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Translating Strategy Maps into Balanced Scorecards

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Title: Translating Strategy Maps into Balanced Scorecards


1
Translating Strategy Maps into Balanced
Scorecards
  • Fall 2006
  • Summarized by Geoff Linton

2
Do Strategy Planning in Phases
3
The Strategic Process at ABB
The Strategy Focused Organization HBS, 2001,
p285
4
How an Organization Creates Value
  • Below is a top down view of how a plan unfolds

5
What a Strategy Map is
  • Visual map showing key linkages
  • Typically a flowchart
  • Or mindmap
  • Helps outlines overall strategy
  • Foundation of the balance scorecard
  • Try to divide into 4 horizontal stratas
  • 1. Finance
  • 2. Customer
  • 3. Business Processes
  • 4. Learning Growth

6
Strategy Map Linkages for Mobil Oil Turnaround
The Strategy Focused Organization HBS, 2001,
p61
7
Divisional Strategy Blueprint Gets Detailed
The Strategy Focused Organization HBS, 2001,
p228
8
Map Your Strategy
  • Work top down
  • Show major pillars
  • Add linkages and dependencies

9
Establishing Measures- Charity Case
Allstate Presentation
10
Establishing Measures- Charity Case
The Strategy Focused Organization HBS, 2001,
p155
11
Why A Strategy Map is Important
  • Failure versus success
  • Aspiration versus execution
  • Leading vs managing
  • clarity

12
Scorecards are Part of Strategy Mapping Process
13
What is a Business Scorecard?
  • One page summary of key business metrics
  • often graphical
  • adopted by best -in-class companies
  • compiled quarterly
  • Balanced Scorecard since 1994
  • Digital Dashboards
  • browser based interface for execs key managers

14
Create a Balanced Scorecard Template
  • Need mix of long term and short term goals
  • Need mix of hard and soft goals (too many
    companies measure just financial goals)
  • Hard Goals profit, scrap, absenteeism
  • Soft Goals Innovation, motivation, productivity
  • Kaplan and Norton (Harvard) developed mix
  • 1. Financial
  • 2. Customer responsiveness,
  • 3. Efficiency and effectiveness,
  • 4. Innovation and learning
  • All 4 prongs are required to succeed over long
    term!

15
Scorecard Results- Charity
The Strategy Focused Organization HBS, 2001,
p21
16
MindManager Collapsed View
17
Defining the Metrics Using the Map
18
3 Column Strategy Map- Natl Bank US
The Strategy Focused Organization HBS, 2001,
p110
19
Natl Bank Online Measures
The Strategy Focused Organization HBS, 2001,
p295
20
Balanced Scorecard for Mobil Oil
The Strategy Focused Organization HBS, 2001,
p41
21
Balanced Linkages for Mobil
22
How to Use Scorecard Approach
  • Select an appropriate mix of lead and lag
    metrics that are consistent with the marketing
    strategy
  • Optimize your strategy based on the key factors
    you can influence which make major impact
  • Focus on factors that help enhance your SCA
  • After each major decision or time period measure
    the scorecard
  • explain changes in key metrics
  • adjust for competitive response

23
Assignment 3 Balanced Scorecard
  • Based on the management team you have developed
    to run the BSG-Online simulation
  • Decide which of the 4 generic competitive
    strategies your team will pursue for the first
    practice round
  • Develop measurable objectives for your team using
    the balanced scorecard method (draw from the 47
    types of decisions in the simulation)
  • Determine current (Before) and planned (After)
    performance
  • Identify completion dates (When?) and responsible
    people (Who?) to achieve the balanced scorecard
    objectives within your team
  • Consider how you arrived at your choices of
    balanced scorecard objectives (Key Decision
    Variables) and how strengthening performance in
    these areas may affect performance in other areas
    (Performance Indicators Affected)

Names ___________________________
___________________________ __________________
_________ ______________________
_____
24
Assignment 3 Balanced Scorecard Scaling the
CLIF
25
Exercise Balanced Scorecard
  • For your firm, identify the key success factors
    which drive profit within your industry, which
    support the business model you developed
  • Develop a balanced scorecard for your firm which
    could be used to track performance.
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