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STRATEGY MANAGEMENT AND PERFORMANCE MEASUREMENT FOR DMOS: A BALANCED SCORECARD APPROACH

STRATEGY MANAGEMENT AND PERFORMANCE MEASUREMENT FOR DMOS: A BALANCED SCORECARD APPROACH. Dr. Douglas C. Frechtling Professor of Tourism Studies School of Business The George Washington University to the Ulysses Conference on Excellence in Public/Private Tourism Destination Management

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STRATEGY MANAGEMENT AND PERFORMANCE MEASUREMENT FOR DMOS: A BALANCED SCORECARD APPROACH

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  1. STRATEGY MANAGEMENT AND PERFORMANCE MEASUREMENT FOR DMOS:A BALANCED SCORECARD APPROACH Dr. Douglas C. Frechtling Professor of Tourism Studies School of Business The George Washington University to the Ulysses Conference on Excellence in Public/Private Tourism Destination Management World Tourism Organization, Madrid, Spain, June 2, 2005

  2. Introduction • Conference devoted to DMO Excellence • Must include “Sustainability” • Long-term focus • Strategic Objectives • Strategy Management System • Performance MeasurementSystem

  3. Business Strategic Objectives • Focus on maximizing owner/shareholder value over the long-term • Now must address contributing to society’s well-being, as well • Still a central focus on finance

  4. Life is Not So Simple for Destination Managers!

  5. Importance of Goals Douglas Pearce, in his singular treatment of Tourist Organizations (1992), states: “Social researchers have noted that goals play a key role in the establishment and existence of organizations.”

  6. Strategic Goals & DMO’s Challenges • “Tourism Supply” can be defined as - • A collection of diverse products • Sold by a multitude of vendors • From a range of industries • In a plethora of locations • To highly segmented markets • Through a complex distribution chain !

  7. In Addition to These Challenges, DMOs . . . • Have little control over product quality, availability or price • Must promote entire product line • Do not benefit much from their activities • Are beholden to several stakeholder groups

  8. Range of DMO Goals • INCREASE BENEFITS • Visitor volumes from selected market segments • Supplier sales • Employment opportunities • Personal income • Government revenue

  9. Range of DMO Goals • REDUCE COSTS • Congestion • Other social costs • Environmental costs • Consumer search costs

  10. A New Solution: The Balanced Scorecard • Introduced by Robert Kaplan and David Norton in 1990 • Adopted by most of the top 500 corporations in America now • Adopted by associations, universities and government agencies, as well • Spawned more than half a dozen books

  11. What Gets Balanced? • Financial and nonfinancial indicators of success • Internal and external stakeholder interests • Leading and lagging success indicators

  12. The BSC is designed to . . . • Guide effective implementation of a strategy • Measure organizational performance in reaching strategic goals

  13. BSC as a Strategy Management System • Requires measurable objectives • Tests every initiative and expense against objectives • Cascades to employees and suppliers • Communicates strategy and objectives

  14. BSC as a Performance Measurement System • Addresses goals in four perspectives • Financial • Customer • Internal processes • Learning and growth • Two types of success indicators • Lagging • Leading – “Performance Drivers”

  15. Adapt the BSC to a DMO • Partnering with Faculty of Tourism and Food at the Dublin Institute of Technology • Apply it to Ireland West Tourism • Assisted by a research grant from the WTO Education Council

  16. The Business Balanced Scorecard Schematic

  17. Sample DMO BSC Matrix

  18. Sample BSC Strategy Map for a DMO

  19. BSC Benefits for the DMO • Provides accountability • Generates measurable results • Creates focus on strategy • Produces information, not just data • Demonstrates efficiency • Drives change • Inspires trust

  20. Next Steps • Consensus building among IWT stakeholders on mission, values and vision statement • Develop key objectives and strategy • Designate performance drivers by perspective • Develop measures, targets and initiatives • Apply BSC and monitor quarterly

  21. Next Steps • Results of the Ireland West Tourism application will be published for the WTO community • Stay tuned to the WTO Education Council

  22. Thank You!

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