Introduction

After completing this lesson, you will be able to:

Define Balanced Scorecard and Performance Management.

Articulate the fundamentals of Kaplan & Nortons Balanced Scorecard

theory.

Slide 1

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An Overview of
the Balanced
Scorecard

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Slide 2

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Introduction
to the
Balanced
Scorecard

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Slide 3

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The Balanced Scorecard measures the balance of four

perspectives. . . a continuous, iterative organizational process.

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Financial
To succeed financially, how should
we appear to our stakeholders?

Innovation, Learning & Growth

To achieve our vision, how will we sustain
our ability to change and improve?

Vision
and
Strategy

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Customer
To achieve our vision, how should
we appear to our customers?

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Internal Business Process

To satisfy our customers, what business
processes must we excel at?

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Balancing Performance
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Slide 4

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Performance
Management
Performance
Measurement
Performance
Monitoring

Financial and non-financial

Measurement and feedback
Accountability
Departmental deployment

Financial orientation
Monthly reporting
Historical information
Based in standards
Static viewing

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Aligned with strategy

Human factors
incorporated
Strategic feedback
possible
Forward-looking (Leading
indicators)
Enterprise deployment

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Short-Term to Long-Term View

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Slide 5

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A planning aid to assist companys in formulating

long-term competitive business strategies and
translating strategy intoshort-term tactics and
actions thereby aligning the organization
strategically.

Long-term
Vision &
Strategy

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Short-term
Tactics &
Action

Scorecard

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Philosophy:
Linking Strategy to Action
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Slide 6

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Value
Financial
Perspective

Operating Margin

Lagging

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Service Utilization

Efficiency Ratio

Customer
Perspective

Top Three
Healthcare System

Leading
Innovation,
Learning & Growth Perspective

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Patient
Recommendations

Number Lives Touched

Internal
Perspective

Efficient Service
Delivery

Employee
Satisfaction

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Effective Outcomes
Management

Leverage IT
Across System

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Strategic Linkage Model:

Healthcare Example
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Slide 7

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The Role of
Technology:

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Sustainability &
Communication

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Individuals

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Balanced
Scorecard

Strategic

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Business
Modeling

Line Managers

Slide 8

Executives

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Trend Analysis
Forecasting

Tactical

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OLAP
Production
Reporting
Query and
Reporting

Historical Perspective

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Analytical
Performance Management
and Business Insight

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Technology Tools
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Slide 9

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Measure (mezhur) - 1. A unit or standard of

measurement; 2. The extent, dimensions,
quantity, etc. of something, ascertained

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especially by comparison with a standard.

What Happened?

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Establish framework which reflects your

strategic initiatives
Define performance targets

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Normalize scores to scale

Assign relative importance

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Define measurement periods

The Role of Technology

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Slide 10

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Analyze (anl iz) - 1. To examine critically, so as

to bring out the essential elements or give the
essence of; to examine carefully and in detail so as

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to identify causes, key factors, possible results

Why Did It Happen?

Database Connectivity

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native connections to Oracle, Informix, Progress,

Sybase, Ingres, MS-SQL Server, DB2 Universal
Database, Hyperion Essbase
ODBC connections to virtually everything else

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Powerful, Scalable, Flexible

robust product architecture
information analysis, query & reporting

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The Role of Technology

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Slide 11

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Plan (plan) - 1. A scheme or method of acting,

doing, proceeding, making, etc., developed in
advance; 2. A format program for specified

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benefits, needs, etc.

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What If We Changed Something?

Detect Quantifiable Cause-and-Effect
Relationships
Perform What-If Analysis
Forecast Goal Attainment

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The Role of Technology

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Slide 12

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Manage (man ij) - 1. To bring about or

succeed in accomplishing; 2. To direct, govern,
or control in action or use.

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Effectively Communicate Initiatives

Establish collaborative communication
environment

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Communicate vision and strategy

Gather feedback

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Closed loop action plans

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The Role of Technology

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Slide 13

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The balanced scorecard is deceptively simple

Commitment of leadership
Employee involvement in their performance measures
Limit the number of measures to the vital few
Accountability for the data
Individual scorecards
Strategic learning - using the scorecard for continuous
improvement
Tie into budgeting process
Linkages to compensation plans & rewards systems

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design and implementation can be difficult, if these key

factors are overlooked.

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Sustainability Factors
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Slide 14

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In Closing.
The Benefits

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Slide 15

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Operationalizes strategy
Focuses entire organization on what needs to be
done to achieve breakthrough performance
Integrates corporate programs (e.G., Quality,
BPR, process redesign and customer service)
Corporate-level measures can be broken down to
lower levels in the organization so that
employees can see what they can do to improve
organizational effectiveness
Provides a comprehensive view of an
organization

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Benefits of a Scorecard
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Slide 16

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Technology reduces the pitfalls of implementing

a manual scorecard process...

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Continuously communicates strategy and performance results of

the organization
Provides organizational tool to manage performance vs.
measuring
Creates collaborative communication environment and automated
feedback loops
Improves organizational speed and decision-making capabilities
Creates a management process that can be continuously
improved

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Technology Benefits
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