Balanced Score Card: The Strategic Management System

What is a Balanced Score Card?

1. Companies express grandiose Visions and exhort managers to implement that

2 Yet the linkages from Vision to formulation to implementation of strategy are lost

3 Also, top managers never get to know the consequences of their investment decisions, that unfold only in the long run

4 BSC provides a tool for internal analysis, in-process developments out of the investments made in previous time periods, and clear guidelines what is required next.

5 In sum, it is an implementation and monitoring and target setting tool

The four perspectives of the BSC

FINANCIAL

CUSTOMER

OPERATIONS

ORGANISATIONAL

EVA

ProfitabilityGrowth

Differentiation

Cost Leadership

Quick Response

Product Development

Demand Management

Order Fulfillment Leadership

Organisational Learning

Ability to Change & Innovate

The BSC can be used to

1. Linking Strategic Vision and implementation; Growth and Productivity

2. Clarify and update Strategy3. Communicate strategy throughout the company4. Align unit and individual goals with strategy5. Synergizing Short-term and long-term goals; budgets and

resource allocation6. Developing objectives, measures and target7. Linking performance with objectives and rewards8. Identify and align strategic initiatives9. Conduct periodic performance reviews to learn about and

improve strategy

Power Grid Corp Mission and Objectives

MissionEstablishment and operation of Regional and National power grids to facilitateTransfer of power within and across the regions with reliability, security, on soundCommercial principles.

Objectives

The corporation has set following objectives in line with its mission and status as ‘Central Transmission Utility’• Undertake transmission of energy through inter-state transmission system• Discharge all functions of planning and co-ordination relating to inter-State• Transmission system with1. i-ix (stakeholder bodies)• Exercise supervision and control over inter-state transmission system• Efficient operations and maintenance of transmission system

Quality PolicyPowergrid shall continuously strive to develop and maintain an efficient and Effective ‘National Grid” with due regard to time, cost, technology, value additionAnd social concerns in all its operations to the satisfaction of all the stakeholders.

Powergrid at a Glance

•Incorporated in 1989, Started commercial production in 1992, notified in 1998 as CTU•Single Largest Transmission utility in the world: Carries 40% of power generated and 1/3rd of the installed power in the country•Recognized as “Miniratna” by GOI•First utility to get ISO 9001 in the country•First PSU to establish and implement the Environmental and Social Policy and Procedures (ESPP)•Obtained IP-II License from DoT, GOI for connecting 56 cities with 14000 km OFC•No. of Employees: 6877•ULDC for real time monitoring•99% availability•Excellent Emergency Restoration System (ERS)• Working to Catalyze private investment to the tune of Rs. 23,000 crores•Powergrid Intranet•Consistently begged Excellent MOU Award, Prime Minister’s award for two consecutive years

Growth Profile

  1992-93 2000-01%

Growth

Physical GrowthCircuit KMsNo of Sub StationsTransf. Capacity(MVA) Inter-Regional Transfer Capacity(MW) Export of Surplus Power from Eastern Region (MU)

 23,000

3913,200 500   0

 40,189

6633,230 4,500 

  6,790

 7569152800 --

Financial GrowthNet Profit (Rs. Crores)Turnover (Rs. Crores) Capital Employed

 236(US$

52 M) 634(US$ 141 M)  3795(US$

843 M)

 742(US$ 165 M) 2683(US$ 596 M)  

11117(US$ 2470 M)

 214323 550

Major Projects in Hand800 kV Tehri Transmission System 2000 MW HVDC Link (1500 KM) Transmission Line between Talcher in Orissa and Kolar in Karanataka 500 MW Sasaram HVDC Back to Back Project 400 kV Naptha Jakhri Transmission System Unified Load Despatch Centre projects of Soutern, Northern, Eastern, Western and North Eastern regions Future PlansDevelopment of Robust National Grid FORMATION OF SAARC GRID PerformanceMost of the projects are completed well ahead of Generation Projects even against the difficult terrain and climatic conditions e.g. URI, NER Projects, etc. Transmission system availability maintained consistently above 98% Rated "EXCELLENT" on MOU with MOP since 1993-94 Awarded with "PRIME MINISTER's MOU AWARD" since 1997-98  Disaster ManagementEvolved one of the Best Disaster Management System in Power Sector using Emergency Restoration System (ERS) Devastation caused by cyclone on Orissa in 1999, Gujarat in 1998 and Bhuj 2001 was attended by POWERGRID on war footing  400 KV DC Uri-Wagoora collapsed line in hilly and snowbound terrain restored in minimal time, using ERS

