Balanced Scorecard Quick Guide April, 2010. Basics & Best Practices Terminologies Balanced Scorecard Quick Guide.
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Balanced Scorecard Quick Guide
April, 2010
Basics & Best Practices Terminologies
Balanced Scorecard Quick Guide
Booz & Company28 March 2009
In addition, Strategic & Business Planning relies on well-defined, best practice terminology
Strategic & Business Planning Process Key Terminology
Units
Key Performance Indicators (KPI)
Goal
Objective
Strategy
Initiative
Any Business or Functional Unit. According to the new organization structure, GACA has five Business Units (KKIA, KAIA, KFIA, Domestic Airports and ANS) and five Functional Units (Corporate Core, IT, Finance, Human Resources, Internal Audit) and a Safety and Economic Regulation function1
A measure used to monitor how well a business is achieving its quantifiable objectives. KPIs are found at both the strategic (assets turnover, customer satisfaction index) or operational levels (e.g. traffic volume)
Long-term target value (a number) of KPI; set to be attained after five years
Short-term target value (a number) of KPI; set to be attained in one year
A means or action that will lead to the achievement of a goal (five years ahead)
A means or action that will lead to the achievement of the objective (one years ahead). A set of initiatives form a strategy
Balanced Scorecard Quick Guide
Contents
• BSC general work flow• Internal Scanning Summary • External Analysis Summary • SWOT Analysis Summary • Strategy Mapping Summary • KPIs Setting Summary • Targets Setting Summary • Initiatives Setting Summary • BSC Dashboard Summary • Performance Assessment Summary
Balanced Scorecard Quick Guide
Now
• BSC general work flow• Internal Scanning Summary • External Analysis Summary • SWOT Analysis Summary • Strategy Mapping Summary • KPIs Setting Summary • Targets Setting Summary • Initiatives Setting Summary • BSC Dashboard Summary • Performance Assessment Summary
Balanced Scorecard Quick Guide
One Of The Best Practices For BSC Work Flow
1. Internal Scanning
2. External Scanning
3. SWOT Analysis
4. Strategy Mapping
6. Targets Setting
5. KPIs Setting
7. Initiatives Setting
9. Performance Monitoring
8. BSC Dashboard
Balanced Scorecard Quick Guide
Now
• BSC general work flow• Internal Scanning Summary • External Analysis Summary • SWOT Analysis Summary • Strategy Mapping Summary • KPIs Setting Summary • Targets Setting Summary • Initiatives Setting Summary • BSC Dashboard Summary • Performance Assessment Summary
Balanced Scorecard Quick Guide
Internal Scanning Summary
IntroductionInternal scanning is a strategic planning technique that helps in determining the firm’s strengths and weaknesses and any related issues inside the firm
Purpose• Knowing firm’s strengths and weaknesses• Getting exposed to the firm’s processes and chain of commands
Suitable Techniques
The following techniques are suitable to serve the internal scanning purpose:• Value Chain Analysis• Capability Assessment
Expected Outcomes
Once the internal scanning is done, it is expected to have:• Firm’s strengths • Firm’s weaknesses • Firm’s processes and value transferred from each process to another • potentials for improvements
Balanced Scorecard Quick Guide
Now
• BSC general work flow• Internal Scanning Summary
– Related Templates • External Analysis Summary • SWOT Analysis Summary • Strategy Mapping Summary • KPIs Setting Summary • Targets Setting Summary • Initiatives Setting Summary • BSC Dashboard Summary • Performance Assessment Summary
Balanced Scorecard Quick Guide
Value Chain Analysis
Activity A
Key Responsibilities
Key Responsibilities
Key Responsibilities
Key Responsibilities
Activity B Activity C Activity D
Value transferred Value transferred Value transferred Value transferred
Template
Balanced Scorecard Quick Guide
Capability Assessment
Organization Readiness (%)
People Readiness (%)
Process Readiness (%)
System Readiness (%)
Evidence and Comments
Activity A
Activity B
Activity C
Activity D
Template
Balanced Scorecard Quick Guide
Now
