Can libraries benefit from the use of Balanced Scorecard?

Can libraries benefit from the use of Balanced Scorecard?

Snjólfur ÓlafssonUniversity of Iceland

Faculty of Economics and Business Administration

8th June 2004

2 Snjólfur Ólafsson, 8th June ‘04

Aim of my talk

To provide the participants with an understanding of what Balanced Scorecard is,how it works and what it deliversand thereby allowing them to evaluate whether

Balanced Scorecard is something that could be a helpful tool for their libraries.

(A presentation at the NVBFs forårskonference I Island, Reykjavik 7. – 8. juni 2004

Abstract written by Hrönn Pétursdóttir)


Structure of my talk

The Balanced Scorecard in a nutshellThe development of the Balanced Scorecard Implementing strategyThe two main tools of the Balanced Scorecard

– Strategy maps– Scorecards

Implementing and using the Balanced Scorecard


The Balanced Scorecard (BSC)

BSC developed from being– a measurement system to be

– a methodology for implementing strategy

BSC offers two tools Strategy maps Scorecards


Litterature

Kaplan & Norton (1992): The Balanced Scorecard – Measures That Drive Performance. Harvard Business Review, 70 (1), 71-79.

Kaplan & Norton (1996): The Balanced Scorecard: Translating strategy into action. Harvard Business School Publishing Corporation.

Kaplan & Norton (2001): The Strategy Focused Organization: How balanced scorecard companies thrive in the new business environment. Harvard Business School Publishing Corporation.

Niven (2003): Balanced Scorecard step by step for Government and Nonprofit Agencies. New York: John Wiley & Sons.


Snapshots from history

195x: General Electric developes the first scorecard

1983: Eden et al. presents cognitive maps to analyse issues

1989: Eden calles the cognitive maps strategic maps when the issue is a strategy

________________________________________________________________________________________________________________________

1990: Research project (KPMG ...)

1992: Kaplan & Norton write a paper about scorecards

1996: Kaplan & Norton write a book about scorecards

2000: Kaplan & Norton write a paper about strategy maps

2001: Kaplan & Norton write a book about strategy maps and scorecards


Balanced Scorecard

Describe the strategy– with strategy maps (with objectives)– in more details than is usally done– translate the strategy into operational terms

Define measures– which are put on scorecards– and tell what is stratically important– and measure how the implementation goes


The balance – the four perspectives

Financial perspective In order to get financial results

Customer perspective

you must keep the customers satisfied, and thus you need to

Internal business process perspective

have effective and efficient processes, and thus you need

Learning and growth perspective

good people in a learning organization


Put in other words

To succeed financially, how must we look to our shareholders?

To achieve our mission, how should we appear to our customers?

To satisfy our customers, which business processes must we excel at?

To achieve our vision, how will we sustain our ability to change and improve?


Implementing “strategy”

Definition by Quinn (1980), (see Grant 2002):A strategy is the pattern or plan

that integrates an organization’s main goals, policiesand actions sequences into a cohesive whole

Definition by Olafsson (2003) – translation from Icelandic:Strategy is a description

of the results that are sought afterand how they are to be optained/accomplished

Usually, only a part of the description exists in writing


The two tools of BSC

Strategy map is– “a logical and comprehensive architecture for describing

strategy”– If you want to implement a strategy it is important to have a

clear desciption of your strategy

Scorecard (balanced scorecard)– Measures are the pillars but objectives the foundation– Other information on the scorecards, e.g.

Measurements Targets Projects

Use the strategy maps to find out what is important and measure it in the scorecards


Strategy map

Different variants / lookThe strategy map should tell the story of the strategy

You make profit

Satisfied customers

Good processes

Learning and growth

means “leads to”



Scorecards

Different what information is on scorecardsNext slide shows typical informationSoftware

– Excel– specialised software


Information on scorecards

Perspective Objectives Measure Measurements Targets Projects

Low turnover Turnover 13%, 11%, 12% 10% Instr. system

Finance

Customers

Processes

People


Strategy implementation

General management issues– Key managers and structure – The employees must know, want to and be able to

The work of the employees must support the strategy– Cascading strategy (The strategy should be developed

clear and detailed)– Change projects vs Business as usual


Cascading strategy

If you want the employees to support the strategy (implementation) it should be clear how their objectives are linked to the strategy

Cascading means building lower order scorecards (or strategy maps)

A sub-objective (or task) in a higher order strategy can be a main objective in a lower order strategy


Change projects vs Business as usual

The employees work can be split in two parts:A. Business as usual

B. Change projects (implementation pr., development pr.)

Some write as if strategy is implemented mainly through projects

BSC is more concerned with Business as usual “Managing continuity and strategic change” (Eden &

Ackerman)


Change projects

Project management– How to manage a project

Projects management– (portfolio management, program management)– Projects play now much greater role in business than before

• Development projects, change projects, implementation projects, …

– Managing change

List of change projects in the light of strategy mapList of change projects in the scorecards


Business as usual

Possible effects of BSC on employees– How the employee prioritizes tasks (his time)– Put emphasis on ...– Make changes in some processes og behaviour– Make notice of and pass information (because they know

that other employees need the information)


The reasons for implementation

E.g.To clarify the strategy and develop itTo help employees know the strategy

– and be able to support it

To improve management information


Non-profit organizations

The BSC can be as useful as for companiesUsually more difficultThe perspectives

– Don’t let them be in the way– Finance perspective can be anywhere

Can libraries benefit from the use of Balanced Scorecard?

Yes, most of them, IF it is done professionally


Experience

The Balanced Scorecard insures a clear linkage between projects and strategic objectives. In addition,

the process of Balanced Scorecard development enforces alignment, transparency and accountability

throughout the organization.

Dr Bernhardt Gueldner, Senior Process Engineer,

Siemens-ICM


Experience - 2

One of the things I like about the Balanced Scorecard is that it ‘turns over the rocks,' if you will. Nothing can

hide. If you’re doing well, you see it; if you need improvement in some areas, you see that as well. You get smarter. It is an essential component of our culture

and supports ongoing change.

Dr. Jon Meliones, Chief Medical DirectorDuke Children's Hospital


Experience - 3

For me, the most exciting thing about the Balanced Scorecard is that we won’t be allocating resources to

non-strategic activities anymore. As soon as I realized that having a Balanced Scorecard will help us with this,

it was like a light went off in my head!

Joe Verbarro, Private BankingSummit Bank


Experience - 4

The Balanced Scorecard has become an integral part of our change management process, enabling us to look

beyond financial measures and concentrate on factors that create economic value: quality, organizational learning, and focusing on customers. The scorecard has delivered on our

major goals in communication, teamwork, learning, and commitment.

Michael Hegarty, vice chairman

Chase Manhattan Bank

Documents

Can libraries benefit from the use of Balanced Scorecard?