introducing the balanced scorecard - ziggomembers.home.nl/j.s.sterk/aqm/inrroductionof... ·...
TRANSCRIPT
2GCActive
Management
2GC LimitedAlbany House Market StreetMaidenhead Berkshire SL6 8BE UKTel +44 (0) 1628 421506 www2GCcoukFax +44 (0) 1628 421507 Info2gccouk
Introducing the Balanced Scorecard
bull This presentation prepared by 2GC Active Management intends to provide readers with an initial overview of the issues associated with implementation of the Balanced Scorecard as a strategic management system
bull The presentation introduces the following topicsndash General management issues related to strategic controlndash The Balanced Scorecard ndash Underlying Scorecard processes and success criteria
bull It is intended for personal use and in-house presentations only copy 2GC Limited 2001
bull Supplemental notes are available on request ndash please email notes2gccouk
(V11) November 2001 Introducing the Balanced ScorecardPage 2
2GCActive
Managementcopy 2GC Limited 2001
Structure of presentation
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 3
2GCActive
Managementcopy 2GC Limited 2001
General management issuesWhat is this all about
Dilbert
(V11) November 2001 Introducing the Balanced ScorecardPage 4
2GCActive
Managementcopy 2GC Limited 2001
General management issuesImplementing Strategic Goals
Vision
97
Vision
9797
Significant strategic success
33
Significant strategic success
3333
Clear strategic
plans
80
Clear strategic
plans
8080
Some strategic success
52
Some strategic success
5252
From Strategic Performance Measurement amp Management Business Intelligence Renaissance Worldwide 1997
bull Almost all organisations have a strategic vision ndash few manage to realise it
(V11) November 2001 Introducing the Balanced ScorecardPage 5
2GCActive
Managementcopy 2GC Limited 2001
General management issuesBarriers to effective performance management
Source Based on paper by John H Lingle and William A Schiemann ldquoFrom balanced scorecard to strategic gauges Is measurement worth itldquo published in ldquoManagement Reviewrdquo Volume 85 Issue 3 Mar 1996 p 56
Fuzzy objectivesFuzzy objectives
Unjustified trust in informal Unjustified trust in informal feedback systemsfeedback systems
Entrenched measurement Entrenched measurement systemssystems
Too many measures and Too many measures and loss of focusloss of focus
(V11) November 2001 Introducing the Balanced ScorecardPage 6
2GCActive
Managementcopy 2GC Limited 2001
General management issuesRealising the need to change
Why
WhatWho
How
When
(V11) November 2001 Introducing the Balanced ScorecardPage 7
2GCActive
Managementcopy 2GC Limited 2001
What is Balanced Scorecard
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 8
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced Scorecard
bullldquoThe idea of the Scorecard is to describe the essential ingredients of business successrdquo(Olve et al ldquoPerformance Driversrdquo)
bullldquoBalanced Scorecard is one of the 15 most important management concepts ever introduced in Harvard Business Reviewrdquo(Harvard Business Review 75th Anniversary issue)
bull50 of North American companies claim to be using Balanced Scorecard(Recent survey by Bain amp Company)
One of the most dangerous forms of human error is forgetting what one is trying to to achievePaul Nitze
(V11) November 2001 Introducing the Balanced ScorecardPage 9
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardBackground amp underlying philosophy
bullWhat is itndash Strategic communication and
performance measurement toolbullOrigins
ndash Developed from a tool developed in 1980s but some similarities with other pre-existing tools
ndash Introduced to wider audience in early 1990rsquos by R Kaplan amp D Norton in series of articles in Harvard Business Review
bullUnderlying philosophyndash Clear communication of goals and
prioritiesndash Learning amp team-working
Internal PerspectiveInternal Perspective
Learning amp Growth PerspectiveLearning amp Growth Perspective
Financial PerspectiveFinancial Perspective
Customer PerspectiveCustomer Perspective
Act
iviti
esO
utco
mes
Act
iviti
esO
utco
mes
Out
com
esO
utco
mes
Act
iviti
esA
ctiv
ities
(V11) November 2001 Introducing the Balanced ScorecardPage 10
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardDo what needs to get donehellip
Are we doing what we set out to do
What do we want to achieve and what must we do to achieve it
Take action
Create amend strategic vision
Createchange linked strategic
objectives
Review results and cause amp effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
(V11) November 2001 Introducing the Balanced ScorecardPage 11
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardDifferent applications for Balanced Scorecard
bullldquoManagement Controlrdquo
ndash Maintain the temperature
bullldquoStrategic Controlrdquondash What temperature
7060 80
D A Y amp N I G H T
HOT OFF COOL
Assess Outcome
Set TargetHeater Run if room is below target temp
Thermostat Compare with
Target
MeasureRoom Temp
(V11) November 2001 Introducing the Balanced ScorecardPage 12
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardStrategic control vs Management control
Organisational hierarchy
Strat
egic
emph
asis
Operational emphasis
(V11) November 2001 Introducing the Balanced ScorecardPage 13
2GCActive
Managementcopy 2GC Limited 2001
What is the Balanced Scorecard The latest Balanced Scorecard thinking
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 6
2GCActive
M anagementcopy 2GC Lim ited 1999
Balanced Scorecard DocumentationObjective M easure Supporting Initiatives
I1 Drive trade term s by channel W e will develop clear trading terms for different custom er groups W e will achieve our targetlevels of availability visibility and trade su pport via these trading terms
bull Trade customers adhering to trade standard terms amongst a sam ple of top XX customers
bull Develop standard trading terms (GG)
I2 Deliver custom er service standards Deliver timely f irst class service to the trade an d retailers
bull Cases delivered in full against order quantity
bull Orders delivered on time
bull Logistics Project (RS)bull SAP Project (PH)
I3 Im plem ent m ajor account m anagem ent programm e W e will continue to treat our custom ers as business partners W e will establish an account developm ent model to ensure high quality relationships exist w ith key account customers
bull of major accounts with a business plan bull Define ldquomajorrdquo accounts (AC)
I4 Deliver exce llent consum er propositions W e must meet consum er needs through the development and communication of an integrated brand proposition In the NPD sector we will launch new products only after they h ave m et pre-agreed qu ality image need and volume criteria
bull Brand Systems signed off by OE bull Develop core brand propositions (AC)bull NPD Process Improvement (ACAD)bull Cream ing project (AD)
I5 Deliver exce llent internal custom er service W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull SLA Qualitative Evaluations by SLA ow ners bull Logistics Project (RS)bull Factory Cost Reduction (DL)
I6 Effective m anagem ent of com pany assets W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull Total working capitalbull Fixed Asset Utilisationbull Outstanding Debtor Da ys
bull Plant ration alisation (AD)bull L4 L2 (DL)bull SAP (RS)
I7 Effective control of the business (No Surprises) W e will heighten our efforts to streamline the organisation to h elpdrive sound asset managem ent and cost reduction W e will invoke a cost conscious culture to complem ent our stream lining efforts
bull ldquoNo surprisesrdquo evaluation of actual performance against budget or forecast for- stock cover per city- sales per city- national costs
bull Analyse Risk project (PS)
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 6
2GCActive
M anagementcopy 2GC Lim ited 1999
Balanced Scorecard DocumentationObjective M easure Supporting Initiatives
I1 Drive trade term s by channel W e will develop clear trading terms for different custom er groups W e will achieve our targetlevels of availability visibility and trade su pport via these trading terms
bull Trade customers adhering to trade standard terms amongst a sam ple of top XX customers
bull Develop standard trading terms (GG)
I2 Deliver custom er service standards Deliver timely f irst class service to the trade an d retailers
bull Cases delivered in full against order quantity
bull Orders delivered on time
bull Logistics Project (RS)bull SAP Project (PH)
I3 Im plem ent m ajor account m anagem ent programm e W e will continue to treat our custom ers as business partners W e will establish an account developm ent model to ensure high quality relationships exist w ith key account customers
bull of major accounts with a business plan bull Define ldquomajorrdquo accounts (AC)
I4 Deliver exce llent consum er propositions W e must meet consum er needs through the development and communication of an integrated brand proposition In the NPD sector we will launch new products only after they h ave m et pre-agreed qu ality image need and volume criteria
bull Brand Systems signed off by OE bull Develop core brand propositions (AC)bull NPD Process Improvement (ACAD)bull Cream ing project (AD)
I5 Deliver exce llent internal custom er service W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull SLA Qualitative Evaluations by SLA ow ners bull Logistics Project (RS)bull Factory Cost Reduction (DL)
I6 Effective m anagem ent of com pany assets W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull Total working capitalbull Fixed Asset Utilisationbull Outstanding Debtor Da ys
bull Plant ration alisation (AD)bull L4 L2 (DL)bull SAP (RS)
I7 Effective control of the business (No Surprises) W e will heighten our efforts to streamline the organisation to h elpdrive sound asset managem ent and cost reduction W e will invoke a cost conscious culture to complem ent our stream lining efforts
bull ldquoNo surprisesrdquo evaluation of actual performance against budget or forecast for- stock cover per city- sales per city- national costs
bull Analyse Risk project (PS)
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 5
2GCActive
M anagementcopy 2GC Limited 1999
Strategic Linkage M odel
Fina
ncia
l Pe
rspe
ctiv
eC
usto
mer
Per
spec
tive
Lear
ning
amp G
row
th
Pe
rspe
ctiv
eIn
tern
al
Per
spec
tive
DBX Understands and Responds to m y Needs
DBX Products are m y First Choice Products
DBX Products are Good Value for Money
DBX Products are V isible and Availab le
DBX has an Excellent Consumer Franchise
Drive Trade Term s by Channel
Im plem ent Major Account Managem ent
Program m e
Effective Control of Business (No Surprises)
Sales Growth (by City by P roduct)
Gross Contribution (After City Sales and
Marketing)Asset Turn Overheads as a of
NSV
Improved Shareh older Value (ROCE)
I Have a Good Relationship with DBX
Develop Better W ork P ractices and IS
Develop and Retain P rofessional M anagers
Develop Service Agreem ents
Effective M anagem ent o f Com pany Assets
Deliver Excellent In ternal Custom er
ServiceDeliver Custom er
Service Standards
Develop Professional Custom er Oriented Skilled
Sales Force
Deliver Excellent Consum er
Propositions
Understand Im pact O f Various M arketing Levers
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 5
2GCActive
M anagementcopy 2GC Limited 1999
Strategic Linkage M odel
Fina
ncia
l Pe
rspe
ctiv
eC
usto
mer
Per
spec
tive
Lear
ning
amp G
row
th
Pe
rspe
ctiv
eIn
tern
al
Per
spec
tive
DBX Understands and Responds to m y Needs
DBX Products are m y First Choice Products
DBX Products are Good Value for Money
DBX Products are V isible and Availab le
DBX has an Excellent Consumer Franchise
Drive Trade Term s by Channel
Im plem ent Major Account Managem ent
Program m e
Effective Control of Business (No Surprises)
Sales Growth (by City by P roduct)
Gross Contribution (After City Sales and
Marketing)Asset Turn Overheads as a of
NSV
Improved Shareh older Value (ROCE)
I Have a Good Relationship with DBX
Develop Better W ork P ractices and IS
Develop and Retain P rofessional M anagers
Develop Service Agreem ents
Effective M anagem ent o f Com pany Assets
Deliver Excellent In ternal Custom er
ServiceDeliver Custom er
Service Standards
Develop Professional Custom er Oriented Skilled
Sales Force
Deliver Excellent Consum er
Propositions
Understand Im pact O f Various M arketing Levers
21 November 2001 2GC Limited Introduction to 2GC Active ManagementPage 4
2GCActive
M anagem entcopy 2GC Limited 1999
Destination Statem entSales Volume50000 MT
Distribution50 Cities
Sales Revenue pound 50 M illion
One M anufacturing Site
ROCE 7Capital Em ployed No m ore th an pound45 million
Product Manager
Marketing Director
Factory Director
Manufacturing Director
Regional Sales Manager
Sales Director
Managing Director
No m ore than 6 Core Brand ProductsMinimum sales volum esndash 5000 MT for each core brandndash 2000M T for each m ajor product
Employer of Choice ( 1 in industry and ranked in FM CG top 10)
Marketing SalesBranding Clear brand propositions systems
established for the six core brandsbull DBX has two of th e top five category product brandsbull Producthouse brand awaren ess targets in DBX city
strategies achievedM edia and promotional strategy City market share
targets achieved within agreed budgetbull M odels and measures of th e relative impact of all
m arketing levers available to assist in th e evaluation targeting of m arketing activity
Im proved Skills and Processes Standardised and transparent m arketing processes developed and agreed within DBX and with Group
bull M arketing team skills targets (b ased on extern al benchmark com parisons) achieved through training and recruitment (where applicable)
Overall DBX seen as one of top 10 FMCG Corsquos servicing key accounts in th e country (and 1 in category)
Customer M arket Focus Sales s taff achieving set targ ets in line with city s trategies for focus on custom er and market issues
bull Assess using distribution by chann el visib ility and trade prom otions
Im proved Skills and Processes Standardised and transp arent sales processes develop ed and agreed within DBX and with Group
bull Sales team skills targets (based on extern al b enchm ark comparisons) achieved through training and recruitment (where applicable)
Organisational Structurebull Clear scope and role statements exis t for all functions (including Sales
amp Marketing)bull Supporting functions (includ ing supply chain) will be achieving all
agreed service level targets with sales amp marketing
Supply ChainCost efficient supp ly chain based on flexib le p roduction lines will deliverbull Increased responsiveness to market dem ands bull Lower cycle timesbull Product channel freshness targe ts
Inform ation System sAppropriate in form ation systems that w ill meet DB Xrsquos needsbull All necessary m anagement inform ation p roduced within p re-agreed tim elines and scales
M anagementbull Senior m anagement w ill be com mitted to working on stra teg y and evalua ted on their
ab ility to coach advise guide and ensure tha t tasks are delega ted effectivelybull Professional m iddle management will exist that w ill be able to ac t m ore independently
within de fined guidelines and have the skills required for their job rolendash Succession plans for key positions wi ll existndash Recruiting and training policies will aim to raise middle manage ment competence to
meet internationa l standards
21 November 2001 2GC Limited Introduction to 2GC Active ManagementPage 4
2GCActive
M anagem entcopy 2GC Limited 1999
Destination Statem entSales Volume50000 MT
Distribution50 Cities
Sales Revenue pound 50 M illion
One M anufacturing Site
ROCE 7Capital Em ployed No m ore th an pound45 million
Product Manager
Marketing Director
Factory Director
Manufacturing Director
Regional Sales Manager
Sales Director
Managing Director
No m ore than 6 Core Brand ProductsMinimum sales volum esndash 5000 MT for each core brandndash 2000M T for each m ajor product
Employer of Choice ( 1 in industry and ranked in FM CG top 10)
Marketing SalesBranding Clear brand propositions systems
established for the six core brandsbull DBX has two of th e top five category product brandsbull Producthouse brand awaren ess targets in DBX city
strategies achievedM edia and promotional strategy City market share
targets achieved within agreed budgetbull M odels and measures of th e relative impact of all
m arketing levers available to assist in th e evaluation targeting of m arketing activity
Im proved Skills and Processes Standardised and transparent m arketing processes developed and agreed within DBX and with Group
bull M arketing team skills targets (b ased on extern al benchmark com parisons) achieved through training and recruitment (where applicable)
Overall DBX seen as one of top 10 FMCG Corsquos servicing key accounts in th e country (and 1 in category)
Customer M arket Focus Sales s taff achieving set targ ets in line with city s trategies for focus on custom er and market issues
bull Assess using distribution by chann el visib ility and trade prom otions
Im proved Skills and Processes Standardised and transp arent sales processes develop ed and agreed within DBX and with Group
bull Sales team skills targets (based on extern al b enchm ark comparisons) achieved through training and recruitment (where applicable)
Organisational Structurebull Clear scope and role statements exis t for all functions (including Sales
amp Marketing)bull Supporting functions (includ ing supply chain) will be achieving all
agreed service level targets with sales amp marketing
Supply ChainCost efficient supp ly chain based on flexib le p roduction lines will deliverbull Increased responsiveness to market dem ands bull Lower cycle timesbull Product channel freshness targe ts
Inform ation System sAppropriate in form ation systems that w ill meet DB Xrsquos needsbull All necessary m anagement inform ation p roduced within p re-agreed tim elines and scales
M anagementbull Senior m anagement w ill be com mitted to working on stra teg y and evalua ted on their
ab ility to coach advise guide and ensure tha t tasks are delega ted effectivelybull Professional m iddle management will exist that w ill be able to ac t m ore independently
within de fined guidelines and have the skills required for their job rolendash Succession plans for key positions wi ll existndash Recruiting and training policies will aim to raise middle manage ment competence to
meet internationa l standards
bullThe ldquoobjective drivenrdquoBalanced Scorecard has emerged as best practice
(V11) November 2001 Introducing the Balanced ScorecardPage 14
2GCActive
Managementcopy 2GC Limited 2001
What is Balanced ScorecardMore than just a set of goals amp measures
Balanced Scorecard design
Balanced Scorecard development
Balanced Scorecard deployment
bull Value from first application
bull Business model reflected in relationship between strategic goals
bull Corporate strategic measurement amp management tool
ndash divisionsndash business unitsndash functions
bull All management Systems aligned with strategy
bull Drive strategic behaviour into everyday decisions and operations
(V11) November 2001 Introducing the Balanced ScorecardPage 15
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard design
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 16
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designWhere to go an how to get there
bullBest practice is to use a development group that comprises the the likely users of the Balanced Scorecard
bullDesign choices should be based on jointly held perception of a strategic ldquoDestinationrdquo
bullThe design should measure progress against the organisationrsquos key strategic objectives (activities and outcomes)
bullLinks between strategic objectives should be articulated ndash these express the management teamrsquos beliefs about which activities drive which outcomes
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 17
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designMonitor progress in achieving goals
bullDevelopment of measures follow clarification and agreement of strategic objectives becausehellip
bullMeasures track progress in achieving those objectives against agreed targets
bullIdentify and monitor extraordinary activities and projects furthering achievement of objectives
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Out
com
es
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development A
ctiv
ities
Act
iviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
Financial Perspective
Objectives Measures Targets Initiatives
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets Initiatives
(V11) November 2001 Introducing the Balanced ScorecardPage 18
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designThe components of a Strategic Balanced Scorecard
bull Financial Marketndash Total NSV pound120m (nominal) ndashndash Has achieved 10 CAGR on NSndash Operating Margin gt10ndash Controllable overheads less thndash Operating Profit pound12m (nomin
Destination StatementDescription of how the organisation will be at some specific future date if the management teamrsquos strategies are successful
Fin
anci
alCu
stom
er
Best value for money
The leading and most innovative
brand
Drive Increased Demand
Profitable Sales Growth
Strategic Linkage Model (SLM)Graphic illustration of ldquocause and effectrdquo relationships between the strategic goals that must be achieved if the organisation is to reach its destination state
ObjectiveObjective DescriptionDescription
Total Shareholder Return is above Groups cost of equity over the medium to long term
Total Shareholder Return is above Groups cost of equity over the medium to long term
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means better than equivalent payments by known Group
Measures (Freq)Measures (Freq)
bull CAGR of Total ShareholdeReturn
bull ROIC (Target gt WACC)
bull CAGR of Total ShareholderReturn
bull ROIC (Target gt WACC)
bull PampL account net tax chargea of profit for financial ye
bull WACC
bull PampL account net tax chargeda of profit for financial yea
bull WACC
Group Strategy Delivers Value
Achieve Optimum Tax Rate amp WACC
F1
F2
Objective and Measure Documentation
ndashClear and concise description of strategic objectives and the measures chosen to track their achievement
F11
F12
-30p
8
150p
18Dividend expected kept a1000 pence leading to loprevious years
Measure Value Target PerfObjective Status
Outperform capital markets
F21 200 185Increasing cash inflow froCash amp a sset
F21 200 185Increasing cash inflow froCash amp a sset
t
Progress Reporting FormatsIllustration of how (and by whom) Scorecard information will be communicated
o Initiative overviewOverview of which initiatives support which Scorecard objectives incl owners and deadlines for finalisation
(V11) November 2001 Introducing the Balanced ScorecardPage 19
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard roll-out
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 20
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard Development Development within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
The optimal role-out
sequence is ldquoTop Downrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 21
