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Building a Strategic Balanced Scorecard Product Image

Building a Strategic Balanced Scorecard

  • Published: February 2008
  • Region: Global
  • 262 Pages
  • Business Intelligence [part of Optima Media Group]

A blueprint for translating your business strategy into operational objectives, measures and targets “Immensely practical. It gives clear guidelines, useful examples and plenty of level-headed advice about what to do and what not to do. It will helpcompanies enormously to avoid the pitfalls in creating a balancedscorecard.” Penny Jarvis, Director, Egremont “Practical, workaday and useful. The report takes a sleeves-rolled-up approach and helped me learn form other people's experience. It's an excellent resource. What's also important for me is that it helps to show how the scorecard can be made to work in a public sector environment. An excellent piece of work.” Julian Taylor, Director, Network Learning and Performance, Scottish Enterprise Network In too many cases strategy is a ring-bound document that sits on the shelf seen only by the CEO and a few strategic planners. Yet globalization, e-business and an ever more demanding customer base mean that organizations should reconsider strategy over shorter timescales and amend their objectives with increasing regularity. The balanced scorecard offers the opportunity to take strategy out of the boardroom and onto READ MORE >

Author Profile
Acknowledgements
Preface
Chapter 1: The Evolution of the Strategic Balanced Scorecard
Executive Summary
Section 1: The Origins and Evolution of the Balanced Scorecard
The Balanced Scorecard Explained
The foundations for the balanced scorecard concept
Analog Devices: the first scorecard
A strategy implementation framework
The Need for a Strategy Map
Section 1 Summary
Section 2: Principles of the Strategy-Focused Organization
Principle 1: Translate the strategy to operational terms
Principle 2: Align the organization to the strategy
Principle 3: Make strategy everyone's everyday job
Principle 4: Make strategy a continual process
Principle 5: Mobilize change through executive leadership
Responding to Initial Failure
Section 3: Rating the Scorecard
How Advisors and Consultants Rate the Scorecard
Scoring Scorecard Implementation
Rating the Educators
Corporate Benefits Achievement
Section 3 Summary
Chapter 1: Action Points
Case Study: Saatchi & Saatchi Worldwide
Chapter 2: How Companies Apply the Scorecard
Executive Summary
Introduction
Section 1: Scorecard Variations
Telstra Case Report
Fortis Group Case Report
Banking 365 Case Report
NSK Bearings Case Report
Combining the Scorecard With the EFQM Excellence Model
Other Scorecard Approaches
The Impact of Adapted Models
Scorecards and Business Success
Section 1 Summary
Sections 2: Variations on the Scorecard Theme
Schneiderman's Seven Levels of Balanced Scorecard Implementation
A Level One Balanced Scorecard
A Level Two Balanced Scorecard
A Level Three Balanced Scorecard
A Level Four Balanced Scorecard
A Level Five Balanced Scorecard
A Level Six Balanced Scorecard
A Level Seven Balanced Scorecard
Section 2 Summary
Chapter 2 Action Points
Case Study: NSK Bearings Peterlee
Case Study: Johnson Controls
Chapter 3: Planning and Managing the Scorecard Programme
Executive Summary
Introduction
Why the Scorecard Should be Treated as a Programme Not a Project
Section 1: Making the Business Case
Define the Long-term Benefits
Mobil Oil Refocuses on the Longer Term
Controllable and Uncontrollable Factors
Shorter-term Benefits
Managing Benefits Expectations
Section 1 Summary
Section 2: Senior Management Sponsorship
When the CEO Should Take Responsibility For the Scorecard
A Senior Champion
Section 2 Summary
Section 3: Programme Management
Steering Groups and Management Teams
Choosing a Programme Manager
Programme Teams in Action at Booz|Allen|Hamilton
The Role of Teams in Other Case Study Organizations
Handing Over Programme Responsibility
Section 3 Summary
Section 4: The Role of Management Consultants
A Growing Service Business
How Companies Evaluate the Contribution of Consultants
Where Consultants Fail
Consultancy Skills
Facilitating the Debate on Enterprise-level Goals and Measures
Helping to Spread Best Practice
Knowledge Transfer
Section 4 Summary
Section 5: Balanced Scorecard Training
Section 5 Summary
Chapter 3 Action Points
Case Study: Booz|Allen|Hamilton
Chapter 4: Creating the Enterprise-level Strategy Map and Balanced
Scorecard
Executive Summary
Section 1: Making the Strategy Connections
Creating a One-Team Mindset
Strategy Formulation
Workshop Process
Timescales: The Case for Making Rapid Progress
Section 2: Creating the Strategy Map
Individual Senior Management Interviews
Executive Workshop 1
The strategy map as hypothesis
Strategy mapping challenges
The number of objectives
St Mary/Duluth Case
Strategic theming
Vision statements
Process objectives
Assigning ownership of objectives
Section 3: Strategic Measures and Targets
Executive Workshop 2
The role of measures
Robust non-financial metrics
Measurement shortcomings
