As soon as he said-

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As soon as he said- Money isnt Everything -
I knew we were in trouble
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It is important to focus on the means used to
achieve the ends ..not just on the ends
themselves

• To only focus on traditional financial accounting
  measures (such as ROI, ROE, EPS) ..does not
  give mgt the whole picture.

3

• Performance needs to be judged thru mix of both
  financial non-financial measures.
• As - non-financial measures are drivers of
  financial outcomes

Will Make - if sell product
Will sell product if consumer wants, knows about
, can get, LIKES product
To achieve above everyone must effectively do
their job
To effectively do job must know what to do
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Organizations Often Have A Gap Between Strategy
and Action
Strategy Is a Step In a Continuum
MISSION Why we exist
VALUES Whats important to us
VISION What we want to be
STRATEGY Our game plan
STRATEGIC OUTCOMES
SatisfiedSHAREHOLDERS
Delighted CUSTOMERS
Efficient and EffectivePROCESSES
Motivated PreparedWORKFORCE
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The Balanced Scorecard Is A Bridge To Close That
Gap
Strategy Is a Step In a Continuum
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Strategic Thinking- the ten big ideas
9 9. Metrics that matter Balanced score card-
a system that attempts to balance financial
performance w/ consideration of customer's
perspective, learning growth perspective,
internal business process perspective
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Balanced Scorecard History
Measurement and Reporting
Enterprise-wide Strategic Management
Alignment and Communication
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Balanced Scorecard Hall of Fame Implemented
Strategies and Achieved Breakthrough Results Fast
Mobil
ATT Canada
Saatchi Saatchi

• Last to first
• Cash flow 1.2b
• ROI 6 --gt 16

3 years
3 years
2b
7b
2-5 years
Cigna
Brown Root
2-5 years
3 years

• 1 in growth profitability

3b
City of Charlotte
Duke Childrens
3 years
3 years

• Customer Satisfaction 70
• Public Official Award

• Customer Satisfaction 1
• Cost/Case 33

Wells Fargo
Southern Garden
3-5 years
3 years

• Customers 450
• Best Online Bank

• Least Cost Producer

2 years
UPS
Chemical Bank
Hilton Hotels
3 years
2 years

• Revenues 9
• Net Income 33

• 99 Merged Target Asset Retention

• Customer Satisfaction
• Market Revenue Index

10

• What is measured gets noticed
• What is noticed gets acted on
• What is acted on gets improved

Today 70 of Fortune 1,000 companies utilize
a Balanced Scorecard to help manage
performance because..
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Perspectives Encompass all Respective Functional
Domains
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For Each Perspective
Financial Objectives Measures Targets
Initiatives Responsibility Budget 1. 2. 3. Custom
er Business ProcessesLearning
Growth Objectives Measures Targets
Initiatives Responsibility Budget 1. 2. 3.
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Basic Scorecard Terminology(Southwest Airlines
Example)
Strategy Map
Targets The level of performance or rate of
improvement needed
InitiativesKey action programs required to
achieve targets
Measures How performance is measured against
objectives
Strategic Theme Operating Efficiency
Objectives What the strategy is trying to
achieve
Profits and RONA
Financial
Fewer planes
Grow Revenues
Attract Retain More Customers
Customer
On-time Service
Lowest prices
Targets
Initiatives
Measures
Internal
Fast ground turnaround

• 30 Minutes
• 90

• Cycle time optimization

• On Ground Time
• On-Time Departure

Learning
Ground crew alignment
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A Complete Scorecard is a Program for Action
Objectives
Measures
Initiatives
Targets
Strategic Theme Operations Excellence
Strategic ThemeOperating Efficiency
Profits and RONA
Financial