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentDevelopment within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
Corporate Balanced Scorecard
Co-ordinatingBalanced Scorecard
Support Function Balanced Scorecard
Operating Unit Balanced Scorecard
Departmental Balanced ScorecardTeam Level
Balanced Scorecard
(V11) November 2001 Introducing the Balanced ScorecardPage 22
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
What
How
What
Board level ScorecardBoard level Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Overall VisionOverall Vision
Subordinate ScorecardSubordinate Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Local VisionLocal Vision
How
TeamIndividual ScorecardTeamIndividual Scorecard
Objectives
Measures amp Targets
Initiatives
TeamIndividual Vision
TeamIndividual Vision
Strategic direction
Strategic direction
Strategy implementation
Strategy implementation
(V11) November 2001 Introducing the Balanced ScorecardPage 23
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 24
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 25
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Strategic alignment amp goal setting
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 26
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Align existing management control tools with strategy
SVA amp EVASVA amp EVAB
udge
tsB
udge
ts
BEMBEMBalanced Scorecard
ABCABC HR ToolsHR Tools
(V11) November 2001 Introducing the Balanced ScorecardPage 27
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Support two-way communication of strategyhellip
Fuzzy objectivesFuzzy objectives
Unjustified trust in informal
Unjustified trust in informal
feedback systems
feedback systemsEntren
ched m
easure
ment
Entren
ched m
easure
ment
system
s
system
s
BSC
(V11) November 2001 Introducing the Balanced ScorecardPage 28
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
Comm
unica
tion Com
munication
Board levelScorecard
process
OperationalScorecard
process
Support function Scorecard
process
Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets
Take action
Create amend
strategic vision
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
Communication
(V11) November 2001 Introducing the Balanced ScorecardPage 29
2GCActive
Managementcopy 2GC Limited 2001
Success criteria
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 30
2GCActive
Managementcopy 2GC Limited 2001
Key success factorsCultural building blocks of Scorecard success
bullInclusive design process building on consensus seeking amp involvement
bullParticipative management style focused on learning open discussion and creative thinking
bullSponsorship and commitment from entire management team -top management in particular
bullldquoEmbeddingrdquo of management processes to use refresh and renew the Balanced Scorecard over time
(V11) November 2001 Introducing the Balanced ScorecardPage 31
2GCActive
Managementcopy 2GC Limited 2001
Introducing the Balanced ScorecardTo find out morehellip
bullVisit 2GCrsquos Web Sitendash We focus specifically on strategic
control and performance measurement issues and have a wide range of working papers FAQs and presentations to download on these topics
ndash The site also has a recommended reading list that covers relevant topics and the ldquoWeblinksrdquo database of relevant Internet sites
bullContact 2GCndash Let us know if you have a question
you canrsquot answer wersquoll do what we can to helphellip
bull info2gccouk
- Introducing the Balanced Scorecard
- Structure of presentation
- General management issuesWhat is this all about
- General management issuesImplementing Strategic Goals
- General management issuesBarriers to effective performance management
- General management issuesRealising the need to change
- What is Balanced Scorecard
- What is a Balanced Scorecard
- What is a Balanced ScorecardBackground amp underlying philosophy
- What is a Balanced ScorecardDo what needs to get donehellip
- What is a Balanced ScorecardDifferent applications for Balanced Scorecard
- What is a Balanced ScorecardStrategic control vs Management control
- What is the Balanced Scorecard The latest Balanced Scorecard thinking
- What is Balanced ScorecardMore than just a set of goals amp measures
- Balanced Scorecard design
- Balanced Scorecard designWhere to go an how to get there
- Balanced Scorecard designMonitor progress in achieving goals
- Balanced Scorecard designThe components of a Strategic Balanced Scorecard
- Balanced Scorecard roll-out
- Balanced Scorecard Development Development within the organisation
- Balanced Scorecard DevelopmentDevelopment within the organisation
- Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
- Balanced Scorecard deployment
- Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
- Balanced Scorecard deployment Strategic alignment amp goal setting
- Balanced Scorecard deployment Align existing management control tools with strategy
- Balanced Scorecard deployment Support two-way communication of strategyhellip
- Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
- Success criteria
- Key success factorsCultural building blocks of Scorecard success
- Introducing the Balanced ScorecardTo find out morehellip
-
(V11) November 2001 Introducing the Balanced ScorecardPage 2
2GCActive
Managementcopy 2GC Limited 2001
Structure of presentation
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 3
2GCActive
Managementcopy 2GC Limited 2001
General management issuesWhat is this all about
Dilbert
(V11) November 2001 Introducing the Balanced ScorecardPage 4
2GCActive
Managementcopy 2GC Limited 2001
General management issuesImplementing Strategic Goals
Vision
97
Vision
9797
Significant strategic success
33
Significant strategic success
3333
Clear strategic
plans
80
Clear strategic
plans
8080
Some strategic success
52
Some strategic success
5252
From Strategic Performance Measurement amp Management Business Intelligence Renaissance Worldwide 1997
bull Almost all organisations have a strategic vision ndash few manage to realise it
(V11) November 2001 Introducing the Balanced ScorecardPage 5
2GCActive
Managementcopy 2GC Limited 2001
General management issuesBarriers to effective performance management
Source Based on paper by John H Lingle and William A Schiemann ldquoFrom balanced scorecard to strategic gauges Is measurement worth itldquo published in ldquoManagement Reviewrdquo Volume 85 Issue 3 Mar 1996 p 56
Fuzzy objectivesFuzzy objectives
Unjustified trust in informal Unjustified trust in informal feedback systemsfeedback systems
Entrenched measurement Entrenched measurement systemssystems
Too many measures and Too many measures and loss of focusloss of focus
(V11) November 2001 Introducing the Balanced ScorecardPage 6
2GCActive
Managementcopy 2GC Limited 2001
General management issuesRealising the need to change
Why
WhatWho
How
When
(V11) November 2001 Introducing the Balanced ScorecardPage 7
2GCActive
Managementcopy 2GC Limited 2001
What is Balanced Scorecard
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 8
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced Scorecard
bullldquoThe idea of the Scorecard is to describe the essential ingredients of business successrdquo(Olve et al ldquoPerformance Driversrdquo)
bullldquoBalanced Scorecard is one of the 15 most important management concepts ever introduced in Harvard Business Reviewrdquo(Harvard Business Review 75th Anniversary issue)
bull50 of North American companies claim to be using Balanced Scorecard(Recent survey by Bain amp Company)
One of the most dangerous forms of human error is forgetting what one is trying to to achievePaul Nitze
(V11) November 2001 Introducing the Balanced ScorecardPage 9
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardBackground amp underlying philosophy
bullWhat is itndash Strategic communication and
performance measurement toolbullOrigins
ndash Developed from a tool developed in 1980s but some similarities with other pre-existing tools
ndash Introduced to wider audience in early 1990rsquos by R Kaplan amp D Norton in series of articles in Harvard Business Review
bullUnderlying philosophyndash Clear communication of goals and
prioritiesndash Learning amp team-working
Internal PerspectiveInternal Perspective
Learning amp Growth PerspectiveLearning amp Growth Perspective
Financial PerspectiveFinancial Perspective
Customer PerspectiveCustomer Perspective
Act
iviti
esO
utco
mes
Act
iviti
esO
utco
mes
Out
com
esO
utco
mes
Act
iviti
esA
ctiv
ities
(V11) November 2001 Introducing the Balanced ScorecardPage 10
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardDo what needs to get donehellip
Are we doing what we set out to do
What do we want to achieve and what must we do to achieve it
Take action
Create amend strategic vision
Createchange linked strategic
objectives
Review results and cause amp effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
(V11) November 2001 Introducing the Balanced ScorecardPage 11
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardDifferent applications for Balanced Scorecard
bullldquoManagement Controlrdquo
ndash Maintain the temperature
bullldquoStrategic Controlrdquondash What temperature
7060 80
D A Y amp N I G H T
HOT OFF COOL
Assess Outcome
Set TargetHeater Run if room is below target temp
Thermostat Compare with
Target
MeasureRoom Temp
(V11) November 2001 Introducing the Balanced ScorecardPage 12
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardStrategic control vs Management control
Organisational hierarchy
Strat
egic
emph
asis
Operational emphasis
(V11) November 2001 Introducing the Balanced ScorecardPage 13
2GCActive
Managementcopy 2GC Limited 2001
What is the Balanced Scorecard The latest Balanced Scorecard thinking
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 6
2GCActive
M anagementcopy 2GC Lim ited 1999
Balanced Scorecard DocumentationObjective M easure Supporting Initiatives
I1 Drive trade term s by channel W e will develop clear trading terms for different custom er groups W e will achieve our targetlevels of availability visibility and trade su pport via these trading terms
bull Trade customers adhering to trade standard terms amongst a sam ple of top XX customers
bull Develop standard trading terms (GG)
I2 Deliver custom er service standards Deliver timely f irst class service to the trade an d retailers
bull Cases delivered in full against order quantity
bull Orders delivered on time
bull Logistics Project (RS)bull SAP Project (PH)
I3 Im plem ent m ajor account m anagem ent programm e W e will continue to treat our custom ers as business partners W e will establish an account developm ent model to ensure high quality relationships exist w ith key account customers
bull of major accounts with a business plan bull Define ldquomajorrdquo accounts (AC)
I4 Deliver exce llent consum er propositions W e must meet consum er needs through the development and communication of an integrated brand proposition In the NPD sector we will launch new products only after they h ave m et pre-agreed qu ality image need and volume criteria
bull Brand Systems signed off by OE bull Develop core brand propositions (AC)bull NPD Process Improvement (ACAD)bull Cream ing project (AD)
I5 Deliver exce llent internal custom er service W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull SLA Qualitative Evaluations by SLA ow ners bull Logistics Project (RS)bull Factory Cost Reduction (DL)
I6 Effective m anagem ent of com pany assets W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull Total working capitalbull Fixed Asset Utilisationbull Outstanding Debtor Da ys
bull Plant ration alisation (AD)bull L4 L2 (DL)bull SAP (RS)
I7 Effective control of the business (No Surprises) W e will heighten our efforts to streamline the organisation to h elpdrive sound asset managem ent and cost reduction W e will invoke a cost conscious culture to complem ent our stream lining efforts
bull ldquoNo surprisesrdquo evaluation of actual performance against budget or forecast for- stock cover per city- sales per city- national costs
bull Analyse Risk project (PS)
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 6
2GCActive
M anagementcopy 2GC Lim ited 1999
Balanced Scorecard DocumentationObjective M easure Supporting Initiatives
I1 Drive trade term s by channel W e will develop clear trading terms for different custom er groups W e will achieve our targetlevels of availability visibility and trade su pport via these trading terms
bull Trade customers adhering to trade standard terms amongst a sam ple of top XX customers
bull Develop standard trading terms (GG)
I2 Deliver custom er service standards Deliver timely f irst class service to the trade an d retailers
bull Cases delivered in full against order quantity
bull Orders delivered on time
bull Logistics Project (RS)bull SAP Project (PH)
I3 Im plem ent m ajor account m anagem ent programm e W e will continue to treat our custom ers as business partners W e will establish an account developm ent model to ensure high quality relationships exist w ith key account customers
bull of major accounts with a business plan bull Define ldquomajorrdquo accounts (AC)
I4 Deliver exce llent consum er propositions W e must meet consum er needs through the development and communication of an integrated brand proposition In the NPD sector we will launch new products only after they h ave m et pre-agreed qu ality image need and volume criteria
bull Brand Systems signed off by OE bull Develop core brand propositions (AC)bull NPD Process Improvement (ACAD)bull Cream ing project (AD)
I5 Deliver exce llent internal custom er service W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull SLA Qualitative Evaluations by SLA ow ners bull Logistics Project (RS)bull Factory Cost Reduction (DL)
I6 Effective m anagem ent of com pany assets W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull Total working capitalbull Fixed Asset Utilisationbull Outstanding Debtor Da ys
bull Plant ration alisation (AD)bull L4 L2 (DL)bull SAP (RS)
I7 Effective control of the business (No Surprises) W e will heighten our efforts to streamline the organisation to h elpdrive sound asset managem ent and cost reduction W e will invoke a cost conscious culture to complem ent our stream lining efforts
bull ldquoNo surprisesrdquo evaluation of actual performance against budget or forecast for- stock cover per city- sales per city- national costs
bull Analyse Risk project (PS)
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 5
2GCActive
M anagementcopy 2GC Limited 1999
Strategic Linkage M odel
Fina
ncia
l Pe
rspe
ctiv
eC
usto
mer
Per
spec
tive
Lear
ning
amp G
row
th
Pe
rspe
ctiv
eIn
tern
al
Per
spec
tive
DBX Understands and Responds to m y Needs
DBX Products are m y First Choice Products
DBX Products are Good Value for Money
DBX Products are V isible and Availab le
DBX has an Excellent Consumer Franchise
Drive Trade Term s by Channel
Im plem ent Major Account Managem ent
Program m e
Effective Control of Business (No Surprises)
Sales Growth (by City by P roduct)
Gross Contribution (After City Sales and
Marketing)Asset Turn Overheads as a of
NSV
Improved Shareh older Value (ROCE)
I Have a Good Relationship with DBX
Develop Better W ork P ractices and IS
Develop and Retain P rofessional M anagers
Develop Service Agreem ents
Effective M anagem ent o f Com pany Assets
Deliver Excellent In ternal Custom er
ServiceDeliver Custom er
Service Standards
Develop Professional Custom er Oriented Skilled
Sales Force
Deliver Excellent Consum er
Propositions
Understand Im pact O f Various M arketing Levers
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 5
2GCActive
M anagementcopy 2GC Limited 1999
Strategic Linkage M odel
Fina
ncia
l Pe
rspe
ctiv
eC
usto
mer
Per
spec
tive
Lear
ning
amp G
row
th
Pe
rspe
ctiv
eIn
tern
al
Per
spec
tive
DBX Understands and Responds to m y Needs
DBX Products are m y First Choice Products
DBX Products are Good Value for Money
DBX Products are V isible and Availab le
DBX has an Excellent Consumer Franchise
Drive Trade Term s by Channel
Im plem ent Major Account Managem ent
Program m e
Effective Control of Business (No Surprises)
Sales Growth (by City by P roduct)
Gross Contribution (After City Sales and
Marketing)Asset Turn Overheads as a of
NSV
Improved Shareh older Value (ROCE)
I Have a Good Relationship with DBX
Develop Better W ork P ractices and IS
Develop and Retain P rofessional M anagers
Develop Service Agreem ents
Effective M anagem ent o f Com pany Assets
Deliver Excellent In ternal Custom er
ServiceDeliver Custom er
Service Standards
Develop Professional Custom er Oriented Skilled
Sales Force
Deliver Excellent Consum er
Propositions
Understand Im pact O f Various M arketing Levers
21 November 2001 2GC Limited Introduction to 2GC Active ManagementPage 4
2GCActive
M anagem entcopy 2GC Limited 1999
Destination Statem entSales Volume50000 MT
Distribution50 Cities
Sales Revenue pound 50 M illion
One M anufacturing Site
ROCE 7Capital Em ployed No m ore th an pound45 million
Product Manager
Marketing Director
Factory Director
Manufacturing Director
Regional Sales Manager
Sales Director
Managing Director
No m ore than 6 Core Brand ProductsMinimum sales volum esndash 5000 MT for each core brandndash 2000M T for each m ajor product
Employer of Choice ( 1 in industry and ranked in FM CG top 10)
Marketing SalesBranding Clear brand propositions systems
established for the six core brandsbull DBX has two of th e top five category product brandsbull Producthouse brand awaren ess targets in DBX city
strategies achievedM edia and promotional strategy City market share
targets achieved within agreed budgetbull M odels and measures of th e relative impact of all
m arketing levers available to assist in th e evaluation targeting of m arketing activity
Im proved Skills and Processes Standardised and transparent m arketing processes developed and agreed within DBX and with Group
bull M arketing team skills targets (b ased on extern al benchmark com parisons) achieved through training and recruitment (where applicable)
Overall DBX seen as one of top 10 FMCG Corsquos servicing key accounts in th e country (and 1 in category)
Customer M arket Focus Sales s taff achieving set targ ets in line with city s trategies for focus on custom er and market issues
bull Assess using distribution by chann el visib ility and trade prom otions
Im proved Skills and Processes Standardised and transp arent sales processes develop ed and agreed within DBX and with Group
bull Sales team skills targets (based on extern al b enchm ark comparisons) achieved through training and recruitment (where applicable)
Organisational Structurebull Clear scope and role statements exis t for all functions (including Sales
amp Marketing)bull Supporting functions (includ ing supply chain) will be achieving all
agreed service level targets with sales amp marketing
Supply ChainCost efficient supp ly chain based on flexib le p roduction lines will deliverbull Increased responsiveness to market dem ands bull Lower cycle timesbull Product channel freshness targe ts
Inform ation System sAppropriate in form ation systems that w ill meet DB Xrsquos needsbull All necessary m anagement inform ation p roduced within p re-agreed tim elines and scales
M anagementbull Senior m anagement w ill be com mitted to working on stra teg y and evalua ted on their
ab ility to coach advise guide and ensure tha t tasks are delega ted effectivelybull Professional m iddle management will exist that w ill be able to ac t m ore independently
within de fined guidelines and have the skills required for their job rolendash Succession plans for key positions wi ll existndash Recruiting and training policies will aim to raise middle manage ment competence to
meet internationa l standards
21 November 2001 2GC Limited Introduction to 2GC Active ManagementPage 4
2GCActive
M anagem entcopy 2GC Limited 1999
Destination Statem entSales Volume50000 MT
Distribution50 Cities
Sales Revenue pound 50 M illion
One M anufacturing Site
ROCE 7Capital Em ployed No m ore th an pound45 million
Product Manager
Marketing Director
Factory Director
Manufacturing Director
Regional Sales Manager
Sales Director
Managing Director
No m ore than 6 Core Brand ProductsMinimum sales volum esndash 5000 MT for each core brandndash 2000M T for each m ajor product
Employer of Choice ( 1 in industry and ranked in FM CG top 10)
Marketing SalesBranding Clear brand propositions systems
established for the six core brandsbull DBX has two of th e top five category product brandsbull Producthouse brand awaren ess targets in DBX city
strategies achievedM edia and promotional strategy City market share
targets achieved within agreed budgetbull M odels and measures of th e relative impact of all
m arketing levers available to assist in th e evaluation targeting of m arketing activity
Im proved Skills and Processes Standardised and transparent m arketing processes developed and agreed within DBX and with Group
bull M arketing team skills targets (b ased on extern al benchmark com parisons) achieved through training and recruitment (where applicable)
Overall DBX seen as one of top 10 FMCG Corsquos servicing key accounts in th e country (and 1 in category)
Customer M arket Focus Sales s taff achieving set targ ets in line with city s trategies for focus on custom er and market issues
bull Assess using distribution by chann el visib ility and trade prom otions
Im proved Skills and Processes Standardised and transp arent sales processes develop ed and agreed within DBX and with Group
bull Sales team skills targets (based on extern al b enchm ark comparisons) achieved through training and recruitment (where applicable)
Organisational Structurebull Clear scope and role statements exis t for all functions (including Sales
amp Marketing)bull Supporting functions (includ ing supply chain) will be achieving all
agreed service level targets with sales amp marketing
Supply ChainCost efficient supp ly chain based on flexib le p roduction lines will deliverbull Increased responsiveness to market dem ands bull Lower cycle timesbull Product channel freshness targe ts
Inform ation System sAppropriate in form ation systems that w ill meet DB Xrsquos needsbull All necessary m anagement inform ation p roduced within p re-agreed tim elines and scales
M anagementbull Senior m anagement w ill be com mitted to working on stra teg y and evalua ted on their
ab ility to coach advise guide and ensure tha t tasks are delega ted effectivelybull Professional m iddle management will exist that w ill be able to ac t m ore independently
within de fined guidelines and have the skills required for their job rolendash Succession plans for key positions wi ll existndash Recruiting and training policies will aim to raise middle manage ment competence to
meet internationa l standards
bullThe ldquoobjective drivenrdquoBalanced Scorecard has emerged as best practice
(V11) November 2001 Introducing the Balanced ScorecardPage 14
2GCActive
Managementcopy 2GC Limited 2001
What is Balanced ScorecardMore than just a set of goals amp measures
Balanced Scorecard design
Balanced Scorecard development
Balanced Scorecard deployment
bull Value from first application
