Engineered

Balanced
Scorecard
Consolidated & Prepared By:
Fadi N. Al-Abbadi

2008
“People and their managers are
working so hard to be sure things
are done right, that they hardly
have time to decide if they are
doing the right things”
Stephen Covey

2
The Evolution Of Measurement

Balanced Scorecard
Six Sigma

Late Shareholder Competencies/ Business Process

Value Capabilities Reengineering
20th
Century Customer
Satisfaction

Competitive Comparative Operational

Advantage Benchmarking Improvement

Management
19th Accounting
Century
Double-entry
15th Bookkeeping
Century
Financi Strategic Operational
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What is BSC?

• The balanced scorecard (BSC) is a

Performance Management System
that enables organizations to clarify
their vision and strategy and
translate them into action.
• It also provides feedback around
both the internal business processes
and external outcomes in order to
continuously improve strategic
performance and results.
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BSC Perspectives

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Examples of Measurements
by Perspective
Financial Internal
Processes
• ROI • Production
• Revenue • Delivery
• Earnings • Operations
• Capital • Quality Control
• Cash Flow • R&D

Learning and Customer

Growth
• Employee • Quality
• HR Capital • Service
• Knowledge • Pricing
• Technology • Time
• Best Practices • Image

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Benefits of Implementing
a BSC

• Accelerates behavioral and cultural

changes

• Shortens implementation cycle for

strategy

• Facilitates communication among

managers, employees, and
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BSC History and Evolution
1st Generation
• The original BSC concepts were
developed in the late 1980s and
published by Kaplan and Norton in
1992

• Focused on strategy and vision, but

said little about how to design or use
effectively

• Said little about how measure

selection activity could be done. 8
BSC History and Evolution
2nd Generation

• Measures are chosen to relate to

specific strategic objectives, the
design aim being to identify about 20-
25 strategic objectives each
associated with one or more
measures and assigned to one of four
perspectives
• Visually document the major causal
relationships between strategic 9
BSC History and Evolution
3rd Generation
• Destination statement: A description,
ideally including quantitative detail, of
what the organization (or part of
organization managed by the
Balanced Scorecard users)

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BSC History and Evolution
3rd Generation

• Strategic Linkage Model with ‘Activity’

and ‘Outcome’ Perspectives: A
simplification of a 2nd Generation
Balanced Scorecard strategic linkage
model - with a single ‘outcome’
perspective replacing the Financial
and Customer perspectives, and a
single ‘activity’ perspective replacing
the Learning and Growth and Internal
Business Process perspectives.
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Meeting the Challenge
with the Balanced
Scorecard
The balanced scorecard is a
performance management system
that

• enables an organization to establish,

accomplish, and measure the success
of its strategies
• is used to evaluate an organization’s
impact from several perspectives, such
as customers, employees, internal
business processes, and financial
results
• allows effective communication of 12
Balanced Scorecard
Terms
Vision
Customers Mission
Goals

Perspectives STRATEG Themes

YObjectives
Performance Drivers Measures
Critical Success Factors
KPI Targets Thresholds

Initiatives
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Advantages of the BSC

• Emphasizes achieving results and

implementing strategy

• Focuses on high-impact performance

measures

• Is easy to use and economical to

maintain
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Advantages of the BSC

• Empowers process owners to make

improvements

• Allows comparisons to best-in-class

performance (benchmarking)

• Bridges the gap among strategy,

development, formulation, and
implementation
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Why Use a BSC?

• Losing competitive position

• New technological advances

• Changing labor markets

• Employee shifts/Downsizing

• Government management reforms

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 BSC Methodology—Nine
Steps to Building &
Implementing
Phase a BSC
One: Building a Balanced Scorecard Performance System

• Conducting an Organizational Assessment

• Defining Strategic Themes
• Choosing Perspectives and Developing Objectives
• Developing a Strategic Map of the Organization
• Defining Performance Measures
• Developing Initiatives

Phase Two: Implementing the Balanced Scorecard

• Computerizing and Communicating Performance Information

• Cascading the Scorecard throughout the Organization
• Using Scorecard Information to Evaluate and Improve Performance

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Meeting the Challenge
with the Balanced
Scorecard Assessment Evaluate
& Improve
Strategic
Themes

Cascade

Perspectives
& Objectives
Computerize
&
Communicate

Strategic
Map
Initiatives
Performance 18
Measures
 Example: Strategic
Mapping Improve
Returns Improve
Broaden
Operating
Revenue Mix
Efficiency
Financial
Increase
Increase Customer Customer Satisfaction
Confidence in Our Customer Through Superior
Advice Execution

Understand Develop Cross-Sell Internal Shift to

Minimize Provide
Appropriate
Customer New
Products
the Product
Line
Processes Channel
Problems Rapid
Response
Segments

Increase
Employee
Productivity

Develop Provide
Align
Access to
Strategic Personal
Skills Strategic
Goals
Information

Employees 19
 Typical Performance
Measures Financial
•Shareholder value
•Investment
•Asset utilization
Objective Measure Target Initiative
•Resource allocation
•Profitability

Customer Internal Business Process

Objective Measure Target Initiative
Objective Measure Target Initiative Strategy

•Value proposition •Production efficiency

•Retention •Cost
•Service quality Learning & Growth •Bottlenecks
•Satisfaction Objective Measure Target Initiative

•Skills coverage
•Innovation
•Employee development
•Capacity building
•Knowledge transfer
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Example: Linking Objectives,
Measures, Targets, and
Initiatives
What strategy
must be achieved
and what is
How success will
be measured and
Performance
expectation
Key action
programs
required to
critical to its tracked achieve objectives
success

Objective Measure Target Initiatives

• Sales Promotions
Financial

Broaden Revenue mix 10% Product A

revenue mix 40% Product B • New Channel
50% Product C Marketing
Increase Customer
Customer

customer retention 95% • Frequent Buyers’

satisfaction Club
1999 -- 15%
Internal

Develop new % Revenue from

2000 -- 50% • R & D Program
products new products
2001 -- 60% • Customer Mailing
Learning &

Develop • Custom Training

Skill coverage
Growth

strategic skills 90% • Knowledge Library

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Cascading Scorecards
Support Strategy Corporate

Financial
Business Units
Goal Customer
Measure Target Initiative
Customer
Support Units
Goal Measure Target Initiative
Goal Measure Target Initiative

Team/
Individual

Customer
Customer Vision Internal Business Process
Internal Business
Goal Measure Target Initiative
Customer Goal Measure Target Process
Initiative
Goal Measure Target Initiative Mission Internal
Goal Business
Measure TargetProcess
Initiative
Goal Measure Target Initiative Goal Measure Target Initiative
Strategy

Learning and Growth

Goal Learning
Measure and Growth
Target Initiative
Goal Learning and
Measure TargetGrowth
Initiative
Goal Measure Target Initiative

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BSC Templates

The generated sheets are as following:

• Goals Establishment sheet

• Themes Checklist sheet
• Strategic map sheet
• Measurement definition sheet
• Measurement summary sheet
• Lag/Lead comparison sheet
• Summary sheet
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References

Available upon request

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 Thank you

fadi_ju@yahoo.com

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