Post on 06-Jul-2018
8/16/2019 Presentacion Norton
1/25
8/16/2019 Presentacion Norton
2/25
2©1999 The Balanced Scorecard Collaborative, Inc. All rights Reserved.BSCC – 00029–2/18/99
How does one
measurebusinessstrategy?
How does oneexecute businessstrategy?
How does HRmeasure its
contribution tobusinessstrategy?
How doesanyone measuretheir contribution
to businessstrategy?
8/16/2019 Presentacion Norton
3/25
3©1999 The Balanced Scorecard Collaborative, Inc. All rights Reserved.BSCC – 00029–2/18/99
“Less than 10% of strategies
effectively formulated are
effectively executed”
Fortune
“Business Strategy is now the
single most important issue…
and will remain so for the next
five years”
Business Week
8/16/2019 Presentacion Norton
4/25
4©1999 The Balanced Scorecard Collaborative, Inc. All rights Reserved.BSCC – 00029–2/18/99
ManagementControl
StrategicEnterprise
Management
From
To
The economy is in the midst of a transition …from the Industrial Age to the Knowledge Age.This shift creates pressures to change the waywe manage.
q Instability – the annual budget whichmoves incrementally from the last year isno longer adequate. Companies mustmanage to visions and strategies.
q Knowledge Workers – those withknowledge are the key to success.Strategy must be implemented from thebottom.
q Teams & Networks – the “chain of command” is being replaced by “self-governing teams”. New accountabilityapproaches are needed.
q Leaders – incremental change must giveway to dramatic transformation. Newapproaches to leadership are required.
8/16/2019 Presentacion Norton
5/25
5©1999 The Balanced Scorecard Collaborative, Inc. All rights Reserved.BSCC – 00029–2/18/99
(USM&R)1993
#6 inprofitability
1995
1996
1997
1998
#1 in profitability
#1 in profitability
#1 in profitability
#1 in profitability
Mobil
1993
Property & Casualty
Retail Bank1993 Profits = $x
199419951996
Profits = $8xProfi ts = $13xProfi ts = $19x
Brown & Root Engineering
(Rockwater)
1993Losingmoney
1996
#1 in growthand
profitability
Profit Stock
$275M loss
Stock Price = $59
1994
1995199619971998
$15M
$60M$80M$98M$94M
$74
$114$146$205$249
8/16/2019 Presentacion Norton
6/25
6©1999 The Balanced Scorecard Collaborative, Inc. All rights Reserved.BSCC – 00029–2/18/99
1. Leadership From the Top – Create the Climate for
Change
– Create a Common Focus for Change Activities
– Rationalize and Align theOrganization
3. Unlock and Focus Hidden Assets
– Reengineer Work Processes
– Create Knowledge SharingNetworks
2. Make Strategy Everyone’s Job – Comprehensive Communication
to Create Awareness
– Align Goals and Incentives
– Align Resources and Initiatives
4. Make Strategy a ContinuousProcess
– Strategic Feedback ThatEncourages Learning
– Executive Teams ManageStrategic Themes
– Testing Hypotheses, Adapting,and Learning
STRATEGY
FormulateFormulate
NavigateNavigateCommunicateCommunicate
ExecuteExecute
8/16/2019 Presentacion Norton
7/25
7©1999 The Balanced Scorecard Collaborative, Inc. All rights Reserved.BSCC – 00029–2/18/99
ROI
Financial PerspectiveFinancial Perspective
“How do we look toour shareholders”
Learning & GrowthLearning & Growth
“How will wesustain our ability
to change andimprove”
Customer PerspectiveCustomer Perspective
“How do we look toour customers”
Business ProcessesBusiness Processes
“What businessprocesses must
we excel at”Budget
Financial PerspectiveFinancial Perspective
“How do we look toour shareholders”
Learning & GrowthLearning & Growth
“How will wesustain our ability
to change andimprove”
Customer PerspectiveCustomer Perspective
“How do we look toour customers”
Business ProcessesBusiness Processes
“What businessprocesses must
we excel at”
Customer
Financial PerspectiveFinancial Perspective
“How do we look toour shareholders”
Learning & GrowthLearning & Growth
“How will wesustain our ability
to change andimprove”
Customer PerspectiveCustomer Perspective
“How do we look toour customers”
