Strategy Maps and the

Balanced Scorecard

Don Breckenridge Jr.

President

The Typical Owner

Owners are typically the Rainmakers

Rainmakers tend to work FOR the business instead of ON the business.

Most dont know how to work ON their business.

So how can you work ON taking your business to the next level and building corporate value?

The Answer is Strategy

Companies with formal strategy execution process in place dramatically outperform companies without it.

If you cant describe your strategy, how are you ever going achieve it?

You cant measure what you cant describe

You cant manage what you cant measure

More importantly, how are your employees going to achieve it?

Employees Need To Know

The Overall Strategy

The Initiatives and Objectives to achieve the Strategy

Where they fit into the Strategy

What Skills and Knowledge they need in order to achieve the Strategy

How to Measure Progress toward achieving the Strategy

Strategy Maps & Balanced Scorecard

Entrepreneurs need a systematic approach to describing, executing and measuring strategy.

Strategy Maps are used to clarify and communicate the corporate strategy on one sheet of paper.

The Balanced Scorecard is used to measure variables and initiatives that lead you to success in achieving your strategy.

Where does strategy start?

Customer need

Competitive landscape

Your competitive offering

Mission, Values, Vision, Strategy, etc.

How Corporate Value is Created

MissionWhy we exist

ValuesWhats important to us

VisionWhat we want to become

StrategyHow were going to get there

Strategy MapVisual explaination of the strategy

Balanced ScorecardMeasures and focus

Targets and IntiativesWhat needs to get done

Personal ObjectivesWhat each person needs to do

Strategic Outcomes

Satisfied Shareholders Delighted CustomersEfficient and Effective

Processes

Motivated and Prepared

Workforce

The 4 Perspectives of a Strategy Map

Cause and Effect

Financial

Perspective

Customer

Perspective

Internal

Perspective

Learning

and Growth

Perspective

Process

1. Quality

2. Turnaround Time

Human Capital

1. Employee Attraction and

Retention

2. Employee Readiness and

Training

3. Automation through technology

Competitive Advantage

Low Cost Supplier High Quality,

Low Price, Easy Purchase

Shareholder Value

1. Higher Revenues

2. Lower Costs

Financial Perspective

What is financial success to our shareholders?

Revenue Growth and Mix

Cost Reduction / Productivity Improvement

Asset Utilization / Investment Strategy

Customer Perspective

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

What is our Competitive Advantage?

Variables include: Quality, Time, Cost, Relationship, Brand Image

Customer Value Propositions

Lowest Cost

High quality, low cost, quick service

Dell, McDonalds, Southwest Airlines

Product / Service Leader

First to market, new market segments

Intel, Apple

Complete Customer Solutions / Customer Intimacy

High quality, total solution, customer partnership, retention

Ritz Carlton, Northwestern Mutual Insurance

System Lock-in

High switching costs

XM Satellite Radio, Linked-In

Customer Perspective

Internal Business Perspective

To satisfy customers and shareholders, what operations are critical?

Overall Operational Process

Customer Operational Process

Customer Selection

Customer Acquisition

Production and Delivery of Service and Product

Customer Satisfaction

Customer Retention

Market Share

Customer Profitability

Internal Perspective Strategy Map

Long Term Shareholder Value

Increase Operational

Efficiency

Increase Asset

Utilization

Expand Contractor

Revenues

Growth Strategy Productivity StrategyFinancial

Perspective

Customer

Perspective

Operational Excellence

1. Efficient and Effective Candidate

Networking and Management

2. Fast and Accurate Candidate

Qualification Process

3. Maximize coverage on all job

orders in minimum time

4. Internal routing to recruitment

specialists

Customer Value Proposition

Internal

Perspective

Industry leader in building

relationships and providing

personalized service by

knowledgeable employees who

truly care.

Brand Image of the most

networked IT placement firm in

the U.S. through a philosophy of

partnering with candidates and

employers.

Customer Mgmt Process

1. Attraction

2. Acquisition

3. Retention

4. Growth

5. Advocacy

Innovation Process

1. Understand customers current

needs and anticipate future needs

2. Understand candidates current

needs and anticipate future needs

3. Prioritize Opportunities

4. Employ third party technology to

reach deliver unique products and

services

Single source for all staffing

needs from executive to

temporary placement for the

Information Technology Industry.

Maintain the largest, up-to-date

network of programmer

candidates in the U.S.

Expand Direct

Placement Revenue

Together, these enable us to place the right candidates in the right positions thereby providing necessary resources for customers to achieve their vision.

Learning & Growth Perspective

Human Capital

Information Capital

Culture for Continuous Improvement

Culture

Leadership

Alignment

Teamwork

Full Strategy Map Example

What to Measure?

