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Linking the Balanced Scorecard to the Strategy

In: Business and Management

Submitted By wxs6505206
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Linking the balanced scorecard to strategy 1. Managers need to operate multiple measurements of business-unit performance 2. BSC * Most of non-financial measures have limitations (e.g. customer satisfaction, employee attitude) a. Only report how worked in the past, but no guidance on how to operate in the future. b. Measures are genetic, irrelevant to specific strategy objects * Measures on a BSC should be derived from the business-unit’s unique strategy (translate the vision and strategy into coherent measures) * Executives use BSC to articulate, communicate the strategy and to achieve a common goal (BSC is a communication, infor, and learning system, not as a traditional control system) : BSC不像traditional那样只有keep in compliance with a pre-established plan, 也有着眼于未来的计划) 3. Chose strategy measures (4 pers) * Financial
Define Long-run objectives (3 stages of life cycle) a. Rapid growth: e.g. develop and enhance new products and services, construct production facilities, build operating capabilities… b. sustain: e.g. attract investment & reinvestment, earn excellent returens, maintain existing market share and grow from year-to-year c. Harvest (mature): e.g. only invest enough to maintain equipment & capabilities, not to expand, max. CF back
Themes: revenue growth and mix, cost reduction/ productivity improvement, asset utilization/ investment strategy

* Customer (for current success, unlikely to meet for future success)
Genetic measure: customer satisfaction: provide feedbacks on how well the company is doing (cannot be over-emphasised, only extremely or completely satisfying, the company can count on the repeat purchasing behaviours) customer retention: retain existing customers, measure customer loyalty (% growth of business with existing customers) new customer acquisition: increase customer based on targeted segments, measured by NO. of new customers or total sales to new customers customer profitability: use ABC to measure, want profitable customers, may reveal that certain targeted customers are unprofitable market and account share in targeted segments: how well a company is penetrating a desired market (公司完成sales的目标可能是在non-targeted segments,更准确地evaluate所用的strategy达到了expected results)

* Internal business process (for current success, unlikely to meet for future success)
Object: 1. Deliver on the value proposition of customers in targeted segments
2. satisfy shareholders expectations of excellent financial returns

这图暴露了 difference between Traditional & BSC approach
Traditional: try to monitor and improve existing business processes
BSC: identify entirely new processes and incorporate innovation processes into the internal business processes * Learning & growth
Long-term growth and improvements
3 sources: people (re-skilling employees), system (enhancing infor techonology and systems) and organizational procedures (align procedures and routines) 4. Link multi-scorecard measures to a single strategy * Cause and effect relationship: the chain should pervade all 4 persp. Of BSC
e.g. a chain in vertical vector

* Outcomes and performance drivers a. The performance drivers reflect the uniqueness of the business unit’s strategy b. A good BSC should have a mix of core outcome measures and performance drivers. c. A test of whether a BSC truly communicates both outcomes and performance drivers is its sensitivity and transparency. * Linked to financials
BSC is more than a collection of non-financial and financial measurements, translating strategies into a linked set of measures that define long-term strategic objects whose feedback can be obtained. 5. From 4 pes. Of BSC, can get several measures, however it is too complicated for org. to absorb and implement, BSC should be the instrumentation for a single strategy. The effective way is to combine dozens of measures into an integrated system. BSC should not be a day-to-day measurement system, but should direct the attention of managers on critical competitive factors. 6. Case: translate a strategy into a measurement framework (自己去看吧太长不写了)
Metro bank
National insurance company 7. Summary: why BSC important * BSC describe the vision of the future of the entire organization * BSC shared understanding: create a model that each employee knows how to contribute * BSC focuses change efforts : right indicators are identified, investments will drive desired long-term outcomes (?不懂) * BSC permits the organization learning at the executive level: cause-and-effect relationship can test strategy in real-time and adapt as they learn.…...

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