Business ProcessesBusiness Processes
“What businessprocesses must
we excel at”People
Financial PerspectiveFinancial Perspective
“How do we look toour shareholders”
Learning & GrowthLearning & Growth
“How will wesustain our ability
to change andimprove”
Customer PerspectiveCustomer Perspective
“How do we look toour customers”
Business ProcessesBusiness Processes
“What businessprocesses must
we excel at”
Quality
Financial PerspectiveFinancial Perspective
“How do we look toour shareholders”
Learning & GrowthLearning & Growth
“How will wesustain our ability
to change andimprove”
Customer PerspectiveCustomer Perspective
“How do we look toour customers”
Business ProcessesBusiness Processes
“What businessprocesses must
we excel at”
ShareholderValue
Financial PerspectiveFinancial Perspective
“How do we look toour shareholders”
Learning & GrowthLearning & Growth
“How will wesustain our ability
to change andimprove”
Customer PerspectiveCustomer Perspective
“How do we look toour customers”
Business ProcessesBusiness Processes
“What businessprocesses must
we excel at”
8/16/2019 Presentacion Norton
8/25
8©1999 The Balanced Scorecard Collaborative, Inc. All rights Reserved.BSCC – 00029–2/18/99
The Balanced Scorecard Translates Strategy intoTerms That Can Be Understood and Acted Upon
STRATEGY
FormulateFormulate
NavigateNavigateCommunicateCommunicate
ExecuteExecute
8/16/2019 Presentacion Norton
9/25
9©1999 The Balanced Scorecard Collaborative, Inc. All rights Reserved.BSCC – 00029–2/18/99
o Measurement is the
language that gives clarity
to vague concepts.
o Measurement is used to
communicate, not to
control.
o Strategy can be described
as a series of cause and
effect relationships
"If we succeed, how willwe look to our shareholders?”
The Strategy
Financial PerspectiveFinancial Perspective
"To achieve my vision,how must I look to my
customers?”
Customer PerspectiveCustomer Perspective
"To satisfy my customer,
at which processes mustI excel?”
Internal PerspectiveInternal Perspective
"To achieve my vision, howmust my organization learn
and improve?”
Organization LearningOrganization Learning
8/16/2019 Presentacion Norton
10/25
10©1999 The Balanced Scorecard Collaborative, Inc. All rights Reserved.BSCC – 00029–2/18/99
q Operating Income Growth
q Same Store Sales Growth
q Inventory Turns
q Expense / Sales Growth Ratio
q Category Market Share
qCategory Margin
q Sales psf
q Quality / Returns
q Out of Stock
q Frequency of Purchase
q Units Per Transaction
q Transaction Size
q Customer Feedback
q Employee Climate Survey
qTurnover
q Strategic Skill Coverage
q Systems vs. Plan
FinancialFinancial Customer Customer
InternalInternal Learning & GrowthLearning & Growth
8/16/2019 Presentacion Norton
11/25
11©1999 The Balanced Scorecard Collaborative, Inc. All rights Reserved.BSCC – 00029–2/18/99
The Revenue Growth Strategy““Achieve aggressive, profitable growth by
increasing our share of the customer’s closet”
The Productivity Strategy“Improve operating efficiency through real
estate productivity and improved inventorymanagement”
Financial
ProfitableGrowth
Growth Productivity
Customer
ShoppingExperience
BrandImage
ConsistentQuality / Fit
FashionDesign
Price /Benefit
CompleteOffering
Availability
Right ProductBuilding Image Shopping Experience
Strategic Awareness
Staff Competencies
TechnologyInfrastructure
Internal
Learning
& GrowthGoal
Alignment
“Shopping
Experience” Pathway
“Fashion
Excellence”Pathway
“Achieving
BrandDominance”Pathway
“ Sourcing &
Distribution” Pathway
8/16/2019 Presentacion Norton
12/25
12©1999 The Balanced Scorecard Collaborative, Inc. All rights Reserved.BSCC – 00029–2/18/99
Sourcing & DistributionPathway
ProfitabilityFinancial
Customer
Internal
Learning
RevenueGrowth
Measurement Target
• Operating Income
• Sales vs. Last Yr
• Return Rate – Quality – Other
• Customer Loyalty – Ever Active % – # units
• % of Merchandisefrom “A” factories
• Items in-Stock vs.