bull Business model reflected in relationship between strategic goals
bull Corporate strategic measurement amp management tool
ndash divisionsndash business unitsndash functions
bull All management Systems aligned with strategy
bull Drive strategic behaviour into everyday decisions and operations
(V11) November 2001 Introducing the Balanced ScorecardPage 15
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard design
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 16
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designWhere to go an how to get there
bullBest practice is to use a development group that comprises the the likely users of the Balanced Scorecard
bullDesign choices should be based on jointly held perception of a strategic ldquoDestinationrdquo
bullThe design should measure progress against the organisationrsquos key strategic objectives (activities and outcomes)
bullLinks between strategic objectives should be articulated ndash these express the management teamrsquos beliefs about which activities drive which outcomes
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 17
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designMonitor progress in achieving goals
bullDevelopment of measures follow clarification and agreement of strategic objectives becausehellip
bullMeasures track progress in achieving those objectives against agreed targets
bullIdentify and monitor extraordinary activities and projects furthering achievement of objectives
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Out
com
es
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development A
ctiv
ities
Act
iviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
Financial Perspective
Objectives Measures Targets Initiatives
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets Initiatives
(V11) November 2001 Introducing the Balanced ScorecardPage 18
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designThe components of a Strategic Balanced Scorecard
bull Financial Marketndash Total NSV pound120m (nominal) ndashndash Has achieved 10 CAGR on NSndash Operating Margin gt10ndash Controllable overheads less thndash Operating Profit pound12m (nomin
Destination StatementDescription of how the organisation will be at some specific future date if the management teamrsquos strategies are successful
Fin
anci
alCu
stom
er
Best value for money
The leading and most innovative
brand
Drive Increased Demand
Profitable Sales Growth
Strategic Linkage Model (SLM)Graphic illustration of ldquocause and effectrdquo relationships between the strategic goals that must be achieved if the organisation is to reach its destination state
ObjectiveObjective DescriptionDescription
Total Shareholder Return is above Groups cost of equity over the medium to long term
Total Shareholder Return is above Groups cost of equity over the medium to long term
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means better than equivalent payments by known Group
Measures (Freq)Measures (Freq)
bull CAGR of Total ShareholdeReturn
bull ROIC (Target gt WACC)
bull CAGR of Total ShareholderReturn
bull ROIC (Target gt WACC)
bull PampL account net tax chargea of profit for financial ye
bull WACC
bull PampL account net tax chargeda of profit for financial yea
bull WACC
Group Strategy Delivers Value
Achieve Optimum Tax Rate amp WACC
F1
F2
Objective and Measure Documentation
ndashClear and concise description of strategic objectives and the measures chosen to track their achievement
F11
F12
-30p
8
150p
18Dividend expected kept a1000 pence leading to loprevious years
Measure Value Target PerfObjective Status
Outperform capital markets
F21 200 185Increasing cash inflow froCash amp a sset
F21 200 185Increasing cash inflow froCash amp a sset
t
Progress Reporting FormatsIllustration of how (and by whom) Scorecard information will be communicated
o Initiative overviewOverview of which initiatives support which Scorecard objectives incl owners and deadlines for finalisation
(V11) November 2001 Introducing the Balanced ScorecardPage 19
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard roll-out
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 20
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard Development Development within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
The optimal role-out
sequence is ldquoTop Downrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 21
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentDevelopment within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
Corporate Balanced Scorecard
Co-ordinatingBalanced Scorecard
Support Function Balanced Scorecard
Operating Unit Balanced Scorecard
Departmental Balanced ScorecardTeam Level
Balanced Scorecard
(V11) November 2001 Introducing the Balanced ScorecardPage 22
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
What
How
What
Board level ScorecardBoard level Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Overall VisionOverall Vision
Subordinate ScorecardSubordinate Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Local VisionLocal Vision
How
TeamIndividual ScorecardTeamIndividual Scorecard
Objectives
Measures amp Targets
Initiatives
TeamIndividual Vision
TeamIndividual Vision
Strategic direction
Strategic direction
Strategy implementation
Strategy implementation
(V11) November 2001 Introducing the Balanced ScorecardPage 23
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 24
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 25
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Strategic alignment amp goal setting
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 26
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Align existing management control tools with strategy
SVA amp EVASVA amp EVAB
udge
tsB
udge
ts
BEMBEMBalanced Scorecard
ABCABC HR ToolsHR Tools
(V11) November 2001 Introducing the Balanced ScorecardPage 27
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Support two-way communication of strategyhellip
Fuzzy objectivesFuzzy objectives
Unjustified trust in informal
Unjustified trust in informal
feedback systems
feedback systemsEntren
ched m
easure
ment
Entren
ched m
easure
ment
system
s
system
s
BSC
(V11) November 2001 Introducing the Balanced ScorecardPage 28
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
Comm
unica
tion Com
munication
Board levelScorecard
process
OperationalScorecard
process
Support function Scorecard
process
Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets
Take action
Create amend
strategic vision
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
Communication
(V11) November 2001 Introducing the Balanced ScorecardPage 29
2GCActive
Managementcopy 2GC Limited 2001
Success criteria
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 30
2GCActive
Managementcopy 2GC Limited 2001
Key success factorsCultural building blocks of Scorecard success
bullInclusive design process building on consensus seeking amp involvement
bullParticipative management style focused on learning open discussion and creative thinking
bullSponsorship and commitment from entire management team -top management in particular
bullldquoEmbeddingrdquo of management processes to use refresh and renew the Balanced Scorecard over time
(V11) November 2001 Introducing the Balanced ScorecardPage 31
2GCActive
Managementcopy 2GC Limited 2001
Introducing the Balanced ScorecardTo find out morehellip
bullVisit 2GCrsquos Web Sitendash We focus specifically on strategic
control and performance measurement issues and have a wide range of working papers FAQs and presentations to download on these topics
ndash The site also has a recommended reading list that covers relevant topics and the ldquoWeblinksrdquo database of relevant Internet sites
bullContact 2GCndash Let us know if you have a question
you canrsquot answer wersquoll do what we can to helphellip
bull info2gccouk
- Introducing the Balanced Scorecard
- Structure of presentation
- General management issuesWhat is this all about
- General management issuesImplementing Strategic Goals
- General management issuesBarriers to effective performance management
- General management issuesRealising the need to change
- What is Balanced Scorecard
- What is a Balanced Scorecard
- What is a Balanced ScorecardBackground amp underlying philosophy
- What is a Balanced ScorecardDo what needs to get donehellip
- What is a Balanced ScorecardDifferent applications for Balanced Scorecard
- What is a Balanced ScorecardStrategic control vs Management control
- What is the Balanced Scorecard The latest Balanced Scorecard thinking
- What is Balanced ScorecardMore than just a set of goals amp measures
- Balanced Scorecard design
- Balanced Scorecard designWhere to go an how to get there
- Balanced Scorecard designMonitor progress in achieving goals
- Balanced Scorecard designThe components of a Strategic Balanced Scorecard
- Balanced Scorecard roll-out
- Balanced Scorecard Development Development within the organisation
- Balanced Scorecard DevelopmentDevelopment within the organisation
- Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
- Balanced Scorecard deployment
- Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
- Balanced Scorecard deployment Strategic alignment amp goal setting
- Balanced Scorecard deployment Align existing management control tools with strategy
- Balanced Scorecard deployment Support two-way communication of strategyhellip
- Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
- Success criteria
- Key success factorsCultural building blocks of Scorecard success
- Introducing the Balanced ScorecardTo find out morehellip
-
(V11) November 2001 Introducing the Balanced ScorecardPage 3
2GCActive
Managementcopy 2GC Limited 2001
General management issuesWhat is this all about
Dilbert
(V11) November 2001 Introducing the Balanced ScorecardPage 4
2GCActive
Managementcopy 2GC Limited 2001
General management issuesImplementing Strategic Goals
Vision
97
Vision
9797
Significant strategic success
33
Significant strategic success
3333
Clear strategic
plans
80
Clear strategic
plans
8080
Some strategic success
52
Some strategic success
5252
From Strategic Performance Measurement amp Management Business Intelligence Renaissance Worldwide 1997
bull Almost all organisations have a strategic vision ndash few manage to realise it
(V11) November 2001 Introducing the Balanced ScorecardPage 5
2GCActive
Managementcopy 2GC Limited 2001
General management issuesBarriers to effective performance management
Source Based on paper by John H Lingle and William A Schiemann ldquoFrom balanced scorecard to strategic gauges Is measurement worth itldquo published in ldquoManagement Reviewrdquo Volume 85 Issue 3 Mar 1996 p 56
Fuzzy objectivesFuzzy objectives
Unjustified trust in informal Unjustified trust in informal feedback systemsfeedback systems
Entrenched measurement Entrenched measurement systemssystems
Too many measures and Too many measures and loss of focusloss of focus
(V11) November 2001 Introducing the Balanced ScorecardPage 6
2GCActive
Managementcopy 2GC Limited 2001
General management issuesRealising the need to change
Why
WhatWho
How
When
(V11) November 2001 Introducing the Balanced ScorecardPage 7
2GCActive
Managementcopy 2GC Limited 2001
What is Balanced Scorecard
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 8
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced Scorecard
bullldquoThe idea of the Scorecard is to describe the essential ingredients of business successrdquo(Olve et al ldquoPerformance Driversrdquo)
bullldquoBalanced Scorecard is one of the 15 most important management concepts ever introduced in Harvard Business Reviewrdquo(Harvard Business Review 75th Anniversary issue)
bull50 of North American companies claim to be using Balanced Scorecard(Recent survey by Bain amp Company)
One of the most dangerous forms of human error is forgetting what one is trying to to achievePaul Nitze
(V11) November 2001 Introducing the Balanced ScorecardPage 9
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardBackground amp underlying philosophy
bullWhat is itndash Strategic communication and
performance measurement toolbullOrigins
ndash Developed from a tool developed in 1980s but some similarities with other pre-existing tools
ndash Introduced to wider audience in early 1990rsquos by R Kaplan amp D Norton in series of articles in Harvard Business Review
bullUnderlying philosophyndash Clear communication of goals and
prioritiesndash Learning amp team-working
Internal PerspectiveInternal Perspective
Learning amp Growth PerspectiveLearning amp Growth Perspective
Financial PerspectiveFinancial Perspective
Customer PerspectiveCustomer Perspective
Act
iviti
esO
utco
mes
Act
iviti
esO
utco
mes
Out
com
esO
utco
mes
Act
iviti
esA
ctiv
ities
(V11) November 2001 Introducing the Balanced ScorecardPage 10
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardDo what needs to get donehellip
Are we doing what we set out to do
What do we want to achieve and what must we do to achieve it
Take action
Create amend strategic vision
Createchange linked strategic
objectives
Review results and cause amp effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
(V11) November 2001 Introducing the Balanced ScorecardPage 11
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardDifferent applications for Balanced Scorecard
bullldquoManagement Controlrdquo
ndash Maintain the temperature
bullldquoStrategic Controlrdquondash What temperature
7060 80
D A Y amp N I G H T
HOT OFF COOL
Assess Outcome
Set TargetHeater Run if room is below target temp
Thermostat Compare with
Target
MeasureRoom Temp
(V11) November 2001 Introducing the Balanced ScorecardPage 12
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardStrategic control vs Management control
Organisational hierarchy
Strat
egic
emph
asis
Operational emphasis
(V11) November 2001 Introducing the Balanced ScorecardPage 13
2GCActive
Managementcopy 2GC Limited 2001
What is the Balanced Scorecard The latest Balanced Scorecard thinking
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 6
2GCActive
M anagementcopy 2GC Lim ited 1999
Balanced Scorecard DocumentationObjective M easure Supporting Initiatives
I1 Drive trade term s by channel W e will develop clear trading terms for different custom er groups W e will achieve our targetlevels of availability visibility and trade su pport via these trading terms
bull Trade customers adhering to trade standard terms amongst a sam ple of top XX customers
bull Develop standard trading terms (GG)
I2 Deliver custom er service standards Deliver timely f irst class service to the trade an d retailers
bull Cases delivered in full against order quantity
bull Orders delivered on time
bull Logistics Project (RS)bull SAP Project (PH)
I3 Im plem ent m ajor account m anagem ent programm e W e will continue to treat our custom ers as business partners W e will establish an account developm ent model to ensure high quality relationships exist w ith key account customers
bull of major accounts with a business plan bull Define ldquomajorrdquo accounts (AC)
I4 Deliver exce llent consum er propositions W e must meet consum er needs through the development and communication of an integrated brand proposition In the NPD sector we will launch new products only after they h ave m et pre-agreed qu ality image need and volume criteria
bull Brand Systems signed off by OE bull Develop core brand propositions (AC)bull NPD Process Improvement (ACAD)bull Cream ing project (AD)
I5 Deliver exce llent internal custom er service W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull SLA Qualitative Evaluations by SLA ow ners bull Logistics Project (RS)bull Factory Cost Reduction (DL)
I6 Effective m anagem ent of com pany assets W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull Total working capitalbull Fixed Asset Utilisationbull Outstanding Debtor Da ys
bull Plant ration alisation (AD)bull L4 L2 (DL)bull SAP (RS)
I7 Effective control of the business (No Surprises) W e will heighten our efforts to streamline the organisation to h elpdrive sound asset managem ent and cost reduction W e will invoke a cost conscious culture to complem ent our stream lining efforts
bull ldquoNo surprisesrdquo evaluation of actual performance against budget or forecast for- stock cover per city- sales per city- national costs
bull Analyse Risk project (PS)
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 6
2GCActive
M anagementcopy 2GC Lim ited 1999
Balanced Scorecard DocumentationObjective M easure Supporting Initiatives
I1 Drive trade term s by channel W e will develop clear trading terms for different custom er groups W e will achieve our targetlevels of availability visibility and trade su pport via these trading terms
bull Trade customers adhering to trade standard terms amongst a sam ple of top XX customers
bull Develop standard trading terms (GG)
I2 Deliver custom er service standards Deliver timely f irst class service to the trade an d retailers
bull Cases delivered in full against order quantity
bull Orders delivered on time
bull Logistics Project (RS)bull SAP Project (PH)
I3 Im plem ent m ajor account m anagem ent programm e W e will continue to treat our custom ers as business partners W e will establish an account developm ent model to ensure high quality relationships exist w ith key account customers
bull of major accounts with a business plan bull Define ldquomajorrdquo accounts (AC)
I4 Deliver exce llent consum er propositions W e must meet consum er needs through the development and communication of an integrated brand proposition In the NPD sector we will launch new products only after they h ave m et pre-agreed qu ality image need and volume criteria
bull Brand Systems signed off by OE bull Develop core brand propositions (AC)bull NPD Process Improvement (ACAD)bull Cream ing project (AD)
I5 Deliver exce llent internal custom er service W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull SLA Qualitative Evaluations by SLA ow ners bull Logistics Project (RS)bull Factory Cost Reduction (DL)
I6 Effective m anagem ent of com pany assets W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull Total working capitalbull Fixed Asset Utilisationbull Outstanding Debtor Da ys
bull Plant ration alisation (AD)bull L4 L2 (DL)bull SAP (RS)
I7 Effective control of the business (No Surprises) W e will heighten our efforts to streamline the organisation to h elpdrive sound asset managem ent and cost reduction W e will invoke a cost conscious culture to complem ent our stream lining efforts
bull ldquoNo surprisesrdquo evaluation of actual performance against budget or forecast for- stock cover per city- sales per city- national costs
bull Analyse Risk project (PS)
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 5
2GCActive
M anagementcopy 2GC Limited 1999
Strategic Linkage M odel
Fina
ncia
l Pe
rspe
ctiv
eC
usto
mer
Per
spec
tive
Lear
ning
amp G
row
th
Pe
rspe
ctiv
eIn
tern
al
Per
spec
tive
DBX Understands and Responds to m y Needs
DBX Products are m y First Choice Products
DBX Products are Good Value for Money
DBX Products are V isible and Availab le
DBX has an Excellent Consumer Franchise
Drive Trade Term s by Channel
Im plem ent Major Account Managem ent
Program m e
Effective Control of Business (No Surprises)
Sales Growth (by City by P roduct)
Gross Contribution (After City Sales and
Marketing)Asset Turn Overheads as a of
NSV
Improved Shareh older Value (ROCE)
I Have a Good Relationship with DBX
Develop Better W ork P ractices and IS
Develop and Retain P rofessional M anagers
Develop Service Agreem ents
Effective M anagem ent o f Com pany Assets
Deliver Excellent In ternal Custom er
ServiceDeliver Custom er
Service Standards
Develop Professional Custom er Oriented Skilled
Sales Force
Deliver Excellent Consum er
Propositions
Understand Im pact O f Various M arketing Levers
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 5
2GCActive
M anagementcopy 2GC Limited 1999
Strategic Linkage M odel
Fina
ncia
l Pe
rspe
ctiv
eC
usto
mer
Per
spec
tive
Lear
ning
amp G
row
th
Pe
rspe
ctiv
eIn
tern
al
Per
spec
tive
DBX Understands and Responds to m y Needs
DBX Products are m y First Choice Products
DBX Products are Good Value for Money
DBX Products are V isible and Availab le
DBX has an Excellent Consumer Franchise
Drive Trade Term s by Channel
Im plem ent Major Account Managem ent
Program m e
Effective Control of Business (No Surprises)
Sales Growth (by City by P roduct)
Gross Contribution (After City Sales and
Marketing)Asset Turn Overheads as a of
NSV
Improved Shareh older Value (ROCE)
I Have a Good Relationship with DBX
Develop Better W ork P ractices and IS
Develop and Retain P rofessional M anagers
Develop Service Agreem ents
Effective M anagem ent o f Com pany Assets
Deliver Excellent In ternal Custom er
ServiceDeliver Custom er
Service Standards
Develop Professional Custom er Oriented Skilled
Sales Force
Deliver Excellent Consum er
Propositions
Understand Im pact O f Various M arketing Levers
21 November 2001 2GC Limited Introduction to 2GC Active ManagementPage 4
2GCActive
M anagem entcopy 2GC Limited 1999
Destination Statem entSales Volume50000 MT
Distribution50 Cities
Sales Revenue pound 50 M illion
One M anufacturing Site
ROCE 7Capital Em ployed No m ore th an pound45 million
Product Manager
Marketing Director
Factory Director
Manufacturing Director
Regional Sales Manager
Sales Director
Managing Director
No m ore than 6 Core Brand ProductsMinimum sales volum esndash 5000 MT for each core brandndash 2000M T for each m ajor product
Employer of Choice ( 1 in industry and ranked in FM CG top 10)
Marketing SalesBranding Clear brand propositions systems
established for the six core brandsbull DBX has two of th e top five category product brandsbull Producthouse brand awaren ess targets in DBX city
strategies achievedM edia and promotional strategy City market share
targets achieved within agreed budgetbull M odels and measures of th e relative impact of all
m arketing levers available to assist in th e evaluation targeting of m arketing activity
Im proved Skills and Processes Standardised and transparent m arketing processes developed and agreed within DBX and with Group
bull M arketing team skills targets (b ased on extern al benchmark com parisons) achieved through training and recruitment (where applicable)
Overall DBX seen as one of top 10 FMCG Corsquos servicing key accounts in th e country (and 1 in category)
Customer M arket Focus Sales s taff achieving set targ ets in line with city s trategies for focus on custom er and market issues
bull Assess using distribution by chann el visib ility and trade prom otions
Im proved Skills and Processes Standardised and transp arent sales processes develop ed and agreed within DBX and with Group
bull Sales team skills targets (based on extern al b enchm ark comparisons) achieved through training and recruitment (where applicable)
Organisational Structurebull Clear scope and role statements exis t for all functions (including Sales
amp Marketing)bull Supporting functions (includ ing supply chain) will be achieving all
agreed service level targets with sales amp marketing
Supply ChainCost efficient supp ly chain based on flexib le p roduction lines will deliverbull Increased responsiveness to market dem ands bull Lower cycle timesbull Product channel freshness targe ts