Diversification in TelecomEmbarked upon a mission to establish a National Backbone of Telecom Network and synergise its Power Transmission Networks to telecom super highways in a phased manner In Phase-1, excess capacity available in ULDC scheme will be utilised In Phase -2, extend telecom network to 56 cities of the country by the year 2002-03. Plan to enter telecom business as National Long Distance Operator Consultancy POWERGRID is executing total turnkey consultancy contracts of over Rs. 25 crores ( US $ 7 million)Consultancy ProjectsM/s West Bengal Power Development Corporation Ltd. (WBPDCL): Merz & Mclellan ( M&M) : Electricity department, Govt. of Pondicherry : Karnataka Electricity Board (KEB) Delhi Vidyut Board (DVB) National Hydro Power Corporation (NHPC) Andhra Pradesh State Electricity Board (APSEB) Haryana State Electricity Board (HSEB) System Studies Independent Power Producers (IPPs) Indo-Bangladesh Interconnection West Bengal State Electricity Board (WBSEB)

ARTICULATE A VISION FOR THE CORPORATION

MissionEstablishment and operation of Regional and National power grids to facilitateTransfer of power within and across the regions with reliability, security, on soundCommercial principles.

Financial Perspective: Improve ROI by 20%

PRODUCTIVITY STRATEGYImprove productivity by better asset utilization 10%•Improve productivity of human resources 10%•Gain government financial assistance for additional resources from multilateral funding agencies

GROWTH STRAEGY•Add sources of revenue by putting up infrastructure in the existing business 10%•Add new sources of revenue from telecom business 5%•Cover more national geographies by adding 10% every year in profitable zones•Add newer activities to yield 20% better results during next 5 years

CUSTOMER PERSPECTIVE

•Solve customer problems through advice and consulting•DO ABC customer analysis and identify profitable customers and their needs•Advice on financial matters to customers with outstanding dues problems.•Use relationships with the suppliers to help SEBs•Restructure loans to help improve customer health•Develop customer responsiveness•Tie up with other agencies like NTPC to integrate the national grid•Develop relationships with IPPs•Manage distribution in select areas for your customers at a price

INTERNAL PROCESS PERSPECTIVE

•Develop relationship in the Ministry of Power at critical functional decisions•Develop consortium type relations with customers, investors, suppliers and competitors•Develop Newer services for customers•Develop capabilities to handle customer request responsibly and responsively•Generate demand for power for bulk users•Manage grids while keeping environmental concerns at the forefront•Improve through technology the crisis and disaster management for •Develop Information and Knowledge management systems•Develop data base on customers and competitors for real time decision making•Develop excellence in project management areas•Align projects with suppliers in a timely manner•Minimize time and cost over runs at every cost•Develop power-related competencies for advisory services•Set up a group for locating newer opportunities in telecommunication and grid management•Continuously improve quality standards in tasks, processes and relationships

ORGANISATIONAL LEARNING AND GROWTH PERSPECTIVE

1. Develop performance measures for individuals, centres, regions, and corporate entities 2. Link rewards like bonuses and incentives, promotions to performance measures3. Identify technical, managerial and behavioral profile for each level of management4. Identify skill gaps and train people or recruit from outside5. Motivate and develop people in newer skills in low-ranked employees6. Sensitize each employee about environmental and safety concerns 7. Sensitize every one on the need to keep the grid in near perfect operating conditions and the impact of failure on the customers, users and its financial and strategic consequences8. Manage alliance in new areas like telecommunications or acquire newer

skills through training and/ or fresh recruitment9. Train people in boundary relationship management, in particular legal,

statutory, and government bodies and public relations management

Develop Measures and Targets (quantitative/ Qualitative) For Each Item In Each Perspective

The Balanced Scorecard Strategy Map

Improve Shareholder Value

* share price * return on capital employed

Financial Perspective Revenue Growth StrategyProductivity Strategy

Build the franchise

Increase valueto customers

Improve coststructure

Improve useof assets

* Revenue from new sources

* customer profitability * operating cost per unit produced * asset utilization

CustomerPerspective

Customer ValuePropositions

Product Leadership

Customer Intimacy

•Customer acquisition, retention &satisfaction

Internal ProcessPerspective

Build the franchisethrough innovations

Increase customer value through customercustomer managementprocesses

Achieve operational excellence throughoperations and logistics processes

Become a good corporate citizenthrough regulatory and environmental process

Learning andGrowth Perspective

Employee competencies technology Corporate culture

Customer Value Proposition Strategies

Operational Excellence

Product/Service Attribute

Price Time

Quality Selection

Relationships

SmartShopper

Image

Companies excel at Competitive Pricing,Product quality and on-time delivery

Customer Intimacy

Product/Service Attribute

ServiceCustomerRelations

Image

RelationshipsImage

Companies excel at offering personalized service to Customers and at building long-term relations with them

Customer Intimacy

Customer Intimacy

Product/Service Attribute

time

functionality

Best inClass

RelationshipsImage

Customer Intimacy

General Requirement

Diffentiator

Companies excel at creating uniqueProducts that push the envelope