Case Study

2GC Case Study # 11

Zenith Systems
Cascaded 3rd Generation Balanced
Scorecard in a small services company
December 2013

2GC Active Management

1 Bell StreetMaidenheadBerkshireSL6 1BUUK
T:+44 1628 421506E:info@2GC.euW:2GC.eu
Copyright 2GC Limited 2013. All rights reserved.
This document is licensed under a Creative Commons License. You are free to copy, distribute, display,
and perform the work subject to the following conditions:

Attribution. You must give the original author credit.

Non-commercial. You may not use this work for commercial purposes.
No Derivative Works. If you remix, transform, or build upon the material, you may not distribute
the modified material.
For any reuse or distribution, you must make clear to others the license terms of this work. Any of these
conditions can be waived if you get permission from the copyright holder.
More information on this license from http://creativecommons.org/licenses/by-nc-nd/4.0/deed.en_GB

Zenith Case Study

Summary
Zenith is a leading independent IT infrastructure services provider, delivering multi-vendor
field, on-site and project services throughout the UK, Europe and internationally to more
than 80 countries.
We work in partnership with major IT channel organisations, providing them with the
capabilities they need to support their customers. We also work directly for a broad range
of commercial and public sector clients.
Zenith Systems Web Site
2GC worked with the UK component of Zenith Systems over an eight month period in 2007
to introduce a Corporate Balanced Scorecard, and cascade this Balanced Scorecard down
into the two largest divisions of the firm. We worked closely with Executive Board, with the
support of the firms Quality Manager.
In the UK, Zenith Systems is a small engineering services firm comprising a field engineering
force, a Business Development team, an in-house engineering support team, and some
administration support. The firm provides outsourced engineering services to large public
and private sector organisations in the UK. Originally part of a much larger IT services
organisation (where it provided similar services to other parts of the IT services organisation,
and some of its clients), the firm was separated from its parent company in 2006, and after a
brief period of independence was acquired in 2007 by Zenith Systems Europe a panEuropean firm oering a broad range of outsourced engineering services. The firms new
owners introduced a new focus on financial and strategic performance - which was an area
of sensitivity for the UK management team: under the firms original owners cost
management had the primary requirement.
This note has the following sections:

The Client need;

Processes followed;
Challenges faced;
Outcomes achieved.
The Client need.
The executive team, and in particular the newly appointed CEO were concerned about four
issues that they thought were making it dicult for the firm to meet its new owners
expectations with regard to strategic and financial performance. These were:

Lack of Board clarity around the priorities for the business in the medium to long-term.
A tendency for Directors to micro-manage within their Divisions/Departments;
Lack of progress on transformational projects that went beyond the day-to-day;

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Zenith Case Study

Some occasional disharmony between Client Services (eectively the Operations team)
and Business Development (Sales) Divisions in relation to client relationships;

Zeniths Quality Manager was appointed to identify options for addressing these concerns,
and after some research he decided the primary issue was strategic management (the firm
had good financial reporting systems in place). So he proposed to the Board that they
should consider developing a Corporate Balanced Scorecard - a device he thought would
provide both the clarity of strategic purpose that was needed, and also the information
necessary to allow the executive team to track the organisations strategic performance.
Following a proposal and presentation as part of a competitive tender, 2GC was appointed
to assist the Board to create a Corporate Balanced Scorecard.

Processes followed
2GC used its normal 3rd Generation
Balanced Scorecard process
supplemented by assistance from the
internal project leader, who assisted
with the workshops and provided much
of the internal impetus to complete the
requisite Balanced Scorecard design
activities.
The small Board of Directors were keen
participants in the Corporate level
design process, and this followed typical
best-practice patterns (for a description
of this process, see our FAQ Answer
What is a state of the art Balanced
Scorecard design?, which can be
downloaded from http://www.2gc.eu/
resources-faqs).
Because of the small size of the organisation, 2GC were able to run a simpler Balanced
Scorecard design process within the two main divisions Client Services and Business
Development - which re-used some elements from the corporate design activity. The design
approach for this cascade work comprised:

A first workshop to build a Divisional Destination Statement, Strategy Map and define

Objectives. During their workshop each Divisional management team reviewed the
Corporate Destination and adjusted this to reflect how they saw their Division looking in
four years ahead, and worked from this shared view of the future to build a Strategy
Map and produced first draft Objective definitions. In total this work took each team
about one and half days of workshop based activity; An example of the Strategic
Linkage Model produced during this activity is shown overleaf.

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Zenith Case Study

A second and final workshop which was used to finalise the definition of the objectives

selected, to choose measures and targets to track these objectives, and to agree how the
resulting Balanced Scorecard was going to be used in the management of the Division;

An analysis of how the three Balanced Scorecards Corporate, Client Services and

Business Development interacted and which objectives were reflected on all three was
produced by 2GC for consideration by the Board and use in monitoring progress.

After the completion of the Corporate Balanced Scorecard 2GC attended one of the early
review meetings to assist the Board in eciently reviewing progress.

Figure - Example of Divisional Strategic Linkage Model from Zenith Systems

Challenges faced in this project

Two particular challenges were encountered and met during the project:

The culture of the organisation was very short-term focused.

Managers found it hard

to focus on the longer term, and this made it hard for them to determine where to focus
eort on transforming the way the company operates.

Completion of the detail.