Inform ation System sAppropriate in form ation systems that w ill meet DB Xrsquos needsbull All necessary m anagement inform ation p roduced within p re-agreed tim elines and scales
M anagementbull Senior m anagement w ill be com mitted to working on stra teg y and evalua ted on their
ab ility to coach advise guide and ensure tha t tasks are delega ted effectivelybull Professional m iddle management will exist that w ill be able to ac t m ore independently
within de fined guidelines and have the skills required for their job rolendash Succession plans for key positions wi ll existndash Recruiting and training policies will aim to raise middle manage ment competence to
meet internationa l standards
21 November 2001 2GC Limited Introduction to 2GC Active ManagementPage 4
2GCActive
M anagem entcopy 2GC Limited 1999
Destination Statem entSales Volume50000 MT
Distribution50 Cities
Sales Revenue pound 50 M illion
One M anufacturing Site
ROCE 7Capital Em ployed No m ore th an pound45 million
Product Manager
Marketing Director
Factory Director
Manufacturing Director
Regional Sales Manager
Sales Director
Managing Director
No m ore than 6 Core Brand ProductsMinimum sales volum esndash 5000 MT for each core brandndash 2000M T for each m ajor product
Employer of Choice ( 1 in industry and ranked in FM CG top 10)
Marketing SalesBranding Clear brand propositions systems
established for the six core brandsbull DBX has two of th e top five category product brandsbull Producthouse brand awaren ess targets in DBX city
strategies achievedM edia and promotional strategy City market share
targets achieved within agreed budgetbull M odels and measures of th e relative impact of all
m arketing levers available to assist in th e evaluation targeting of m arketing activity
Im proved Skills and Processes Standardised and transparent m arketing processes developed and agreed within DBX and with Group
bull M arketing team skills targets (b ased on extern al benchmark com parisons) achieved through training and recruitment (where applicable)
Overall DBX seen as one of top 10 FMCG Corsquos servicing key accounts in th e country (and 1 in category)
Customer M arket Focus Sales s taff achieving set targ ets in line with city s trategies for focus on custom er and market issues
bull Assess using distribution by chann el visib ility and trade prom otions
Im proved Skills and Processes Standardised and transp arent sales processes develop ed and agreed within DBX and with Group
bull Sales team skills targets (based on extern al b enchm ark comparisons) achieved through training and recruitment (where applicable)
Organisational Structurebull Clear scope and role statements exis t for all functions (including Sales
amp Marketing)bull Supporting functions (includ ing supply chain) will be achieving all
agreed service level targets with sales amp marketing
Supply ChainCost efficient supp ly chain based on flexib le p roduction lines will deliverbull Increased responsiveness to market dem ands bull Lower cycle timesbull Product channel freshness targe ts
Inform ation System sAppropriate in form ation systems that w ill meet DB Xrsquos needsbull All necessary m anagement inform ation p roduced within p re-agreed tim elines and scales
M anagementbull Senior m anagement w ill be com mitted to working on stra teg y and evalua ted on their
ab ility to coach advise guide and ensure tha t tasks are delega ted effectivelybull Professional m iddle management will exist that w ill be able to ac t m ore independently
within de fined guidelines and have the skills required for their job rolendash Succession plans for key positions wi ll existndash Recruiting and training policies will aim to raise middle manage ment competence to
meet internationa l standards
bullThe ldquoobjective drivenrdquoBalanced Scorecard has emerged as best practice
(V11) November 2001 Introducing the Balanced ScorecardPage 14
2GCActive
Managementcopy 2GC Limited 2001
What is Balanced ScorecardMore than just a set of goals amp measures
Balanced Scorecard design
Balanced Scorecard development
Balanced Scorecard deployment
bull Value from first application
bull Business model reflected in relationship between strategic goals
bull Corporate strategic measurement amp management tool
ndash divisionsndash business unitsndash functions
bull All management Systems aligned with strategy
bull Drive strategic behaviour into everyday decisions and operations
(V11) November 2001 Introducing the Balanced ScorecardPage 15
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard design
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 16
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designWhere to go an how to get there
bullBest practice is to use a development group that comprises the the likely users of the Balanced Scorecard
bullDesign choices should be based on jointly held perception of a strategic ldquoDestinationrdquo
bullThe design should measure progress against the organisationrsquos key strategic objectives (activities and outcomes)
bullLinks between strategic objectives should be articulated ndash these express the management teamrsquos beliefs about which activities drive which outcomes
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 17
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designMonitor progress in achieving goals
bullDevelopment of measures follow clarification and agreement of strategic objectives becausehellip
bullMeasures track progress in achieving those objectives against agreed targets
bullIdentify and monitor extraordinary activities and projects furthering achievement of objectives
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Out
com
es
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development A
ctiv
ities
Act
iviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
Financial Perspective
Objectives Measures Targets Initiatives
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets Initiatives
(V11) November 2001 Introducing the Balanced ScorecardPage 18
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designThe components of a Strategic Balanced Scorecard
bull Financial Marketndash Total NSV pound120m (nominal) ndashndash Has achieved 10 CAGR on NSndash Operating Margin gt10ndash Controllable overheads less thndash Operating Profit pound12m (nomin
Destination StatementDescription of how the organisation will be at some specific future date if the management teamrsquos strategies are successful
Fin
anci
alCu
stom
er
Best value for money
The leading and most innovative
brand
Drive Increased Demand
Profitable Sales Growth
Strategic Linkage Model (SLM)Graphic illustration of ldquocause and effectrdquo relationships between the strategic goals that must be achieved if the organisation is to reach its destination state
ObjectiveObjective DescriptionDescription
Total Shareholder Return is above Groups cost of equity over the medium to long term
Total Shareholder Return is above Groups cost of equity over the medium to long term
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means better than equivalent payments by known Group
Measures (Freq)Measures (Freq)
bull CAGR of Total ShareholdeReturn
bull ROIC (Target gt WACC)
bull CAGR of Total ShareholderReturn
bull ROIC (Target gt WACC)
bull PampL account net tax chargea of profit for financial ye
bull WACC
bull PampL account net tax chargeda of profit for financial yea
bull WACC
Group Strategy Delivers Value
Achieve Optimum Tax Rate amp WACC
F1
F2
Objective and Measure Documentation
ndashClear and concise description of strategic objectives and the measures chosen to track their achievement
F11
F12
-30p
8
150p
18Dividend expected kept a1000 pence leading to loprevious years
Measure Value Target PerfObjective Status
Outperform capital markets
F21 200 185Increasing cash inflow froCash amp a sset
F21 200 185Increasing cash inflow froCash amp a sset
t
Progress Reporting FormatsIllustration of how (and by whom) Scorecard information will be communicated
o Initiative overviewOverview of which initiatives support which Scorecard objectives incl owners and deadlines for finalisation
(V11) November 2001 Introducing the Balanced ScorecardPage 19
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard roll-out
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 20
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard Development Development within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
The optimal role-out
sequence is ldquoTop Downrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 21
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentDevelopment within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
Corporate Balanced Scorecard
Co-ordinatingBalanced Scorecard
Support Function Balanced Scorecard
Operating Unit Balanced Scorecard
Departmental Balanced ScorecardTeam Level
Balanced Scorecard
(V11) November 2001 Introducing the Balanced ScorecardPage 22
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
What
How
What
Board level ScorecardBoard level Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Overall VisionOverall Vision
Subordinate ScorecardSubordinate Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Local VisionLocal Vision
How
TeamIndividual ScorecardTeamIndividual Scorecard
Objectives
Measures amp Targets
Initiatives
TeamIndividual Vision
TeamIndividual Vision
Strategic direction
Strategic direction
Strategy implementation
Strategy implementation
(V11) November 2001 Introducing the Balanced ScorecardPage 23
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 24
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 25
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Strategic alignment amp goal setting
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 26
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Align existing management control tools with strategy
SVA amp EVASVA amp EVAB
udge
tsB
udge
ts
BEMBEMBalanced Scorecard
ABCABC HR ToolsHR Tools
(V11) November 2001 Introducing the Balanced ScorecardPage 27
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Support two-way communication of strategyhellip
Fuzzy objectivesFuzzy objectives
Unjustified trust in informal
Unjustified trust in informal
feedback systems
feedback systemsEntren
ched m
easure
ment
Entren
ched m
easure
ment
system
s
system
s
BSC
(V11) November 2001 Introducing the Balanced ScorecardPage 28
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
Comm
unica
tion Com
munication
Board levelScorecard
process
OperationalScorecard
process
Support function Scorecard
process
Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets
Take action
Create amend
strategic vision
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
Communication
(V11) November 2001 Introducing the Balanced ScorecardPage 29
2GCActive
Managementcopy 2GC Limited 2001
Success criteria
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 30
2GCActive
Managementcopy 2GC Limited 2001
Key success factorsCultural building blocks of Scorecard success
bullInclusive design process building on consensus seeking amp involvement
bullParticipative management style focused on learning open discussion and creative thinking
bullSponsorship and commitment from entire management team -top management in particular
bullldquoEmbeddingrdquo of management processes to use refresh and renew the Balanced Scorecard over time
(V11) November 2001 Introducing the Balanced ScorecardPage 31
2GCActive
Managementcopy 2GC Limited 2001
Introducing the Balanced ScorecardTo find out morehellip
bullVisit 2GCrsquos Web Sitendash We focus specifically on strategic
control and performance measurement issues and have a wide range of working papers FAQs and presentations to download on these topics
ndash The site also has a recommended reading list that covers relevant topics and the ldquoWeblinksrdquo database of relevant Internet sites
bullContact 2GCndash Let us know if you have a question
you canrsquot answer wersquoll do what we can to helphellip
bull info2gccouk
- Introducing the Balanced Scorecard
- Structure of presentation
- General management issuesWhat is this all about
- General management issuesImplementing Strategic Goals
- General management issuesBarriers to effective performance management
- General management issuesRealising the need to change
- What is Balanced Scorecard
- What is a Balanced Scorecard
- What is a Balanced ScorecardBackground amp underlying philosophy
- What is a Balanced ScorecardDo what needs to get donehellip
- What is a Balanced ScorecardDifferent applications for Balanced Scorecard
- What is a Balanced ScorecardStrategic control vs Management control
- What is the Balanced Scorecard The latest Balanced Scorecard thinking
- What is Balanced ScorecardMore than just a set of goals amp measures
- Balanced Scorecard design
- Balanced Scorecard designWhere to go an how to get there
- Balanced Scorecard designMonitor progress in achieving goals
- Balanced Scorecard designThe components of a Strategic Balanced Scorecard
- Balanced Scorecard roll-out
- Balanced Scorecard Development Development within the organisation
- Balanced Scorecard DevelopmentDevelopment within the organisation
- Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
- Balanced Scorecard deployment
- Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
- Balanced Scorecard deployment Strategic alignment amp goal setting
- Balanced Scorecard deployment Align existing management control tools with strategy
- Balanced Scorecard deployment Support two-way communication of strategyhellip
- Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
- Success criteria
- Key success factorsCultural building blocks of Scorecard success
- Introducing the Balanced ScorecardTo find out morehellip
-
(V11) November 2001 Introducing the Balanced ScorecardPage 4
2GCActive
Managementcopy 2GC Limited 2001
General management issuesImplementing Strategic Goals
Vision
97
Vision
9797
Significant strategic success
33
Significant strategic success
3333
Clear strategic
plans
80
Clear strategic
plans
8080
Some strategic success
52
Some strategic success
5252
From Strategic Performance Measurement amp Management Business Intelligence Renaissance Worldwide 1997
bull Almost all organisations have a strategic vision ndash few manage to realise it
(V11) November 2001 Introducing the Balanced ScorecardPage 5
2GCActive
Managementcopy 2GC Limited 2001
General management issuesBarriers to effective performance management
Source Based on paper by John H Lingle and William A Schiemann ldquoFrom balanced scorecard to strategic gauges Is measurement worth itldquo published in ldquoManagement Reviewrdquo Volume 85 Issue 3 Mar 1996 p 56
Fuzzy objectivesFuzzy objectives
Unjustified trust in informal Unjustified trust in informal feedback systemsfeedback systems
Entrenched measurement Entrenched measurement systemssystems
Too many measures and Too many measures and loss of focusloss of focus
(V11) November 2001 Introducing the Balanced ScorecardPage 6
2GCActive
Managementcopy 2GC Limited 2001
General management issuesRealising the need to change
Why
WhatWho
How
When
(V11) November 2001 Introducing the Balanced ScorecardPage 7
2GCActive
Managementcopy 2GC Limited 2001
What is Balanced Scorecard
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 8
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced Scorecard
bullldquoThe idea of the Scorecard is to describe the essential ingredients of business successrdquo(Olve et al ldquoPerformance Driversrdquo)
bullldquoBalanced Scorecard is one of the 15 most important management concepts ever introduced in Harvard Business Reviewrdquo(Harvard Business Review 75th Anniversary issue)
bull50 of North American companies claim to be using Balanced Scorecard(Recent survey by Bain amp Company)
One of the most dangerous forms of human error is forgetting what one is trying to to achievePaul Nitze
(V11) November 2001 Introducing the Balanced ScorecardPage 9
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardBackground amp underlying philosophy
bullWhat is itndash Strategic communication and
performance measurement toolbullOrigins
ndash Developed from a tool developed in 1980s but some similarities with other pre-existing tools
ndash Introduced to wider audience in early 1990rsquos by R Kaplan amp D Norton in series of articles in Harvard Business Review
bullUnderlying philosophyndash Clear communication of goals and
prioritiesndash Learning amp team-working
Internal PerspectiveInternal Perspective
Learning amp Growth PerspectiveLearning amp Growth Perspective
Financial PerspectiveFinancial Perspective
Customer PerspectiveCustomer Perspective
Act
iviti
esO
utco
mes
Act
iviti
esO
utco
mes
Out
com
esO
utco
mes
Act
iviti
esA
ctiv
ities
(V11) November 2001 Introducing the Balanced ScorecardPage 10
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardDo what needs to get donehellip
Are we doing what we set out to do
What do we want to achieve and what must we do to achieve it
Take action
Create amend strategic vision
Createchange linked strategic
objectives
Review results and cause amp effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
(V11) November 2001 Introducing the Balanced ScorecardPage 11
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardDifferent applications for Balanced Scorecard
bullldquoManagement Controlrdquo
ndash Maintain the temperature
bullldquoStrategic Controlrdquondash What temperature
7060 80
D A Y amp N I G H T
HOT OFF COOL
Assess Outcome
Set TargetHeater Run if room is below target temp
Thermostat Compare with
Target
MeasureRoom Temp
(V11) November 2001 Introducing the Balanced ScorecardPage 12
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardStrategic control vs Management control
Organisational hierarchy
Strat
egic
emph
asis
Operational emphasis
(V11) November 2001 Introducing the Balanced ScorecardPage 13
2GCActive
Managementcopy 2GC Limited 2001
What is the Balanced Scorecard The latest Balanced Scorecard thinking
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 6
2GCActive
M anagementcopy 2GC Lim ited 1999
Balanced Scorecard DocumentationObjective M easure Supporting Initiatives
I1 Drive trade term s by channel W e will develop clear trading terms for different custom er groups W e will achieve our targetlevels of availability visibility and trade su pport via these trading terms
bull Trade customers adhering to trade standard terms amongst a sam ple of top XX customers
bull Develop standard trading terms (GG)
I2 Deliver custom er service standards Deliver timely f irst class service to the trade an d retailers
bull Cases delivered in full against order quantity
bull Orders delivered on time
bull Logistics Project (RS)bull SAP Project (PH)
I3 Im plem ent m ajor account m anagem ent programm e W e will continue to treat our custom ers as business partners W e will establish an account developm ent model to ensure high quality relationships exist w ith key account customers
bull of major accounts with a business plan bull Define ldquomajorrdquo accounts (AC)
I4 Deliver exce llent consum er propositions W e must meet consum er needs through the development and communication of an integrated brand proposition In the NPD sector we will launch new products only after they h ave m et pre-agreed qu ality image need and volume criteria
bull Brand Systems signed off by OE bull Develop core brand propositions (AC)bull NPD Process Improvement (ACAD)bull Cream ing project (AD)
I5 Deliver exce llent internal custom er service W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull SLA Qualitative Evaluations by SLA ow ners bull Logistics Project (RS)bull Factory Cost Reduction (DL)
I6 Effective m anagem ent of com pany assets W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull Total working capitalbull Fixed Asset Utilisationbull Outstanding Debtor Da ys
bull Plant ration alisation (AD)bull L4 L2 (DL)bull SAP (RS)
I7 Effective control of the business (No Surprises) W e will heighten our efforts to streamline the organisation to h elpdrive sound asset managem ent and cost reduction W e will invoke a cost conscious culture to complem ent our stream lining efforts
bull ldquoNo surprisesrdquo evaluation of actual performance against budget or forecast for- stock cover per city- sales per city- national costs
bull Analyse Risk project (PS)
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 6
2GCActive
M anagementcopy 2GC Lim ited 1999
Balanced Scorecard DocumentationObjective M easure Supporting Initiatives
I1 Drive trade term s by channel W e will develop clear trading terms for different custom er groups W e will achieve our targetlevels of availability visibility and trade su pport via these trading terms
bull Trade customers adhering to trade standard terms amongst a sam ple of top XX customers
bull Develop standard trading terms (GG)
I2 Deliver custom er service standards Deliver timely f irst class service to the trade an d retailers
bull Cases delivered in full against order quantity
bull Orders delivered on time
bull Logistics Project (RS)bull SAP Project (PH)
I3 Im plem ent m ajor account m anagem ent programm e W e will continue to treat our custom ers as business partners W e will establish an account developm ent model to ensure high quality relationships exist w ith key account customers
bull of major accounts with a business plan bull Define ldquomajorrdquo accounts (AC)
I4 Deliver exce llent consum er propositions W e must meet consum er needs through the development and communication of an integrated brand proposition In the NPD sector we will launch new products only after they h ave m et pre-agreed qu ality image need and volume criteria
bull Brand Systems signed off by OE bull Develop core brand propositions (AC)bull NPD Process Improvement (ACAD)bull Cream ing project (AD)
I5 Deliver exce llent internal custom er service W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull SLA Qualitative Evaluations by SLA ow ners bull Logistics Project (RS)bull Factory Cost Reduction (DL)
I6 Effective m anagem ent of com pany assets W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull Total working capitalbull Fixed Asset Utilisationbull Outstanding Debtor Da ys
bull Plant ration alisation (AD)bull L4 L2 (DL)bull SAP (RS)
I7 Effective control of the business (No Surprises) W e will heighten our efforts to streamline the organisation to h elpdrive sound asset managem ent and cost reduction W e will invoke a cost conscious culture to complem ent our stream lining efforts
bull ldquoNo surprisesrdquo evaluation of actual performance against budget or forecast for- stock cover per city- sales per city- national costs
bull Analyse Risk project (PS)
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 5
2GCActive
M anagementcopy 2GC Limited 1999
Strategic Linkage M odel
Fina
ncia
l Pe
rspe
ctiv
eC
usto
mer
Per
spec
tive
Lear
ning
amp G
row
th
Pe
rspe
ctiv
eIn
tern
al
Per
spec
tive
DBX Understands and Responds to m y Needs
DBX Products are m y First Choice Products
DBX Products are Good Value for Money
DBX Products are V isible and Availab le
DBX has an Excellent Consumer Franchise
Drive Trade Term s by Channel
