Any professional involved in the Balanced Scorecard drew a well-known 4 sector diagrams on the flip chart. Popular 4 perspectives of the Balanced Scorecard seem to be everywhere, but are they the most important part? What is the best way to explain to someone about a Balanced Scorecard concept?
For my opinion, instead of talking about 4 perspectives it makes much more sense to focus on strategies (including generic ones) and the cause-and-effect connection between business objectives.
What do you think? How do you explain the basics of the Balanced Scorecard if someone asks you?
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Put it-all-together: Business or Balanced Scorecard, KPIs, Strategy Map
1. PUTTING IT ALL TOGETHER: A
CLEAR VIEW OF THE BALANCED
SCORECARD FRAMEWORK
Based on
http://www.bscdesigner.com/put-it-all-together.htm
By Aleksey Savkin
2. BSC DESIGNER
Source: www.bscdesigner.com
"I'd like to learn about the BSC and I
want to know where to
begin to put it all together."
A CLEAR VIEW OF THE BALANCED
SCORECARD FRAMEWORK
3. BSC DESIGNER
"I'm not able to use a Business
Scorecard properly. I'm getting
lost in the volume of
information."
Source: www.bscdesigner.com
"I'd like to learn about the BSC and I
want to know where to
begin to put it all together."
A CLEAR VIEW OF THE BALANCED
SCORECARD FRAMEWORK
4. BSC DESIGNER
"I'm not able to use a Business
Scorecard properly. I'm getting
lost in the volume of
information."
"I want to understand the
concept itself! "
Source: www.bscdesigner.com
"I'd like to learn about the BSC and I
want to know where to
begin to put it all together."
A CLEAR VIEW OF THE BALANCED
SCORECARD FRAMEWORK
5. BSC DESIGNER
"I'm not able to use a Business
Scorecard properly. I'm getting
lost in the volume of
information."
"I want to understand the
concept itself! "
Source: www.bscdesigner.com
"I'd like to learn about the BSC and I
want to know where to
begin to put it all together."
"I want to have a clear view of
the whole framework, starting
from scratch till having an
effective strategy map."
A CLEAR VIEW OF THE BALANCED
SCORECARD FRAMEWORK
6. BSC DESIGNER
A CLEAR VIEW OF THE BALANCED
SCORECARD FRAMEWORK
• These questions are not a surprise.
7. BSC DESIGNER
A CLEAR VIEW OF THE BALANCED
SCORECARD FRAMEWORK
• These questions are not a surprise.
• Any strategy management concept is quite
complex,
8. BSC DESIGNER
A CLEAR VIEW OF THE BALANCED
SCORECARD FRAMEWORK
• These questions are not a surprise.
• Any strategy management concept is quite
complex,
• And without seeing a big picture, the design
and later implementation cannot be a success.
10. BSC DESIGNER
IT IS ALL ABOUT STRATEGY
• When you have a problem, your resources are
unlimited and there is no competition, then
you can solve it.
11. BSC DESIGNER
IT IS ALL ABOUT STRATEGY
• When you have a problem, your resources are
unlimited and there is no competition, then
you can solve it.
• When you have a set of interconnected and
your resources are limited, then solving the
problem is not that easy.
12. BSC DESIGNER
The strategy is an answer to "why?" (the reason of the problem) and "how?" (the
solution to the problem) question.
IT IS ALL ABOUT STRATEGY
Source: www.bscdesigner.com
13. BSC DESIGNER
Come up with ideas
that could possibly
work out and solve the
problem
Strategy Formulation
The strategy is an answer to "why?" (the reason of the problem) and "how?" (the
solution to the problem) question.
IT IS ALL ABOUT STRATEGY
Source: www.bscdesigner.com
14. BSC DESIGNER
Describe these ideas in
an easy to understand,
and to communicate
way
Come up with ideas
that could possibly
work out and solve the
problem
Strategy Formulation Strategy Description
The strategy is an answer to "why?" (the reason of the problem) and "how?" (the
solution to the problem) question.
