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Business Metrics using Balanced Scorecard—A Primer

Business Metrics using Balanced Scorecard—A Primer. PM Learning Group April 8, 2010. “The Big Four”. BSC: “Not Invented Here”; non-academic. Kaplan & Norton’s Strategy-Focused Organization. This Term. Means…. Lingo explained.

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Business Metrics using Balanced Scorecard—A Primer

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  1. Business Metrics using Balanced Scorecard—A Primer PM Learning Group April 8, 2010

  2. “The Big Four”

  3. BSC: “Not Invented Here”; non-academic

  4. Kaplan & Norton’s Strategy-Focused Organization

  5. This Term Means… Lingo explained 4 perspectives; quadrants Bottom line not enough. Need “supporting” info across business for long-term success Alignment Executive strategy is not philosophy, but fed by operations data and tactical performance Strategy map; objectives The components identified and arranged to make vision reachable Scorecard Measures arrayed in quadrants indicating progress Dashboard Measures showing operational “health” or consistency *LEAN measures captured on VSMs: Cycle time, % C&A, wait-time, touch-time, # steps Initiative “can’t get there (target; desired state) from here”

  6. Strategy Map: a series of cause-and-effect relationships consultation CUSTOMER collaboration LRNG/ GROWTH INT. PROCESS Financial stewardship FINANCIAL

  7. How to pick measures • The financial perspective …designers were encouraged to choose measures to answer to the question, “How do we look to shareholders? (or investors; taxpayers)” • The customer perspective encourages the identification of measures that answer the question, “How do customers see us?” • The internal business perspective encourages the identification of measures that answer the question, “What must we excel at?” • The innovation and learning perspective encourages the measures that answer the question, “Can we continue to improve and create value?”

  8. Scorecard vs. Dashboard

  9. FINANCE & FACILITIES • Administration •Capital Projects Office • Facilities Services • Financial Management • Treasury Group • UniversityAudit Operational Performance Dashboard Report Contact: F2MR@uw.edu

  10. Finance & Facilities’ Strategy Map for 2008–2013 Mission Vision Values We are a global leaderable to deliver outstanding service anywhere, anytime • Collaboration • Integrity We help people who change the world • Diversity • Respect • Excellence • Teamwork • Innovation Value to You, Our Customer 3 1 1 C.3 Provide clear, timely, accurate, consistent communications from knowledgeable staff C.2 Help solve complex University-wide problems C.1 Provide value for your money Improve Operational Excellence Attract and Retain a Talented and Diverse Staff 2 3 1 3 2 1 O.3 Lead strategic UW-wide projects O.2 Develop customer value proposition S.1 Create and maintain collaborative relationships S.2 Enhance leadership effectiveness S.3 Develop individuals to their full potential O.4 Champion environmental stewardship O.1 Improve, streamline and innovate Enhance Resources 3 4 2 R.1 Provide cost-effective services R.2 Build and maintainUW’s physical assets R.3 Increase and stewardUW’s financial assets Report Contact: F2MR@uw.edu Adopted, March 25, 2008

  11. Scorecard Example

  12. Is there an easy way to manage all these metrics? “…roughly 1/3 of organisations use office software to report their Balanced Scorecard, 1/3 use bespoke software developed specifically for their own use, and 1/3 use one of the many commercial packages available.” F2’s “tool of choice” is Excel: Benefit: Easy to incorporate ongoing business data; new measures; new dashboards Drawback: Clunky and labor-intensive Best news of all: YOU CAN EASILY JOIN IN!

  13. Examples of Measure-types • Lead (KPI; tactical “instance metric”) • Lag (actual project cost vs. estimate) • Qualitative (satisfaction; assessment; opinion) • Quantitative (counts, rates, volume, trend) • Financial (turnover, variable costs, fixed costs, earnings, working capital) • Performance ratios (ROE, margin) • Utilization (downtime, subscription, capacity) • Comparative (benchmarks, best-in-class, competitor) • Absolute or fixed target (zero-defect, control limits)

  14. Prospective Lean Measures PURPOSE OF THE DAY: Align the organization with Strategy Map, Lean approach, our initiatives, metrics & reporting. Review budget package as needed. Measurement Stakeholder(s) and/or owner(s): Staff LeanProject Leader STEAM / M&R / Leaders Process (process map, current & future state) Event (project, workshop) Lean Organization (adoption, culture) • Cycle time/wait time • Reduced process steps • Number of transactions • Eliminate errors and/or rework • Meeting customer requirements (understanding voice of customer) • Improved accuracy and completeness of information during hand-offs (and other types) • Trend from baseline for improvements • Expense reduction • Achieve event objective(s) • Milestone/timeline • Kaizen progress

  15. Process Measure Examples

  16. Questions?

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