Balanced Scorecard design workshops produce high quality

thinking about the choices that the organisation needs to make (in terms of priority
outcomes and the activities needed to deliver them). However the information created
in these sessions is usually in the form of indicative, or at best draft statements - the

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Zenith Case Study

workshop participants need to find time to finalise these statements after the workshop
is completed.
We found that the work on the Destination
Statement component of the Divisional Balanced
Scorecard helped the managers build consensus
about longer term goals. This shared consensus also
went some way to addressing the issues of interdivisional disharmony and micro management
focus - the managers for the first time developed a
shared long-term view of the things the organisation
was trying to achieve, and some clarity about how
each Division would contribute towards this
outcome. The work subsequently on the Strategic
Linkage Model was also helpful in providing a forum
within which the priorities of the organisation could
be openly discussed, trade-os and compromises
reached, and a single set of overall goals for the
organisation identified. At this stage, each of the
strategic objectives identified for the organisation
was assigned to one of the executive team - their
role being to ensure the organisation paid
attention to this objective: their first task was
ensuring that the measures and targets associated with the objective were properly chosen.
But despite this assignment of responsibility within the executive team, the participants were
busy people, and they found it hard to put the time aside to complete this finalisation
activity. Without completed measures and targets, the Balanced Scorecard was of little
utility as a performance management device. If the device was going to deliver the value
sought, it needed to be fully functional - and so the measure and target completion activity
was a focus of attention for the the internal project manager. As often happens, in the end it
was necessary for him to actively prompt participation from some of the executive team, a
task that as made easier by the active support of the Chief Executive.

Outcomes achieved
The project was a success. At the executive board level:

The Board agreed on a clear set of strategic priorities for the business in the medium
to long-term.

Transformational

projects were clearly identified with an owner assigned and

resources allocated against a timeline;

The tendency for Directors to micro-manage in their Divisions/Departments was

reduced this was addressed in two ways: firstly by having a more strategic set of
priorities at Corporate level and by an open debate about handing down responsibility
in the Client Services division;

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Zenith Case Study

The boundary issues between the two divisions have not disappeared altogether some
things are immutable like a wet British summer!
Within the two Divisions the results were equally positive:

The

two divisions have each established a clear statement of what they are doing to
contribute to the organisations overall success;

The

divisional strategic linkage models have proved valuable in both articulating the
local strategic goals within each divisions, and acting as a basis for the discussion of
performance within the wider organisation.

Overall the project was seen as successful:

We enjoyed working with 2GC, they brought an intuitive process that allowed us to
identify objectives that we were not fully clear on before and forced us to put in place a
formal review process that provides the impetus for us to have regular reviews of our
performance
Project Manager

Conclusion
The cascading of corporate Balanced Scorecards is
often seen as an exercise for large corporate
businesses - where issues of scale aected both
communication of strategic objectives into the
organisation, as well as the reporting on relevant
information back to the centre. This case study
illustrates the relative simplicity and value of
implementing cascaded Balanced Scorecards in a
smaller company. 2GCs 3rd Generation
methodology provided an ecient and
straightforward mechanism to ensure management
team and organisational alignment behind shared
strategic goals, including:

Vertical

and horizontal alignment between the

divisions and the executive board.

Clarification

of priorities for each division,

helping the identification of key activity and
outcome objectives, and measures to track
progress in delivery of these.

Identification

of key stakeholders and their

responsibilities.

In particular in this case study we observe the importance of the Strategic Linkage Model as
a device for crystallising opinions around a set of priority outcomes and a set of associated
activities needed to deliver these outcomes.

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Zenith Case Study

Because the Strategic Linkage Model should reflect the views of an organisations leadership
about what is important, and how activity links to delivery of outcomes, the design approach
necessarily requires the participation of an organisations leadership group. This case has
illustrated that such participation is both practical and has wider benefits beyond the
creation of a robust strategic linkage model - related to improving the understanding of the
strategy and its implications for the organisation, and facilitating the communication of the
strategy to the wider organisation.
2GCs approach to performance management system design puts the Strategic Linkage
Model at the centre of the strategy management system (which is helpful as this is the main
application of these activity-outcome linkage models). Using time-ecient design processes,
the participation of a senior leadership team in the design process a practical and economic
option.
The role of the Strategic Linkage Model in performance management work is discussed in
more detail in the 2GC FAQ An introduction to Strategic Linkage Models which can be
downloaded from http://www.2gc.eu/resources-faqs.

About 2GC
2GC is a research-led consultancy expert in addressing the strategic and performance
management issues faced by organisations in today's era of rapid change and intense
competition. Founded in 1999, UK-based 2GC has worked with organisations in over 36
countries, helping senior management teams to implement their strategic goals. Central to
much of 2GC's work is the application of its 3rd Generation Balanced Scorecard, an approach
to strategic implementation, strategy management and performance measurement.

Contact 2GC Active Management

Phone: +44 1628 421506
Email: info@2gc.eu

Zenith Systems - Case Study

Copyright 2GC Limited, 2013

5 December 2013

2GC Active Management

1 Bell StreetMaidenheadBerkshireSL6 1BUUK
T:+44 1628 421506E:info@2GC.euW:2GC.eu
Copyright 2GC Limited 2013. All rights reserved.
This document is licensed under a Creative Commons License. You are free to copy, distribute, display,
and perform the work subject to the following conditions:

Attribution. You must give the original author credit.

Non-commercial. You may not use this work for commercial purposes.
No Derivative Works. If you remix, transform, or build upon the material, you may not distribute
the modified material.
For any reuse or distribution, you must make clear to others the license terms of this work. Any of these
conditions can be waived if you get permission from the copyright holder.
More information on this license from http://creativecommons.org/licenses/by-nc-nd/4.0/deed.en_GB