• BSC general work flow• Internal Scanning Summary • External Analysis Summary • SWOT Analysis Summary • Strategy Mapping Summary • KPIs Setting Summary • Targets Setting Summary • Initiatives Setting Summary • BSC Dashboard Summary • Performance Assessment Summary
Balanced Scorecard Quick Guide
External Scanning Summary
IntroductionExternal scanning is a strategic planning technique that helps in determining the firm’s opportunities and threats and any related issues outside the firm
Purpose• Knowing firm’s opportunities and threats • Getting exposed to the firm’s competitors and market changes
Suitable Techniques
The following techniques are suitable to serve the external scanning purpose:• Industry Trends• Porter 5 Forces Model
Expected Outcomes
Once the external scanning is done, it is expected to have:• Firm’s opportunities • Firm’s threats • New trends and demands • potentials for investments and competitive advantages
Balanced Scorecard Quick Guide
Now
• BSC general work flow• Internal Scanning Summary• External Analysis Summary
– Related Templates • SWOT Analysis Summary • Strategy Mapping Summary • KPIs Setting Summary • Targets Setting Summary • Initiatives Setting Summary • BSC Dashboard Summary • Performance Assessment Summary
Balanced Scorecard Quick Guide
Corporate Industry Trends
Trend Description Supporting Evidence ImplicationsTrend A
Trend B
Trend A
Trend B
Trend A
Trend B
Trend A
Trend B
Trend A
Trend B
Com
petiti
ve
Tren
dsM
arke
t Tr
ends
Regu
lato
ry
Tren
dsTe
chno
logy
Tr
ends
Oth
er
Tren
ds
Template
Balanced Scorecard Quick Guide
FocalFirm
Buyers
Suppliers
Entry
Rivalry
Substitutes
Complementors
DemographicTrends
TechnologicalChange
CulturalTrends
EconomicClimate
Legal/PoliticalConditions
SpecificInternational
Events
Industry
General External Environment
Template
Balanced Scorecard Quick Guide
Now
• BSC general work flow• Internal Scanning Summary • External Analysis Summary • SWOT Analysis Summary • Strategy Mapping Summary • KPIs Setting Summary • Targets Setting Summary • Initiatives Setting Summary • BSC Dashboard Summary • Performance Assessment Summary
Balanced Scorecard Quick Guide
SWOT Summary
Introduction SWOT is a strategic planning technique that helps in determining the firm’s strategic directions and priories
PurposeKnowing what strategies will sustain the growth of the firm and what will be done in order to extract advantaged over the competitors
Suitable Techniques
The following techniques are suitable to serve the SWOT purpose:• SWOT Matching
Expected Outcomes
Once the SWOT is done, it is expected to have:• Firm’s strategic directions and priorities
Balanced Scorecard Quick Guide
Now
• BSC general work flow• Internal Scanning Summary• External Analysis Summary • SWOT Analysis Summary
– Related Templates • Strategy Mapping Summary • KPIs Setting Summary • Targets Setting Summary • Initiatives Setting Summary • BSC Dashboard Summary • Performance Assessment Summary
Balanced Scorecard Quick Guide
SWOT SummaryEx
tern
al F
acto
rsO
ppor
tuni
ties
Thre
ats
Internal FactorsStrengths Weaknesses
1. Internal Strengths Matched with External Opportunities … … … …
2. Internal Weaknesses Relative to External Opportunities … … … …
3. Internal Strengths Matched with External Threats … … … …
4. Internal Weaknesses Relative to External Threats … … … …
Template
Balanced Scorecard Quick Guide
Leverage the planned expansion for Jeddah airport to attract the growing charter market in the region
SO1
SO2
SO1
WO1
WO2
WO3
WT2
SWOT Analysis
Explore New Market Segments
to Expand Revenue Base
Strategic Priorities1
2
3
SO ST
WO WT
WO4
WO5
WO6
Template
Balanced Scorecard Quick Guide
Now
• BSC general work flow• Internal Scanning Summary • External Analysis Summary • SWOT Analysis Summary • Strategy Mapping Summary • KPIs Setting Summary • Targets Setting Summary • Initiatives Setting Summary • BSC Dashboard Summary • Performance Assessment Summary
Balanced Scorecard Quick Guide
Strategy Mapping Summary
IntroductionStrategy mapping is a strategic planning technique that helps in representing the firm’s strategies in such a way that shows the cause and effect of each strategy
