Sie sind auf Seite 1von 29

Testing Strategy with Multiple

Performance Measures
Evidence from a Balanced
Scorecard at Store24
Presented By
BRIJESH SEHGAL J.K.YADAV SAJISEBASTIAN
VIJAY KUMAR SANJEEV KUMAR SANJAY KUMAR
S.P. SINGH

8/2/2010 1
Agenda
• Introduction
• Objective
• Process
• Analysis
• Results
• Conclusion
• References/Credentials
• Q&A
8/2/2010 2
Introduction

What the study is about?

Who did the study?

Why ?
8/2/2010 3
What the study is about?
Store24, a privately held convenience store retailer in New England, the 4th largest in the region.
Whose primary product categories include cigarettes, beverages, snacks, prepared foods, and lottery
tickets. It operates in a mature environment with competition from convenience stores, gasoline
retailers, and drug stores. During FYs 1998 and 1999, Store24 formulated a strategy aimed at
increasing sales and margins. To achieve this, Store24 changed its strategy to creating
entertaining in-store atmospheres that would differentiate its stores from those of competitors. To
implement the same Store24 used BSC & Strategy Map, but the strategy was unsuccessful .

This study is a follow up research to analyze the failure of above strategy focusing on following
points:

 investigate the role of the balanced scorecard in generating useful information for testing and validating
an organization's strategy.

 Testing and validation of assumption underlying BSC.

 Finding the gap through statistical tests of the hypotheses underlying the firm's balanced scorecard and
strategy map

8/2/2010 4
Who did the study?
Name Designation/Organisation Paper Publish
Dennis Campbell associate professor in the Accounting and
Management unit at Harvard Business School
Srikant M. Datar Arthur Lowes Dickinson Professor of
Accounting at Harvard Business School
V.G. Narayanan the Thomas D. Casserly, Jr. Professor of
Business Administration at Harvard Business
School
Susan L. Kulp Assistant Professor of Accountancy “Organizational Control Mechanisms: The Next
Phase of Procurement Efficiency," Interfaces, May-
June 2006

“Manufacturer Benefits from Information Integration


with Retail Customers," Management Science, April
2004

“Supply-Chain Coordination: How Companies


Leverage Information Flows to Generate Value," The
Practice of Supply Chain Management: Where
Theory and Application Converge, 2003

8/2/2010 5
Why?
 Understand to what extent do balanced
scorecards (BSC) provide useful information
for testing and validating an organization's
strategy?

 Understanding the role of balance scorecard in


the potential learning and feedback

8/2/2010 6
Objectives
• to explore whether, when, and how information about
problems with strategy of Store24 was captured in Store24’s
balanced scorecard.

• Find evidence that performance measurement of BSC


provide useful and timely information for testing the efficacy
of an organization's strategy.

• To stimulate new theories about the role of


multidimensional performance measurement systems in the
strategic feedback and learning processes of organizations

8/2/2010 7
Process
 Strategy
 Balance Scorecard (BSC)
Performance Measurement
System
 Strategy Map
 Hypotheses Underlying the BSC
8/2/2010 8
Strategy of Store24
 Traditional Strategy
 cleanliness,
 efficiency,
 freshness
 Differentiation Strategy
 Greater Loyalty
 “end-caps”- contained high margin product
 Fun & Entertainment

8/2/2010 9
Balanced Scorecard Performance
Measurement System
Performance measures were organized around
the four traditional balanced scorecard
perspectives
– financial
– customer
– internal
– learning & growth

8/2/2010 10
Balance Scorecard
Financial Perspective Sales Revenue
Margin
Controllable Contribution
EBIT
Customer Perspective Transaction Volume
In-store Comment Card

Process Perspective Audit Score

Learning & Growth Perspective Managerial Skill


Crew Skill

8/2/2010 11
Learning
Learning & Growth
& Growth Internal
Internal Customer
Customer Financial
Financial
Perspective Perspective
Perspective Perspective
Perspective

8/2/2010
Perspective
Perspective Perspective
Balance Scorecard of Store24

12
8/2/2010 13
Strategy Map

8/2/2010 14
8/2/2010 15
Hypotheses Underlying the BSC & Strategy
Map

Explicit

Implicit
8/2/2010 16
Explicit Hypotheses
 H1: Ceteris Paribus strategy inputs are positively related to
financial performance.

H2: Ceteris Paribus strategy inputs are positively related to


strategy-specific customer outcomes.

H3: Ceteris Paribus strategy-specific customer outcomes are


positively related to financial performance.

H4: Ceteris Paribus measures of employee capabilities are


positively related to measures of strategy inputs.
8/2/2010 17
Implicit Hypotheses
 H5: Ceteris Paribus the impact of increases in
strategy inputs on strategy-specific customer
outcomes is positively related to the level of
employee capabilities.

 H6: Ceteris Paribus the impact of increases in


strategy-specific customer outcomes on
financial performance is positively related to
the level of employee capabilities.
8/2/2010 18
Summary of Hypotheses Underlying the
Scorecard and Strategy Map

Financial
Perspective Financial Performance

H3

Customer H1
Perspective Strategy-Specific Customer Outcomes

H6 H2

Internal
Perspective Strategy Input
H5

H4
Learning
& Growth Employee Capabilities
Perspective

8/2/2010 19
Analysis
Financial Performance
Non Financial Performance
 Measure of Strategy Inputs
 Measure of Basic Operational Compliance
 Measure of Strategy –Specific Customer
Outcomes
 Employee Capability
Customers Performance Measure

8/2/2010 20
Strategy-Specific Input Measure
125%

124%
Walk Through Audit Score

123%

122%

121%

120%

119%
Q1 FY99 Q2 FY99 Q3 FY99 Q4 FY99

8/2/2010 21
Strategy-Specific Customer Outcome
Measure

6.2

6.1
Enjoyable Experience

6
Rating

5.9

5.8

5.7

5.6

5.5
Q1 FY99 Q2 FY99 Q3 FY99 Q4 FY99

8/2/2010 22
RESULT

8/2/2010 23
Result
• These results highlight that the hypothesized link in the scorecard between internal implementation of the
action plans related to the new strategy and financial performance does not exist (H1). However, it is
unclear whether the strategy was poorly formulated or poorly implemented.

