From Vision to

Action Plan

The Balanced
Scorecard
Approach
 What is a Balanced Scorecard?

“A Balanced Scorecard is a framework that

focuses on shareholder, customer, internal
and learning requirements of a business in
order to create a system of linked objectives,
measures, targets and initiatives which
collectively describe the strategy of an
organization and how that strategy can be
achieved.”
 What is a BSC?

• BSC is not a
• dash-board of financial and non-financial
indicators.
• new/re-hashed measurement system.
• BSC is a tool to convert a strategy into action.
Balanced Scorecard - Concept

FINANCIAL PERSPECTIVE
To succeed financially, how should
we appear to our shareholders
(Corporate Management)?

CUSTOMER BUSINESS PROCESS

PERSPECTIVE (EXT.) PERSPECTIVE (INT.)
To achieve our mission, how To satisfy our shareholders &
should we appear to our customers, what business processes
customers? must we excel at?

RENEWAL, LEARNING,
GROWTH PERSPECTIVE
To achieve our mission, how will we
sustain our ability to change &
improve?
Balanced Scorecard - Concept

Financial
Objectives Measures Targets Initiatives
"To succeed
financially, how
should we appear
to our
shareholers?"

Customer Internal Business Processes

Objectives Measures Targets Initiatives Objectives Measures Targets Initiatives
"To achieve "To satisfy our
our vision, Vision & sharholeders
how should Strategy & customers,
we appear to what business
our must we excel
customers?" at?"

Learning & Growth

Objectives Measures Targets Initiatives
"To achieve our
vision, how will
we sustain our
ability to change
and improve?"
 BSC & Strategy?
• A strategy is a set of hypotheses about cause and
effect.
• Any system such as BSC should tell the story of
the BU’s strategy.
• It should make explicit the sequence of hypotheses
about the cause-and-effect relationships between
various action the BU proposes to take.
• Every element selected for a BSC should be an
element in a chain of cause & effect relationship
that communicates the meaning of the BU’s
strategy.
-Hope is not a strategy
Financial ROCE

Customer Loyalty
Customer
On-time Delivery

Internal/
Business Process Process
Process Quality Cycle Time

Learning and Growth

Employee Skills
 Illustrative Strategy Map - Software Services Company
F1 Become a leading
Financial software solutions Reduce resource costs
F2 company by 2003 F5
Improve onsite and improve margins
project profitability F3 F4
Develop new customer /
Develop offshore revenues
market revenues

Customer C3
C1 SoftCo understands my C2
specific needs and SoftCo provides Softco delivers on
provides appropriate solutions globally time & provides high
services quality services

Internal I5
I1 I2 I4
Expand product/ I3 Develop lead
services portfolio Optimize business
Implement resource Mange customer generation
& develop a roadmap processes
utilization processes relationship capability

Learning & Growth

L1 L2 L3
Clearly define Improve manpower quality by
Implement performance
•Organization Structure training, redundancy and
management system
• Roles & responsibilities recruitment
 Strategy Map (Strategic Linkage Model)
Financial Improve Stakeholder
Value
Profitable Sales
Drive Growth
Increased Demand
Cost Efficiency

Customer
The leading and
Best value for money Partners see us
Most innovative Preferred Strong relationships
value adding
brand Business partner with supply chain

Market development activities

Develop new Expand Develop

Brand Building
channels and through new category Improve business
segments concepts management information and
Implement best
control
practices

Internal

Creating preferred organization

Management Culture and

Core skills and Common systems Knowledge
Capabilities attitude
knowledge and processes Sharing
change

Learning & Growth

 BSC Organisation
Vision

Mission

4
Themes Perspectives

Objectives Initiatives

Measures

Feedback &
Learning
 Accounts
Receivable Return on
Capital
FINANCIAL
employed
Operating
expenses

Customer
CUSTOMER Satisfaction

INTERNAL BUSINESS rework

PROCESS

Employees’
LEARNING AND GROWTH Employees’ Suggestions
Morale

Echo Engineering – Linking Measurements from Four Perspectives

 BSC Components
Statement of what How success in
strategy must achieve achieving the The level of Key action programs
and what is critical to its strategy will be performance or rate of required to achieve
success measured and improvement needed objectives
tracked

Objective Measure Target Initiatives

Broaden Revenue mix 10% Product X
Financial

revenue mix 40% Product Y

50% Product Z

Increase Customer • 95% • Frequent

Customer

customer retention Buyers Club

satisfaction

Cross-sell our % Revenue from • 2001 15% • Customer

Mailing
Internal

products new products

• 2002 50% • Segmentation

Develop Skill coverage • 90%

& Growth
Learning

strategic skills • Product

Training
 Business Execution

Development
Quality Projects,
Projects, Activities, etc.
–1– Activities, etc. Corporate
Identify Marketing Projects,
Initiatives Projects, Activities, etc.
Activities, etc.