PurposeTo ensure that each strategy does really serve a specific other strategy, and the overall strategies serve and feed the firm's vision
Suitable Techniques
The following techniques are suitable to serve the strategy mapping purpose:• Strategy Map
Expected Outcomes
Once the strategy mapping is done, it is expected to have:• Firm’s strategy map
Balanced Scorecard Quick Guide
Now
• BSC general work flow• Internal Scanning Summary• External Analysis Summary • SWOT Analysis Summary • Strategy Mapping Summary
– Related Templates • KPIs Setting Summary • Targets Setting Summary • Initiatives Setting Summary • BSC Dashboard Summary • Performance Assessment Summary
Balanced Scorecard Quick Guide
LEARNING AND GROWTHPERSPECTIVE
INTERNALPERSPECTIVE
CUSTOMERPERSPECTIVE
FINANCIALPERSPECTIVE
VISION
Template
Balanced Scorecard Quick Guide
Now
• BSC general work flow• Internal Scanning Summary • External Analysis Summary • SWOT Analysis Summary • Strategy Mapping Summary • KPIs Setting Summary • Targets Setting Summary • Initiatives Setting Summary • BSC Dashboard Summary • Performance Assessment Summary
Balanced Scorecard Quick Guide
KPIs Setting Summary
IntroductionKPIs (Key Performance Indicators) are measures that indicate how is the progress of strategic objectives and targets achievements
PurposeTo indicate and alarm the management for strategy and targets achievements or deviations
Suitable Techniques
•KPIs Profile• Benchmarking • KPIs Libraries
Expected Outcomes
Once the KPIs setting is done, it is expected to have:• Firm’s KPIs• KPIs definitions & frequency of review •KPIs formulas • Strategic objectives that are measures by specific KPIs• KPIs owners
Balanced Scorecard Quick Guide
Now
• BSC general work flow• Internal Scanning Summary• External Analysis Summary • SWOT Analysis Summary • Strategy Mapping Summary• KPIs Setting Summary
– Related Templates • Targets Setting Summary • Initiatives Setting Summary • BSC Dashboard Summary • Performance Assessment Summary
Balanced Scorecard Quick Guide
Definition
Definition
Definition
Definition
KPI Definition
X+Y = Z
X+Y = Z
X+Y = Z
X+Y = Z
KPI Formula
W/M/Q/S/A
W/M/Q/S/A
W/M/Q/S/A
W/M/Q/S/A
Frequency
Name / Dept.
Name / Dept.
Name / Dept.
Name / Dept.
Owner
Template
Balanced Scorecard Quick Guide
Now
• BSC general work flow• Internal Scanning Summary • External Analysis Summary • SWOT Analysis Summary • Strategy Mapping Summary • KPIs Setting Summary • Targets Setting Summary • Initiatives Setting Summary • BSC Dashboard Summary • Performance Assessment Summary
Balanced Scorecard Quick Guide
Targets Setting Summary
Introduction Targets are those values (determined in each KPI) that the management wants to achieve within a certain time
PurposeTo make the KPIs and the measurement more quantifiable and measureable
Suitable Techniques
• Benchmarking • Forecasting • Feasibility studies • Market Research
Expected Outcomes
Once the targets setting is done, it is expected to have:• KPIs targets • Targets values & units
Balanced Scorecard Quick Guide
Now
• BSC general work flow• Internal Scanning Summary • External Analysis Summary • SWOT Analysis Summary • Strategy Mapping Summary • KPIs Setting Summary • Targets Setting Summary • Initiatives Setting Summary • BSC Dashboard Summary • Performance Assessment Summary
Balanced Scorecard Quick Guide
Initiatives Setting Summary
Introduction Are those actions that are predesigned and dedicated to achieve the determined targets and to activate specific KPIs
Purpose To help the firm achieving strategic objectives
Suitable Techniques
• Benchmarking •Feasibility studies • Market Research • R&D
Expected Outcomes
Once the initiatives setting is done, it is expected to have:• Strategic plan initiatives • Owners
Balanced Scorecard Quick Guide
Now
• BSC general work flow• Internal Scanning Summary• External Analysis Summary • SWOT Analysis Summary • Strategy Mapping Summary• KPIs Setting Summary • Targets Setting Summary • Initiatives Setting Summary
– Related Templates • BSC Dashboard Summary • Performance Assessment Summary
Balanced Scorecard Quick Guide
Strategic Priority A
Strategic Priority B
Strategic Priority C
Strategic Priority D
