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     KEYZINE: An e-zine for LEADERS:
   ABOUT THE PEOPLE PART OF BUSINESS
             Volume 80, November 2007
  Publisher: © Key Associates, 2007
              ISSN # 1545-8873
           http://www.mkkey.com/

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This Issue: "Balanced Scorecard"

Contents:

"Poor measurement systems cause employees to question 
the competence of managers who 'manage by the numbers' 
when the numbers conflict with the economic reality 
and the organization's objectives.”
                                        - Robert S. Kaplan

 "I am ill at these numbers."
                              - William Shakespeare

"Anyone who thinks there are safety in numbers has not
looked at the stock market pages."
                              - Irene Peter
"A manager who does not understand a process will
attempt to manage it by the numbers.”
                               - W. Edwards Deming

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WHAT'S HOT IN LEADERSHIP
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UNDERSTANDING MEASUREMENT...

BUT UNDERSTANDING THAT MEASUREMENT
IS A PROXY FOR THE REAL THING.

BALANCING THE FINANCIAL PERSPECTIVE
WITH OPERATIONAL AND HUMAN MEASURES--
CUSTOMER VIEWPOINTS, SERVICE INDICATORS, 
QUALITY, AND INNOVATION.

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MAINTAINING YOURSELF AS A LEADER
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A colleague of mine used to ask: "What handful
of indicators would you choose to determine if
your organization is operating well?  And if
these numbers are in the optimal range, you could
knock off and go play golf?"

Having a Balanced Scorecard is like looking 
at the dashboard of your car--if any of the dials 
indicate failure, your car will not run.  Perhaps 
even be ruined.

What system of metrics do you trust?

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FREQUENTLY ASKED QUESTIONS
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What is a Balanced Scorecard?

Developed by Kaplan & Norton (1993), the Balanced 
Scorecard is a management/measurement approach
designed to translate vision and strategy into action.  
It views the performance of the organization from four 
perspectives: Learning and Growth; internal Business 
Processes; Customer Satisfaction; and Financial indicators.  
Each perspective includes objectives, measures, targets and 
initiatives.

The balanced scorecard consists of four sections: 
clarifying and translating vision and strategy; 
communicating and linking strategic objectives and measures; 
planning, setting targets, and aligning strategic initiatives; and 
enhancing strategic feedback and learning (Kaplan & Norton, 1996).

 

What are some of the suggested metrics?

How are we delighting our customers?  
Measure lead times, quality, performance and 
service, customer satisfaction, and value. 

What must our company excel at? 
Determine the processes and competencies that 
are most critical, then specify measures, such as 
cycle time, quality, safety, employee skills, project 
management and productivity, to track them. 

Third, how can your company continue to learn, improve
and create value? 
Track your ability to launch new products, 
create more value for customers, and improve operating 
efficiencies.  Notice number of employee suggestions, 
employee satisfaction/retention, % revenue from new services.

Fourth, how has your company done by its shareholders? 
Measure cash flow, project profitability, revenue per employee,
operating income by division, increased market share 
by segment, reliability of performance, and return-on-capital-employed.

 

How do we relate our daily work to the Scorecard ?

The measures you choose to track in each area are 
sometimes referred to as "the Big Dots." Every project 
should connect to the Big Dots.   The emphasis in 
work becomes move the Big Dots, not add more projects 
(Godfrey & Plsek, 2006).

 

EXERCISE:

Create a scorecard of metrics, which, if all were operating 
at optimal levels, you could take off and play golf.  Name a 
measure in each category that links business results to 
customer needs and expectations.  (Tie this to all your 
business units.)

INTERNAL PROCESSES _____________

CRITICAL TO SATISFACTION ____________

INNOVATION & IMPROVEMENT _____________

LEARNING & GROWTH ____________

FINANCIAL _____________

OTHER _____________


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EDUCATIONAL OPPORTUNITIES
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Balanced Scorecard User Group
http://www.scorecardsupport.com/

Thoughtware, white paper
http://www.visumsolutions.com/?gclid=CLybtsuRgJACFQGRPAodLSgLuQ

More free white papers
http://www.qpr.com/Solutions/Balanced_Scorecard/?gclid=COf1_eWRgJACFQGdPAodVRvqsw

Training, downloadable white papers, examples
http://www.imtc3.com/Balanced-Scorecard.cfm?gclid=COmvmq6SgJACFQxFgQodwxt9og

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OTHER USEFUL WEBSITES 
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 The official newsletter of the Balanced Scorecard Revolution
https://www.2p9.com/HarvardBusinessReview/ManagementUpdate/0407balanced/landing.cfm?trkid=20890S17662130

Free hosted trial on scorecards
http://www.spiderstrategies.com/

Automate balanced scorecards and dashboards
http://www.activestrategy.com/software_solutions/software_overview.aspx?_kk=00653902-4d72-4169-87c1-af75b41aa3d2&_kt=914772139&gclid=CIGSm6qRgJACFQIUPAodxGbMtA

More free software
http://www.visumsolutions.com/?gclid=CIyf_46--48CFQIUPAodiQdILQ

Former Keyzines on related topics:
Volume 48, March 2005 - The Strategic Plan
Volume 49, April 2005 - Measurement
Volume 50, May 2005 - Picture of a Process
Volume 74, May 2007 - Simplify


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ARTICLES/PUBLICATIONS                              
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Eckerson, Wayne W.  Performance Dashboards: 
Measuring, Monitoring, and Managing Your Business.  
Wiley, 2005.

Godfrey, Marjorie & Paul Plsek.  Measuring progress 
in microsytem development: Value Compass, balanced 
scorecard, MAT, and Transition Survey.  Presentation 
to the Vermont Oxford Network Semi-annual Meeting, 
Philadelphia, PA, October 20, 2006.

Hannabarger, Charles, Frederick Buchman, & Peter Economy.  
Balanced Scorecard Strategy For Dummies.  For Dummies, 2007.

Kaplan, Robert S. & David P. Norton.  Putting the
Balanced Scorecard to Work.  Harvard Business
Review.  September-October, 1993.

Kaplan, Robert S. & David P. Norton.  The Strategy-Focused 
Organization: How Balanced Scorecard Companies 
Thrive in the New Business Environment.  Harvard Business 
School Press, 2000.

Kaplan, Robert S. & David P. Norton.  The Balanced Scorecard: 
Translating Strategy into Action.  Harvard Business 
School Press, 1996.

Nair, Mohan.  Essentials of Balanced Scorecard.  Wiley, 2004.

Niven, Paul R.  Balanced Scorecard Step-by-Step: 
Maximizing Performance and Maintaining Results.  
Wiley, 2006.

Parmenter, David.  Key Performance Indicators: Developing, 
Implementing,and Using Winning KPIs.    Wiley, 2007.

Smith, Ralph.  Business Process Management and the 
Balanced Scorecard : Focusing Processes on Strategic 
Drivers.  Wiley, 2006.