Im plem ent Major Account Managem ent
Program m e
Effective Control of Business (No Surprises)
Sales Growth (by City by P roduct)
Gross Contribution (After City Sales and
Marketing)Asset Turn Overheads as a of
NSV
Improved Shareh older Value (ROCE)
I Have a Good Relationship with DBX
Develop Better W ork P ractices and IS
Develop and Retain P rofessional M anagers
Develop Service Agreem ents
Effective M anagem ent o f Com pany Assets
Deliver Excellent In ternal Custom er
ServiceDeliver Custom er
Service Standards
Develop Professional Custom er Oriented Skilled
Sales Force
Deliver Excellent Consum er
Propositions
Understand Im pact O f Various M arketing Levers
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 5
2GCActive
M anagementcopy 2GC Limited 1999
Strategic Linkage M odel
Fina
ncia
l Pe
rspe
ctiv
eC
usto
mer
Per
spec
tive
Lear
ning
amp G
row
th
Pe
rspe
ctiv
eIn
tern
al
Per
spec
tive
DBX Understands and Responds to m y Needs
DBX Products are m y First Choice Products
DBX Products are Good Value for Money
DBX Products are V isible and Availab le
DBX has an Excellent Consumer Franchise
Drive Trade Term s by Channel
Im plem ent Major Account Managem ent
Program m e
Effective Control of Business (No Surprises)
Sales Growth (by City by P roduct)
Gross Contribution (After City Sales and
Marketing)Asset Turn Overheads as a of
NSV
Improved Shareh older Value (ROCE)
I Have a Good Relationship with DBX
Develop Better W ork P ractices and IS
Develop and Retain P rofessional M anagers
Develop Service Agreem ents
Effective M anagem ent o f Com pany Assets
Deliver Excellent In ternal Custom er
ServiceDeliver Custom er
Service Standards
Develop Professional Custom er Oriented Skilled
Sales Force
Deliver Excellent Consum er
Propositions
Understand Im pact O f Various M arketing Levers
21 November 2001 2GC Limited Introduction to 2GC Active ManagementPage 4
2GCActive
M anagem entcopy 2GC Limited 1999
Destination Statem entSales Volume50000 MT
Distribution50 Cities
Sales Revenue pound 50 M illion
One M anufacturing Site
ROCE 7Capital Em ployed No m ore th an pound45 million
Product Manager
Marketing Director
Factory Director
Manufacturing Director
Regional Sales Manager
Sales Director
Managing Director
No m ore than 6 Core Brand ProductsMinimum sales volum esndash 5000 MT for each core brandndash 2000M T for each m ajor product
Employer of Choice ( 1 in industry and ranked in FM CG top 10)
Marketing SalesBranding Clear brand propositions systems
established for the six core brandsbull DBX has two of th e top five category product brandsbull Producthouse brand awaren ess targets in DBX city
strategies achievedM edia and promotional strategy City market share
targets achieved within agreed budgetbull M odels and measures of th e relative impact of all
m arketing levers available to assist in th e evaluation targeting of m arketing activity
Im proved Skills and Processes Standardised and transparent m arketing processes developed and agreed within DBX and with Group
bull M arketing team skills targets (b ased on extern al benchmark com parisons) achieved through training and recruitment (where applicable)
Overall DBX seen as one of top 10 FMCG Corsquos servicing key accounts in th e country (and 1 in category)
Customer M arket Focus Sales s taff achieving set targ ets in line with city s trategies for focus on custom er and market issues
bull Assess using distribution by chann el visib ility and trade prom otions
Im proved Skills and Processes Standardised and transp arent sales processes develop ed and agreed within DBX and with Group
bull Sales team skills targets (based on extern al b enchm ark comparisons) achieved through training and recruitment (where applicable)
Organisational Structurebull Clear scope and role statements exis t for all functions (including Sales
amp Marketing)bull Supporting functions (includ ing supply chain) will be achieving all
agreed service level targets with sales amp marketing
Supply ChainCost efficient supp ly chain based on flexib le p roduction lines will deliverbull Increased responsiveness to market dem ands bull Lower cycle timesbull Product channel freshness targe ts
Inform ation System sAppropriate in form ation systems that w ill meet DB Xrsquos needsbull All necessary m anagement inform ation p roduced within p re-agreed tim elines and scales
M anagementbull Senior m anagement w ill be com mitted to working on stra teg y and evalua ted on their
ab ility to coach advise guide and ensure tha t tasks are delega ted effectivelybull Professional m iddle management will exist that w ill be able to ac t m ore independently
within de fined guidelines and have the skills required for their job rolendash Succession plans for key positions wi ll existndash Recruiting and training policies will aim to raise middle manage ment competence to
meet internationa l standards
21 November 2001 2GC Limited Introduction to 2GC Active ManagementPage 4
2GCActive
M anagem entcopy 2GC Limited 1999
Destination Statem entSales Volume50000 MT
Distribution50 Cities
Sales Revenue pound 50 M illion
One M anufacturing Site
ROCE 7Capital Em ployed No m ore th an pound45 million
Product Manager
Marketing Director
Factory Director
Manufacturing Director
Regional Sales Manager
Sales Director
Managing Director
No m ore than 6 Core Brand ProductsMinimum sales volum esndash 5000 MT for each core brandndash 2000M T for each m ajor product
Employer of Choice ( 1 in industry and ranked in FM CG top 10)
Marketing SalesBranding Clear brand propositions systems
established for the six core brandsbull DBX has two of th e top five category product brandsbull Producthouse brand awaren ess targets in DBX city
strategies achievedM edia and promotional strategy City market share
targets achieved within agreed budgetbull M odels and measures of th e relative impact of all
m arketing levers available to assist in th e evaluation targeting of m arketing activity
Im proved Skills and Processes Standardised and transparent m arketing processes developed and agreed within DBX and with Group
bull M arketing team skills targets (b ased on extern al benchmark com parisons) achieved through training and recruitment (where applicable)
Overall DBX seen as one of top 10 FMCG Corsquos servicing key accounts in th e country (and 1 in category)
Customer M arket Focus Sales s taff achieving set targ ets in line with city s trategies for focus on custom er and market issues
bull Assess using distribution by chann el visib ility and trade prom otions
Im proved Skills and Processes Standardised and transp arent sales processes develop ed and agreed within DBX and with Group
bull Sales team skills targets (based on extern al b enchm ark comparisons) achieved through training and recruitment (where applicable)
Organisational Structurebull Clear scope and role statements exis t for all functions (including Sales
amp Marketing)bull Supporting functions (includ ing supply chain) will be achieving all
agreed service level targets with sales amp marketing
Supply ChainCost efficient supp ly chain based on flexib le p roduction lines will deliverbull Increased responsiveness to market dem ands bull Lower cycle timesbull Product channel freshness targe ts
Inform ation System sAppropriate in form ation systems that w ill meet DB Xrsquos needsbull All necessary m anagement inform ation p roduced within p re-agreed tim elines and scales
M anagementbull Senior m anagement w ill be com mitted to working on stra teg y and evalua ted on their
ab ility to coach advise guide and ensure tha t tasks are delega ted effectivelybull Professional m iddle management will exist that w ill be able to ac t m ore independently
within de fined guidelines and have the skills required for their job rolendash Succession plans for key positions wi ll existndash Recruiting and training policies will aim to raise middle manage ment competence to
meet internationa l standards
bullThe ldquoobjective drivenrdquoBalanced Scorecard has emerged as best practice
(V11) November 2001 Introducing the Balanced ScorecardPage 14
2GCActive
Managementcopy 2GC Limited 2001
What is Balanced ScorecardMore than just a set of goals amp measures
Balanced Scorecard design
Balanced Scorecard development
Balanced Scorecard deployment
bull Value from first application
bull Business model reflected in relationship between strategic goals
bull Corporate strategic measurement amp management tool
ndash divisionsndash business unitsndash functions
bull All management Systems aligned with strategy
bull Drive strategic behaviour into everyday decisions and operations
(V11) November 2001 Introducing the Balanced ScorecardPage 15
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard design
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 16
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designWhere to go an how to get there
bullBest practice is to use a development group that comprises the the likely users of the Balanced Scorecard
bullDesign choices should be based on jointly held perception of a strategic ldquoDestinationrdquo
bullThe design should measure progress against the organisationrsquos key strategic objectives (activities and outcomes)
bullLinks between strategic objectives should be articulated ndash these express the management teamrsquos beliefs about which activities drive which outcomes
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 17
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designMonitor progress in achieving goals
bullDevelopment of measures follow clarification and agreement of strategic objectives becausehellip
bullMeasures track progress in achieving those objectives against agreed targets
bullIdentify and monitor extraordinary activities and projects furthering achievement of objectives
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Out
com
es
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development A
ctiv
ities
Act
iviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
Financial Perspective
Objectives Measures Targets Initiatives
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets Initiatives
(V11) November 2001 Introducing the Balanced ScorecardPage 18
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designThe components of a Strategic Balanced Scorecard
bull Financial Marketndash Total NSV pound120m (nominal) ndashndash Has achieved 10 CAGR on NSndash Operating Margin gt10ndash Controllable overheads less thndash Operating Profit pound12m (nomin
Destination StatementDescription of how the organisation will be at some specific future date if the management teamrsquos strategies are successful
Fin
anci
alCu
stom
er
Best value for money
The leading and most innovative
brand
Drive Increased Demand
Profitable Sales Growth
Strategic Linkage Model (SLM)Graphic illustration of ldquocause and effectrdquo relationships between the strategic goals that must be achieved if the organisation is to reach its destination state
ObjectiveObjective DescriptionDescription
Total Shareholder Return is above Groups cost of equity over the medium to long term
Total Shareholder Return is above Groups cost of equity over the medium to long term
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means better than equivalent payments by known Group
Measures (Freq)Measures (Freq)
bull CAGR of Total ShareholdeReturn
bull ROIC (Target gt WACC)
bull CAGR of Total ShareholderReturn
bull ROIC (Target gt WACC)
bull PampL account net tax chargea of profit for financial ye
bull WACC
bull PampL account net tax chargeda of profit for financial yea
bull WACC
Group Strategy Delivers Value
Achieve Optimum Tax Rate amp WACC
F1
F2
Objective and Measure Documentation
ndashClear and concise description of strategic objectives and the measures chosen to track their achievement
F11
F12
-30p
8
150p
18Dividend expected kept a1000 pence leading to loprevious years
Measure Value Target PerfObjective Status
Outperform capital markets
F21 200 185Increasing cash inflow froCash amp a sset
F21 200 185Increasing cash inflow froCash amp a sset
t
Progress Reporting FormatsIllustration of how (and by whom) Scorecard information will be communicated
o Initiative overviewOverview of which initiatives support which Scorecard objectives incl owners and deadlines for finalisation
(V11) November 2001 Introducing the Balanced ScorecardPage 19
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard roll-out
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 20
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard Development Development within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
The optimal role-out
sequence is ldquoTop Downrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 21
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentDevelopment within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
Corporate Balanced Scorecard
Co-ordinatingBalanced Scorecard
Support Function Balanced Scorecard
Operating Unit Balanced Scorecard
Departmental Balanced ScorecardTeam Level
Balanced Scorecard
(V11) November 2001 Introducing the Balanced ScorecardPage 22
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
What
How
What
Board level ScorecardBoard level Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Overall VisionOverall Vision
Subordinate ScorecardSubordinate Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Local VisionLocal Vision
How
TeamIndividual ScorecardTeamIndividual Scorecard
Objectives
Measures amp Targets
Initiatives
TeamIndividual Vision
TeamIndividual Vision
Strategic direction
Strategic direction
Strategy implementation
Strategy implementation
(V11) November 2001 Introducing the Balanced ScorecardPage 23
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 24
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 25
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Strategic alignment amp goal setting
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 26
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Align existing management control tools with strategy
SVA amp EVASVA amp EVAB
udge
tsB
udge
ts
BEMBEMBalanced Scorecard
ABCABC HR ToolsHR Tools
(V11) November 2001 Introducing the Balanced ScorecardPage 27
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Support two-way communication of strategyhellip
Fuzzy objectivesFuzzy objectives
Unjustified trust in informal
Unjustified trust in informal
feedback systems
feedback systemsEntren
ched m
easure
ment
Entren
ched m
easure
ment
system
s
system
s
BSC
(V11) November 2001 Introducing the Balanced ScorecardPage 28
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
Comm
unica
tion Com
munication
Board levelScorecard
process
OperationalScorecard
process
Support function Scorecard
process
Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets
Take action
Create amend
strategic vision
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
Communication
(V11) November 2001 Introducing the Balanced ScorecardPage 29
2GCActive
Managementcopy 2GC Limited 2001
Success criteria
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 30
2GCActive
Managementcopy 2GC Limited 2001
Key success factorsCultural building blocks of Scorecard success
bullInclusive design process building on consensus seeking amp involvement
bullParticipative management style focused on learning open discussion and creative thinking
bullSponsorship and commitment from entire management team -top management in particular
bullldquoEmbeddingrdquo of management processes to use refresh and renew the Balanced Scorecard over time
(V11) November 2001 Introducing the Balanced ScorecardPage 31
2GCActive
Managementcopy 2GC Limited 2001
Introducing the Balanced ScorecardTo find out morehellip
bullVisit 2GCrsquos Web Sitendash We focus specifically on strategic
control and performance measurement issues and have a wide range of working papers FAQs and presentations to download on these topics
ndash The site also has a recommended reading list that covers relevant topics and the ldquoWeblinksrdquo database of relevant Internet sites
bullContact 2GCndash Let us know if you have a question
you canrsquot answer wersquoll do what we can to helphellip
bull info2gccouk
- Introducing the Balanced Scorecard
- Structure of presentation
- General management issuesWhat is this all about
- General management issuesImplementing Strategic Goals
- General management issuesBarriers to effective performance management
- General management issuesRealising the need to change
- What is Balanced Scorecard
- What is a Balanced Scorecard
- What is a Balanced ScorecardBackground amp underlying philosophy
- What is a Balanced ScorecardDo what needs to get donehellip
- What is a Balanced ScorecardDifferent applications for Balanced Scorecard
- What is a Balanced ScorecardStrategic control vs Management control
- What is the Balanced Scorecard The latest Balanced Scorecard thinking
- What is Balanced ScorecardMore than just a set of goals amp measures
- Balanced Scorecard design
- Balanced Scorecard designWhere to go an how to get there
- Balanced Scorecard designMonitor progress in achieving goals
- Balanced Scorecard designThe components of a Strategic Balanced Scorecard
- Balanced Scorecard roll-out
- Balanced Scorecard Development Development within the organisation
- Balanced Scorecard DevelopmentDevelopment within the organisation
- Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
- Balanced Scorecard deployment
- Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
- Balanced Scorecard deployment Strategic alignment amp goal setting
- Balanced Scorecard deployment Align existing management control tools with strategy
- Balanced Scorecard deployment Support two-way communication of strategyhellip
- Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
- Success criteria
- Key success factorsCultural building blocks of Scorecard success
- Introducing the Balanced ScorecardTo find out morehellip
-
(V11) November 2001 Introducing the Balanced ScorecardPage 5
2GCActive
Managementcopy 2GC Limited 2001
General management issuesBarriers to effective performance management
Source Based on paper by John H Lingle and William A Schiemann ldquoFrom balanced scorecard to strategic gauges Is measurement worth itldquo published in ldquoManagement Reviewrdquo Volume 85 Issue 3 Mar 1996 p 56
Fuzzy objectivesFuzzy objectives
Unjustified trust in informal Unjustified trust in informal feedback systemsfeedback systems
Entrenched measurement Entrenched measurement systemssystems
Too many measures and Too many measures and loss of focusloss of focus
(V11) November 2001 Introducing the Balanced ScorecardPage 6
2GCActive
Managementcopy 2GC Limited 2001
General management issuesRealising the need to change
Why
WhatWho
How
When
(V11) November 2001 Introducing the Balanced ScorecardPage 7
2GCActive
Managementcopy 2GC Limited 2001
What is Balanced Scorecard
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 8
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced Scorecard
bullldquoThe idea of the Scorecard is to describe the essential ingredients of business successrdquo(Olve et al ldquoPerformance Driversrdquo)
bullldquoBalanced Scorecard is one of the 15 most important management concepts ever introduced in Harvard Business Reviewrdquo(Harvard Business Review 75th Anniversary issue)
bull50 of North American companies claim to be using Balanced Scorecard(Recent survey by Bain amp Company)
One of the most dangerous forms of human error is forgetting what one is trying to to achievePaul Nitze
(V11) November 2001 Introducing the Balanced ScorecardPage 9
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardBackground amp underlying philosophy
bullWhat is itndash Strategic communication and
performance measurement toolbullOrigins
ndash Developed from a tool developed in 1980s but some similarities with other pre-existing tools
ndash Introduced to wider audience in early 1990rsquos by R Kaplan amp D Norton in series of articles in Harvard Business Review
bullUnderlying philosophyndash Clear communication of goals and
prioritiesndash Learning amp team-working
Internal PerspectiveInternal Perspective
Learning amp Growth PerspectiveLearning amp Growth Perspective
Financial PerspectiveFinancial Perspective
Customer PerspectiveCustomer Perspective
Act
iviti
esO
utco
mes
Act
iviti
esO
utco
mes
Out
com
esO
utco
mes
Act
iviti
esA
ctiv
ities
(V11) November 2001 Introducing the Balanced ScorecardPage 10
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardDo what needs to get donehellip
Are we doing what we set out to do
What do we want to achieve and what must we do to achieve it
Take action
Create amend strategic vision
Createchange linked strategic
objectives
Review results and cause amp effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
(V11) November 2001 Introducing the Balanced ScorecardPage 11
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardDifferent applications for Balanced Scorecard
bullldquoManagement Controlrdquo
ndash Maintain the temperature
bullldquoStrategic Controlrdquondash What temperature
7060 80
D A Y amp N I G H T
HOT OFF COOL
Assess Outcome
Set TargetHeater Run if room is below target temp
Thermostat Compare with
Target
MeasureRoom Temp
(V11) November 2001 Introducing the Balanced ScorecardPage 12
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardStrategic control vs Management control
Organisational hierarchy
Strat
egic
emph
asis
Operational emphasis
(V11) November 2001 Introducing the Balanced ScorecardPage 13
2GCActive
Managementcopy 2GC Limited 2001
What is the Balanced Scorecard The latest Balanced Scorecard thinking
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 6
2GCActive
M anagementcopy 2GC Lim ited 1999
Balanced Scorecard DocumentationObjective M easure Supporting Initiatives
I1 Drive trade term s by channel W e will develop clear trading terms for different custom er groups W e will achieve our targetlevels of availability visibility and trade su pport via these trading terms
bull Trade customers adhering to trade standard terms amongst a sam ple of top XX customers
bull Develop standard trading terms (GG)
I2 Deliver custom er service standards Deliver timely f irst class service to the trade an d retailers
bull Cases delivered in full against order quantity
bull Orders delivered on time
bull Logistics Project (RS)bull SAP Project (PH)
I3 Im plem ent m ajor account m anagem ent programm e W e will continue to treat our custom ers as business partners W e will establish an account developm ent model to ensure high quality relationships exist w ith key account customers
bull of major accounts with a business plan bull Define ldquomajorrdquo accounts (AC)
I4 Deliver exce llent consum er propositions W e must meet consum er needs through the development and communication of an integrated brand proposition In the NPD sector we will launch new products only after they h ave m et pre-agreed qu ality image need and volume criteria
bull Brand Systems signed off by OE bull Develop core brand propositions (AC)bull NPD Process Improvement (ACAD)bull Cream ing project (AD)
I5 Deliver exce llent internal custom er service W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull SLA Qualitative Evaluations by SLA ow ners bull Logistics Project (RS)bull Factory Cost Reduction (DL)