Plan
• % of StrategicSkills Available
Initiative
• LikesProgram
• CorporateFactoryDevelopmentProgram
• Strategic Skillsplan
• MerchantsDesktop
• 20% Increase
• 12% Increase
• Reduce by50% each yr
• 60%• 2.4 units
• 70% byyear 3
• 85%
• yr 1 50%yr 3 75%yr 5 90%Factory
RelationshipSkills
MerchandiseBuying / Planning
Skills
“A” ClassFactories
Line PlanManagement
ProductQuality
ShoppingExperience
• Qualitymanagement
• Customer loyalty
8/16/2019 Presentacion Norton
13/25
13©1999 The Balanced Scorecard Collaborative, Inc. All rights Reserved.BSCC – 00029–2/18/99
1. Leadership From the Top – Create the Climate for
Change
– Create a Common Focus for Change Activities
– Rationalize and Align theOrganization
3. Unlock and Focus Hidden Assets
– Reengineer Work Processes
– Create Knowledge SharingNetworks
2. Make Strategy Everyone’s Job – Comprehensive Communication
to Create Awareness
– Align Goals and Incentives
– Align Resources and Initiatives
4. Make Strategy a ContinuousProcess
– Strategic Feedback ThatEncourages Learning
– Executive Teams ManageStrategic Themes
– Testing Hypotheses, Adapting,and Learning
STRATEGY
FormulateFormulate
NavigateNavigateCommunicateCommunicate
ExecuteExecute
8/16/2019 Presentacion Norton
14/25
14©1999 The Balanced Scorecard Collaborative, Inc. All rights Reserved.BSCC – 00029–2/18/99
Create Organization
Alignment by Linking
Scorecards
#1.
A Corporate Scorecard definesoverall strategic priorities.
#3.
Each Support Unit develops aplan for “best practice” sharing
to create synergies acrossSBUs.
LINE BUSINESSES SUPPORT UNITS
CORPORATE
SBU A
SBUB
SBUC
SBUD
CORPORATE SCORECARD(Shared Strategic Agenda)
Themes Measures
Convenience Store Marketing
Gasoline Marketing
Manufacturing Services
Supply Programs
Environment and Safety
Human Resources
1. Financial Growth
2. Delight the Consumer
3. Win-Win Relationship
4. Safe and Reliable
5. Competitive Supplier
6. Good Neighbor
7. Quality
8. Motivated and Prepared
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xx
xx
xx
xx
xx
xx
xxxx
#2.
Each SBU develops along-range plan and BSCconsistent with corporate
strategic agenda.
#4.
Departments, teams andindividuals develop
scorecards consistent withSBU strategy.
8/16/2019 Presentacion Norton
15/25
15©1999 The Balanced Scorecard Collaborative, Inc. All rights Reserved.BSCC – 00029–2/18/99
Align Goals and
Incentives
“Every month a high percentage of our people sit down with the card, look at how
we’ve done, and calculate their compensation. Just the doing of that calculations
forces everyone in this organization to look at the 15 or 20 things that are most
important to their business. I think that’s a very powerful thing to have happen.”
