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Introduction to Balanced ScorecardIntroduction to BPR

LOGOIntroduction to Balanced

ScorecardDeveloped by

Robert Kaplan (Harvard) and David Norton early 90s..

The balanced scorecard is a strategic management system (not only a measurement system) Internal assessment, improvement and reporting

system Key is the link to the strategic plan

System to turn strategy into action

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The 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. Kaplan & Norton

LOGOBalanced Scorecard

Enables organizations to clarify their vision and strategy and translate them into action

It provides feedback about both the internal business processes and external outcomes

Continuous improvement of strategic performance and results.

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The balanced scorecard suggests that we view the organization from four perspectives: The learning growth perspective The business process perspective The customer perspective The financial perspective

Develop metrics, collect data and analyze relative to each of these perspectives

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LOGO Learning and Growth Perspective

Development of the human resources This perspective supports the concept that people are a

company's main resource and most valuable asset metrics defined for this perspective must measure various

aspects of employee improvement, growth, and satisfaction. • personnel training and improvement • cultivation of corporate culture• organizational development, including the nurturing of corporate

experts, gurus, and mentors• setting up of fast and efficient knowledge transfer infrastructure• opening up of communication lines among personnel

LOGO Business Processes Perspective

Internal business processes. These metrics, which measure various aspects

(efficiency, speed, quality, etc.) of how well the company's products, services and internal support systems are produced or delivered

LOGOThe customer perspective

Focus on customer satisfaction.  Rigorous data analysis to understand the

customer Difficult to reflect the true sentiment of the

customer. 

LOGOFinancial Perspective

Indicates if the transformation of strategy leads to economic success

Define the financial performance that the strategy is to achieve Revenue growth Cost reduction

• Cost reduction from energy efficiencyMeasures the effectiveness of the other

perspectives

LOGOCharacteristics of good metrics

reflect the true present status of the company from many different perspectives

provide constructive feedback to various company processes, leading to continuous improvement

show trends in company performance over time, facilitating adjustments to changes

quantify many things, making analyses more accurate and solutions more effective.

LOGOClose the loop

once the metrics have been defined and implemented

scorecard data becomes available, follow-through becomes imperativemovements in the metrics must be analyzed to

identify their causes. Causes that produce positive (negative)

changes must be sustained or enhanced (eliminated)

LOGOWhat is BPR?

Reengineering is the fundamental rethinking and redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed.

(Hammer & Champy, 1993)

LOGOBPR is Not?

AutomationDownsizingOutsourcing

LOGO BPR Versus Process Simplification

Process Reengineering

Radical TransformationVision-Led

Change Attitudes & BehaviorsDirector-Led

Limited Number of Initiatives

Process Simplification

Incremental ChangeProcess-Led

Assume Attitudes & BehaviorsManagement-Led

Various Simultaneous Projects

(Source Coulson-Thomas, 1992)

LOGO BPR Versus Continuous Improvement

Process Reengineering

Radical TransformationPeople & Technology Focus

High InvestmentRebuild

Champion Driven

Continuous Improvement

Incremental ChangePeople Focus

Low InvestmentImprove ExistingWork Unit Driven

LOGOWhat is a Process?

A specific ordering of work activities across time and space, with a beginning, an end, and clearly identified inputs and outputs: a structure for action.

(Davenport, 1993)

LOGOWhat is a Business Process?

A group of logically related tasks that use the firm's resources to provide customer-oriented results in support of the organization's objectives

LOGOWhy Reengineer?

Customers Demanding Sophistication Changing Needs

Competition Local Global

LOGOWhy Reengineer?

Change Technology Customer Preferences

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Why Organizations Don’t Reengineer? Complacency*

A feeling of contentment or self-satisfaction, especially when coupled with an unawareness of danger, trouble, or controversy.

An instance of contented self-satisfaction. *www.dictionary.com

Political Resistance

New Developments

Fear of Unknown and Failure

LOGOPerformance

BPR seeks improvements of

Cost Quality Service Speed

LOGOOrigins

Scientific Management. FW Taylor (1856-1915). Frederick Herzberg - Job Enrichment Deming et al - Total Quality Management and

Kaizen In Search of Excellence (Peters and Waterman) Value-Added Analysis (Porter).

LOGOKey Characteristics

Systems Philosophy Global Perspective on Business Processes Radical ImprovementIntegrated ChangePeople CentredFocus on End-CustomersProcess-Based

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TransformationInputs Outputs

Feedback

Environment

Systems Perspective

LOGOProcess Based

Added Value BPR Initiatives must add-value over and above

the existing process

Customer-Led BPR Initiatives must meet the needs of the

customer

LOGORadical Improvement

Sustainable Process improvements need to become firmly

rooted within the organization

Stepped Approach Process improvements will not happen over night

they need to be gradually introduced Also assists the acceptance by staff of the

change

LOGOIntegrated Change

Viable Solutions Process improvements must be viable and

practical

Balanced Improvements Process improvements must be realistic

LOGOPeople-Centred

Business UnderstandingEmpowerment & ParticipationOrganizational Culture

LOGOFocus on End-Customers

Process improvements must relate to the needs of the organization and be relevant to the end-customers to which they are designed to serve