Pentagon Federal Credit Union Case Report
Scotiabank Case Report
The need for valid, actionable measures
The politics of measurement
How many measures to choose
Data accessibility
The need for measurement innovation
Target setting
Relative performance
Benchmarking
Section 4: Strategic Initiatives
Executive Workshop 3
Prioritization: how to select the initiatives that count
Chapter 4 Action Points
Case Study: Scottish Enterprise
Chapter 5: Devolving the Balanced Scorecard
Executive Summary
Section 1: Making Strategy Delivery Part of Everyone's Daily Work
A Major Change Programme
Section 1 Summary
Section 2: Cascaded Scorecards Throughout the Organization
Active Involvement is the Secret of Scorecard Devolution
Mandating Measures
An Ideal Scorecard Cascade
The Use of Pilot Projects
Functional Scorecards
Verizon Communications Case Report
Human Capital Linkage Model
Section 1 Summary
Section 3: Personal Scorecards
Capability Development
How to link personal and enterprise scorecards
Scotiabank
Mobil Oil
Section 5 Summary
Section 4: Compensation and Incentives
Changing the System
Scorecard Weighting and Compensation Practice
Cigna Property P&C Case Report
The Case Against Making the Compensation Link
Section 4 Summary
Section 5: Communicating the Strategy and the Scorecard
Pentagon Federal Credit Union Case Report
St Mary's /Duluth Health Clinic Case Report
Section 5 Summary
Section 6: Deployment Checklist
Chapter 5 Action Points
Case Study: Royal Canadian Mounted Police
Chapter 6: Making Strategy Development a Continual Process
Executive Summary
Section 1: Transforming Strategy From an Event into a Living Process
Section 2: Strategic Learning
Making Strategy Development a Continually Evolving Process
Management Meetings
St Mary's/Duluth Health Clinic Case Report
How Companies Learn From Their Scorecard Programmes
Better Focused Meetings
Section 2 Summary
Section 3: The Role of Technology
The Benefits of Automation
A scorecard on every desktop
Texas Education Agency Case Report
When to automate
The alternative to dedicated software solutions
The cost of automation
Software Product Certification
Choosing Software
Section 3 Summary
Section 4: Linking Strategy to the Budgeting Process
Case Examples
Funding Strategic Initiatives
Devolved Responsibility
Abandoning the Budget
Rolling Forecasts
Borealis Case Report
Section 4 Summary
Conclusion
Chapter 6 Action Points
Case Study: Bank Universal 2
Chapter 7: How to Maintain the Momentum of the Scorecard
Programme
Executive Summary
Retaining a Focus on Strategy
Section 1: Maintaining Momentum with a Scorecard Programme
Success and Failure
Section 1 Summary
Section 2: Scorecard Survival Factors
Mergers and Acquisitions
A Change of CEO
Non-executive Boards
Section 2 Summary
Section 3: 20 Questions Every Organization Must Answer
1. What kind of balanced scorecard do we want to develop?
2. For what purpose are we going to use the scorecard?
3. What is the business case for using the scorecard?
4. How will senior management awareness be raised and buy-in achieved?
5. How will we ensure that the scorecard is managed as an on-going programme?
6. Should we use management consultants to support the scorecard programme?
7. Should the senior team collectively own the scorecard?
8. How long should be allocated to creating the first strategy map and balanced
scorecard?
9. How many objectives and measures should we include on the strategy map
and scorecard?
10. How will we develop meaningful measures?
11. What kind of performance measurement culture do we have now and
what kind of culture do we want?
12. To what level will a strategy map and balanced scorecard be deployed?
13. Should we pilot the scorecard prior to full rollout?
14. What are the change management implications of scorecard rollout?
15. Should the appraisal system and incentive-compensation be aligned to
scorecard results?
16. How will internal communications support the scorecard programme
17. How will we ensure that strategic learning becomes a key output of
scorecard usage?
18. How should we use technology to support the scorecard effort?
19. Should we integrate strategy with the budgeting process?
20. How long will it take to become strategy-focused using the scorecard?
Section 4: The Future of the Scorecard
Accounting Scandals
Case Study: Banking 365
Appendix 1 Scorecard Readiness Self-Assessment
Appendix 2 Scorecard Software Vendors
Appendix 3 Scorecard Consultants
Index

Chapter 1: Introduction
This chapter provides a descripton of the Balanced Scorecard management system, explaining how ‘Strategy Map's' and ‘Balanced Scorecards' work together, and what they typically look like.
The chapter explains the five principles (and sub-components) of the Strategy-Focused Organization:
-Mobilize change through executive leadership.
-Translate strategy to operational terms.
-Align the organization to the strategy.
-Make strategy everyone's everyday job.
-Make strategy a continual process.
At the outset this chapter will detail the Critical Success Factors (CSFs) for succeeding with the Balanced Scorecard.