• although the strategy was well implemented, the strategy formulation may have been flawed.

• suggest problems with the fit of the differentiation strategy with Store24’s employee capabilities. Crew
skills determine the magnitude of the relationship between strategy outcomes and financial performance,
but the relationship is only greater than zero for high levels of crew skills

• information in the scorecard reveals that the primary role of employee capabilities is not necessarily in
ensuring store-level execution of the strategy (e.g. H4), but rather in ensuring that even if executed well at
the local level, the differentiation strategy ultimately translated into the desired financial outcomes.
• Tables 3-5 offering evidence that formal analysis of the data generated by Store24's balanced scorecard
provides timely information about strategic problems relative to the firm's quarterly strategy review
process.
• the operating standards which Store24 executives eventually abandoned were not, while those they
retained were, drivers of financial performance.

Overall, these results provide evidence that Store24 executives learned about the underlying drivers of
store performance despite a lack of reliance on formal statistical analysis of the assumed relationships
underlying their scorecard.

8/2/2010 24
Conclusion

8/2/2010 25
References
1. Aiken, L.S. and S.G. West. 1991. Multiple Regression: Testing and Interpreting interactions.
London: Sage Publications.
2. Banker, R. D., G. Potter, and D. Srinivasan. 2001. An Empirical Investigation of an Incentive Plan
that Includes Nonfinancial Performance Measures. The Accounting Review 75 (1).
3. Banker, R. D., H. Chang, and M. Pizzini. 2004. The Balanced Scorecard: Judgemental Effects of
Performance Measures Linked to Strategy. The Accounting Review 79 (1).
4. Campbell, D. and D. Lane. 2006. "China Resources Corporation (A): 6S Management."
Harvard Business School Case 107-013.
5. Campbell, D. 2008. Nonfinancial Performance Measures and Promotion-Based Incentives.
Journal of Accounting Research. Forthcoming.
6. Cstore News, 2000.
7. Fitzsimmons, J.A. and M.J. Fitzsimmons. 2001. Service Management: Operations, Strategy, and
Information Technology. New York: McGraw-Hill.
8. Goold, M. and Quinn, J. 1990. The Paradox of Strategic Controls. Strategic Management
Journal, 11 (1), 43-57
9. Ittner, C.D. and D.F. Larcker. 1998a. Innovations in Performance Measurement: Trends and
Research Implications. Journal of Management Accounting Research 6: 205-238. 32

8/2/2010 26
Reference
10. Ittner, C.D. and D.F. Larcker. 1998b. Are non-financial measures leading indicators of financial
performance?: An analysis of customer satisfaction. Journal of Accounting Research 36: 1-35.
11. Ittner, C.D. and D.F. Larcker. 2001. Assessing Empirical Research in Managerial Accounting: A
Value-Based Management Perspective. Journal of Accounting and Economics 32: 349-410.
12. Ittner, C., Larcker, D., and Meyer, M. 2003. "Subjectivity and the Weighting of Performance
Measures: Evidence From a Balanced Scorecard." The Accounting Review. 78(3) : 725-758
13. Ittner, C.D. and D.F. Larcker 2005. Moving from Strategic Measurement to Strategic Data Analysis.
Controlling Strategy: Management, Accounting, and Performance Measurement. Edited by C.
Chapman. Oxford University Press.
14. Kaplan, R.S. and D.P. Norton. 1992. The Balanced Scorecard – Measures that drive performance.
Harvard Business Review 70 (1): 71-79.
15. ___. 1996 The Balanced Scorecard: Translating Strategy into Action. Boston, MA: Harvard Business
School Press.
16. Kaplan, R. S. 1998 "Mobil USM&R (A): Linking the Balanced Scorecard." Harvard Business School
Case 197-025.
17. ___. 2000 The Strategy Focused Organization. Boston, MA: Harvard Business School Press.
18. ___. 2004 Strategy Maps: Converting Intangible Assets into Tangible Outcomes. Boston:
Harvard Business School Publishing

8/2/2010 27
Reference
19. ___. 2006 Alignment: Using the Balanced Scorecard to Create Corporate
Synergies. Boston: Harvard Business School Press
20. ___. 2008 The Execution Premium: Linking Strategy to Operations for
Competitive Advantage. Harvard Business School Press
22. Mackinnon, J.G. and White, H. 1985. Some Heteroskedasticity Consistent
Covariance Matrix Estimators with Improved Finite Sample Properties. Journal
of Econometrics. 29: 53-57.
23. Selto, F. and M. Malina 2001. Communicating Strategy: An Empirical Study
of the Effectiveness of the Balanced Scorecard. Journal of Management
Accounting Research. 13: 47-90
21. Nagar, V. and M. V. Rajan. 2001. The Revenue Implications of Financial and
Operational Measures of Product Quality. The Accounting Review 76 (4):
495-513.

8/2/2010 28
Q&A

8/2/2010 29

Das könnte Ihnen auch gefallen