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Finance & Facilities Metrics & Reporting Instructors: LuAnn Stokke, Vincent Lau

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balanced scorecard 101 november 29 th 2010

Finance & Facilities

Metrics & Reporting

Instructors: LuAnn Stokke, Vincent Lau

The Balanced Scorecard (BSC) is an important tool that aligns business activities, improves communications, and measures organization performance against strategic goals. Attendees can expect to gain a good understanding of BSC principles and how BSC theory relates to real-life application in F2.   This course will provide definitions and help demystify the relationship among operation, strategy, dashboard, scorecard, strategy maps, initiatives, values, mission, vision, and other terms.

Balanced Scorecard 101November 29th, 2010

agenda
Agenda

Background and Quality Improvement Infrastructure

What is Balanced Scorecard?

Vision to Operation

Operational Dashboards

Exercise 1

BREAK

Strategy Map, Objectives & Initiatives

Strategic Scorecards

Exercise 2

Targets & Benchmarks

introduction
Introduction

Welcome

What have you heard? What would you like to know more about?

- LEAN, QI, PI, PDCA, Deming, Strategy Map, BSC, Dashboard, Scorecards, Kaizen, Strategic Objectives, Initiatives, etc.

f2 qi pyramid
F2 QI Pyramid

Vision

Efficient

Processes

Delighted

Customers

Strategic Plans

Leaders Staff

Trustworthy Trustworthy

Trusting of Others Trusting of Others

Approachable, Inspiring Collaborative, Committed

Quality Improvement System

Trained Staff Recognition Data Analysis

Customer Focus Empowered Staff Problem Solving

Teamwork Quality Processes Measurement Systems

f2 9 principles
F2 9 Principles
  • What are the goals?

1. Customer Focus

2. Continuous Improvement

How is it done?

3. Quality Definition

4. Work Process Focus

5. Prevention

6. Error-Free Attitude

7. Manage by Facts

Who does it?

8. Participation / Empowerment

9. Total Involvement

what is balanced scorecard
What is Balanced Scorecard?

More than a performance measurement tool:

  • Helps organizations effectively execute strategy.
  • Articulates strategy in actionable terms.
  • Serves as a roadmap for strategy execution.
  • Mobilizes and aligns leaders and staff to make strategy a continuous process.
  • Illustrates cause-and-effect relationships between actions and outcomes.
f2 organization s bsc journey
F2 Organization’s BSC Journey

Different organizations have different journeys. There is no right or wrong way to implement continuous improvement.

  • BSC
  • QI
  • LEAN
cascading vision to operation

Is it real?

Timeframe

Owners

(F2 perspective)

Also Known As

Vision

Conceptual

Factual

One day in the future

Not yet clearly attainable?

An ideal world

UW President

Board of Regents

Executives

Government

Mission

5 – 10 years

40,000 ft

point of view

SVP / AVPs

Controller

Executives

Leaders

Strategy

3 – 5 years

Leaders

Managers

Supervisors

Staff

20,000 ft

point of view

Strategic Scorecard

Operation

Present – 1 year

Managers

Supervisors

Staff

Ground level

point of view

Operational Dashboard

Cascading Vision to Operation

Description

Ideal State. A lofty dream.

A common goal / future for the entire organization.

What does the organization do?

What type of business?

Often interchangeably used as Vision

Major Goals & Performance Objectives to achieve the Mission & Vision

Specific actions to achieve work-level targets aligned with strategic goals.

we all play a role
We All Play a Role

Rev. Dr. Martin Luther King

Vision

“I have a dream that all men will be judged by the merit of their character, not by the color of their skin.”

  • Dr. King’s vision/mission of equality is achievable with successful Strategy & Operations.
  • We all play a role/influence the success of an organization.
  • Successful Strategy is how to achieve Vision & Mission.
  • Successful Operation helps achieve Strategy (Strategic Objectives).

Mission

Eliminate racial injustice in American society

Strategy

  • Establish national-public attention to racial injustice
  • Educate people about racial injustice
  • Governments establish civil rights for all citizens

Operation

  • Speak at public events
  • March alongside civil-rights activists
  • Engage politicians at events
  • Object to and stand-up against racial injustice

Values

Utilize a passive/non-violent approach

we all play a role10
We All Play a Role

Vision / Mission / Values

Strategy

Operations / Tactics

slide11

We all Play a Role

VISION / MISSION

Set Direction

  • STEAM
  • Executives

Work Teams / Measure

Analysts

Leaders Directors Supervisors Coordinators

STRATEGY

Systems; Cross-functional

OPERATION

Execution/Feedback

examples of f2 key processes
Examples of F2 Key Processes

Value

Added Tasks

INPUT

OUTPUT

bsc s four perspectives
BSC’s Four Perspectives

According to Kaplan & Norton, long-term success is best gauged via a BALANCED perspective.