Strategic Priority
1. KPI12. KPI23. KPI3
1. KPI12. KPI23. KPI3
1. KPI12. KPI23. KPI3
1. KPI12. KPI23. KPI3
KPI
VALUE (unit)
VALUE (unit)
VALUE (unit)
VALUE (unit)
Target
1. Action A2. Action B3. Action C
1. Action A2. Action B3. Action C
1. Action A2. Action B3. Action C
1. Action A2. Action B3. Action C
Initiative
Template
Balanced Scorecard Quick Guide
Now
• BSC general work flow• Internal Scanning Summary • External Analysis Summary • SWOT Analysis Summary • Strategy Mapping Summary • KPIs Setting Summary • Targets Setting Summary • Initiatives Setting Summary • BSC Dashboard Summary • Performance Assessment Summary
Balanced Scorecard Quick Guide
BSC Dashboard Summary
Introduction It is a simple visualization of the firm’s performance
Purpose To help the management taking decisions and being up to date with the firm’s overall performance
Suitable Techniques
• MS Power Point Presentation • MS Excel• other software
Expected Outcomes
Once the BSC dashboard is done, it is expected to have:• Projected BSC perspectives and firm's strategic priorities with notifying designs
Balanced Scorecard Quick Guide
Now
• BSC general work flow• Internal Scanning Summary• External Analysis Summary • SWOT Analysis Summary • Strategy Mapping Summary• KPIs Setting Summary • Targets Setting Summary • Initiatives Setting Summary • BSC Dashboard Summary
– Related Templates • Performance Assessment Summary
Balanced Scorecard Quick Guide
Internal Processes Dimension Indicators
Internal Processes Dimension Indicators
% (Actual / Target)
% (Actual / Target)
Learning & Growth Dimension Indicators
Learning & Growth Dimension Indicators
% (Actual / Target)
% (Actual / Target)
Financial Dimension Indicators
Financial Dimension Indicators
Actual < 90% of Target
90% of Target < Actual < 100% of Target
Actual >= 100% of Target
% (Actual / Target)
% (Actual / Target)
Internal Processes Dimension Indicators
Internal Processes Dimension Indicators
% (Actual / Target)
% (Actual / Target)
Template
Balanced Scorecard Quick Guide
Now
• BSC general work flow• Internal Scanning Summary • External Analysis Summary • SWOT Analysis Summary • Strategy Mapping Summary • KPIs Setting Summary • Targets Setting Summary • Initiatives Setting Summary • BSC Dashboard Summary • Performance Assessment Summary
Balanced Scorecard Quick Guide
Performance Assessment Summary
Introduction It is a systematic examination of the whole strategic plan and its achievements and implications
Purpose Contiguous learning and improvement
Suitable Techniques
• Cause& Effect • systematic inspections and assessment• Corrective planning • Preventive planning • Lessons Learned
Expected Outcomes
Once the performance assessment is done, it is expected to have:• Performance assessment reports
Balanced Scorecard Quick Guide
Now
• BSC general work flow• Internal Scanning Summary• External Analysis Summary • SWOT Analysis Summary • Strategy Mapping Summary• KPIs Setting Summary • Targets Setting Summary • Initiatives Setting Summary • BSC Dashboard Summary • Performance Assessment Summary
– Related Templates Balanced Scorecard
Quick Guide
External FactorsExternal Factors DescriptionDescriptionAA
XX
Internal FactorsInternal Factors
Operational LeverOperational Lever Root CauseRoot Cause Corrective Action PlanCorrective Action Plan11
22
XX
% Plan Completed% Plan Completed
30%
04/0909/08
33%
01/0911/08
80%
w%
dd/yydd/yy
Template
Balanced Scorecard Quick Guide
KPI(Target Unit)KPI(Target Unit)
6 5 48
30
0
10
20
30
40
M-3 M-2 M-1 Current Month Cumulative To Date0
10
20
30
40
Actual Target
CommentsComments
Summary of drivers for performance
Summary of actions taken to rectify any variance
Summary of drivers for performance
Summary of actions taken to rectify any variance
Overall StatusOverall Status
Based on both current performance and on cumulative-to-date performanceBased on both current performance and on cumulative-to-date performance
Gap =< -10% of Target -10% of Target < Gap < 0% of Target Gap >= 0% of Target
Template
Balanced Scorecard Quick Guide
End of
Balanced Scorecard Quick Guide
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