what is balanced scorecard

7/28/2019 What is Balanced Scorecard

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The Balance Scorecard

A Strategic Management ---- a new approach

developed in the early 1990s by RobertKaplan and David Norton.

This approach provides a clear prescription

as to what companies should measure inorder to balance the financial perspective.


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Introduction:------

The Balanced Scorecard is a management

system that enables organizations to clarifytheirvision and strategy and translate them

into action.

It provides feedback around both the internal

business process and external outcomes inorder to continuously improve strategic

performance and results.


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Methodology:----------

The Balanced Scorecard methodology buildson some key concepts of previousmanagement ideas such as TQM (TotalQuality Management) including customer

defined quality, continuous improvement,employee empowerment and primarilymeasurement-based management andfeedback.


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Four Perspectives

The Balanced Scorecard suggests that weview the organization fromfour perspectives

and to develop metrics, collect data andanalyze it relative to each of theseperspectives.

The Learning and Growth Perspective

The Business Process Perspective

The CustomerPerspective

The Financial Perspective.


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Learning and Growth Perspective

To Achieve the vision, how will we sustain the

ability to change and improve.

People need to constantly learn and grow to

accept the desired changes happening in the

organization This is an important perspective

as it takes into consideration Learning andGrowth of employees so that they don't resist

change and therefore improve continuously.


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Internal Business Process

To satisfy the shareholders and customers

what business process must one be excellent.

All the business process should be efficient

and effective so as to satisfy the customer's

demands and shareholder's needs.

Internal business Process are importantaspect for productivity and overall attainment

of organizational goals and objectives.


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Customer Perspective

To achieve the vision, how should one appear

to the customers

Customers are one of the most important

asset of the organization. Their satisfaction is

of utmost important for the business. Hence to

take the customer aspect or perspective intoconsideration is necessary.


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Financial Perspective

To succeed financially how should one appear

to the shareholders. The objectives, targets

measures and initiatives should be taken into

consideration.

Financial perspective is the most important

perspective. It helps the organization to knowthe cost effectiveness and profitability of the

organization


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DoubleLoop Feedback

In order to shield the customer from receiving

poor quality products,aggressive efforts were

focused on inspection and testing at the end

of the production line.

True causes of defects can never be identified

and there is always inefficiencies due torejection of defects. Hence the causes of

variation needs to be identified and fixed


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DoubleLoop Feedback

To establish such a process, Deming

emphasized that all business processes

should be part of a system with feedback

loops. The feedback data should be examined

by managers to determine the causes of

variation, what are the processes withsignificant problems and then they can focus

attention on fixing the subset of processes.


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DoubleLoop Feedback

The Balanced Scorecard incorporates

feedback around internal business process

outputs, as in TQM, but also adds a feedback

loop around the outcomes of business

strategies. This creates a double-loop

feedback processes in the balancedscorecard.


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Performance metrics

Financial Perspective

Goals Measures Survive Cash flow

Succeed Quarterly sales growth

and operating income by division Prosper Increase market share

and ROE


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Customer Perspective

Goals Measures New Product Percent of sales from new Products

Percent of sales from Proprietary products Responsive On-time delivery supply Preferred Share of key accounts Supplier purchases

Ranking by key accounts

Customer Time with customers

Partnership


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Internal Business Perspective

Goals Measures Technology Manufacturing geometry Capability Vs competition Manufacturing Cycle time

Excellence Unit costYield

Design Silicon effi ciency Productivity Engineering efficiency

New product Actual introduction scheduleIntroduction Vs. Plan


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Internal Business Perspective

Goals Measures

Technology Time to develop

Leadership next generation

Manufacturing Process time to maturity

Learning

Product percent of products that equal 80% salesfocus

Time to market New product Introduction

Vs. competition


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what is balanced scorecard

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