Chapter 2: The Balanced Scorecard: It's practice thus far
This chapter provides a practical explication of how organizations
have actually been implementing the Balanced Scorecard since its inception in 1992.
It explains how, and why, the scorecard evolved from a ‘narrow' management system to a full-bodied strategy implementation system based on the five principles of the strategy-focused organization.
It also shows that although organizations will concur that they primarily use a Balanced Scorecard to implement their strategies, the supporting key motives will differ according to their own requirements. As examples, the scorecard may be used to:
-Create a culture of accountability where accountability has previously been weak.
-Educate managers as to the importance of non-financial performance metrics where historically the focus has been essentially financial.
-Better communicate strategy to employees and/or other stakeholders where historically communication has been poor.
Based on case examples this chapter explains why organizations have been using the scorecard – and what they really hoped to get from the exercise.
This chapter also explains that scorecard designs differ considerably in practice: from the classic strategy map with supporting scorecard of objectives, measures, targets and initiatives to scorecards of 5/6 perspectives and no strategy map. This chapter shows different scorecard types and explains the organizational rationale for taking different approaches.
Furthermore, this chapter explains that even ‘classic' scorecards can be different due to industry/sector diktats, for example changing the perspective ‘hierarchy' for a public sector organization. Examples of such scorecards will be provided.
Chapter 3: Managing the Scorecard ‘Programme'
To being the process of explaining how to build a scorecard management system, we start with something that is typically missing from the scorecard literature - a template for project managing a Balanced Scorecard design and implementation process. This chapter will explain:
-How to make the ‘business' case for scorecard design and implementation. Essentially why do it in the first place, what is the enterprize hoping to achieve?
-How to plan a scorecard programme.
-Who to include in a scorecard implementation project.
-Skills requirements for scorecard ‘project' members – facilitation, etc.
-When, and when not, to use external consultants.
-Securing senior management sponsorship and senior champion.
-'Training' people to work with the scorecard.
Chapter 4: How to Create a Strategy Map and Balanced Scorecard.
Based on case study examples and thought-leader input this chapter provides a step-by-step, practical template for building an enterprize-level Strategy Map and Balanced Scorecard. It will detail:
- The importance of ensuring the process is ‘owned' by senior management.
- Designing and running senior management workshops and face-to-face sessions.
- Selecting strategic objectives, measures, targets and initiatives.
- Creating senior management teamwork.
- Dealing with/overcoming any senior management resistance to the scorecard concept.
- Ensuring the Scorecard is actionable.
A template for ‘project managing' this phase will be provided.
Chapter 5: Creating Aligned Balanced Scorecards
This chapter provides a practical, step-by-step template for cascading the Balanced Scorecard deep inside the organization. It explains how to use the enterprize-level scorecard as the basis for creating aligned scorecards at unit, function, team and even individual levels. It basically explains how to ‘make strategy everyone's everyday job'.
The chapter outlines the importance of:
- Ensuring people at each level play a role in designing their own scorecards.
- Making sure the devolved scorecards reflect the priorities of that level as well as supporting higher-level scorecards.
- Strategic communications.
- Aligning compensation and appraisal systems with scorecard results.
A template for ‘project managing' this phase will be provided.
Chapter 6: Ensuring ‘Real-Time' Strategic Management and Learning.
Based on case examples and thought-leader input, this chapter explains how the Balanced Scorecard should be used as a powerful ‘real time' strategic management and learning system. It explains how to put in place robust strategic feedback mechanisms and the importance of making the scorecard the centre of management meetings.
It also details the importance of ensuring that data capture and performance reporting systems (probably through electronic, or automated, scorecard systems) makes it possible for all employees to have access to, and be able to comment on, scorecard performance.
This chapter will also explain that for a Balanced Scorecard Management System to be fully effective it is vital for the scorecard to be integrated into the planning and budgeting processes.
A template for ‘project managing' this phase will be provided.
Chapter 7: Maintaining Momentum
Part 1:
Given the fact that the scorecard is now over a decade old this chapter outlines what have been, and are, the CSFs for maintaining scorecard momentum. This chapter will consider how organizations:
-Keep the scorecard ‘alive' following initial rollout.
-Maintain the scorecard when a CEO changes or the senior sponsor leaves.
-Continuously improve scorecard usage.
-What have been the CSFs for maintaining momentum?
A template for ‘project managing' this phase will be provided.
Part 2:
This chapter will also sums up the key learnings from the Report. It does this by posing (and providing answers to, based on the Report case studies) 20 key questions that organizations should ask before, during and after scorecard rollout.
This part of the chapter will also prognosticate on how the scorecard may develop over the next few years.
Appendix A: Directory of Consultants and other useful sources.
Appendix B: Directory of Software Vendors.

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