Balance Scorecard
Eng. Murhaf Ashi
10 March , 2010
Cascading to Details
Strategic point of view
“ Do not repeat the tactics which have gained you one
victory, but let your methods be regulated by the
infinite variety of circumstances ”infinite variety of circumstances ”
Sun Tzu c. 490 BC, Chinese military strategist
Eng. Murhaf Ashi
Balance Scorecard
Company
BSC
Eng. Murhaf Ashi
Company
current
situation Target
Strategy
Agenda
• Introduction to BSC
• Measure Performance
• BSC history
• Stake Holder analysis
• S.W.O.T Analysis
• BSC four perspective
• Key Performance Indicators (KPI)
• Initiatives Matrix
• BSC strategy map examples
• References
Eng. Murhaf Ashi
Dose it work
• By 2004, the balanced scorecard has been at least partially
implemented in about 57% of global corporations, according
to a survey by Bain. This site contains some examples of
companies and government organizations that have reported
their use of the balanced scorecard. We have prepared atheir use of the balanced scorecard. We have prepared a
database of over 130 of these organizations. For details please
see our examples of balanced scorecard usage.
Eng. Murhaf Ashi
Success Stories
AMEDD Finds Direction in Strategic Planning
The Army Surgeon General and Commander of the US Army MedicalCommand champion the use of the balanced scorecard as "the principal toolby which they improve operational and fiscal effectiveness and better meetthe needs of patients and stakeholders.
Award for ExcellenceAward for Excellence
The Institute honors Mecklenburg County, NC with an Award for Excellence for successfully transforming the county government and positioning it for tough times.
Scorecard Driving Strategy at Veolia Water North America
With a new CEO and ambitious revenue goals, Veolia NA first successfullyimplemented a balanced scorecard and then integrated the scorecarddeeper into its organization using an e-learning tool
Eng. Murhaf Ashi
Agenda
• Introduction to BSC
• Measure Performance
• BSC history
• Stake Holder analysis
• S.W.O.T Analysis
• BSC four perspective
• Key Performance Indicators (KPI)
• Initiatives Matrix
• BSC strategy map examples
• References
Eng. Murhaf Ashi
Why We Should Measure Performance ?
Performance measurement improves communications internallyamong employees, as well as externally between the organization andas customers and stakeholders.
The emphasis on measuring and improving performance (i.e.,"results- oriented management") has created a new climate, affectingall government agencies, and most private sector and nonprofitinstitutions as well.
Eng. Murhaf Ashi
Good Performance Measures
• Provide a way to see if our strategy is working
• Focus employees' attention on what matters most to success
• Allow measurement of accomplishments, not just of the work that is
performed
• Provide a common language for communication• Provide a common language for communication
• Are explicitly defined in terms of owner, unit of measure, collection
frequency, data quality, expected value(targets), and thresholds
• Are valid, to ensure measurement of the right things
• Are verifiable, to ensure data collection accuracy
Eng. Murhaf Ashi
Agenda
• Introduction to BSC
• Measure Performance
• BSC history
• Stake Holder analysis
• S.W.O.T Analysis
• BSC four perspective
• Key Performance Indicators (KPI)
• Initiatives Matrix
• BSC strategy map examples
• References
Eng. Murhaf Ashi
What is the balanced scorecard?
• The balanced scorecard is a strategic planning and management system
that is widely applicable to organizations regardless of size or type of
business.
• The system, extensively used in business and industry, government, and
nonprofit organizations worldwide, provides a method of aligning business
activities to the vision and strategy of the organization, improving internalactivities to the vision and strategy of the organization, improving internal
and external communications, and monitoring organization performance
against strategic goals
Eng. Murhaf Ashi
BSC history
• It was originated by Robert Kaplan and David Norton of Harvard University in
about 1990, but the roots of the balanced scorecard are deep, and include the
pioneering work of General Electric on performance measurement reporting in the
1950’s and the work of French process engineers in the early part of the 20th
century in France.
Eng. Murhaf Ashi
David Norton Robert Kaplan
Basic Concepts
Balanced Scorecard views the organization from 4 distinct
perspectives:
Learning and Growth Perspective
– What do we excel at?
Business Process PerspectiveBusiness Process Perspective
– How do we continue to grow and create value?
Customer Perspective
– How do our customers see us?
Financial Perspective
– How do we achieve the lowest cost?
Eng. Murhaf Ashi
Basic Concepts
Learning and Growth Perspective
• What do we excel at?
Business Process Perspective
Balanced Scorecard views the organization from 4 distinct perspectives:
Business Process Perspective
• How do we continue to grow and create value?
Customer Perspective
• How do our customers see us?
Financial Perspective
• How do we achieve the lowest cost?