I6 Effective m anagem ent of com pany assets W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull Total working capitalbull Fixed Asset Utilisationbull Outstanding Debtor Da ys
bull Plant ration alisation (AD)bull L4 L2 (DL)bull SAP (RS)
I7 Effective control of the business (No Surprises) W e will heighten our efforts to streamline the organisation to h elpdrive sound asset managem ent and cost reduction W e will invoke a cost conscious culture to complem ent our stream lining efforts
bull ldquoNo surprisesrdquo evaluation of actual performance against budget or forecast for- stock cover per city- sales per city- national costs
bull Analyse Risk project (PS)
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 6
2GCActive
M anagementcopy 2GC Lim ited 1999
Balanced Scorecard DocumentationObjective M easure Supporting Initiatives
I1 Drive trade term s by channel W e will develop clear trading terms for different custom er groups W e will achieve our targetlevels of availability visibility and trade su pport via these trading terms
bull Trade customers adhering to trade standard terms amongst a sam ple of top XX customers
bull Develop standard trading terms (GG)
I2 Deliver custom er service standards Deliver timely f irst class service to the trade an d retailers
bull Cases delivered in full against order quantity
bull Orders delivered on time
bull Logistics Project (RS)bull SAP Project (PH)
I3 Im plem ent m ajor account m anagem ent programm e W e will continue to treat our custom ers as business partners W e will establish an account developm ent model to ensure high quality relationships exist w ith key account customers
bull of major accounts with a business plan bull Define ldquomajorrdquo accounts (AC)
I4 Deliver exce llent consum er propositions W e must meet consum er needs through the development and communication of an integrated brand proposition In the NPD sector we will launch new products only after they h ave m et pre-agreed qu ality image need and volume criteria
bull Brand Systems signed off by OE bull Develop core brand propositions (AC)bull NPD Process Improvement (ACAD)bull Cream ing project (AD)
I5 Deliver exce llent internal custom er service W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull SLA Qualitative Evaluations by SLA ow ners bull Logistics Project (RS)bull Factory Cost Reduction (DL)
I6 Effective m anagem ent of com pany assets W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull Total working capitalbull Fixed Asset Utilisationbull Outstanding Debtor Da ys
bull Plant ration alisation (AD)bull L4 L2 (DL)bull SAP (RS)
I7 Effective control of the business (No Surprises) W e will heighten our efforts to streamline the organisation to h elpdrive sound asset managem ent and cost reduction W e will invoke a cost conscious culture to complem ent our stream lining efforts
bull ldquoNo surprisesrdquo evaluation of actual performance against budget or forecast for- stock cover per city- sales per city- national costs
bull Analyse Risk project (PS)
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 5
2GCActive
M anagementcopy 2GC Limited 1999
Strategic Linkage M odel
Fina
ncia
l Pe
rspe
ctiv
eC
usto
mer
Per
spec
tive
Lear
ning
amp G
row
th
Pe
rspe
ctiv
eIn
tern
al
Per
spec
tive
DBX Understands and Responds to m y Needs
DBX Products are m y First Choice Products
DBX Products are Good Value for Money
DBX Products are V isible and Availab le
DBX has an Excellent Consumer Franchise
Drive Trade Term s by Channel
Im plem ent Major Account Managem ent
Program m e
Effective Control of Business (No Surprises)
Sales Growth (by City by P roduct)
Gross Contribution (After City Sales and
Marketing)Asset Turn Overheads as a of
NSV
Improved Shareh older Value (ROCE)
I Have a Good Relationship with DBX
Develop Better W ork P ractices and IS
Develop and Retain P rofessional M anagers
Develop Service Agreem ents
Effective M anagem ent o f Com pany Assets
Deliver Excellent In ternal Custom er
ServiceDeliver Custom er
Service Standards
Develop Professional Custom er Oriented Skilled
Sales Force
Deliver Excellent Consum er
Propositions
Understand Im pact O f Various M arketing Levers
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 5
2GCActive
M anagementcopy 2GC Limited 1999
Strategic Linkage M odel
Fina
ncia
l Pe
rspe
ctiv
eC
usto
mer
Per
spec
tive
Lear
ning
amp G
row
th
Pe
rspe
ctiv
eIn
tern
al
Per
spec
tive
DBX Understands and Responds to m y Needs
DBX Products are m y First Choice Products
DBX Products are Good Value for Money
DBX Products are V isible and Availab le
DBX has an Excellent Consumer Franchise
Drive Trade Term s by Channel
Im plem ent Major Account Managem ent
Program m e
Effective Control of Business (No Surprises)
Sales Growth (by City by P roduct)
Gross Contribution (After City Sales and
Marketing)Asset Turn Overheads as a of
NSV
Improved Shareh older Value (ROCE)
I Have a Good Relationship with DBX
Develop Better W ork P ractices and IS
Develop and Retain P rofessional M anagers
Develop Service Agreem ents
Effective M anagem ent o f Com pany Assets
Deliver Excellent In ternal Custom er
ServiceDeliver Custom er
Service Standards
Develop Professional Custom er Oriented Skilled
Sales Force
Deliver Excellent Consum er
Propositions
Understand Im pact O f Various M arketing Levers
21 November 2001 2GC Limited Introduction to 2GC Active ManagementPage 4
2GCActive
M anagem entcopy 2GC Limited 1999
Destination Statem entSales Volume50000 MT
Distribution50 Cities
Sales Revenue pound 50 M illion
One M anufacturing Site
ROCE 7Capital Em ployed No m ore th an pound45 million
Product Manager
Marketing Director
Factory Director
Manufacturing Director
Regional Sales Manager
Sales Director
Managing Director
No m ore than 6 Core Brand ProductsMinimum sales volum esndash 5000 MT for each core brandndash 2000M T for each m ajor product
Employer of Choice ( 1 in industry and ranked in FM CG top 10)
Marketing SalesBranding Clear brand propositions systems
established for the six core brandsbull DBX has two of th e top five category product brandsbull Producthouse brand awaren ess targets in DBX city
strategies achievedM edia and promotional strategy City market share
targets achieved within agreed budgetbull M odels and measures of th e relative impact of all
m arketing levers available to assist in th e evaluation targeting of m arketing activity
Im proved Skills and Processes Standardised and transparent m arketing processes developed and agreed within DBX and with Group
bull M arketing team skills targets (b ased on extern al benchmark com parisons) achieved through training and recruitment (where applicable)
Overall DBX seen as one of top 10 FMCG Corsquos servicing key accounts in th e country (and 1 in category)
Customer M arket Focus Sales s taff achieving set targ ets in line with city s trategies for focus on custom er and market issues
bull Assess using distribution by chann el visib ility and trade prom otions
Im proved Skills and Processes Standardised and transp arent sales processes develop ed and agreed within DBX and with Group
bull Sales team skills targets (based on extern al b enchm ark comparisons) achieved through training and recruitment (where applicable)
Organisational Structurebull Clear scope and role statements exis t for all functions (including Sales
amp Marketing)bull Supporting functions (includ ing supply chain) will be achieving all
agreed service level targets with sales amp marketing
Supply ChainCost efficient supp ly chain based on flexib le p roduction lines will deliverbull Increased responsiveness to market dem ands bull Lower cycle timesbull Product channel freshness targe ts
Inform ation System sAppropriate in form ation systems that w ill meet DB Xrsquos needsbull All necessary m anagement inform ation p roduced within p re-agreed tim elines and scales
M anagementbull Senior m anagement w ill be com mitted to working on stra teg y and evalua ted on their
ab ility to coach advise guide and ensure tha t tasks are delega ted effectivelybull Professional m iddle management will exist that w ill be able to ac t m ore independently
within de fined guidelines and have the skills required for their job rolendash Succession plans for key positions wi ll existndash Recruiting and training policies will aim to raise middle manage ment competence to
meet internationa l standards
21 November 2001 2GC Limited Introduction to 2GC Active ManagementPage 4
2GCActive
M anagem entcopy 2GC Limited 1999
Destination Statem entSales Volume50000 MT
Distribution50 Cities
Sales Revenue pound 50 M illion
One M anufacturing Site
ROCE 7Capital Em ployed No m ore th an pound45 million
Product Manager
Marketing Director
Factory Director
Manufacturing Director
Regional Sales Manager
Sales Director
Managing Director
No m ore than 6 Core Brand ProductsMinimum sales volum esndash 5000 MT for each core brandndash 2000M T for each m ajor product
Employer of Choice ( 1 in industry and ranked in FM CG top 10)
Marketing SalesBranding Clear brand propositions systems
established for the six core brandsbull DBX has two of th e top five category product brandsbull Producthouse brand awaren ess targets in DBX city
strategies achievedM edia and promotional strategy City market share
targets achieved within agreed budgetbull M odels and measures of th e relative impact of all
m arketing levers available to assist in th e evaluation targeting of m arketing activity
Im proved Skills and Processes Standardised and transparent m arketing processes developed and agreed within DBX and with Group
bull M arketing team skills targets (b ased on extern al benchmark com parisons) achieved through training and recruitment (where applicable)
Overall DBX seen as one of top 10 FMCG Corsquos servicing key accounts in th e country (and 1 in category)
Customer M arket Focus Sales s taff achieving set targ ets in line with city s trategies for focus on custom er and market issues
bull Assess using distribution by chann el visib ility and trade prom otions
Im proved Skills and Processes Standardised and transp arent sales processes develop ed and agreed within DBX and with Group
bull Sales team skills targets (based on extern al b enchm ark comparisons) achieved through training and recruitment (where applicable)
Organisational Structurebull Clear scope and role statements exis t for all functions (including Sales
amp Marketing)bull Supporting functions (includ ing supply chain) will be achieving all
agreed service level targets with sales amp marketing
Supply ChainCost efficient supp ly chain based on flexib le p roduction lines will deliverbull Increased responsiveness to market dem ands bull Lower cycle timesbull Product channel freshness targe ts
Inform ation System sAppropriate in form ation systems that w ill meet DB Xrsquos needsbull All necessary m anagement inform ation p roduced within p re-agreed tim elines and scales
M anagementbull Senior m anagement w ill be com mitted to working on stra teg y and evalua ted on their
ab ility to coach advise guide and ensure tha t tasks are delega ted effectivelybull Professional m iddle management will exist that w ill be able to ac t m ore independently
within de fined guidelines and have the skills required for their job rolendash Succession plans for key positions wi ll existndash Recruiting and training policies will aim to raise middle manage ment competence to
meet internationa l standards
bullThe ldquoobjective drivenrdquoBalanced Scorecard has emerged as best practice
(V11) November 2001 Introducing the Balanced ScorecardPage 14
2GCActive
Managementcopy 2GC Limited 2001
What is Balanced ScorecardMore than just a set of goals amp measures
Balanced Scorecard design
Balanced Scorecard development
Balanced Scorecard deployment
bull Value from first application
bull Business model reflected in relationship between strategic goals
bull Corporate strategic measurement amp management tool
ndash divisionsndash business unitsndash functions
bull All management Systems aligned with strategy
bull Drive strategic behaviour into everyday decisions and operations
(V11) November 2001 Introducing the Balanced ScorecardPage 15
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard design
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 16
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designWhere to go an how to get there
bullBest practice is to use a development group that comprises the the likely users of the Balanced Scorecard
bullDesign choices should be based on jointly held perception of a strategic ldquoDestinationrdquo
bullThe design should measure progress against the organisationrsquos key strategic objectives (activities and outcomes)
bullLinks between strategic objectives should be articulated ndash these express the management teamrsquos beliefs about which activities drive which outcomes
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 17
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designMonitor progress in achieving goals
bullDevelopment of measures follow clarification and agreement of strategic objectives becausehellip
bullMeasures track progress in achieving those objectives against agreed targets
bullIdentify and monitor extraordinary activities and projects furthering achievement of objectives
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Out
com
es
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development A
ctiv
ities
Act
iviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
Financial Perspective
Objectives Measures Targets Initiatives
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets Initiatives
(V11) November 2001 Introducing the Balanced ScorecardPage 18
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designThe components of a Strategic Balanced Scorecard
bull Financial Marketndash Total NSV pound120m (nominal) ndashndash Has achieved 10 CAGR on NSndash Operating Margin gt10ndash Controllable overheads less thndash Operating Profit pound12m (nomin
Destination StatementDescription of how the organisation will be at some specific future date if the management teamrsquos strategies are successful
Fin
anci
alCu
stom
er
Best value for money
The leading and most innovative
brand
Drive Increased Demand
Profitable Sales Growth
Strategic Linkage Model (SLM)Graphic illustration of ldquocause and effectrdquo relationships between the strategic goals that must be achieved if the organisation is to reach its destination state
ObjectiveObjective DescriptionDescription
Total Shareholder Return is above Groups cost of equity over the medium to long term
Total Shareholder Return is above Groups cost of equity over the medium to long term
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means better than equivalent payments by known Group
Measures (Freq)Measures (Freq)
bull CAGR of Total ShareholdeReturn
bull ROIC (Target gt WACC)
bull CAGR of Total ShareholderReturn
bull ROIC (Target gt WACC)
bull PampL account net tax chargea of profit for financial ye
bull WACC
bull PampL account net tax chargeda of profit for financial yea
bull WACC
Group Strategy Delivers Value
Achieve Optimum Tax Rate amp WACC
F1
F2
Objective and Measure Documentation
ndashClear and concise description of strategic objectives and the measures chosen to track their achievement
F11
F12
-30p
8
150p
18Dividend expected kept a1000 pence leading to loprevious years
Measure Value Target PerfObjective Status
Outperform capital markets
F21 200 185Increasing cash inflow froCash amp a sset
F21 200 185Increasing cash inflow froCash amp a sset
t
Progress Reporting FormatsIllustration of how (and by whom) Scorecard information will be communicated
o Initiative overviewOverview of which initiatives support which Scorecard objectives incl owners and deadlines for finalisation
(V11) November 2001 Introducing the Balanced ScorecardPage 19
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard roll-out
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 20
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard Development Development within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
The optimal role-out
sequence is ldquoTop Downrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 21
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentDevelopment within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
Corporate Balanced Scorecard
Co-ordinatingBalanced Scorecard
Support Function Balanced Scorecard
Operating Unit Balanced Scorecard
Departmental Balanced ScorecardTeam Level
Balanced Scorecard
(V11) November 2001 Introducing the Balanced ScorecardPage 22
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
What
How
What
Board level ScorecardBoard level Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Overall VisionOverall Vision
Subordinate ScorecardSubordinate Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Local VisionLocal Vision
How
TeamIndividual ScorecardTeamIndividual Scorecard
Objectives
Measures amp Targets
Initiatives
TeamIndividual Vision
TeamIndividual Vision
Strategic direction
Strategic direction
Strategy implementation
Strategy implementation
(V11) November 2001 Introducing the Balanced ScorecardPage 23
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 24
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 25
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Strategic alignment amp goal setting
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 26
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Align existing management control tools with strategy
SVA amp EVASVA amp EVAB
udge
tsB
udge
ts
BEMBEMBalanced Scorecard
ABCABC HR ToolsHR Tools
(V11) November 2001 Introducing the Balanced ScorecardPage 27
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Support two-way communication of strategyhellip
Fuzzy objectivesFuzzy objectives
Unjustified trust in informal
Unjustified trust in informal
feedback systems
feedback systemsEntren
ched m
easure
ment
Entren
ched m
easure
ment
system
s
system
s
BSC
(V11) November 2001 Introducing the Balanced ScorecardPage 28
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
Comm
unica
tion Com
munication
Board levelScorecard
process
OperationalScorecard
process
Support function Scorecard
process
Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets
Take action
Create amend
strategic vision
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
Communication
(V11) November 2001 Introducing the Balanced ScorecardPage 29
2GCActive
Managementcopy 2GC Limited 2001
Success criteria
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 30
2GCActive
Managementcopy 2GC Limited 2001
Key success factorsCultural building blocks of Scorecard success
bullInclusive design process building on consensus seeking amp involvement
bullParticipative management style focused on learning open discussion and creative thinking
bullSponsorship and commitment from entire management team -top management in particular
bullldquoEmbeddingrdquo of management processes to use refresh and renew the Balanced Scorecard over time
(V11) November 2001 Introducing the Balanced ScorecardPage 31
2GCActive
Managementcopy 2GC Limited 2001
Introducing the Balanced ScorecardTo find out morehellip
bullVisit 2GCrsquos Web Sitendash We focus specifically on strategic
control and performance measurement issues and have a wide range of working papers FAQs and presentations to download on these topics
ndash The site also has a recommended reading list that covers relevant topics and the ldquoWeblinksrdquo database of relevant Internet sites
bullContact 2GCndash Let us know if you have a question
you canrsquot answer wersquoll do what we can to helphellip
bull info2gccouk
- Introducing the Balanced Scorecard
- Structure of presentation
- General management issuesWhat is this all about
- General management issuesImplementing Strategic Goals
- General management issuesBarriers to effective performance management
- General management issuesRealising the need to change
- What is Balanced Scorecard
- What is a Balanced Scorecard
- What is a Balanced ScorecardBackground amp underlying philosophy
- What is a Balanced ScorecardDo what needs to get donehellip
- What is a Balanced ScorecardDifferent applications for Balanced Scorecard
- What is a Balanced ScorecardStrategic control vs Management control
- What is the Balanced Scorecard The latest Balanced Scorecard thinking
- What is Balanced ScorecardMore than just a set of goals amp measures
- Balanced Scorecard design
- Balanced Scorecard designWhere to go an how to get there
- Balanced Scorecard designMonitor progress in achieving goals
- Balanced Scorecard designThe components of a Strategic Balanced Scorecard
- Balanced Scorecard roll-out
- Balanced Scorecard Development Development within the organisation
- Balanced Scorecard DevelopmentDevelopment within the organisation
- Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
- Balanced Scorecard deployment
- Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
- Balanced Scorecard deployment Strategic alignment amp goal setting
- Balanced Scorecard deployment Align existing management control tools with strategy
- Balanced Scorecard deployment Support two-way communication of strategyhellip
- Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
- Success criteria
- Key success factorsCultural building blocks of Scorecard success
- Introducing the Balanced ScorecardTo find out morehellip
-
(V11) November 2001 Introducing the Balanced ScorecardPage 6
2GCActive
Managementcopy 2GC Limited 2001
General management issuesRealising the need to change
Why
WhatWho
How
When
(V11) November 2001 Introducing the Balanced ScorecardPage 7
2GCActive
Managementcopy 2GC Limited 2001
What is Balanced Scorecard
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 8
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced Scorecard
bullldquoThe idea of the Scorecard is to describe the essential ingredients of business successrdquo(Olve et al ldquoPerformance Driversrdquo)
bullldquoBalanced Scorecard is one of the 15 most important management concepts ever introduced in Harvard Business Reviewrdquo(Harvard Business Review 75th Anniversary issue)
bull50 of North American companies claim to be using Balanced Scorecard(Recent survey by Bain amp Company)
One of the most dangerous forms of human error is forgetting what one is trying to to achievePaul Nitze
(V11) November 2001 Introducing the Balanced ScorecardPage 9
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardBackground amp underlying philosophy
bullWhat is itndash Strategic communication and
performance measurement toolbullOrigins
ndash Developed from a tool developed in 1980s but some similarities with other pre-existing tools
ndash Introduced to wider audience in early 1990rsquos by R Kaplan amp D Norton in series of articles in Harvard Business Review
bullUnderlying philosophyndash Clear communication of goals and
prioritiesndash Learning amp team-working
Internal PerspectiveInternal Perspective
Learning amp Growth PerspectiveLearning amp Growth Perspective
Financial PerspectiveFinancial Perspective
Customer PerspectiveCustomer Perspective
Act
iviti
esO
utco
mes
Act
iviti
esO
utco
mes
Out
com
esO
utco
mes
Act
iviti
