balanced scorecard eng
DESCRIPTION
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2 / 16SATISFACTION
Outsourcing
Growth Strategy Tools
Supply Chain Management
Benchmarking Strategic Planning
CRM
Scenario & Contingency Planning
Mission and Vision Statements
Lean Six Sigma
Voice of the Customer Innovation
Strategic Alliances
Mergers and Acquisitons Business Process ReengineeringCore Competencies
Balanced Scorecard
TQMDownsizing
Decision Rights Tools
Online Communities
Knowledge ManagementShared Service Centers
Price Optimization ModelsCollaborative Innovation
Loyalty Management Tools
USAGE
Management Tools in 2008Usage and Satisfaction
80%
70%
55%
40%
25%
10%3.50 3.60 3.70 3.80 3.90 4.00 4.10
Source : Management Tools And Trends 2009, Bain & Company 2 / 18
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Management Tools in 2008Largest Satisfaction Changes
1 Balanced Scorecard 3.60 3.83 21 8
2 Lean Six Sigma* 3.66 3.87 18 5
3 Loyalty Management Tools 3.59 3.79 22 17
4Mission and Vision
Statements3.78 3.91 8 3
5 Growth Strategy Tools 3.75 3.87 13 5
2006mean
2008mean
2006 rank
2008rank
Source : Management Tools And Trends 2009, Bain & Company 3 / 18*Called Six Sigma in 2006
Intangible Assets in Industry and Information Ages
1982 1992 2002
38%
62%75%
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Today, the center of value creation has shifted from tangible assets tointangibles such as
Customer relations
Innovative products and services
High quality and responsive business processes
Information technologies and customer databases
Employee capabilities, skills and motivation
One-dimensional financial-based models measure past performance andsacrifice long term to short term results and fail to successfully measure theperformance of today’s firm.
• One of the most widespread multi-dimensional performance measurementmodels is the Balanced Scorecard (BSC), which was invented in 1992 by Drs.David Norton and Robert Kaplan.
One-dimensional to Multi-dimensional Performance Measuring
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World Countries Investing in Intellectual Property
Resource-Poor Countries 1970 GDP per Capita 2007 GDP per Capita
South Korea 1.954 19.751
Taiwan 2.987 16.606
Singapore 4.438 35.163
Hong Kong 5.695 29.660
Israel 8.102 22.475
Denmark 12.685 57.261
Turkey 506 9.629
Resource-Rich Countries 1970 GDP per Capita 2007 GDP per Capita
Indonesia 1.194 1.925
Nigeria 1.233 1.159
Former USSR 5.569 (Russia) 9.075
Saudi Arabia 7.624 15.481
Venezuela 10.672 8.596
Source: A. Maddison, The World Economy: A Millennial Perspective. Numbers are in constant 1990 dollars.
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STRATEGY
CUSTOMERHow do we exceed customer/stakeholder expectations?
LEARNING & GROWTHWhat skills, tools, and culture are required to perform these processes?
FINANCIALWhat do our customers/stakeholders look for in financial results?
INTERNAL PROCESSESWhat process do we need to improve to fulfill these expectations?
