Dr.

Parvez A Shah

 The balanced scorecard is a strategic planning and

management system that is used extensively in business and industry, government, and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals

 Increase focus on strategy and results

Improve organizational performance by measuring what

matters Align organization strategy with the work people do on a day-to-day basis Focus on the drivers of future performance Improve communication of the organizations Vision and Strategy Prioritize Projects / Initiatives

How do customers see us (Customer Perspective) 2. What must we excel at (Internal Perspective) 3. Can we continue to improve and create value? (innovation and Learning Perspective) 4. How do we look to shareholders? (Financial Perspective)
1.

This perspective includes employee training and corporate cultural attitudes related to both individual and corporate self-improvement. Kaplan and Norton emphasize that 'learning' is more than 'training'; it also includes things like mentors and tutors within the organization, as well as that ease of communication among workers that allows them to readily get help on a problem when it is needed

 A firms ability to improve, innovate and learn is tied

directly to its value. In simple terms, only by developing new products and services, creating great value for customers.

 However, given the rapid rate of markets, technologies

and global competition, the criteria for success are constantly changing. To prosper & survive the managers must make constant frequent changes to existing products and services as well as introduce entirely new products and services, creating greater value for customers and increasing operating efficiency. A firms ability to do well from an innovation & learning perspective is more dependent on its intangible assets than the tangibles.

Human Capital: (Skills, Talent & Knowledge) 2. Information Capital: ( Information Systems, Networks) & 3. Organisation Capital: (Leadership and Culture)
1.

This perspective refers to internal business processes. Metrics based on this perspective allow the managers to know how well their business is running, and whether its products and services conform to customer requirements (the mission). Since, customer based measures are vital, they must be translated into indicators of what the firm must do internally to meet customers expectations.

 Excellent customer performance results from

processes, decisions & actions that occur throughout organisation in a coordinated fashion, and managers must focus on those critical internal operations that enable them to satisfy customer needs. These include internal critical factors that affect: i. Cycle Time ii. Quality iii. Employee skills & iv. Productivity.

Recent management philosophy has shown an increasing realization of the importance of customer focus and customer satisfaction in any business. These are leading indicators: if customers are not satisfied, they will eventually find other suppliers that will meet their needs. Poor performance from this perspective is thus a leading indicator of future decline, even though the current financial picture may look good. In developing metrics for satisfaction, customers should be analyzed in terms of kinds of customers and the kinds of processes for which we are providing a product or service to those customer groups.

 For the balanced scorecard to work, managers must

articulate goals for 4 key categories of customer concerns: time, quality, performance & service, and cost. For example, lead time may be measured as the time from the Cos receipt of an order to the time it actually delivers the product or service to the customer. Also quality measures may indicate the level of defective incoming products as perceived by the customer.

 The Financial Perspective

Kaplan and Norton do not disregard the traditional need for financial data. Timely and accurate funding data will always be a priority, and managers will do whatever necessary to provide it. In fact, often there is more than enough handling and processing of financial data

Strategy Mapping Strategy maps are communication tools used to tell a story of how value is created for the organization. They show a logical, step-by-step connection between strategic objectives (shown as ovals on the map) in the form of a cause-and-effect chain. Generally speaking, improving performance in the objectives found in the Learning & Growth perspective (the bottom row) enables the organization to improve its Internal Process perspective Objectives (the next row up), which in turn enables the organization to create desirable results in the Customer and Financial perspectives (the top two rows).

 The Balanced Scorecard has always attracted criticism

from a variety of sources. Most has come from the academic community, who dislike the empirical nature of the framework: Kaplan and Norton notoriously failed to include any citation of prior art in their initial papers on the topic. Some of this criticism focuses on technical flaws in the methods and design of the original Balanced Scorecard proposed by Kaplan and Norton and has over time driven the evolution of the device through its various Generation.

 Another criticism, usually from consultants, is that

the balanced scorecard does not provide a bottom line score or a unified view with clear recommendations: it is simply a list of metrics. These critics usually include in their criticism suggestions about how the 'unanswered' question postulated could be answered.

 The core characteristic of the Balanced Scorecard and its

derivatives is the presentation of a mixture of financial and non-financial measures each compared to a 'target' value within a single concise report. The report is not meant to be a replacement for traditional financial or operational reports but a succinct summary that captures the information most relevant to those reading it. It is the method by which this 'most relevant' information is determined (i.e. the design processes used to select the content) that most differentiates the various versions of the tool in circulation.

thank you.