Eng. Murhaf Ashi
Agenda
• Introduction to BSC
• Measure Performance
• BSC history
• Stake Holder analysis
• S.W.O.T Analysis
• BSC four perspective
• Key Performance Indicators (KPI)
• Initiatives Matrix
• BSC strategy map examples
• References
Eng. Murhaf Ashi
Stake Holder analysis
Manage CloselyKeep SatisfiedHigh
CEO- John
VP- David. A
GM- Peter
Mngr- Vector .S
Mngr- H.Q
This tool should be
applied at the early
stages of the BSC to
identified all
stakeholder who will
benefit from the BSC
Monitor Minimum Effort
Keep Informed
low
low
Power
Interest High
VP- David. A
contractor
Coworker-
press
Government sector
benefit from the BSC
strategy.
Identifying the nature
of each stakeholder
Blocker, Neutral and
Supporter will help to
understand their
demand and to find
what the new strategy
could promises them
Agenda
• Introduction to BSC
• Measure Performance
• BSC history
• Stake Holder analysis
• S.W.O.T Analysis
• BSC four perspective
• Key Performance Indicators (KPI)
• Initiatives Matrix
• BSC strategy map examples
• References
Eng. Murhaf Ashi
S.W.O.T Analysis
Strengths Weaknesses
SWOT analysis is a tool for auditing an
organization and its environment. It is
the first stage of planning
SWOT stands for strengths,
Opportunities Threats
SWOT stands for strengths,
weaknesses, opportunities, and
threats. Strengths and weaknesses
are internal factors. Opportunities
and threats are external factors.
Agenda
• Introduction to BSC
• Measure Performance
• BSC history
• Stake Holder analysis
• S.W.O.T Analysis
• BSC four perspective
• Key Performance Indicators (KPI)
• Initiatives Matrix
• BSC strategy map examples
• References
Eng. Murhaf Ashi
BSC four perspective
Customer
satisfaction
Product quality
& quantity
Process
Employees
Skills and
education
Branch and
leafs strength
Quality of Soil
Customer Perspective
BSC four perspective
Financial Perspective
Learning and Growth Perspective
Business Process Perspective
Customer Perspective
� Customer focus, orientation, and satisfaction are key
components
� Customer will find other suppliers if they are not satisfied or
their requirements are not being met
� Poor customer satisfaction is a leading indicator of future� Poor customer satisfaction is a leading indicator of future
financial decline. Even if the current financial picture is good
� Developing metrics in this area requires that customer
profiles be done as well as the processes that provide the
products and services to them
Business Process Perspective
� This refers to internal business processes.
� Metrics are used in this perspective to determine how well theorganization’s businesses are running.
� Determine whether the businesses products and services conformto customer requirements (the Mission).
� Metrics must be carefully designed by those who know thebusiness processes best.
� Typically there are 2 types of business processes relative to BSC:
1) Mission Oriented Processes that are special functions of major lines of
business. Typically this requires specialized metrics.
2) Support Processes that are the day-to-day processes that support the
business and organization. Typically they can be measured and benchmarked
with generic metrics.
Learning and Growth Perspective
� Employee training.
� Corporate culture attitudes on individual and corporate self-
improvement.
� Knowledge worker organization with people as the repository of
knowledge.knowledge.
� Continuous learning mode of operation driven by rapid technology
advancements.
� Learning is more than training (for example, it includes mentors and
tutors, ease of communication, etc.).
� Utilization of technology tools, “high technology work systems” (for
example, the intranet).
Financial Perspective
� Based on financial data that is timely and accurate funding
data
� Implementation of a corporate financial database is key
� Centralization and processing, accessibility, and automation of
financial data is keyfinancial data is key
� Special attention must be paid to any possible “skewing” of
the Financial Perspective
� Risk Assessment and Cost/Benefit Analysis should be included
in this
� perspective
Two type of structures (Depend on organization nature)
Customer PerspectiveFinancial Perspective
Non profitable organization Profitable organization
Stakeholder Mission
Eng. Murhaf Ashi
Customer Perspective
Business Process Perspective
Learning and Growth Perspective
Financial Perspective
Financial Perspective
Customer Perspective
Business Process Perspective
Learning and Growth Perspective
BSC objective example
Operate in the black with 5% margin by increasing
revenuesFinancial Perspective
Increase utilization of servicesCustomer Perspective
Eng. Murhaf Ashi
Provide high quality servicesBusiness Process Perspective
Motivate, recognize and retain staffLearning and Growth Perspective
Cause & Effect relationship
Increase
utilization
Increase the
annual
profit Financial Perspective
Increase
employers
computer
skills
Increase
employers
Marketing
skills
Provide
high quality
services
utilization
of servicesCustomer Perspective
Business Process Perspective
Learning and Growth Perspective
Agenda
• Introduction to BSC
• Measure Performance
• BSC history
• Stake Holder analysis
• S.W.O.T Analysis
• BSC four perspective
• Key Performance Indicators (KPI)
• Initiatives Matrix
• BSC strategy map examples
• References
Eng. Murhaf Ashi
Key Performance Indicators (KPI)
� Key performance indicators (KPI) are quantifiable measures of
progress toward an organization’s goals.
� For example, the timely collection of receivables is a KPI for
the goal of maintaining healthy cash flow, and value added
per factory payroll hour is a KPI for the goal of maximizingper factory payroll hour is a KPI for the goal of maximizing
factory productivity.