IT IS ALL ABOUT STRATEGY
Source: www.bscdesigner.com
15. BSC DESIGNER
Follow the developed
plan and see if it works
Describe these ideas in
an easy to understand,
and to communicate
way
Come up with ideas
that could possibly
work out and solve the
problem
Strategy Formulation Strategy Description Strategy Execution
The strategy is an answer to "why?" (the reason of the problem) and "how?" (the
solution to the problem) question.
IT IS ALL ABOUT STRATEGY
Source: www.bscdesigner.com
16. BSC DESIGNER
Follow the developed
plan and see if it works
Describe these ideas in
an easy to understand,
and to communicate
way
Come up with ideas
that could possibly
work out and solve the
problem
Strategy Formulation Strategy Description Strategy Execution
Business Scorecard
helps to describe the
strategy
Source: www.bscdesigner.com
The strategy is an answer to "why?" (the reason of the problem) and "how?" (the
solution to the problem) question.
IT IS ALL ABOUT STRATEGY
17. BSC DESIGNER
Follow the developed
plan and see if it works
Describe these ideas in
an easy to understand,
and to communicate
way
Come up with ideas
that could possibly
work out and solve the
problem
Strategy Formulation Strategy Description Strategy Execution
Business Scorecard
helps to describe the
strategy
Generic strategies can
help you to come up
with some insights
Source: www.bscdesigner.com
The strategy is an answer to "why?" (the reason of the problem) and "how?" (the
solution to the problem) question.
IT IS ALL ABOUT STRATEGY
18. BSC DESIGNER
Follow the developed
plan and see if it works
Describe these ideas in
an easy to understand,
and to communicate
way
Come up with ideas
that could possibly
work out and solve the
problem
Strategy Formulation Strategy Description Strategy Execution
Business Scorecard
helps to describe the
strategy
Generic strategies can
help you to come up
with some insights
A well described
strategy is much easier
to execute
Source: www.bscdesigner.com
The strategy is an answer to "why?" (the reason of the problem) and "how?" (the
solution to the problem) question.
IT IS ALL ABOUT STRATEGY
20. BSC DESIGNER
WHERE TO BEGIN THE BUSINESS
SCORECARD PROJECT?
• The biggest problem with all failed scorecard
projects is that they are focusing too much on
KPIs.
21. BSC DESIGNER
WHERE TO BEGIN THE BUSINESS
SCORECARD PROJECT?
• The biggest problem with all failed scorecard
projects is that they are focusing too much on
KPIs.
• Once a tremendous amount of time was
spend on obtaining required information, and
companies failed to make any business use of
the scorecard.
22. BSC DESIGNER
WHERE TO BEGIN THE BUSINESS
SCORECARD PROJECT?
• The biggest problem with all failed scorecard
projects is that they are focusing too much on
KPIs.
• Once a tremendous amount of time was spend
on obtaining required information, and
companies failed to make any business use of the
scorecard.
• The answer to the question: “Where to begin the
business scorecard project” is “Start with
business context!”
23. BSC DESIGNER
Source: www.bscdesigner.com
Financial Objectives
Customer Value
A simple cause-and-effect chain to describe
the strategy
A SIMPLE DESCRIPTION OF THE
STRATEGY
Understand how your top level
objectives are linked down to the
increase of the customer value.
24. BSC DESIGNER
Source: www.bscdesigner.com
Financial Objectives
Customer Value
Business Systems
Understand how your top level
objectives are linked down to the
increase of the customer value.
In its turn, how you are going to provide
this customer value using your
business systems.
A SIMPLE DESCRIPTION OF THE
STRATEGY
A simple cause-and-effect chain to describe
the strategy
25. BSC DESIGNER
Source: www.bscdesigner.com
Financial Objectives
Customer Value
Business Systems
Learning & Growth
Understand how your top level
objectives are linked down to the
increase of the customer value.