For example, financial statements will not display intangible assets:

cycle-time, knowledge management, staff capability, customer satisfaction, etc.

A fully functioning Dashboard may consist of 20-25 measures, with a larger portion in Internal Process

Customer

(esp. important for Non-Profit)

20% of measures

Financial

  • 20% of measures

Internal Process

40% of measures

Learning & Growth

  • 20% of measures
example restaurant dashboard
Example: Restaurant Dashboard

Customer

Average wait time (in minutes) for customer to receive order

# of inaccurate orders per 1,000

Financial

Annual % growth in revenue

Average margin per order

Internal Process

# Days to develop new product

% of food wasted

Learning & Growth

% of Staff cross-trained

% of servers > 5 years with company

exercise 1 operation
Exercise 1 - Operation

Setting:

  • It is the year 2000, and you are the Blockbuster senior management team.
  • You are the industry leader in renting movies.
  • Your competitors include Hollywood Video, local video stores, and grocery stores.
  • Assignment:
  • Create the Blockbuster operational dashboard.
  • Using the four perspectives, what measures would you like to see that would show you know how well Blockbuster is doing?
  • Report out & debrief to class.
  • Dashboard attributes:
  • Measures key processes
  • Operational in nature
  • Displays day-to-day activities
  • Reinforces doing our job well
  • Analyzes performance
  • Provides baseline for improvement efforts

Customer

Financial

Internal Process

Learning &

Growth

intermission trivia
Intermission Trivia

“A New Hope” was sub-titled to help distinguish from its prequel and sequel.

But to this day, most remember the iconic movie as “Star Wars”

  • “A New Hope”
  • “Genesis”
  • “Anakin’s Vengeance”

Star Wars episodes 5 & 6 were titled “Empire Strikes Back” and “Return of the Jedi”

What was the title given to the original 1977 movie Star Wars?

  • “A New Hope”
  • “Genesis”
  • “Anakin’s Vengeance”
intermission trivia20
Intermission Trivia
  • Which is the most expensive movie to date?
  • Avatar $237M
  • Pirates of the Caribbean: At World's End $300M
  • Titanic $200M

Which is the most expensive movie to date?

  • Avatar
  • Pirates of the Caribbean: At World's End
  • Titanic
intermission trivia21
Intermission Trivia

Guess this animated science fiction movie:

  • Year is 2105
  • Earth is covered in trash
  • Humans live on luxury Starliners
  • Trash compactor robot cleans Earth
  • Robot & movie titled “WALL• E”
we all play a role22
We All Play a Role

Vision / Mission / Values

Strategy

Operation / Tactics

developing and managing strategy
Developing and Managing Strategy

Strategy Map

Balanced Scorecard

Dashboards

scorecard
Scorecard

Now that you have a Strategy Map and Strategic Objectives, how would you know you are making progress in achieving it?

A Scorecard tells the story of the strategy.

Reviewing the Scorecard is a way to assess progress towards the Strategic Objectives on the Map.

BSC scorecard vs. "metrics": BSC not a collection of measures, it's a description of the organization's strategy.

exercise 2 strategy
Exercise 2—Strategy

It is the Year 2010, present time

Your table is the senior management team of one of these assigned companies: Blockbuster, Netflix or Redbox. You all provide entertainment products to consumers, but using different business models.

In the last 10 years, there have been significant changes within the industry

  • Internet technologies
  • Changing customer demographics
  • New business lines (e.g., game rentals, agreements with studios for exclusive movie release dates)
  • Hollywood Video bankrupt (formerly major Blockbuster rival)

As the senior management team, craft a Strategy Map for your firm. Where is your company heading in the next 5 years, given what you know?

Draft at least one scorecard measure for each perspective to help you understand whether you’re achieving your strategic objectives.

slide32

STRATEGY MAP TEMPLATE

MISSION

Deliver quality entertainment

VISION

Bringing quality of life anywhere, anytime

FINANCIAL

Double profits within 5 years.

CUSTOMER

INTERNAL PROCESS

LEARNING & GROWTH

benchmarking defined
Benchmarking Defined

“Benchmarking is the process of comparing one’s business processes and performance metrics to industry bests and/or best practices from other industries. Dimensions typically measured are quality, time, and cost. Improvements from learning mean doing things better, faster, and cheaper.”en.wikipedia.org/wiki/Benchmarking

how benchmarking works
How Benchmarking Works

LEAN, CPI, BSC

Remote Research/Analysis

“STEP 1”

“STEP 2”

“STEP 3”

BSC—either dashboard or scorecard

developing and managing strategy37
Developing and Managing Strategy

Strategy Map

Balanced Scorecard

Dashboards

thank you
Thank you

The Balanced Scorecard (BSC) aligns business activities, improves communications, and measures organization performance against strategic goals.

What would you like to know more about?

How to get involved? (classes, teams, dashboards & scorecards, etc.)

time permitting
Time permitting

How does operational dashboard link to scorecard and strategy map