. These processes enable to deliver the value propositions to customers and satisfy stake holders expectations.

Innovation Process

- Product Design

- Product Development

- Process Implementation

• Operating Process

- Manufacturing

- Marketing

- After Sale Service

Customer Perspective

• Due to increasing realization of customer focused and customer satisfaction in any organization therefore developing the metrics for satisfaction customers should be analyzed in terms of kind of customers and kind of processes for which we are providing a product or service to those customers groups.

In today’s business scenario “Customer is the king”

Customer perspective• Customer Satisfaction

• Customer Retention

• New Customer Acquisition

• Customer Profitability

• Market Share

• Measures of value Proposition to customer

- Short Lead Time

- On Time Delivery

- Innovative Products

- Anticipating Needs

Customer Perspective – Core Measure

Market Share

Customer Profitability

Customer Satisfaction

CustomerAcquisition

CustomerRetention

Summary

FinancialPerspective

Customer Perspective

InternalProcess

Learning andGrowth

Revenue

CustomerLoyalty

On TimeDelivery

Process QualityProcess Cycle

Time

Employee Competitiveness