Balanced scorecards for the busy business person
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Transcript of Balanced scorecards for the busy business person
Balanced Scorecards for the
Busy Business Person
Presented byWarren J. RutherfordThe Executive Suite
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What is a Balanced Scorecard?
A strategic planning & management system.
Used to align business activities to - business vision and strategy, improve internal and external
communication, monitor performance against goals.
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Why is it used?
1978 NYU Stern School of Business Study (5,000 companies)
95% correlation between balance sheet and business value
Balance Sheet
Intangible
95%
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Why is it used? 2005 NYU Stern School of
Business Study 28% correlation between
balance sheet and business value
Intangibles – the 72% Intellectual Property Strategy Brand Systems Processes Access to Capital Off balance sheet items Customer reputation Executive Team
Balance Sheet
Intangible
72%72%
28%
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Why is it used?
Financial measures not enough
Need to measure value from knowledge -centric activities and perspectives
*Balanced Scorecard Institute
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What does it measure?
Perspectives in each company concerning –
Learning & Growth, Business Process, Customer, & Financial.
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Why is that important to you?
Only 5% of a workforce understands their company’s strategy.
Only 15% of senior management spends more than 1 hour a month defining strategy and aligning operations to it.
Only 25% have their operations aligned to the strategy.
Only 40% align company from budget to strategy.
David Norton, Balanced Scorecard Report, Vol. 3, No. 5 (Sep/Oct 2001)
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What is it that makes us valuable and profitable?
How can we identify, quantify, and measure the intangible assets so that we can increase value and our performance?
The Questions companies have to ask themselves today are:
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Learning & Growth Perspective Employee training. Company cultural attitudes toward individual
& corporate self-improvement. Workforce alignment -
Person/future fit (selecting for the long-term contributions of a person to the business’ long-term strategy).
Formal processes and procedures and professional standards created the best, long-term workforce alignment
Family-like community created the best, long-term workforce alignment.
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Business Process Perspective
Internal processes w/ metrics looking at - How well is the business running? Do products conform to customer
requirements (mission)? What are your major processes? Are they optimized – tasks, time, money? Who has participated in their review?
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Customer Perspective
Customer focus. Customer satisfaction. Analyze by kinds of customers. Analyze the kinds of processes that we
use to provide our products & services to those different customer groups.
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Financial Perspective
Look at change from prior year & objective for following year.
Analyze significant indicators - Revenues, Profit, COGS, Gross Margin, Operating Expense, Inventory, & Return on Assets, etc.
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What do you put in the Scorecard?
Objectives, Measures, Targets, & Initiatives.
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What are some ways to start?
There are many ways to start, and there are programs available to assist.
Develop your vision for a multi-year period .
Ensure your mission is in alignment with customer needs.
Develop strategies that complement your vision and mission.
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What are some ways to start?
Develop objectives that seek annual achievement of these strategies.
Develop action plans that set and track targets for accomplishment of your initiatives.
These can be developed by project, by section, division, department, by company.
Report and discuss monthly to reinforce accountability.
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Example The following illustrates an approach by
The One Page® Business Plan for - Development of a Strategy, Objectives by the 4 perspectives, and Action plans for 1 quarter.
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Summary
Establish benchmarks that are manageable.
Manage the data. Use the data to improve collaboration,
communication, & accountability toward vision, mission, and strategy.
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Thank you!For more information -
Warren J. RutherfordOwnerThe Executive Suite129 Airport RoadHyannis, MA 02601wjr@theexecutivesuite.comwww.theexecutivesuite.com508-778-7700