esA
ctiv
ities
(V11) November 2001 Introducing the Balanced ScorecardPage 10
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardDo what needs to get donehellip
Are we doing what we set out to do
What do we want to achieve and what must we do to achieve it
Take action
Create amend strategic vision
Createchange linked strategic
objectives
Review results and cause amp effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
(V11) November 2001 Introducing the Balanced ScorecardPage 11
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardDifferent applications for Balanced Scorecard
bullldquoManagement Controlrdquo
ndash Maintain the temperature
bullldquoStrategic Controlrdquondash What temperature
7060 80
D A Y amp N I G H T
HOT OFF COOL
Assess Outcome
Set TargetHeater Run if room is below target temp
Thermostat Compare with
Target
MeasureRoom Temp
(V11) November 2001 Introducing the Balanced ScorecardPage 12
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardStrategic control vs Management control
Organisational hierarchy
Strat
egic
emph
asis
Operational emphasis
(V11) November 2001 Introducing the Balanced ScorecardPage 13
2GCActive
Managementcopy 2GC Limited 2001
What is the Balanced Scorecard The latest Balanced Scorecard thinking
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 6
2GCActive
M anagementcopy 2GC Lim ited 1999
Balanced Scorecard DocumentationObjective M easure Supporting Initiatives
I1 Drive trade term s by channel W e will develop clear trading terms for different custom er groups W e will achieve our targetlevels of availability visibility and trade su pport via these trading terms
bull Trade customers adhering to trade standard terms amongst a sam ple of top XX customers
bull Develop standard trading terms (GG)
I2 Deliver custom er service standards Deliver timely f irst class service to the trade an d retailers
bull Cases delivered in full against order quantity
bull Orders delivered on time
bull Logistics Project (RS)bull SAP Project (PH)
I3 Im plem ent m ajor account m anagem ent programm e W e will continue to treat our custom ers as business partners W e will establish an account developm ent model to ensure high quality relationships exist w ith key account customers
bull of major accounts with a business plan bull Define ldquomajorrdquo accounts (AC)
I4 Deliver exce llent consum er propositions W e must meet consum er needs through the development and communication of an integrated brand proposition In the NPD sector we will launch new products only after they h ave m et pre-agreed qu ality image need and volume criteria
bull Brand Systems signed off by OE bull Develop core brand propositions (AC)bull NPD Process Improvement (ACAD)bull Cream ing project (AD)
I5 Deliver exce llent internal custom er service W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull SLA Qualitative Evaluations by SLA ow ners bull Logistics Project (RS)bull Factory Cost Reduction (DL)
I6 Effective m anagem ent of com pany assets W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull Total working capitalbull Fixed Asset Utilisationbull Outstanding Debtor Da ys
bull Plant ration alisation (AD)bull L4 L2 (DL)bull SAP (RS)
I7 Effective control of the business (No Surprises) W e will heighten our efforts to streamline the organisation to h elpdrive sound asset managem ent and cost reduction W e will invoke a cost conscious culture to complem ent our stream lining efforts
bull ldquoNo surprisesrdquo evaluation of actual performance against budget or forecast for- stock cover per city- sales per city- national costs
bull Analyse Risk project (PS)
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 6
2GCActive
M anagementcopy 2GC Lim ited 1999
Balanced Scorecard DocumentationObjective M easure Supporting Initiatives
I1 Drive trade term s by channel W e will develop clear trading terms for different custom er groups W e will achieve our targetlevels of availability visibility and trade su pport via these trading terms
bull Trade customers adhering to trade standard terms amongst a sam ple of top XX customers
bull Develop standard trading terms (GG)
I2 Deliver custom er service standards Deliver timely f irst class service to the trade an d retailers
bull Cases delivered in full against order quantity
bull Orders delivered on time
bull Logistics Project (RS)bull SAP Project (PH)
I3 Im plem ent m ajor account m anagem ent programm e W e will continue to treat our custom ers as business partners W e will establish an account developm ent model to ensure high quality relationships exist w ith key account customers
bull of major accounts with a business plan bull Define ldquomajorrdquo accounts (AC)
I4 Deliver exce llent consum er propositions W e must meet consum er needs through the development and communication of an integrated brand proposition In the NPD sector we will launch new products only after they h ave m et pre-agreed qu ality image need and volume criteria
bull Brand Systems signed off by OE bull Develop core brand propositions (AC)bull NPD Process Improvement (ACAD)bull Cream ing project (AD)
I5 Deliver exce llent internal custom er service W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull SLA Qualitative Evaluations by SLA ow ners bull Logistics Project (RS)bull Factory Cost Reduction (DL)
I6 Effective m anagem ent of com pany assets W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull Total working capitalbull Fixed Asset Utilisationbull Outstanding Debtor Da ys
bull Plant ration alisation (AD)bull L4 L2 (DL)bull SAP (RS)
I7 Effective control of the business (No Surprises) W e will heighten our efforts to streamline the organisation to h elpdrive sound asset managem ent and cost reduction W e will invoke a cost conscious culture to complem ent our stream lining efforts
bull ldquoNo surprisesrdquo evaluation of actual performance against budget or forecast for- stock cover per city- sales per city- national costs
bull Analyse Risk project (PS)
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 5
2GCActive
M anagementcopy 2GC Limited 1999
Strategic Linkage M odel
Fina
ncia
l Pe
rspe
ctiv
eC
usto
mer
Per
spec
tive
Lear
ning
amp G
row
th
Pe
rspe
ctiv
eIn
tern
al
Per
spec
tive
DBX Understands and Responds to m y Needs
DBX Products are m y First Choice Products
DBX Products are Good Value for Money
DBX Products are V isible and Availab le
DBX has an Excellent Consumer Franchise
Drive Trade Term s by Channel
Im plem ent Major Account Managem ent
Program m e
Effective Control of Business (No Surprises)
Sales Growth (by City by P roduct)
Gross Contribution (After City Sales and
Marketing)Asset Turn Overheads as a of
NSV
Improved Shareh older Value (ROCE)
I Have a Good Relationship with DBX
Develop Better W ork P ractices and IS
Develop and Retain P rofessional M anagers
Develop Service Agreem ents
Effective M anagem ent o f Com pany Assets
Deliver Excellent In ternal Custom er
ServiceDeliver Custom er
Service Standards
Develop Professional Custom er Oriented Skilled
Sales Force
Deliver Excellent Consum er
Propositions
Understand Im pact O f Various M arketing Levers
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 5
2GCActive
M anagementcopy 2GC Limited 1999
Strategic Linkage M odel
Fina
ncia
l Pe
rspe
ctiv
eC
usto
mer
Per
spec
tive
Lear
ning
amp G
row
th
Pe
rspe
ctiv
eIn
tern
al
Per
spec
tive
DBX Understands and Responds to m y Needs
DBX Products are m y First Choice Products
DBX Products are Good Value for Money
DBX Products are V isible and Availab le
DBX has an Excellent Consumer Franchise
Drive Trade Term s by Channel
Im plem ent Major Account Managem ent
Program m e
Effective Control of Business (No Surprises)
Sales Growth (by City by P roduct)
Gross Contribution (After City Sales and
Marketing)Asset Turn Overheads as a of
NSV
Improved Shareh older Value (ROCE)
I Have a Good Relationship with DBX
Develop Better W ork P ractices and IS
Develop and Retain P rofessional M anagers
Develop Service Agreem ents
Effective M anagem ent o f Com pany Assets
Deliver Excellent In ternal Custom er
ServiceDeliver Custom er
Service Standards
Develop Professional Custom er Oriented Skilled
Sales Force
Deliver Excellent Consum er
Propositions
Understand Im pact O f Various M arketing Levers
21 November 2001 2GC Limited Introduction to 2GC Active ManagementPage 4
2GCActive
M anagem entcopy 2GC Limited 1999
Destination Statem entSales Volume50000 MT
Distribution50 Cities
Sales Revenue pound 50 M illion
One M anufacturing Site
ROCE 7Capital Em ployed No m ore th an pound45 million
Product Manager
Marketing Director
Factory Director
Manufacturing Director
Regional Sales Manager
Sales Director
Managing Director
No m ore than 6 Core Brand ProductsMinimum sales volum esndash 5000 MT for each core brandndash 2000M T for each m ajor product
Employer of Choice ( 1 in industry and ranked in FM CG top 10)
Marketing SalesBranding Clear brand propositions systems
established for the six core brandsbull DBX has two of th e top five category product brandsbull Producthouse brand awaren ess targets in DBX city
strategies achievedM edia and promotional strategy City market share
targets achieved within agreed budgetbull M odels and measures of th e relative impact of all
m arketing levers available to assist in th e evaluation targeting of m arketing activity
Im proved Skills and Processes Standardised and transparent m arketing processes developed and agreed within DBX and with Group
bull M arketing team skills targets (b ased on extern al benchmark com parisons) achieved through training and recruitment (where applicable)
Overall DBX seen as one of top 10 FMCG Corsquos servicing key accounts in th e country (and 1 in category)
Customer M arket Focus Sales s taff achieving set targ ets in line with city s trategies for focus on custom er and market issues
bull Assess using distribution by chann el visib ility and trade prom otions
Im proved Skills and Processes Standardised and transp arent sales processes develop ed and agreed within DBX and with Group
bull Sales team skills targets (based on extern al b enchm ark comparisons) achieved through training and recruitment (where applicable)
Organisational Structurebull Clear scope and role statements exis t for all functions (including Sales
amp Marketing)bull Supporting functions (includ ing supply chain) will be achieving all
agreed service level targets with sales amp marketing
Supply ChainCost efficient supp ly chain based on flexib le p roduction lines will deliverbull Increased responsiveness to market dem ands bull Lower cycle timesbull Product channel freshness targe ts
Inform ation System sAppropriate in form ation systems that w ill meet DB Xrsquos needsbull All necessary m anagement inform ation p roduced within p re-agreed tim elines and scales
M anagementbull Senior m anagement w ill be com mitted to working on stra teg y and evalua ted on their
ab ility to coach advise guide and ensure tha t tasks are delega ted effectivelybull Professional m iddle management will exist that w ill be able to ac t m ore independently
within de fined guidelines and have the skills required for their job rolendash Succession plans for key positions wi ll existndash Recruiting and training policies will aim to raise middle manage ment competence to
meet internationa l standards
21 November 2001 2GC Limited Introduction to 2GC Active ManagementPage 4
2GCActive
M anagem entcopy 2GC Limited 1999
Destination Statem entSales Volume50000 MT
Distribution50 Cities
Sales Revenue pound 50 M illion
One M anufacturing Site
ROCE 7Capital Em ployed No m ore th an pound45 million
Product Manager
Marketing Director
Factory Director
Manufacturing Director
Regional Sales Manager
Sales Director
Managing Director
No m ore than 6 Core Brand ProductsMinimum sales volum esndash 5000 MT for each core brandndash 2000M T for each m ajor product
Employer of Choice ( 1 in industry and ranked in FM CG top 10)
Marketing SalesBranding Clear brand propositions systems
established for the six core brandsbull DBX has two of th e top five category product brandsbull Producthouse brand awaren ess targets in DBX city
strategies achievedM edia and promotional strategy City market share
targets achieved within agreed budgetbull M odels and measures of th e relative impact of all
m arketing levers available to assist in th e evaluation targeting of m arketing activity
Im proved Skills and Processes Standardised and transparent m arketing processes developed and agreed within DBX and with Group
bull M arketing team skills targets (b ased on extern al benchmark com parisons) achieved through training and recruitment (where applicable)
Overall DBX seen as one of top 10 FMCG Corsquos servicing key accounts in th e country (and 1 in category)
Customer M arket Focus Sales s taff achieving set targ ets in line with city s trategies for focus on custom er and market issues
bull Assess using distribution by chann el visib ility and trade prom otions
Im proved Skills and Processes Standardised and transp arent sales processes develop ed and agreed within DBX and with Group
bull Sales team skills targets (based on extern al b enchm ark comparisons) achieved through training and recruitment (where applicable)
Organisational Structurebull Clear scope and role statements exis t for all functions (including Sales
amp Marketing)bull Supporting functions (includ ing supply chain) will be achieving all
agreed service level targets with sales amp marketing
Supply ChainCost efficient supp ly chain based on flexib le p roduction lines will deliverbull Increased responsiveness to market dem ands bull Lower cycle timesbull Product channel freshness targe ts
Inform ation System sAppropriate in form ation systems that w ill meet DB Xrsquos needsbull All necessary m anagement inform ation p roduced within p re-agreed tim elines and scales
M anagementbull Senior m anagement w ill be com mitted to working on stra teg y and evalua ted on their
ab ility to coach advise guide and ensure tha t tasks are delega ted effectivelybull Professional m iddle management will exist that w ill be able to ac t m ore independently
within de fined guidelines and have the skills required for their job rolendash Succession plans for key positions wi ll existndash Recruiting and training policies will aim to raise middle manage ment competence to
meet internationa l standards
bullThe ldquoobjective drivenrdquoBalanced Scorecard has emerged as best practice
(V11) November 2001 Introducing the Balanced ScorecardPage 14
2GCActive
Managementcopy 2GC Limited 2001
What is Balanced ScorecardMore than just a set of goals amp measures
Balanced Scorecard design
Balanced Scorecard development
Balanced Scorecard deployment
bull Value from first application
bull Business model reflected in relationship between strategic goals
bull Corporate strategic measurement amp management tool
ndash divisionsndash business unitsndash functions
bull All management Systems aligned with strategy
bull Drive strategic behaviour into everyday decisions and operations
(V11) November 2001 Introducing the Balanced ScorecardPage 15
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard design
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 16
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designWhere to go an how to get there
bullBest practice is to use a development group that comprises the the likely users of the Balanced Scorecard
bullDesign choices should be based on jointly held perception of a strategic ldquoDestinationrdquo
bullThe design should measure progress against the organisationrsquos key strategic objectives (activities and outcomes)
bullLinks between strategic objectives should be articulated ndash these express the management teamrsquos beliefs about which activities drive which outcomes
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 17
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designMonitor progress in achieving goals
bullDevelopment of measures follow clarification and agreement of strategic objectives becausehellip
bullMeasures track progress in achieving those objectives against agreed targets
bullIdentify and monitor extraordinary activities and projects furthering achievement of objectives
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Out
com
es
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development A
ctiv
ities
Act
iviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
Financial Perspective
Objectives Measures Targets Initiatives
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets Initiatives
(V11) November 2001 Introducing the Balanced ScorecardPage 18
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designThe components of a Strategic Balanced Scorecard
bull Financial Marketndash Total NSV pound120m (nominal) ndashndash Has achieved 10 CAGR on NSndash Operating Margin gt10ndash Controllable overheads less thndash Operating Profit pound12m (nomin
Destination StatementDescription of how the organisation will be at some specific future date if the management teamrsquos strategies are successful
Fin
anci
alCu
stom
er
Best value for money
The leading and most innovative
brand
Drive Increased Demand
Profitable Sales Growth
Strategic Linkage Model (SLM)Graphic illustration of ldquocause and effectrdquo relationships between the strategic goals that must be achieved if the organisation is to reach its destination state
ObjectiveObjective DescriptionDescription
Total Shareholder Return is above Groups cost of equity over the medium to long term
Total Shareholder Return is above Groups cost of equity over the medium to long term
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means better than equivalent payments by known Group
Measures (Freq)Measures (Freq)
bull CAGR of Total ShareholdeReturn
bull ROIC (Target gt WACC)
bull CAGR of Total ShareholderReturn
bull ROIC (Target gt WACC)
bull PampL account net tax chargea of profit for financial ye
bull WACC
bull PampL account net tax chargeda of profit for financial yea
bull WACC
Group Strategy Delivers Value
Achieve Optimum Tax Rate amp WACC
F1
F2
Objective and Measure Documentation
ndashClear and concise description of strategic objectives and the measures chosen to track their achievement
F11
F12
-30p
8
150p
18Dividend expected kept a1000 pence leading to loprevious years
Measure Value Target PerfObjective Status
Outperform capital markets
F21 200 185Increasing cash inflow froCash amp a sset
F21 200 185Increasing cash inflow froCash amp a sset
t
Progress Reporting FormatsIllustration of how (and by whom) Scorecard information will be communicated
o Initiative overviewOverview of which initiatives support which Scorecard objectives incl owners and deadlines for finalisation
(V11) November 2001 Introducing the Balanced ScorecardPage 19
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard roll-out
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 20
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard Development Development within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
The optimal role-out
sequence is ldquoTop Downrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 21
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentDevelopment within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
Corporate Balanced Scorecard
Co-ordinatingBalanced Scorecard
Support Function Balanced Scorecard
Operating Unit Balanced Scorecard
Departmental Balanced ScorecardTeam Level
Balanced Scorecard
(V11) November 2001 Introducing the Balanced ScorecardPage 22
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
What
How
What
Board level ScorecardBoard level Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Overall VisionOverall Vision
Subordinate ScorecardSubordinate Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Local VisionLocal Vision
How
TeamIndividual ScorecardTeamIndividual Scorecard
Objectives
Measures amp Targets
Initiatives
TeamIndividual Vision
TeamIndividual Vision
Strategic direction
Strategic direction
Strategy implementation
Strategy implementation
(V11) November 2001 Introducing the Balanced ScorecardPage 23
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 24
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 25
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Strategic alignment amp goal setting
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 26
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Align existing management control tools with strategy
SVA amp EVASVA amp EVAB
udge
tsB
udge
ts
BEMBEMBalanced Scorecard
ABCABC HR ToolsHR Tools
(V11) November 2001 Introducing the Balanced ScorecardPage 27
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Support two-way communication of strategyhellip
Fuzzy objectivesFuzzy objectives
Unjustified trust in informal
Unjustified trust in informal
feedback systems
feedback systemsEntren
ched m
easure
ment
Entren
ched m
easure
ment
system
s
system
s
BSC
(V11) November 2001 Introducing the Balanced ScorecardPage 28
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
Comm
unica
tion Com
munication
Board levelScorecard
process
OperationalScorecard
process
Support function Scorecard
process
Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets
Take action
Create amend
strategic vision
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
Communication
(V11) November 2001 Introducing the Balanced ScorecardPage 29
2GCActive
Managementcopy 2GC Limited 2001
Success criteria
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 30
2GCActive
Managementcopy 2GC Limited 2001
Key success factorsCultural building blocks of Scorecard success
bullInclusive design process building on consensus seeking amp involvement
bullParticipative management style focused on learning open discussion and creative thinking
bullSponsorship and commitment from entire management team -top management in particular
bullldquoEmbeddingrdquo of management processes to use refresh and renew the Balanced Scorecard over time
(V11) November 2001 Introducing the Balanced ScorecardPage 31
2GCActive
Managementcopy 2GC Limited 2001
Introducing the Balanced ScorecardTo find out morehellip
bullVisit 2GCrsquos Web Sitendash We focus specifically on strategic
control and performance measurement issues and have a wide range of working papers FAQs and presentations to download on these topics
ndash The site also has a recommended reading list that covers relevant topics and the ldquoWeblinksrdquo database of relevant Internet sites
bullContact 2GCndash Let us know if you have a question
you canrsquot answer wersquoll do what we can to helphellip
bull info2gccouk
- Introducing the Balanced Scorecard
- Structure of presentation
- General management issuesWhat is this all about
- General management issuesImplementing Strategic Goals
- General management issuesBarriers to effective performance management
- General management issuesRealising the need to change
- What is Balanced Scorecard
- What is a Balanced Scorecard
- What is a Balanced ScorecardBackground amp underlying philosophy
- What is a Balanced ScorecardDo what needs to get donehellip
- What is a Balanced ScorecardDifferent applications for Balanced Scorecard
- What is a Balanced ScorecardStrategic control vs Management control