Brian Baker, Mobil Oil
TheRevenueGrow th Strategy
“Improvestabilitybybroadeningthesourcesofrevenuefromcurrentcustomers”
TheProductivity Strategy
“Improve operating efficiency by shifting customers to more cost-effective channels of distribution”
Improve Returns
Improve Operating
EfficiencyBroaden RevenueMix
Increase Customer Conf idenc e in O ur FinancialAdvice
IncreaseCustomer SatisfactionThrough Superior Execution
IncreaseEmployeeProductivity
Access to StrategicInformation
DevelopStrategicSkills
Align Persona lGoals
FinancialPerspective
Customer Perspective
InternalPerspective
Learning Perspective
Cr os s - S el l t he
Product Line
Shift to Appropriate
Channel
Provide Rapid
Response
Dev elop New
Products MinimizeProblems
Understand
Customer Segments
Creating a Holistic View of Strategy PermitsCreating a Holistic View of Strategy PermitsTeamwork and Knowledge SharingTeamwork and Knowledge Sharing
Them Them Them Them Them Them Them Them
Boss
BigBoss
Me
You
Traditional Approach to Job Definition and GoalTraditional Approach to Job Definition and GoalSetting Promotes Fragmentation and “ Silos”Setting Promotes Fragmentation and “ Silos”
8/16/2019 Presentacion Norton
16/25
16©1999 The Balanced Scorecard Collaborative, Inc. All rights Reserved.BSCC – 00029–2/18/99
CASECASE
Leader inROCE
Meet cash flow
plan
Profit leader(margin)
Premiumpricing throughdifferentiation
Fair price
for value
Win-winalliances
Products are
easy to sell
Both make
money
Easy to dobusiness with
Anticipate marketneeds
Perfect OrderFulfillment
Effective customeradmin.
On time
On spec firsttime
As ordered
Documented &
invoiced properly
No returns due to
damages
Willing & able topay on time
Maximize volume:
balance profitable growth withasset utilization
Continuously improve
strategies
Best-in-class
sales
Best-in-class
distributionnetwork
Strategic supply
alliances
Skilled & focusedpeople
Optimize refineryprofitability
Win-win refineryrelationships
Cost-effectiveproduction
Cost-EffectiveSupplier
Efficient & fullyutilized assets
Trusted brandimage
Maintain thelevel of costsappropriate to
supportdifferentiation
Change the
culture
Empowerment Team buildingDemonstrate support
for change
Develop strategic skills and
competencies
Job gapanalysis
Cross-functionalexposure
Information technology
availability
Best practicesExperience
capture
FinancialPerspective
CustomerPerspective
InternalPerspective
Learning &Growth
Build the brandCustomer
driven productdevelopment
8/16/2019 Presentacion Norton
17/25
17©1999 The Balanced Scorecard Collaborative, Inc. All rights Reserved.BSCC – 00029–2/18/99
CASECASE
F1 Leader in Return on CapitalF2 Meet Cash Flow PlanF3 Profit Leader F4 Meet Cost and Asset Utilization Plan
o ROCEo Cash flowo Integrated Incomeo Total Integrated Cost F
i n a n c i a l
C1 Innovative BrandC2 Mutually Profitable RelationshipsC3 Easy to Work WithC4 On Time / On Spec / As Ordered
o Market shareo Distributor Surveyo Customer Surveyo Number of customer / partner complaints C
u s t o m e r
&
P a r t n e r s
I n t e r n a l
L e a r n i n
g
&
G r o w t h
Strategic Measures
I1 Proactive Product DevelopmentI2 Build Superior Brand ImageI3 Develop Best-in-Class Distribution
NetworkI4 Achieve Perfect Order FulfillmentI5 Reduce Manufacturing CostI6 Effectively Utilize Assets
o Percent Revenue from new productso Price vs. competitiono Percent distributors meeting expectationso Percent perfect orderso Total manufacturing cost
L1 Demonstrate Support for change
L2 Develop strategic skills andcompetencies
L3 Ensure information technologyavailability
T o p 3
Competencies
I m p a c t s B S C
O b j e c t i v e s
P e r s o n a l
G r o w t h
Comments
1Effective
Communication
X X Need to communicate team results to other parts of Lubes
Delegates
Effectively
X X Anticipate turnover on team – need to develop coaching skills to speed growth
of new team members
Forward Thinking X Develop a 6 -12 month plan for technical ro ll-out . Focus on
Taking Initiative X New team – I have greatest knowledge of area. Manager has asked me to identify