Financial
Perspective

Customer
–2– Perspective
Screen
Initiatives Internal
Perspective

Organization
Learning

Output: Short List of Strategically Aligned Initiatives

 Strategic Alignment
Step 1. Step 2.
A Corporate Each SBU develops
Scorecard defines Corporate / Group a long-range plan
overall strategic and BSC consistent with the
priorities and context corporate strategic agenda

SBU SBU SBU

A B C

Support Functions

Step 4.
Step 3.
Departments, teams
Each Support Unit and individuals develop
develops a scorecard to scorecards consistent
support the internal Teams and with their organization’s
customers Individuals strategy
Digital Scorecard
DIMENSION MISSION

• Lead the Industry rate of growth MC

BUSINESS • No 1 in profit in Industry
• Global Thrust
• Trusted Partner
CUSTOMER • Reliable & Cost effective Solutions/ services Sales/
• Customer acquisition/expansion Delivery
• Top 3 preferred employer
PEOPLE • Learning Organisation HR
• Digital way
• Technology Excellence
CIO
TECHNOLOGY • Introduction of new Solutions/Services
• World Class Products
• Best in Class Organisation Quality
PROCESSES • Business & Service /Product delivery Excellence
• Quality Leadership
 DIMENSION MISSION STRATEGIC OBJECTIVES OVERALL
( 2002 – 03 ) MEASURES/GOALS
•Lead the Industry rate of growth •Greater offshore delivery/annuity business •Overall Revenue
BUSINESS
•No 1 in profit in Industry •Ensure success of TSCC & Products •PAT
•Global Thrust •Offset pricing pressures through increased •Offshore
productivity •Gross Margins
•Develop Verticles •Products & TSCC
•Minimum- Verticles to be developed
•Trusted Partner • Increased non parent business •Customer Satisfaction Scores
CUSTOMER
•Reliable & Cost effective •Penetrate existing accounts •Existing Customer Growth
Solutions/ services •Re-energise Office of the Customer •Non-HP
•Customer acquisition/expansion

•Top 3 preferred employer •Year of the Employee •Digitell Scores

PEOPLE
•Learning Organisation •Capability Development/Certifications •Retention Rate
•Digital way •Employee creativity/innovation & productivity •Utilisation
•Values as a way of life •Focus on employee creativity/innovation
•Technology Excellence •Incubate & develop new services based on •-% of business through new services
TECHNOLOGY emerging technologies
•Introduction of new •- patent applications filed
Solutions/Services •Develop Solutions based on •Tech up gradation training
•World Class Products Standards/Tools/Frameworks/Methodologies •-% increase in certifications
•Leadership in Technology Forums/Consortiums •-% increase in Bid/Win ratio
•Strategic Alliances with leading Platform Vendors
•Product Road Maps for Product success

•Best in Class Organisation •New all around quality drive through `Service •Digital API – 100% of the identified units
PROCESSES Excellence’
•Business & Service /Product •CMM Level 5/PCMM
delivery Excellence •External Accreditations •Process Improvement Plan
•Quality Leadership •Automation/tools for enhanced effectiveness Implementation
•Institutionalized use of tools and
technologies
 HR….
DIMENSION OVERALL MEASURES/GOALS

• Non Performers – Identification & Management

BUSINESS • Utilisation
• Retention
• Referral Program
• Scalability
• Internal training & learning initiatives

• HR Services – Responsiveness – SLAs

CUSTOMER • Communication Matrix
• Employee welfare initiatives

• Employee Satisfaction
PEOPLE • Digital way Initiatives
• Training & Development

TECHNOLOGY • e HR – PMS, Leave, ESOP, T&D

• PCMM Level 5
PROCESSES • Inter-linkages with other Quality initiatives
• Reporting Matrix
 Execution Calendar
ACTIVITIES TARGET DATES RESPONSIBILITY
Consolidating feedback and seeking Jan/Feb Task Force
inputs

Blue Print Finalisation 25th April Board/MC

MC Scorecard - Individually 15th May MC Team

SMT Scorecards 1st June SMT

Goal setting – entire organisation 20th June All Managers

Review for MC/SMT 30th June MC/SMT/Task Force

30th September
31st December
Performance Reviews 30th September All Managers

Final Evaluation/Feedback April/May Board/MC

Close & Initiate Next Year process May/June MC/Task Force

 Different Types
of
Measures (Targets)

• Outcome Measures or Lag Indicators

• Performance Drivers or Lead indicators
 Balanced Scorecard at National Insurance

Strategic Measuremnts
Strategic Objectives
Lag Lead

Financial Return-on-Equtiy
F1 - Meet Sharholder Expectations Combined Ratio
F2 - Improve Operating Performance Business Mix
F3 - Reduce Sharholder Risk Catastrophic Losses
F4 - Reduce Sharholder Risk

Acquisition / Retention Agency Performance

Customer (vs.plan) (vs.plan)
C1 - Improve Agency Performance Acquisition / Retention Policyholders
C2 - Satisfy Target Policyholders (by segment) Satisfaction Survey

Business Development
Business Max (by
Internal segment)
(vs. plan) Underwriting
I1 - Develop Target Markets Quality Audit
Loss Ration
I2 - Underwrite Profitably Claims Quality Audit
Calims Frequency
I3 - Align Claims with Business Headcount Movement
Claims Serverty
I4 - Improve Productivity Managed Spending
Expences Ratio
Movement