In its turn, how you are going to provide
this customer value using your
business systems.
What information you need to learn
before you are ready to act.
A SIMPLE DESCRIPTION OF THE
STRATEGY
A simple cause-and-effect chain to describe
the strategy
26. THE STRATEGY MAP IS NOT THE
END OF THE STRATEGY
DESCRIPTION PROCESS. ADD
SOME KPIS.
27. BSC DESIGNER
THE SUGGESTED STRATEGY WORKS?
• Having the strategy map is not the end of the
process, it’s just the beginning.
28. BSC DESIGNER
THE SUGGESTED STRATEGY WORKS?
• Having the strategy map is not the end of the
process, it’s just the beginning.
• One more thing that we need is to find out in
some way if we are on the right track with this
strategy or not.
30. BSC DESIGNER
THE SUGGESTED STRATEGY WORKS?
• How do you know that the suggested strategy
works?
• The simplest way is to say: if I see growth in
my profits, then it works.
31. BSC DESIGNER
THE SUGGESTED STRATEGY WORKS?
• How do you know that the suggested strategy
works?
• The simplest way is to say: if I see growth in
my profits, then it works.
• It’s true, but things are not that simple.
32. BSC DESIGNER
THE GROWTH OF THE PROFITS DEPENDS
ON VARIOUS ASPECTS OF THE STRATEGY.
• You might have an excellent idea about
increasing customer value,
33. BSC DESIGNER
THE GROWTH OF THE PROFITS DEPENDS
ON VARIOUS ASPECTS OF THE STRATEGY.
• You might have an excellent idea about
increasing customer value,
• But one of your business systems was not
prepared well for this idea.
34. BSC DESIGNER
THE GROWTH OF THE PROFITS DEPENDS
ON VARIOUS ASPECTS OF THE STRATEGY.
• You might have an excellent idea about
increasing customer value,
• But one of your business systems was not
prepared well for this idea.
• As result, the strategy failed.
35. BSC DESIGNER
WHAT WAS THE REASON FOR THE
PROBLEM?
• Was the problem with the specific business
system that it failed to deliver expected
results,
36. BSC DESIGNER
WHAT WAS THE REASON FOR THE
PROBLEM?
• Was the problem with the specific business
system that it failed to deliver expected
results,
• Or was the problem with incorrect
information that was learned about
customers’ buying priorities,
37. BSC DESIGNER
WHAT WAS THE REASON FOR THE
PROBLEM?
• Was the problem with the specific business
system that it failed to deliver expected
results,
• Or was the problem with incorrect
information that was learned about
customers’ buying priorities,
• Or was there any other reason?
38. BSC DESIGNER
Source: www.bscdesigner.com
Financial Objectives
We cannot use financial indicators only,
as they don’t tell the whole story of
what happened and why.
Are we on the right track with
the strategy? Use KPIs!
REASON AND SOLUTION?
39. BSC DESIGNER
Source: www.bscdesigner.com
Financial Objectives
Customer Value
Business Systems
Learning & Growth
We cannot use financial indicators only,
as they don’t tell the whole story of
what happened and why.
Are we on the right track with
the strategy? Use KPIs!
Have proper indicators on each level of
the strategy.
REASON AND SOLUTION?
41. BSC DESIGNER
ACTION IS THE MOST IMPORTANT
• Don’t forget that by just describing your
intentions in a form of strategy nothing will
happen.
42. BSC DESIGNER
ACTION IS THE MOST IMPORTANT
• Don’t forget that by just describing your
intentions in a form of strategy nothing will
happen.
• You need to follow the strategy map and KPIs
with an action plan.
43. BSC DESIGNER
ACTION IS THE MOST IMPORTANT
• Don’t forget that by just describing your
intentions in a form of strategy nothing will
happen.
• You need to follow the strategy map and KPIs
with an action plan.
• When developing this plan make sure that it is
aligned with business objectives and measures
that you have found.