new approaches to increase market share 8%
2 T eamwork X X On a new t eam – Need t o t ake a more act ive role in sharing my knowledge and
driving team success
3 Risktaker X I have one technical opportunity which could grow sales 14% instead of target 8%.
Must get team to review and critique plan.
Generates Results X X Have been seen as a technical idea person – not great follow through. Work with
Manager to set and meet more realistic goals
Strategic Objectives
8/16/2019 Presentacion Norton
18/25
18©1999 The Balanced Scorecard Collaborative, Inc. All rights Reserved.BSCC – 00029–2/18/99
CASECASE
StrategicThemes
Baseline1995
1996 Actual ResultsPerf FacObjective Measure Freq.
Current YTD% of Target x Weight = Score
Financial
Leader In Return on Capital
Meet Cash Flow Plan
Profit Leader
Meet Cost Plan
ROCE (%)
Cash Flow ($MM)
Integrated Income ($MM)
Total Integrated Costs less ($MM
Customer
Fair Price for Value
Perfect Order Fulfillment
Win-Win Alliances
Easy to do Business With
Market Share - Finished
Percent Perfect Orders
Distributor Survey
Customer Survey
Internal
Continuous Improvement
Efficient & Fully Utilized Assets
Provide Safe Place to Work
Good Neighbor t
Cost Reduction ($MM)
Investment Plan Status
Safety Incidents
Environmental Incidents
L & G
Skill & Competency Development
Leverage Workforce Inclusiveness
Demonstrate Support for Change
Employee Development Plan Status
Inclusiveness Plan Status
Cultural Change Program Status
Update Frequency: A = Annually; S = Semi-Annually; Q = Quarterly; M = Monthly ###
Plan
Q
S
Q
Q
Q
Q
Q
S
Q
A
Q
A
M
M
M
###
###
###
###
###
###
###
###
###
###
###
###
###
###
###
––––
––––
––––
––––
––––
––––
––––
––––
––––
––––
––––
––––
––––
––––
––––
10%
10%
10%
5%
5%
5%
5%
5%
10%
5%
5%
5%
5%
10%
5%
––––
––––
––––
––––
––––
––––
––––
––––
––––
––––
––––
––––
––––
––––
––––
100%
8/16/2019 Presentacion Norton
19/25
19©1999 The Balanced Scorecard Collaborative, Inc. All rights Reserved.BSCC – 00029–2/18/99
CompetenciesTechnology
R&D InboundLogistics
Manufac-turing
OutboundLogistics
Marketing& Sales
Reengineer Processes
ComprehensiveCommunication toCreate Awareness
Rationalize & Align theOrganization
Translate the Strategy
STRATEGY
Align Goals &Incentives
Align Resources& Initiatives
FormulateFormulate
NavigateNavigateCommunicateCommunicate
ExecuteExecute
CreateKnowledge
Networks
8/16/2019 Presentacion Norton
20/25
20©1999 The Balanced Scorecard Collaborative, Inc. All rights Reserved.BSCC – 00029–2/18/99
Create Knowledge
Sharing Networks
LINE BUSINESSES SUPPORT UNITS
CORPORATE
SBU A
SBUB
SBUC
SBUD
CORPORATE SCORECARD(Shared Strategic Agenda)
Themes Measures
Convenience Store Marketing
Gasoline Marketing
Manufacturing Services
Supply Programs
Environment and Safety
Human Resources
1. Financial Growth
2. Delight the Consumer
3. Win-Win Relationship
4. Safe and Reliable
5. Competitive Supplier
6. Good Neighbor
7. Quali ty
8. Motivated and Prepared
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xx
xx
xx
xx
xx
xx
xxxx
Functions of a Knowledge Community
• Define shared mission• Define membership
• Communication infrastructure