You cant manage what you cant measure

Lead vs. Lag Indicators Net Income (lag)

Open Job Orders (lead)

Prospecting Activity (lead)

Strategic vs. Operational Indicators Target a new market (strategic)

Job Order Coverage Ratio

Limit your indicators

Building a Balanced ScorecardObjective Measure

Expand Contractor Revenues Revenue from Contractors

Expand Direct Hire Revenue Revenue from Direct Hires

Increase revenue per customer Revenue per Customer

Increase customer profitability Profit per Customer

Improve sales productivity Cost of Sales

Customer Satisfaction % Customers Highly Satisfied

Single Source Supplier % Needs Fulfilled

Customer Loyalty % New Customers from Referral

Target High Volume Customers # High Volume Customers

Screen Unprofitable Customers # Unprofitable Customers

Acquire New Customers Close Ratio; # New Customers

Increase Marketing Efficiency Cost per Sale

Increase the volume of qualified candidates # New Candidates

Maintain Contact with Candidates % Candidates contacted

Increase the % Job Orders Filled Fill Ratio

Decrease the Time to Fill Fill Time

Quality of Fill % of Placements Terminated

Attract and retain top talent Employee turnover

Maintain highly skilled talent Training; Testing

Information

Technology Automate all Processes % of Processes AutomatedCreate a customer focused environment Customer Survey

Create personal goal alignment Employee objectives linked with BSC

Perspective

Financial

Customer

SelectionCustomer

Acquisition

Customer

Inte

rna

l P

roc

es

sL

ea

rnin

g a

nd

Gro

wth

Human Capital

Organizational

Capital

Sourcing

Production

Strategy Map & Balanced Scorecard

Internal Business Perspective

Learning and Growth Perspective

Customer Perspective

Financial Perspective

Increased

Profitability

Increased

Placements

Additional

Customers

Largest Candidate

Database

Best Qualification

Process

Identify More Highly Qualified

I.T. Candidates

Employ ATS, Web and Sourcing

technology to Automate, Import and

Qualify Candidates

OBJECTIVE

Source more IT candidates

for evaluation and tracking

MEASURE

Number of Candidates per

Day

TARGETS

250 New Candidates per Day

per Sourcing Agent

INITIATIVES

Employ new sourcing

technology in conjunction

with overseas recruiters to

obtain candidate information.

Strategy Map

What do we need to

achieve?How is the objective

measured?What is our goal? What internal initiatives

will accomplish the

objective?

Scorecard Basics

The Corporate Balanced Scorecard

Vision Mission Objectives Measures Targets Initiatives Milestones Accountable Resources

Fin

an

cia

l

Increase Profitability

Net Income$10 Million Net Income by 2008

Cu

sto

mer

Largest Staffing

Firm

# Branches

and Recruiters

100 Branches and

500 Recruiters by 2008

Recruiting

campaign for new recruiters

Task / Action

PlanInternal HR People and $

Inte

rnal

Placements # Placements

2,000 Direct

Placements in

2008

Expansion of

Sourcing

Task / Action

Plan

Sourcing

ManagementPeople and $

Learn

ing

Maintain highly

trained

recruiters

% Recruiters with CPC

95% by end of 2008

All recruiters to

receive training

and take exam

Task / Action Plan

Recruiter Management

People and $

SHORT TERM (TACTICAL)

To

be

co

me t

he larg

est

sta

ffin

g f

irm

in

the U

nit

ed

Sta

tes.

Pro

vid

e h

ighly

qualif

ied c

andid

ate

s to

pote

ntia

l em

plo

yers

in a

short

am

ount of

time.

LONG TERM (STRATEGIC)

Personal Balanced Scorecard

Financial

Customer

Operational

Learning and Growth

Personal Balanced Scorecard

Vision Mission Objectives Measures Targets Initiatives

Fin

an

cia

l

Increase Annual

Income

Annual

Compensation$30k per Month

Cu

sto

me

r

Provide fewer but

higher quality

candidates

Submittal to

Placement RatioAvg. 3:1 Ratio

Specialize in

SQL Server

DBA's

Inte

rna

l

Improve networking

into SQL Server DBA

# Qualified DBA

Contacts

350 Candidates

by 2009

Daily Breakfast

and Lunch

Le

arn

ing

Reach advanced level

of DBA knowledge.

SQL Server DBA

Testing

Advanced Level

by 6/2008

SQL Server

Training from

XYZ University

LONG TERM (STRATEGIC) SHORT TERM (TACTICAL)

To

bec

om

e a

Pin

na

cle

Big

Bille

r.

Pro

vid

e h

igh

ly q

ualif

ied

SQ

L S

erv

er

DB

A c

an

did

ate

s to p

ote

ntia

l em

plo

ye

rs.

Working Together

Owners and Employees have Shared Goals

Owners and Employees can work together on developing the Corporate Strategy, Maps and Scorecards

Employee involvement builds buy-in

Personal Scorecards should align with the Corporate Strategy

Owners need to provide top down enforcement of the strategy

End Goal

Strategy Map

Clarify and communicate your corporate strategy to shareholders, employees and customers.

Balanced Scorecard

Measure true variables that lead to the success of your strategy.

Plan of Strategic Initiatives

Identify strategic initiatives that enable you to achieve your strategy.

Next Steps

Learn More

Balanced Scorecard by Kaplan and Norton

Strategy Maps by Kaplan and Norton

http://www.BSCOL.com

Schedule Time to work ON the business instead of FOR the business.