Balanced Score Card

Dr A. P. Dash
Power Management Institute

Strategy to Business Results

BALANCED SCORECARD
Financial
To succeed
financially, how
should we appear to
our shareholders

Internal Business Process

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

Vision
and
Strategy

To satisfy our
shareholders and
customers, what
business processes
must we excel at?

Learning and Growth

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

The source of value creation has shifted

from Tangible to Intangible assets

IMPACT OF
MEASURES BALANCED
SCORECARD

1983

1993

2003

Tangible

62%

38%

15%

Intangible

38%

62%

85%

Voice of the Business

Voice of the Customer

THE

THE

FINANCIAL

CUSTOMER

PERSPECTIVE

PERSPECTIVE

Voice of the Process

THE

Voice of the Employee

THE

INTERNAL BUSINESS LEARNING & GROWTH

PERSPECTIVE

PERSPECTIVE

Finance
Measures

Revenue
ROCE
Profit
Cost
EVA

Customer
To achieve our vision, how should we appear to
our customers in terms of
Product attributes
Brand
Relationship with the customer

in the targeted segments

Measures
Customer Sat/retention/expansion
Value delivery - to customer
Market/segment share

Process
What processes must we excel at in order to
achieve our vision
Measures of the process

Quality
Cost
Delivery
Asset effectiveness

Learning and Growth

To achieve our vision, how will we sustain our
ability to change and improve in terms of
People
Systems
Infrastructure

Measures
Employee Satisfaction & Retention
Skills - inventory & build up
Investment in strategic systems

Balanced Scorecard
BALANCES

Leading and Lagging Indicators

Leading Measures - Performance Drivers
Before the damage is done
Help take midcourse correction
Examples
Kms walked/week
Total Cholesterol/HDL ratio
Employee satisfaction

Leadership role

Criteria for setting goals

Specific
Measurable
Achievable
Relevant
Time Bound

SMART goals - Are these

SMART?
Complete 3 benchmarking projects by June
2003
Develop a new supplier for fabricated
spares by June 2003
Improve power generation efficiency by
10%

SMART Goals
Ensure cost reduction of Rs. --- crores by Sep 2007
through successful implementation of at least 3
benchmarking projects
Ensure new supplier for <name> spare is certified as
approved vendor by June 2007 (as per certification
norm)
Reduce cost of power generation from avg.
Rs.<>/unit in 2005-06 to Rs. <>/unit in 2006-07

Scorecard - Cause & Effect

Profit

Finance

Customer
Loyalty

Customer
On-time
delivery

Internal Processes

Learning and Growth

Process
Quality
Employee
Skills

Process
Speed
Strategic
Systems

The BSC Strategy Map

CAPTURES THE KEY CAUSE & EFFECT HYPOTHESES
Improve Shareholder Value

FINANCIAL
PERSPECTIVE

Grow Net Revenues

Grow the
customer base

CUSTOMER
PERSPECTIVE

Acquire new
customers

Improve Resource Productivity

Improve customer
profitability
Retain existing
customers

Improve cost
structure

Improve asset
utilization

Increase segment
penetration

Improve customer
satisfaction

Improve customer
relationship

PROCESS
PERSPECTIVE

Innovate new
products/services

Improve Service
Attributes

LEARNING
PERSPECTIVE

Prepare & educate

the work force

Build relationship
management skills

Communicate core
value proposition
Improve operating
efficiencies
Build a pro-active
empowered culture

Reduce
waste

Strategy Map

PMI- BSC Strategy Map Internal & External Customers

Increase ROTI
Revenue/Investment
Business Growth

FINANCIAL
PERSPECTIVE

Growth Of Demand of
organised Programs

Increase Cost Competitiveness

Retaining, increasing revenue from existing

customer; Acquiring new customer

Improve Resource
Utilization

Improve customer satisfaction

CUSTOMER
PERSPECTIVE

Objective Fulfilment from Training Program

Providing Learning Solution to
Business Problems

PROCESS
PERSPECTIVE

Faculty
Value
Proposition

Faculty

LEARNING
Competencies
PERSPECTIVE

Development

Robust
TNA
Process

Increasing Value From Faculty

Positioning of PMI,
Brand Building

Developing
Marketing
Team

Design, delivery,
program

Training
Administration

Taking up
Benchmarking
projects

HR-Admin
Support
Environmental Scan
and Business
Intelligence

The Strategy Map

An example: Telephony Service
provider

Improve XYZ Cos Return on Capital Employed

Financial
Perspective

Revenue Growth Strategy

understand customers needs
and differentiate accordingly

Introduce
e new source
of Revenue through
Value Added Services
*revenue from VAS
*Profit margin

Sell Sticky VAS

services to help
Customer to
communicate better

Productivity Growth Strategy

maximize the use of existing asset
integrate the business to reduce
total delivered cost

