Translating Strategy Maps into Balanced Scorecards

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Translating Strategy Maps into Balanced
Scorecards

• Fall 2006
• Summarized by Geoff Linton

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Do Strategy Planning in Phases
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The Strategic Process at ABB
The Strategy Focused Organization HBS, 2001,
p285
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How an Organization Creates Value

• Below is a top down view of how a plan unfolds

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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

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Strategy Map Linkages for Mobil Oil Turnaround
The Strategy Focused Organization HBS, 2001,
p61
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Divisional Strategy Blueprint Gets Detailed
The Strategy Focused Organization HBS, 2001,
p228
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Map Your Strategy

• Work top down
• Show major pillars
• Add linkages and dependencies

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Establishing Measures- Charity Case
Allstate Presentation
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Establishing Measures- Charity Case
The Strategy Focused Organization HBS, 2001,
p155
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Why A Strategy Map is Important

• Failure versus success
• Aspiration versus execution
• Leading vs managing
• clarity

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Scorecards are Part of Strategy Mapping Process
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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

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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!

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Scorecard Results- Charity
The Strategy Focused Organization HBS, 2001,
p21
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MindManager Collapsed View
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Defining the Metrics Using the Map
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3 Column Strategy Map- Natl Bank US
The Strategy Focused Organization HBS, 2001,
p110
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Natl Bank Online Measures
The Strategy Focused Organization HBS, 2001,
p295
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Balanced Scorecard for Mobil Oil
The Strategy Focused Organization HBS, 2001,
p41
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Balanced Linkages for Mobil
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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

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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 ___________________________
___________________________ __________________
_________ ______________________
_____
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Assignment 3 Balanced Scorecard Scaling the
CLIF
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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.