• 30 /yr
• 20
• 5

• Profitability
• Grow Revenues
• Fewer planes

Fewer planes
Grow Revenues
Attract Retain More Customers

• Customers
• FAA On Time Arrival Rating
• Market Survey

• Customer loyalty program
• Quality management

• 12 growth
• Ranked 1
• Ranked 1

• More Customers
• Flight is on -time
• Lowest prices

Customer
On-time Service
Lowest prices

• On Ground Time
• On-Time Departure

• Cycle time optimization

• 30 Minutes
• 90

Internal

• Fast ground turnaround

Fast ground turnaround

• Ground crew trained
• Ground crew stockholders

• Ground crew training
• ESOP

• yr. 1 70yr. 3 90yr. 5 100

• Ground crew alignment

Learning
Ground crew alignment
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The Complete Balanced Scorecard Strategy Map
Improve Shareholder Value
Financial Perspective the drivers of
shareholder value
Shareholder Value ROCE
Productivity Strategy
Revenue Growth Strategy
Create Value from New Products Services
Improve Cost Structure
Increase Asset Utilization
Enhance Customer Value

• Customer Profitability

• Cost per Unit

• Asset Turnover

• New Revenue Sources

• Market and Account Share

• Customer Satisfaction

• Customer Acquisition

• Customer Retention

Customer Perspective the differentiating value
proposition
Product Leader
Customer Solutions
Customer Value Proposition
Low Total Cost
Product/Service Attributes
Relationship
Image
Price
Quality
Time
Function
Service
Relations
Brand
Internal Perspective how value is created and
sustained

• (Processes that Produce and Deliver Products
  Services)

• (Processes that Enhance Customer Value)

Customer Management Theme
Operations Theme
Innovation Theme
Regulatory and Society Theme

• (Processes that Create New Products and Services)

• (Processes that Improve the Environment and
  Communities)

Learning Growth Perspective role for
intangible assets people, systems, climate and
culture
Human, Information, and Organizational Capital
Strategic Competencies
Strategic Technologies
Climate for Action
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Mobil NAMR Strategy Map
Increase ROE to 12
Financial Perspective
ROCE Net Margin (vs. industry)
Productivity Strategy
Revenue Growth Strategy
New Sources of Non-Gasoline Revenue
Increase Customer Profitability Through Premium
Brands
Become Industry Cost Leader
Maximize Use of Existing Assets

• Non-Gasoline Revenue Margin

• Volume vs. Industry
• Premium Ratio

• Cash Expense (cpg) vs. Industry

• Cash Flow

Customer Perspective
Delight the Consumer
Win-Win Dealer Relations

• Dealer Profit Growth
• Dealer Satisfaction

Differentiators
Basic

• Share of Targeted Segment
• Mystery Shopper Score

• Clean
• Safe
• Quality Product
• Trusted Brand

Speedy Purchase
Friendly Helpful Employees
Recognize Loyalty
Help Develop Business Skills
More Consumer Products
Achieve Operational Excellence
Build the Franchise
Increase Customer Value
Be a Good Neighbor
Understand Consumer Segments
Improve Hardware Performance
Improve Inventory Management
Create Non-Gasoline Products Services
Improve Environmental, Health and Safety
Internal Perspective

• Yield Gap
• Unplanned Downtime

• Inventory Levels
• Run-Out Rate

Best-In-Class Franchise Teams

• New Product Acceptance Rate

On-Spec On-Time
Industry Cost Leader

• Environment Incidents
• Safety Incidents

• Activity Cost vs. Competition

• Dealer Quality Rating

A Motivated and Prepared Workforce
Climate for Action
Competencies
Technology
Learning Growth Perspective

• Aligned
• Personal Growth

• Functional Excellence
• Leadership Skills
• Integrated View

• Process Improvement

• Personal BSC
• Employee Feedback

• Strategic Skill Coverage Ratio

• Systems Milestones

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Capstone's Balanced Scorecard
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Additional AFTER-the-FACT Tools for Managing
Assessing Your Performance

• Company Round Analysis
• Analyst Report

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Round Aanalysis -example
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Simulation Scoring System