Intravate

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Intravate Balanced Scorecards Briefings Part
1 Introduction to the Fundamentals
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First, a few facts

• Less than 10 of strategies effectively
  formulated are effectively executed
• Fortune Magazine
• Over 60 of Fortune 1000 either have, or are
  experimenting with, Balanced Scorecards
• Fortune Magazine
• But.estimated that less than 30 of
  organisations with Balanced Scorecards are
  getting any business benefits, due in the main to
  poor construction
• Balanced Scorecard Collaborative Survey

There are numerous misconceptions
misunderstandings about balanced scorecards
Most are poorly constructed and poorly implemented
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Less than 10 of strategies effectively
formulated are effectively executed
In most organisations something is breaking down
in the Performance Management Chain
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The Performance Management Trap

• More time is spent formulating strategies than
  setting up performance tracking to report on them
• Often the key strategic goals are intensively
  targeted and measured at the top level
• ..but not the key customer, operational and
  organisational drivers of these end results.
• Hence performance targets further down the
  organisation are only weakly aligned to key goals
• Also lower level operational and organisational
  performance is often poorly measured and not
  tracked and reported effectively
• However What gets targeted measured.gets
  managed
• Meaning that personal activities and incentives
  are often locked into the wrong business
  priorities.

.hence, organisations are rarely fully focused
or incentivised around key strategic goals
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Key principles of the balanced scorecard

• Alignment of management focus and resource
  allocation to the achievement of key goals and
  strategic objectives
• the strategy focused organisation
  translating Vision into reality
• Performance targeting measurement of the key
  drivers of success
• To drive the performance of ultimate goals by
  identifying and targeting the internal drivers of
  performance
• To deliver long term performance while managing
  the tensions between different stakeholders
• Shareholders, Customers, Suppliers, Staff
• Feedback and learning
• is the strategy working? - are we on track to
  reach our goals ?

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A Good Balanced Scorecard shouldTells the Story
of your Strategy

• Every measure is part of a chain of cause and
  effect linkages.
• All measures eventually link back to
  organisational performance measures
• It focuses on, and serves as an objective
  decision model (and hence priorities) to help
  manage the tensions and trade-offs
• between differing stakeholders and timescales
• outcome measures (financial, customer) and
  performance drivers (value proposition, internal
  processes, core capabilities, learning
  development characteristics)

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Balanced Scorecard frameworks are away of
managing not just a reporting tool !

• A management tool
• used for both planning and performance reporting
• Key factor being to agree the correct set of
  performance drivers, measures targets-
• relevant to an organisations vision and strategy,
  that identifies, targets measures the drivers
  of end performance goals as well as the end
  goals themselves
• brings together 4 core aspects which are
  necessary to deliver sustain success

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Balanced Scorecards manage the tensions between
different stakeholder groups
Financial How do we look to our Shareholders
Customers How are we doing with our customers?
Process Quality To deliver customer
shareholder value, what must we excel at?
Organisational What competencies, culture
style do we need to sustain and improve
performance?
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At minimum Balanced Scorecards broaden your
perspective of performance
Also referred to as Development or Learning
Growth
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Butit is important to understand the dynamics
between these performance measures
Financial measures
Customer measures
Process Quality measures
Organisational measures
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Not a matter of.
.just dreaming up 4 sets of measures to fill 4
boxes
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Identify, target measure the correct internal
drivers of performance

• End results reflect the quality of management of
  the
• internal performance drivers

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The real drivers of the desired end performance
are rarely targeted, prioritised and reported
effectively
You need to measure and target the internal
processes that contribute towards the achievement
of Core Strategic Goals and not just measure
target the end goals alone
Final results are the outcome of internal
activity
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Strategy Mapping is the method of identifying
Critical Success Factors via Cause Effect
analysis
Identify the Critical Success Factors in the
organisation - the drivers of desired end
performance
Cause Effect Strategy Mapping forces you to
identify these Critical Success Factors
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Managing or Monitoring???
Targeting monitoring lag indicators alone
lets you know how you have done
Targeting monitoring lead indicators enables
you to manage performance, not just watch it
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Key deliverables from an effectiveBalanced
Scorecard framework

• Aligns short - term targets to longer-term
  strategies
• Assists in delivering ultimate strategic
  performance levels by explicitly targeting and
  managing the non-financial drivers of performance
• Aligns departmental and personal objectives to
  ultimate goals core strategies
• Establishes a framework for Business Units, teams
  and individuals within the organisation to see
  and relate to the bigger picture and their role
  on delivering it
• Provides regular monitoring and gives early
  warning of problems long before they impact on
  the ultimate outcomes results
• Creates a feedback loop to learn about, and to
  improve, the effectiveness of current strategies

Building and utilising a Scorecard framework is
strategic management process
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