Balanced Scorecard and Strategy Map

Lunch Bunch (Cabinet)August 23, 2007

Short-Term Goal (Today)

Understand the Balanced Scorecard

Create a Balanced Scorecard that links objectives,

initiatives (new and old), and measures to the

strategy of our organization.

Why think strategically?

Funding cuts (Financial)

• Demonstrate accountability (all areas)

• Improve our performance (Customer/Student Achievement)

• Focus on improving our inputs (Internal processes)

• Alignment of our PD with where we expect our employees to be headed (Learning and Growth)

Why think strategically?• Funding cuts (Financial)• Demonstrate accountability (all areas)• Improve our performance

(Customer/Student Achievement)• Focus on improving our inputs

(Internal processes)• Alignment of our PD with where we

expect our employees to be headed (Learning and Growth)

?

Strategy• Strategy is how we intend to create

value for our customers

10%It is estimated that fewer than 10% strategies that are effectively formulated are effectively implemented.

In the majority of those cases (it is estimated to be 70%) the problem is not the strategy, but the execution of the strategy.– Forbes Magazine

Barriers to strategic thinking

Vision: Only 5% of workforce

understands the strategy

People: Only 25% of managers have

incentives linked to strategy

Management: 85% of Executive Teams spend less than 1 hour on strategy

Resources: 60% of organizations do not

link budgets to strategy

1 hour

It is estimated that managers and executives spend less than 1 hour per month on strategy.

Steps in this Process• Step #1: What is a Balanced

Scorecard?• Step #2: What is a Strategy

Map?• Step #3: What method are we

going to use to create our Strategy Map?

Step #1: What is BSC?

What is a Balanced Scorecard?

…The BSC is a management tool that provides senior executives a comprehensive measure of how the organization is progressing towards achieving its strategic goals.

Balanced Scorecard• The idea of the scorecard is to

describe the essential ingredients of organizational success.

• Its underlying philosophy – Provides a tool for clearly communicating the goals and priorities of the organization.

Introduced in 1992, by Robert Kaplan and David Norton, the Balanced Scorecard is the most commonly used framework for ensuring that agencies execute their strategies. Today, about 70% of the Fortune 1,000 companies utilize the Balanced Scorecard to help manage performance.

Where it started . . .

Some Basic Principles• Quantifies the Organizational Strategy in measurable terms• Strategy is summarized on a Strategy Map over four views of

performance (perspectives).• Must capture a cause-effect relationship between strategic

objectives over the four perspectives on the Strategy Map.• Critical Components include:

- Measurements- Targets- Initiatives

• Everything must be linked: Goals to Objectives, Objectives to Measurements, Measurements to Targets.

Vision and Mission

Strategic Assessment

Strategy Map

Balanced Scorecard

Execution

Monitor

When the community, students and staff are

involved, all students do learn and succeed.

…to ensure all students will be at or above grade level

Four Sectors for Business.

"If we succeed, how will we look to our shareholders?”

The Strategy

Private Sector Organizations

Financial Perspective

"To achieve our vision, how must we look to our

customers?”

Customer Perspective

"To satisfy our customers, at which processes must we

excel?”

Internal Perspective

"To achieve our vision, how must our organization learn

and improve

Learning & Growth

Introducing Strategy Maps

A simple model of the value creation process

Customer• Who are our targeted customers?• What is our value proposition in serving

them?

ProcessesTo satisfy our customers at what processes

must we succeed?

Employee Learning and Growth

• What capabilities and tools do employees require to help then execute our strategy?

Financial Perspective• What financial steps are necessary to

ensure the execution of our strategy?

“Simple, not simplistic.”-Kaplan and Norton

• Make sure relationship between point A (where we are today) and point B (scorecard) is clear

• A scorecard is a final measurement tool. To get there we need to clarify our strategy. To clarify strategy will need to spend some time analyzing strategic data and then develop a map of strategy.