Balanced Scorecard: Implementation

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  • Topic: Strategic management, Management, Strategic planning
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Balanced Scorecard
Airline & FMCG -Implementation
Anand Subramaniam

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To navigate a plane, looking at the fuel indicator is too limited – other factors impact the success of a flight; a cockpit requires a balanced measuring system !! 2

Implementation Highlights
Challenges around Strategy Execution What is Balance Scorecard (BSC) and why firms implement it? My Client’s (FMCG & Airlines) : – – – – – – – – – Challenges, Goals, Benefits Seeked, Critical Success Factors (CSF), Strategy Map Example – themes, CSF, measures & targets, implementation roadmap including time frames, Project Organisation Chart Lessons Learned

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Is this happening at your firm ?
STRATEGY

60% of organizations don’t link strategy & budgets

update the strategy Strategic Learning Loop

test the hypotheses

85% of management teams spend less than one hour per month on strategy issues

BALANCED SCORECARD

BUDGET

78% of organisations lock budgets to an annual cycle 20% of organisations take more than 16 weeks to prepare a budget

funding

Management Control Loop

reporting

PERFORMANCE Input (Resources)
Initiatives & Programs

92% of organisations do not report on lead indicators

Output (Results) 4

Strategy Execution Challenges
“We have a strategy, we just can’t explain it that easily.” “Our employees don’t have a clear understanding of what the strategy is and their role in it.” “Our strategic, operational, and financial plans are not aligned.” “We spend too much time and effort creating plans instead of getting value from the planning process” “I’m not sure our resources are allocated against priorities and our best opportunities.” “We do not know if our strategy is working until it is too late.” “Our data is of poor quality and we have disparate systems to report on performance.” “We don’t have the right measures. There are too many of them and we’re not sure which ones to use”

“Our leadership team does not agree on our key priorities.”

“We are a collection of silos that do not collaborate.”

“We are trying to do 100 things, rather than do 15 critical things well.”

“Recognition and rewards are not based on driving the change we need.”

Unclear Vision Unclear Vision and Strategy and Strategy

Lack of Lack of Organisation Organisation Alignment Alignment

Disjointed Planning Disjointed Planning and Processes and Processes

5 Inability to Test and Inability to Test and Adapt Performance Adapt Performance

Vision to Outcomes – Conceptual Overview
MISSION Why we exist VALUES What’s important to us VISION What we want to be STRATEGY Our game plan BALANCED SCORECARD Translate, Focus and Align STRATEGIC INITIATIVES What are the priorities TOTAL QUALITY MANAGEMENT What we must improve EMPOWERMENT / PERSONAL OBJECTIVES What I need to do

STRATEGIC OUTCOMES Satisfied SHAREHOLDERS Delighted CUSTOMERS Efficient & Effective PROCESSES Motivated & Prepared WORKFORCE

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What is a Balance Scorecard (BSC)?
The Premise

Measurement Communicates Values, Priorities & Direction

The Conclusion

Measurement Must Be Linked To Strategy

Strategy

Balanced Scorecard

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Measurement To Communicate, Not To Control

BSC Perspectives
Perspective Key Concept Key Questions Through the eyes of our customers and stakeholders, how will they judge our products and services? For businesses, how do we create value for owners? Customer/ Stakeholder Satisfaction

Financial Stewardship

Financial Performance

Internal Process

Efficiency

How can we improve internal processes to improve quality, timeliness, economics, and functionality? How can we continually get smarter, innovate, and improve? 8

Organisational Capacity

Knowledge and Innovation

BSC

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Why firm’s implement BSC?
To align corporate strategy with daily operations To make informed business decisions via defined reporting and analysis, to corporate best practices To comply with regulations by disclosing...
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