Performance Dimensions/

Perspectives of Balanced
Scorecard
 Financial Perspective
How do we look to
Goals Measures shareholders?
How do
customers
see us?

What must
we excel at?

Customer Perspective Internal Business

Perspective
Goals Measures
Goals Measures

Innovation and Learning

Perspective Can we continue to
Goals Measures improve and create
value?
Financial Perspective
 1. Financial Perspective
According to Kaplan and Norton, viewing a business
from the financial perspective involves asking the
question "How do we look to shareholders?“
Measures
Financial Is the company  Operating income
achieving its financial  Return on assets
goals?  Sales growth
 Cash flow from
operations
 Reduction of
administrative
expenses
The financial measures can be set through two basic
approaches:

Revenue
Growth Productive
Strategy Strategy

Cost Asset
Reduction Reduction
Objective Objective
 Objectives
Revenue Growth
 Increase the number of new
products, new customers and
new markets
 Change to a more profitable
product/service mix
Cost Reduction
 Reduce product/service cost per  Unit product cost
unit
 Reduce administration and
selling cost per unit
Asset Utilization
 Improved asset utilization
Measures
 Percentage of revenue from new
product / customers/markets
 Percentage of revenues from
existing customers
 Unit administration and selling
cost
 Return on Investment
 Economic Value Added
Customer Perspective
 2. Customer Perspective
According to Kaplan and Norton, viewing a
business from the customer perspective involves
asking the question, "How do customers see us?"
Measures

Customer Is the company meeting  Customer

customer expectations? satisfaction
 Customer Retention
 New customer
acquisition
 Market share
 On time delivery
 Time to fill orders
 Market
Share

Market Customer Customer

Acquisition Profitability Retention

Customer
Satisfaction
Customer value proposition
Product/
Relationshi Image
Value Service
p
Attributes

Functionalit
Price Quality Time
y
 Objectives Measures

Core:
 Increase customer satisfaction  Ratings from customer
 Increase customer retention surveys
 Increase customer acquisition  Percentage business growth
 Increase customer profitability from existing customers
 Increase market share  Total sales to new customers
 Customer profitability analysis
 Percentage market share
Customer value preposition:
 Decrease price and post  Price relative to competitors
purchase costs  Percentage of returns from
 Improve product quality customers
 Improve delivery time  On-time delivery percentage
 Improve product functionality  Rating scores from customer
surveys
 Internal Business
Process Perspective
 3. Internal Business Process
Perspective
According to Kaplan and Norton, viewing a
company from the internal business process
perspective involves asking a question, "What
must we excel at?“
Measures
Internal Processes Is the company improving  Defect rate
critical internal processes?  Lead time
 Number of suppliers
 Material turnover
 Percent of practical
capacity
 Four high level processes

Operating Customer Regulatory and

Innovation
processe managemen social
processes
s t processes processes
The internal business perspective captures
organisational activities into four high level processes:
Operating processes These are the basic, day to day processes
that involve in the production of products and
services and their distribution to customers.
Customer management These processes consist of expansions and
processes deepening relationships with existing and
new customers.
Innovation processes It consist of development of new products
and services and penetration of new markets
and customer segments.
Regulatory and social processes It consist of becoming a good corporate
citizen by establishing relationships with
external stakeholders. The company must
comply with national and local regulations
related to business practices to avoid
shutdowns or expensive litigation.
Generic Value Chain Model
Objectives Measures
Innovation:
 Increase the number of new products  Percentage of revenue from new
products
 Develop new markets and customers  Percentage of revenue from new
markets
 Decrease product development cycle  Reduction in cycle time
time
Operations:
 Increase process quality  Percentage of quality costs to sales
 Increase process efficiency  Output/input ratios
 Decrease process cost  Unit cost trends
 Decrease process time  Manufacturing cycle efficiency
Post-sale services:
 Increase service quality  Percentage of customer requests
handled
 Increase service efficiency  Output/input ratios
 Decrease service cost  Unit cost trends
 Decrease service time  Customer problems resolving cycle
time
Learning and Growth
Perspective
4. Learning and Growth Perspective
It involves asking the question, "How can we
continue to improve and create value?“
Innovation Is the company improving its
ability to innovate?
Measures
 Amount spent on
employee training
 Employee satisfaction
 Employee retention
 Number of new products
 New product sales as a
percent of total sales
 Number of patents
 Three major enabling factors:

Organizational
Employee Information climate for
capabilities system motivation,
capabilities empowerment and
alignment

Employee Employee Employee

satisfaction retention productivity
Objectives
Increase employee capabilities
Increase information capabilities
Increase Motivation,
empowerment and alignment
Measures
 Employees satisfaction survey ratings
 Annual employee turnover percentages
 Sales revenue per employee
 Hours of training
 Percentage of processes with real time
feedback capabilities
 Percentage of customer-facing
employees having online access to
customer and product information
 Suggestion per employee
 Suggestions implemented per employee
 Percentage of employee with personal
goals aligned to the balanced scorecard
 Percentage of employees who achieve
personal goals
Apple’s Balanced Scorecard
Balanced Scorecard Strategy Map
 Building the Strategy Map
Involves the following steps:
1) Clarifying the mission and strategic vision.
2) Specifying objectives in the scorecard areas
necessary to realise this vision.
Cause and Effect Relationship
Among Four Perspectives