� Key performance indicators can be financial or non-financial.
But they must be quantifiable—measurable—accurately and
consistently over time.
� Each objective of the BSC map has a number of KPI’s to
measure the accomplishment of the objective.
Eng. Murhaf Ashi
Types of KPI’s
By Format
Number
Ratio
By what is
measured
Input
Process
Forward/Backward
Measure
Lag
Lead
By Strategic/Operational
Strategic Measures (KPIs)
1 2 3 4
Eng. Murhaf Ashi
Ratio
Percentage
Ranking
Rating
Index
Process
Output
Outcome
LeadStrategic Measures (KPIs)
appearing in a BSC
Operational Measures
not appearing in a BSC
Agenda
• Introduction to BSC
• Measure Performance
• BSC history
• Stake Holder analysis
• S.W.O.T Analysis
• BSC four perspective
• Key Performance Indicators (KPI)
• Initiatives Matrix
• BSC strategy map examples
• References
Eng. Murhaf Ashi
Initiatives Matrix
� The Initiatives Matrix include all the objectives of the balance
scorecard strategy map and all the projects that support each
objective.
� The next slide shows an example of the Initiatives Matrix
Eng. Murhaf Ashi
Example of Initiatives Matrix
Initiatives Matrix
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His
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ore
Jed
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Sta
tio
n
Jed
dah
Cu
ltu
ral
Eve
nts
/Fes
tiva
ls
Project
doesn't
support
objective
C1: Become a Capital of Islamic Culture 3 -3 3 2 2 1 2 3
C2: Attain a High Quality of Life for All 3 -1 2 1 1
C3: Achieve and Maintain Sustainable Development 3 2 2 2
C4: Make Jeddah a Dynamic & Resilient International Commercial & Tourism Centre 1 1 2 2 1 2 2
IP1:Foster Cultural Development
IP2: Build Effective Infrastructure 3 1 2 3 1
IP3:Offer high quality of integrated services 3 1 2 1 2
IP4 Plan strategically and build future capacity 2 1 1 1 1 3 1 1
IP5: Advocate Jeddah Vision and Strategy 2 1 1 1 2
IP6: Ensure Effective Governance and Partnership 1 2 1 1 1 1 1 1 1 1 1 1 1
LG1: Recruit and retain talented and motivated people 1 1 2 2 3
LG2: Align employee to strategy 2 3 1 3 3
LG3: Foster innovative and ethical culture 3 1 2 3
LG4: Make effective use of technology 1 2
F1:Use resources effectively 3 1 2
F2: Maximize return of investments 3 2 2 3
F3:Ensure diversified and sustained sources of income 3 3 1 2 1 1 3
Objective
without
projects
Objective
with 4
projects
Agenda
• Introduction to BSC
• Measure Performance
• BSC history
• Stake Holder analysis
• S.W.O.T Analysis
• BSC four perspective
• Key Performance Indicators (KPI)
• Initiatives Matrix
• BSC strategy map examples
• References
Eng. Murhaf Ashi
BSC strategy map examples
BSC STRATEGY MAP EXAMPLES Examples of BSC strategy map of global organization
Eng. Murhaf Ashi
Agenda
• Introduction to BSC
• Measure Performance
• BSC history
• Stake Holder analysis
• S.W.O.T Analysis
• BSC four perspective
• Key Performance Indicators (KPI)
• Initiatives Matrix
• BSC strategy map examples
• References
Eng. Murhaf Ashi
References
� Dr. Mohammed Mustafa Mahmoud workshop & material
� Epstein, Marc, and Jean-François Manzoni. "Implementing Corporate Strategy: From Tableaux de Bord to Balanced Scorecards."
European Management Journal , April 1998, pp. 190-203.
� "Harvard Business Review Balanced Scorecard Report." Harvard Business Review, 2002 to present (bimonthly).
� Kaplan, Robert S., and David P. Norton. Alignment: Using the Balanced Scorecard to Create Corporate Synergies. Harvard Business
School Press, 2006.
� Kaplan, Robert S., and David P. Norton. "The Balanced Scorecard: Measures That Drive Performance." Harvard Business Review, July
2005, pp. 71-79.
� Kaplan, Robert S., and David P. Norton. The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New
Business Environment. Harvard Business School Press, 2000.
� Kaplan, Robert S., and David P. Norton. Strategy Maps: Converting Intangible Assets into Tangible Outcomes. Harvard Business School
Press, 2004.
� Niven, Paul R. Balanced Scorecard Diagnostics: Maintaining Maximum Performance. John Wiley & Sons, 2005.
� Niven, Paul R. Balanced Scorecard Step-by-Step: Maximizing Performance and Maintaining Results, 2d ed. John Wiley & Sons, 2006
� 2005 Oak Ridge Associated Universities
� RL Information Consulting LLC
� http://www.balancedscorecard.org
� http://www.bain.com
� NAPAL excellence in business management , http://www.napl.org
� www.gate2quality.com
� www.kellen.net
� purestonepartners.com/tag/strategy-management/