48. BSC DESIGNER
FINANCIAL PERSPECTIVE
• On the top level there is a typical financial
goal to increase profits.
• We can possibly do this in several ways:
increase revenue and cut the costs.
51. BSC DESIGNER
CUSTOMERS PERSPECTIVE
• What’s the value of this article for customers?
• On one hand the article answered some
typical questions that we have every day in
our ticket system,
52. BSC DESIGNER
CUSTOMERS PERSPECTIVE
• What’s the value of this article for customers?
• On one hand the article answered some
typical questions that we have every day in
our ticket system,
• On other hand, it educates our prospects
about what can be done about the Balanced
Scorecard.
54. BSC DESIGNER
CUSTOMERS PERSPECTIVE
• In the customers perspective we have these
two objectives:
• Attract more prospects interested in the
business scorecards
55. BSC DESIGNER
CUSTOMERS PERSPECTIVE
• In the customers perspective we have these
two objectives:
• Attract more prospects interested in the
business scorecards
• Cut the costs of providing support by
educating existent customers via articles
57. BSC DESIGNER
HOW ARE WE GOING TO KNOW THAT
THIS APPROACH IS WORKING?
• KPI 1 : The number of sales referred by the
article;
58. BSC DESIGNER
HOW ARE WE GOING TO KNOW THAT
THIS APPROACH IS WORKING?
• KPI 1 : The number of sales referred by the
article;
• KPI 2: The number of support tickets of a
specific type;
61. BSC DESIGNER
INTERNAL PROCESS PERSPECTIVE
• What business systems do we need to do this?
• There should be some writing skills and
experience that we can share.
62. BSC DESIGNER
INTERNAL PROCESS PERSPECTIVE
• What business systems do we need to do this?
• There should be some writing skills and
experience that we can share.
• It is also important to have a business system
that can track back certain orders and find the
original referrer of the customer so that we
can find the value of KPI 1.
63. BSC DESIGNER
INTERNAL PROCESS PERSPECTIVE
• It is important to have a support system where
questions are not just answered, but are
categorized accordingly to some rules so that
we could find out the value of KPI 2.
64. BSC DESIGNER
INTERNAL PROCESS PERSPECTIVE
• It is important to have a support system where
questions are not just answered, but are
categorized accordingly to some rules so that
we could find out the value of KPI 2.
• And the most important business system is
one that will promote a new article to the
prospects.
66. BSC DESIGNER
LEARNING & GROWTH PERSPECTIVE
• What information do we need to have about
the customers?
67. BSC DESIGNER
LEARNING & GROWTH PERSPECTIVE
• What information do we need to have about
the customers?
• We need to understand what their problems
are, because it makes sense writing about the
real world problems, not about invented ones.
68. BSC DESIGNER
LEARNING & GROWTH PERSPECTIVE
• What information do we need to have about
the customers?
• We need to understand what their problems
are, because it makes sense writing about the
real world problems, not about invented ones.
• It means that we need to focus our learning
systems on finding out what challenges our
customers face.
69. BSC DESIGNER
SCORECARD IS FINISHED
• Once we know what customer’s main
challenges are, one can write an article.
70. BSC DESIGNER
SCORECARD IS FINISHED
• Once we know what customer’s main
challenges are, one can write an article.
• We will see how many people can find this
article with search engines and how many
times it was recommended for reading by our
support staff.
71. BSC DESIGNER
SCORECARD IS FINISHED
• In about 2-3 months we will be able to
estimate the ultimate impact of this article on
the sales and operational costs.
72. BSC DESIGNER
SCORECARD IS FINISHED
• In about 2-3 months we will be able to
estimate the ultimate impact of this article on
the sales and operational costs.
• This information can be used then to correct
the content strategy if needed.
74. BSC DESIGNER
MORE ABOUT THE BALANCED SCORECARD
Find more insightful
articles about the
Balanced Scorecard
in ”Articles” section at
www.bscdesigner.com
BSC DESIGNER