Become the Industry

Cost Leader in every
Services we Provide

*Services used compared with

the rest of the country

*VAS cost compared

with the rest of the country

Customer
Perspective

Maximize the use

of existing assets
*Actual cash flow
compared with
business plan

Win Win Dealer Relations

Product/Service attributes

Fast
Activation

VAS

Price

Bill
Plan

Relationship
Friendly
helpful
employees

Recognize
customer
loyalty

Delight the customer

Image
Trusted
Brand

Offer more
types of
services

Help dealers
develop their
business
skills

* Dealer Profitability
* Dealer Satisfaction

Improve XYZ Cos Return on Capital Employed

Financial
Perspective

Revenue Growth Strategy

understand customers needs
and differentiate accordingly

Introduce
e new source
of Revenue through
Value Added Services
*revenue from VAS
*Profit margin

Sell Sticky VAS

services to help
Customer to
communicate better

Productivity Growth Strategy

maximize the use of existing asset
integrate the business to reduce
total delivered cost

Become the Industry

Cost Leader in every
Services we Provide

*Services used compared with

the rest of the country

*VAS cost compared

with the rest of the country

Customer
Perspective

Maximize the use

of existing assets
*Actual cash flow
compared with
business plan

Win Win Dealer Relations

Product/Service attributes

Fast
Activation

VAS

Price

Bill
Plan

Relationship
Friendly
helpful
employees

Recognize
customer
loyalty

Delight the customer

Image
Trusted
Brand

Offer more
types of
services

Help dealers
develop their
business
skills

* Dealer Profitability
* Dealer Satisfaction

Internal Process
Perspective

Innovate & develop

New VAS

Understand & decide

Customer segments better
and build best in class
Channel teams

* new Service acceptance * Share of target market

rate
* Dealer quality rating
* Return on investment

Learning &
Growth
perspective

Promote functional
excellence,develop leader
ship skills and create an
integrated view of the Co.
* Ratio of Strategic skills to job
coverage

Improve hardware
performance and CAS,
deliver quality services
and on time and become
Industry Cost Leader
* Network downtime
* Stock out rate
* TRAI quality parameters
* VAS rate Vs Industry

Adopt new technology

that encourages and helps
Process Improvement

* On time deployment of system

Improve
Environmental
Health & Safety
* reduce number of Envi.
& safety incidents

Align business and

personal goals

* Personal Balanced Score Card

* Employee feed back

BSC Matrix
The one page communication system
of strategies, goals, projects and
initiatives

The Balanced Scorecard Matrix

STRATEGIC

THEMES

OBJECTIVES

MEASURES &
TARGETS

INITIATIVES

Asset
productivity

Improve
revenue
productivity of
locations
Win customer
trust
Market new
products

Rs 45 cr Revenue pa
per location by Mar
03

ABC costing
system

95% customer
approval rating
3 new products by
Mar 03

Loyalty campaign

Establish Reln
ship mgmt
process
Improve
Product devt.
process
Relationship
team in place
Learn new
product
development

90% compliance to
plan elements
Avg. cycle time from
concept to launch <
3 months in 2002-03

Benchmarking
Relationship
marketing & New
product devt.
processes

5 relationship execs
by Sep 02
100% Mktg execs
certified on new
process by Dec 02

Recruitment
Profiling tool
New product
identification pilot
project

PERSPECTIVE

FINANCIAL
CUSTOMER

INTERNAL

Customer
Loyalty
Value
delivery
Relationship
mgmt
Product
innovation

LEARNING

Relationship
skills
Product devt.
skills

Product devt. cell

Implementing the Balanced

Scorecard

HOD and Managers Scorecard

SMART GOAL SHEET FOR 2003 - 04 - NTPC

DEPARTMENT:

BUSINESS/FINANCE

CUSTOMER

PROCESS
LEARNING, GROWTH

POSITION:

No. KRA/OBJECTIVE
1
1.1
1.2
2
2.1
3
3.1
4
4.1
4.2
5
6
7
8
9
9.1
10

WEIGHT MEASURE HOW CALCULATED TARGET

TOTAL
ORIGINATOR:
DATE:
APPROVED BY:
DATE:

100

Broad Implementation Time Table

MTH 1 MTH 2 MTH 3 MTH 4 MTH 5 MTH 6
ORIENTATION
CONTRACT APPROVAL
MGMT STRUCTURE
AS-IS ASSESSMENT
STRATEGY WORKSHOP
DEPLOYMENT EDN, PLAN
BUILDING FIRST LEVEL BSC
BUILDING SUPPORT SYSTEMS
CONSOLIDATING UNIT LEVEL BSC
SMART GOAL EDUCATION
DEPT MGR LEVEL DEPLOYMENT
BSC COMMUNICATION
PROJECT REVIEW