Balanced Scorecard

Concept

BSC provides executives a comprehensive

framework that translates companys vision
and strategy into coherent set of performance
measures.
Specifically it
Clarifies and translate vision and strategy
Communicates and links strategic objectives and
measures
Plans, sets targets, and aligns strategic initiatives.
Enhances strategic feedback and learning.
Four Perspectives

Financial
Customer
Internal Processes
Learning and Growth
Why Balanced?

Provides a relation between tangible and

intangible factors.
Incorporates both lead and lag
measures.
Identifies and integrates both revenue
generating (top line) strategies and cost
reducing (bottom line) strategies.
Financial Perspective

Three Strategic themes

Revenue and growth mix.
Cost reduction/ productivity improvement.

Asset Utilization.
Customer Perspective
Clarity about targeted customers and business
segments.
Core Outcome Measures (LAG) are
Market share
Customer retention
Customer acquisition
Customer satisfaction
Customer profitability
Dependent on customer value proposition (LEAD or
Performance drivers).
Product/service attributes
Image
Relationship
Internal Business Processes

Identification of the processes that are

most critical for achieving customer and
shareholders objectives.
Three principal business processes are:
Innovation
Operations

Post-sale service
Learning and Growth perspective

Three principal categories

Employee capabilities
Information system capabilities
Motivation, empowerment, and alignment.
Core outcomes (LAG)
Employee retention
Employee productivity
Employee satisfaction
Performance drivers (LEAD)
Staff competencies
Technology infrastructure
Climate for action
Three cardinal principles

To link BSC to strategy

Cause and effect relationship
Outcomes and Performance Drivers

Linkage to financials
VALUE CREATION CHAIN OR STRATGEY
MAP FOR LINCOLN

Higher margins
Higher ROI
FINANCIAL
Low cost of
production & sales Higher revenues
Quality premium

Lowest cost High quality Retaining valued customers

CUSTOMER
product product Dealer support thru relationship building

Low in process rejection Low attrition Innovative new products. Trained sales
INTERNAL rate Low training costs Employee suggestions team (customer
High productivity consultants)

Attracting & retaining Developing ownership/ Enhancing technical

LEARNING &
hardworking & committed involvement culture. skill of employees
GROWTH
employees Developing productivity /
quality culture.
Example