Balanced Scorecard Framework
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STRATEGY
•Strategic Awareness•Personal Scorecards•Balanced Paychecks
•Link Budgets & Strategy•S t r a t e g i c L e a r n i n g•Analysis & Inform. System
Build Strategy-Focused Organization
MOBILIZE CHANGETHROUGHEXECUTIVE
LEADERSHIP
MAKE STRATEGY A
CONTINUOUS PROCESS
MAKE STRATEGYEVERYONE’S JOB
ALIGN ORGANIZATION
TO STRATEGY
TRANSLATE STRATEGY
INTO OPERATIONS
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•S t r a t e g y M a p•Balanced Scorecards
•M o b i l i z a t i o n•Governance Process•Strategic Management
•C o r p o r a t e R o l e s•Business Unit Synergies•Support Unit Synergies
BalancedScorecard
Performance measuring - a tool to measure strategic
performance under perspectives financial, customer, internal processesand learning & growth
Strategy communication (strategy maps)- a tool to communicate corporate
strategies from top management down to the floor by means of strategy maps
Strategy implementation - a tool to implement corporate strategies
by aligning distributed day-to-day activities with strategic goals and objectives
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Generic Strategy Map
Customer Management
Processes that enhance customer value
Innovation
Processes that create new products and services
Price Quality Availability Selection Functionality Service Partnership Brand
CUSTOMER VALUE PROPOSITION
PRODUCT / SERVICE ATTRIBUTES RELATIONSHIP IMAGE
Operations Management
Processes that produce and deliver products and services
Regulatory & Social
Processes that improve communities and the environment
Improve
cost structure
Increase
asset utilization
Enhance
customer value
Expand Revenue
Opportunities
Human Capital
Skills
Training
Knowledge
Information Capital Organization Capital
Systems
Databases
Networks
Culture
Leadership
Alignment
Teamwork
Increase Shareholder Value
REVENUE GROWTH STRATEGYPRODUCTIVITY STRATEGY
CREATING
ALIGNMENT
CREATING
READINESS
Processes
Perspective
Customer
Perspective
Financial
Perspective
Learning and
Growth
Strategic Job Families Strategic IO Portfolio Organization Change Agenda
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Alignment throughBalanced ScoreCard
Strategicobjectives
& goals
Plan, processes, actions, initiatives, decisions
All organizational activities support strategic objectives
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Translate, Focus and Align
What are the priorities
What we must improve
What I need to do
BALANCED SCORECARD
STRATEGIC INITIATIVES
TOTAL QUALITY MANAGEMENT
EMPOWERMENT / PERSONAL OBJECTIVES
Why We Exist
What’s important to us
What we want to be
Our game plan
MISSION
VALUES
VISION
STRATEGY
STRATEGIC OUTCOMES
Satisfied
SHAREHOLDERSEfficient and Effective
PROCESSESDelighted
CUSTOMERS
Motivated and Prepared
WORKFORCE
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Business Units
Human ResourcesInformation
Technology
Executive Team
Budgets & Capital
Investments
BSC Aligns & Focuses All Resources on Strategy
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STRATEGY
3rd Generation Balanced Scorecard is an umbrella concept that links together organizational philosophies and management tools
6 Sigma
EVA EFQM
TQM
14 / 18Source : Performance Management & 3rd Generation Balanced Scorecard, http://www.2gc.co.uk
QUALITY ASSESSMENT
BSC
ASSESSM
EN
TBALANCED SCORECARD –
QUALITY (6 SIGMA) COLLABORATION
Improve to Levels of Quality
Excellence
Vit
al
Str
ate
gic
Needs Improvement Excellent
Process Classification
Maintain High Quality Levels
Potential to Cut Back Current Investment
Improve to Minimum
Acceptable Quality Levels
“Quality (6 Sigma) teaches you HOW TOfish.The Balanced Scorecard teaches you WHERE TOfish.”
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-100
-200
-1000
BSC Allows You To Do the Right Things Right
Balanced Scorecard Objectives
Do Things Right Do the Right Things
BusinessExcellence
Strategy-Focused Management
Time (TBM)Quality (TQM)Cost (ABM)
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MOBIL Profitability:Cents per gallon (percent above Industry average)
MOBIL NAM&R’s Relative Profitability, 1990-1998
MOBIL Industry Ranking
199519941993199219911990 1996 1997 19980
+
-
20%
40%
60%
80%
100%
-20%
-40%
-60%
-80%
-100% -92%
-13%-3%
-14%-3%
56%
42%34%
23%
New Strategy and Balanced Scorecard
introduced
#4 #3 #6 #6 #6 #1 #1 #1 #1
MOBIL Profitability:Cents per gallon (percent below Industry average)
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Strategy-Focused Organization, Robert S.
Kaplan, David P. Norton
Balanced Scorecard, Paul Niven,
2nd Edition.1
2 Execution Premium, Robert S.
Kaplan, David P. Norton
3
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