• Acquire, edit, share relevantknowledge
• Share results and best practices
ObjectivesObjectives
• Reduce Manufacturing Cost
• Utilize “Best Practice”
Maintenance Operations
Instrumentation RefineryTurnarounds Machinery
8/16/2019 Presentacion Norton
21/25
21©1999 The Balanced Scorecard Collaborative, Inc. All rights Reserved.BSCC – 00029–2/18/99
Continuous feedback and problem-solving
between review meetings drives performanceMeasures
Initiatives
Assessment
$
Q1 Q2 Q3
Target Marketing Effort f or Southwest Region
On schedule
On schedule
Delayed
Recent Performance in the Business Growth areahas been at or above performance for the past threequarters. The following assessments have beenprovided by initiative owners:
a. Anne Sullivan 9/25/96
b. John Dark 11/14/96
c. Marianne Ritchie 1/15/97
B e s t P r
a c t i c e
C a s e S t
u d y
8/16/2019 Presentacion Norton
22/25
22©1999 The Balanced Scorecard Collaborative, Inc. All rights Reserved.BSCC – 00029–2/18/99
CompetenciesTechnology
R&D InboundLogistics
Manufac-turing
OutboundLogistics
Marketing& Sales
Reengineer Processes
ComprehensiveCommunication toCreate Awareness
Rationalize & Align theOrganization
Translate the Strategy
STRATEGY
Align Goals &Incentives
Align Resources& Initiatives
FormulateFormulate
NavigateNavigateCommunicateCommunicate
ExecuteExecute
CreateKnowledge
Networks
Strategic FeedbackEncourages
Learning
Executive TeamsManage Strategic
Themes
Testing Hypotheses, Adapting & Learning
8/16/2019 Presentacion Norton
23/25
23©1999 The Balanced Scorecard Collaborative, Inc. All rights Reserved.BSCC – 00029–2/18/99
VP Mfg.,Sales, R&DVP Mfg.,
Sales, R&D
SBUExecs.
VPCommunica-
tions
CKO
CIO
COO
STRATEGY
FormulateFormulate
NavigateNavigateCommunicateCommunicate
ExecuteExecute
STRATEGY
Reengineer Processes
Create Awareness
Align theOrganization
Translate the Strategy
CEO
Testing, Learningand Adapting
VPStrategy
Create
KnowledgeNetworks
VP Mfg.,Sales, R&D
Align Humanand Financial
Resources
HRO
CFO
8/16/2019 Presentacion Norton
24/25
24©1999 The Balanced Scorecard Collaborative, Inc. All rights Reserved.BSCC – 00029–2/18/99
• Strategic Partner – Accountable for the “Learning & Growth dimension of the strategy (competencies
and climate)
• Architect: “ Strategy Focused” Performance Management Process – Team-based / holistic
– Goal alignment: Board Room to Back Room
– Reward system: “Balanced Paycheck”
• CFO for Human Capital – Architecture for knowledge sharing
– Strategic competency development
• Coach: The Transformation Process
– Leadership: Not management – Cultural change
• Scorekeeper for Company Strategy – Custodian of performance management process
References: Dave Ulrich; Human Resource Champions / Corporate Leadership Council, HR and the New Math
8/16/2019 Presentacion Norton
25/25
25©1999 The Balanced Scorecard Collaborative, Inc. All rights Reserved.BSCC – 00029–2/18/99
www.bscol.com
Tel: (USA)781.259.3737
ResearchPublications
NetworkingConferences
Training
Implementation
Visit Our Website
Our Mission:
“To facilitate the worldwide
awareness, use, enhancementand integrity of the Balanced
Scorecard as a value-added
management process”