- What is the Balanced Scorecard The latest Balanced Scorecard thinking
- What is Balanced ScorecardMore than just a set of goals amp measures
- Balanced Scorecard design
- Balanced Scorecard designWhere to go an how to get there
- Balanced Scorecard designMonitor progress in achieving goals
- Balanced Scorecard designThe components of a Strategic Balanced Scorecard
- Balanced Scorecard roll-out
- Balanced Scorecard Development Development within the organisation
- Balanced Scorecard DevelopmentDevelopment within the organisation
- Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
- Balanced Scorecard deployment
- Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
- Balanced Scorecard deployment Strategic alignment amp goal setting
- Balanced Scorecard deployment Align existing management control tools with strategy
- Balanced Scorecard deployment Support two-way communication of strategyhellip
- Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
- Success criteria
- Key success factorsCultural building blocks of Scorecard success
- Introducing the Balanced ScorecardTo find out morehellip
-
(V11) November 2001 Introducing the Balanced ScorecardPage 7
2GCActive
Managementcopy 2GC Limited 2001
What is Balanced Scorecard
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 8
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced Scorecard
bullldquoThe idea of the Scorecard is to describe the essential ingredients of business successrdquo(Olve et al ldquoPerformance Driversrdquo)
bullldquoBalanced Scorecard is one of the 15 most important management concepts ever introduced in Harvard Business Reviewrdquo(Harvard Business Review 75th Anniversary issue)
bull50 of North American companies claim to be using Balanced Scorecard(Recent survey by Bain amp Company)
One of the most dangerous forms of human error is forgetting what one is trying to to achievePaul Nitze
(V11) November 2001 Introducing the Balanced ScorecardPage 9
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardBackground amp underlying philosophy
bullWhat is itndash Strategic communication and
performance measurement toolbullOrigins
ndash Developed from a tool developed in 1980s but some similarities with other pre-existing tools
ndash Introduced to wider audience in early 1990rsquos by R Kaplan amp D Norton in series of articles in Harvard Business Review
bullUnderlying philosophyndash Clear communication of goals and
prioritiesndash Learning amp team-working
Internal PerspectiveInternal Perspective
Learning amp Growth PerspectiveLearning amp Growth Perspective
Financial PerspectiveFinancial Perspective
Customer PerspectiveCustomer Perspective
Act
iviti
esO
utco
mes
Act
iviti
esO
utco
mes
Out
com
esO
utco
mes
Act
iviti
esA
ctiv
ities
(V11) November 2001 Introducing the Balanced ScorecardPage 10
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardDo what needs to get donehellip
Are we doing what we set out to do
What do we want to achieve and what must we do to achieve it
Take action
Create amend strategic vision
Createchange linked strategic
objectives
Review results and cause amp effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
(V11) November 2001 Introducing the Balanced ScorecardPage 11
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardDifferent applications for Balanced Scorecard
bullldquoManagement Controlrdquo
ndash Maintain the temperature
bullldquoStrategic Controlrdquondash What temperature
7060 80
D A Y amp N I G H T
HOT OFF COOL
Assess Outcome
Set TargetHeater Run if room is below target temp
Thermostat Compare with
Target
MeasureRoom Temp
(V11) November 2001 Introducing the Balanced ScorecardPage 12
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardStrategic control vs Management control
Organisational hierarchy
Strat
egic
emph
asis
Operational emphasis
(V11) November 2001 Introducing the Balanced ScorecardPage 13
2GCActive
Managementcopy 2GC Limited 2001
What is the Balanced Scorecard The latest Balanced Scorecard thinking
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 6
2GCActive
M anagementcopy 2GC Lim ited 1999
Balanced Scorecard DocumentationObjective M easure Supporting Initiatives
I1 Drive trade term s by channel W e will develop clear trading terms for different custom er groups W e will achieve our targetlevels of availability visibility and trade su pport via these trading terms
bull Trade customers adhering to trade standard terms amongst a sam ple of top XX customers
bull Develop standard trading terms (GG)
I2 Deliver custom er service standards Deliver timely f irst class service to the trade an d retailers
bull Cases delivered in full against order quantity
bull Orders delivered on time
bull Logistics Project (RS)bull SAP Project (PH)
I3 Im plem ent m ajor account m anagem ent programm e W e will continue to treat our custom ers as business partners W e will establish an account developm ent model to ensure high quality relationships exist w ith key account customers
bull of major accounts with a business plan bull Define ldquomajorrdquo accounts (AC)
I4 Deliver exce llent consum er propositions W e must meet consum er needs through the development and communication of an integrated brand proposition In the NPD sector we will launch new products only after they h ave m et pre-agreed qu ality image need and volume criteria
bull Brand Systems signed off by OE bull Develop core brand propositions (AC)bull NPD Process Improvement (ACAD)bull Cream ing project (AD)
I5 Deliver exce llent internal custom er service W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull SLA Qualitative Evaluations by SLA ow ners bull Logistics Project (RS)bull Factory Cost Reduction (DL)
I6 Effective m anagem ent of com pany assets W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull Total working capitalbull Fixed Asset Utilisationbull Outstanding Debtor Da ys
bull Plant ration alisation (AD)bull L4 L2 (DL)bull SAP (RS)
I7 Effective control of the business (No Surprises) W e will heighten our efforts to streamline the organisation to h elpdrive sound asset managem ent and cost reduction W e will invoke a cost conscious culture to complem ent our stream lining efforts
bull ldquoNo surprisesrdquo evaluation of actual performance against budget or forecast for- stock cover per city- sales per city- national costs
bull Analyse Risk project (PS)
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 6
2GCActive
M anagementcopy 2GC Lim ited 1999
Balanced Scorecard DocumentationObjective M easure Supporting Initiatives
I1 Drive trade term s by channel W e will develop clear trading terms for different custom er groups W e will achieve our targetlevels of availability visibility and trade su pport via these trading terms
bull Trade customers adhering to trade standard terms amongst a sam ple of top XX customers
bull Develop standard trading terms (GG)
I2 Deliver custom er service standards Deliver timely f irst class service to the trade an d retailers
bull Cases delivered in full against order quantity
bull Orders delivered on time
bull Logistics Project (RS)bull SAP Project (PH)
I3 Im plem ent m ajor account m anagem ent programm e W e will continue to treat our custom ers as business partners W e will establish an account developm ent model to ensure high quality relationships exist w ith key account customers
bull of major accounts with a business plan bull Define ldquomajorrdquo accounts (AC)
I4 Deliver exce llent consum er propositions W e must meet consum er needs through the development and communication of an integrated brand proposition In the NPD sector we will launch new products only after they h ave m et pre-agreed qu ality image need and volume criteria
bull Brand Systems signed off by OE bull Develop core brand propositions (AC)bull NPD Process Improvement (ACAD)bull Cream ing project (AD)
I5 Deliver exce llent internal custom er service W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull SLA Qualitative Evaluations by SLA ow ners bull Logistics Project (RS)bull Factory Cost Reduction (DL)
I6 Effective m anagem ent of com pany assets W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull Total working capitalbull Fixed Asset Utilisationbull Outstanding Debtor Da ys
bull Plant ration alisation (AD)bull L4 L2 (DL)bull SAP (RS)
I7 Effective control of the business (No Surprises) W e will heighten our efforts to streamline the organisation to h elpdrive sound asset managem ent and cost reduction W e will invoke a cost conscious culture to complem ent our stream lining efforts
bull ldquoNo surprisesrdquo evaluation of actual performance against budget or forecast for- stock cover per city- sales per city- national costs
bull Analyse Risk project (PS)
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 5
2GCActive
M anagementcopy 2GC Limited 1999
Strategic Linkage M odel
Fina
ncia
l Pe
rspe
ctiv
eC
usto
mer
Per
spec
tive
Lear
ning
amp G
row
th
Pe
rspe
ctiv
eIn
tern
al
Per
spec
tive
DBX Understands and Responds to m y Needs
DBX Products are m y First Choice Products
DBX Products are Good Value for Money
DBX Products are V isible and Availab le
DBX has an Excellent Consumer Franchise
Drive Trade Term s by Channel
Im plem ent Major Account Managem ent
Program m e
Effective Control of Business (No Surprises)
Sales Growth (by City by P roduct)
Gross Contribution (After City Sales and
Marketing)Asset Turn Overheads as a of
NSV
Improved Shareh older Value (ROCE)
I Have a Good Relationship with DBX
Develop Better W ork P ractices and IS
Develop and Retain P rofessional M anagers
Develop Service Agreem ents
Effective M anagem ent o f Com pany Assets
Deliver Excellent In ternal Custom er
ServiceDeliver Custom er
Service Standards
Develop Professional Custom er Oriented Skilled
Sales Force
Deliver Excellent Consum er
Propositions
Understand Im pact O f Various M arketing Levers
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 5
2GCActive
M anagementcopy 2GC Limited 1999
Strategic Linkage M odel
Fina
ncia
l Pe
rspe
ctiv
eC
usto
mer
Per
spec
tive
Lear
ning
amp G
row
th
Pe
rspe
ctiv
eIn
tern
al
Per
spec
tive
DBX Understands and Responds to m y Needs
DBX Products are m y First Choice Products
DBX Products are Good Value for Money
DBX Products are V isible and Availab le
DBX has an Excellent Consumer Franchise
Drive Trade Term s by Channel
Im plem ent Major Account Managem ent
Program m e
Effective Control of Business (No Surprises)
Sales Growth (by City by P roduct)
Gross Contribution (After City Sales and
Marketing)Asset Turn Overheads as a of
NSV
Improved Shareh older Value (ROCE)
I Have a Good Relationship with DBX
Develop Better W ork P ractices and IS
Develop and Retain P rofessional M anagers
Develop Service Agreem ents
Effective M anagem ent o f Com pany Assets
Deliver Excellent In ternal Custom er
ServiceDeliver Custom er
Service Standards
Develop Professional Custom er Oriented Skilled
Sales Force
Deliver Excellent Consum er
Propositions
Understand Im pact O f Various M arketing Levers
21 November 2001 2GC Limited Introduction to 2GC Active ManagementPage 4
2GCActive
M anagem entcopy 2GC Limited 1999
Destination Statem entSales Volume50000 MT
Distribution50 Cities
Sales Revenue pound 50 M illion
One M anufacturing Site
ROCE 7Capital Em ployed No m ore th an pound45 million
Product Manager
Marketing Director
Factory Director
Manufacturing Director
Regional Sales Manager
Sales Director
Managing Director
No m ore than 6 Core Brand ProductsMinimum sales volum esndash 5000 MT for each core brandndash 2000M T for each m ajor product
Employer of Choice ( 1 in industry and ranked in FM CG top 10)
Marketing SalesBranding Clear brand propositions systems
established for the six core brandsbull DBX has two of th e top five category product brandsbull Producthouse brand awaren ess targets in DBX city
strategies achievedM edia and promotional strategy City market share
targets achieved within agreed budgetbull M odels and measures of th e relative impact of all
m arketing levers available to assist in th e evaluation targeting of m arketing activity
Im proved Skills and Processes Standardised and transparent m arketing processes developed and agreed within DBX and with Group
bull M arketing team skills targets (b ased on extern al benchmark com parisons) achieved through training and recruitment (where applicable)
Overall DBX seen as one of top 10 FMCG Corsquos servicing key accounts in th e country (and 1 in category)
Customer M arket Focus Sales s taff achieving set targ ets in line with city s trategies for focus on custom er and market issues
bull Assess using distribution by chann el visib ility and trade prom otions
Im proved Skills and Processes Standardised and transp arent sales processes develop ed and agreed within DBX and with Group
bull Sales team skills targets (based on extern al b enchm ark comparisons) achieved through training and recruitment (where applicable)
Organisational Structurebull Clear scope and role statements exis t for all functions (including Sales
amp Marketing)bull Supporting functions (includ ing supply chain) will be achieving all
agreed service level targets with sales amp marketing
Supply ChainCost efficient supp ly chain based on flexib le p roduction lines will deliverbull Increased responsiveness to market dem ands bull Lower cycle timesbull Product channel freshness targe ts
Inform ation System sAppropriate in form ation systems that w ill meet DB Xrsquos needsbull All necessary m anagement inform ation p roduced within p re-agreed tim elines and scales
M anagementbull Senior m anagement w ill be com mitted to working on stra teg y and evalua ted on their
ab ility to coach advise guide and ensure tha t tasks are delega ted effectivelybull Professional m iddle management will exist that w ill be able to ac t m ore independently
within de fined guidelines and have the skills required for their job rolendash Succession plans for key positions wi ll existndash Recruiting and training policies will aim to raise middle manage ment competence to
meet internationa l standards
21 November 2001 2GC Limited Introduction to 2GC Active ManagementPage 4
2GCActive
M anagem entcopy 2GC Limited 1999
Destination Statem entSales Volume50000 MT
Distribution50 Cities
Sales Revenue pound 50 M illion
One M anufacturing Site
ROCE 7Capital Em ployed No m ore th an pound45 million
Product Manager
Marketing Director
Factory Director
Manufacturing Director
Regional Sales Manager
Sales Director
Managing Director
No m ore than 6 Core Brand ProductsMinimum sales volum esndash 5000 MT for each core brandndash 2000M T for each m ajor product
Employer of Choice ( 1 in industry and ranked in FM CG top 10)
Marketing SalesBranding Clear brand propositions systems
established for the six core brandsbull DBX has two of th e top five category product brandsbull Producthouse brand awaren ess targets in DBX city
strategies achievedM edia and promotional strategy City market share
targets achieved within agreed budgetbull M odels and measures of th e relative impact of all
m arketing levers available to assist in th e evaluation targeting of m arketing activity
Im proved Skills and Processes Standardised and transparent m arketing processes developed and agreed within DBX and with Group
bull M arketing team skills targets (b ased on extern al benchmark com parisons) achieved through training and recruitment (where applicable)
Overall DBX seen as one of top 10 FMCG Corsquos servicing key accounts in th e country (and 1 in category)
Customer M arket Focus Sales s taff achieving set targ ets in line with city s trategies for focus on custom er and market issues
bull Assess using distribution by chann el visib ility and trade prom otions
Im proved Skills and Processes Standardised and transp arent sales processes develop ed and agreed within DBX and with Group
bull Sales team skills targets (based on extern al b enchm ark comparisons) achieved through training and recruitment (where applicable)
Organisational Structurebull Clear scope and role statements exis t for all functions (including Sales
amp Marketing)bull Supporting functions (includ ing supply chain) will be achieving all
agreed service level targets with sales amp marketing
Supply ChainCost efficient supp ly chain based on flexib le p roduction lines will deliverbull Increased responsiveness to market dem ands bull Lower cycle timesbull Product channel freshness targe ts
Inform ation System sAppropriate in form ation systems that w ill meet DB Xrsquos needsbull All necessary m anagement inform ation p roduced within p re-agreed tim elines and scales
M anagementbull Senior m anagement w ill be com mitted to working on stra teg y and evalua ted on their
ab ility to coach advise guide and ensure tha t tasks are delega ted effectivelybull Professional m iddle management will exist that w ill be able to ac t m ore independently
within de fined guidelines and have the skills required for their job rolendash Succession plans for key positions wi ll existndash Recruiting and training policies will aim to raise middle manage ment competence to
meet internationa l standards
bullThe ldquoobjective drivenrdquoBalanced Scorecard has emerged as best practice
(V11) November 2001 Introducing the Balanced ScorecardPage 14
2GCActive
Managementcopy 2GC Limited 2001
What is Balanced ScorecardMore than just a set of goals amp measures
Balanced Scorecard design
Balanced Scorecard development
Balanced Scorecard deployment
bull Value from first application
bull Business model reflected in relationship between strategic goals
bull Corporate strategic measurement amp management tool
ndash divisionsndash business unitsndash functions
bull All management Systems aligned with strategy
bull Drive strategic behaviour into everyday decisions and operations
(V11) November 2001 Introducing the Balanced ScorecardPage 15
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard design
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 16
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designWhere to go an how to get there
bullBest practice is to use a development group that comprises the the likely users of the Balanced Scorecard
bullDesign choices should be based on jointly held perception of a strategic ldquoDestinationrdquo
bullThe design should measure progress against the organisationrsquos key strategic objectives (activities and outcomes)
bullLinks between strategic objectives should be articulated ndash these express the management teamrsquos beliefs about which activities drive which outcomes
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 17
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designMonitor progress in achieving goals
bullDevelopment of measures follow clarification and agreement of strategic objectives becausehellip
bullMeasures track progress in achieving those objectives against agreed targets
bullIdentify and monitor extraordinary activities and projects furthering achievement of objectives
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Out
com
es
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development A
ctiv
ities
Act
iviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
Financial Perspective
Objectives Measures Targets Initiatives
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets Initiatives
(V11) November 2001 Introducing the Balanced ScorecardPage 18
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designThe components of a Strategic Balanced Scorecard
bull Financial Marketndash Total NSV pound120m (nominal) ndashndash Has achieved 10 CAGR on NSndash Operating Margin gt10ndash Controllable overheads less thndash Operating Profit pound12m (nomin
Destination StatementDescription of how the organisation will be at some specific future date if the management teamrsquos strategies are successful
Fin
anci
alCu
stom
er
Best value for money
The leading and most innovative
brand
Drive Increased Demand
Profitable Sales Growth
Strategic Linkage Model (SLM)Graphic illustration of ldquocause and effectrdquo relationships between the strategic goals that must be achieved if the organisation is to reach its destination state
ObjectiveObjective DescriptionDescription
Total Shareholder Return is above Groups cost of equity over the medium to long term
Total Shareholder Return is above Groups cost of equity over the medium to long term
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means better than equivalent payments by known Group
Measures (Freq)Measures (Freq)
bull CAGR of Total ShareholdeReturn
bull ROIC (Target gt WACC)
bull CAGR of Total ShareholderReturn
bull ROIC (Target gt WACC)
bull PampL account net tax chargea of profit for financial ye
bull WACC
bull PampL account net tax chargeda of profit for financial yea
bull WACC
Group Strategy Delivers Value
Achieve Optimum Tax Rate amp WACC
F1
F2
Objective and Measure Documentation
ndashClear and concise description of strategic objectives and the measures chosen to track their achievement
F11
F12
-30p
8
150p
18Dividend expected kept a1000 pence leading to loprevious years
Measure Value Target PerfObjective Status
Outperform capital markets
F21 200 185Increasing cash inflow froCash amp a sset
F21 200 185Increasing cash inflow froCash amp a sset
t
Progress Reporting FormatsIllustration of how (and by whom) Scorecard information will be communicated
o Initiative overviewOverview of which initiatives support which Scorecard objectives incl owners and deadlines for finalisation
(V11) November 2001 Introducing the Balanced ScorecardPage 19
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard roll-out
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 20
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard Development Development within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
The optimal role-out
sequence is ldquoTop Downrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 21
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentDevelopment within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
Corporate Balanced Scorecard
Co-ordinatingBalanced Scorecard
Support Function Balanced Scorecard
Operating Unit Balanced Scorecard
Departmental Balanced ScorecardTeam Level
Balanced Scorecard
(V11) November 2001 Introducing the Balanced ScorecardPage 22
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
What
How
What
Board level ScorecardBoard level Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Overall VisionOverall Vision
Subordinate ScorecardSubordinate Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Local VisionLocal Vision
How
TeamIndividual ScorecardTeamIndividual Scorecard
Objectives
Measures amp Targets
Initiatives
TeamIndividual Vision
TeamIndividual Vision
Strategic direction
Strategic direction
Strategy implementation
Strategy implementation
(V11) November 2001 Introducing the Balanced ScorecardPage 23
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 24
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 25
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Strategic alignment amp goal setting
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 26
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Align existing management control tools with strategy
SVA amp EVASVA amp EVAB
udge
tsB
udge
ts
BEMBEMBalanced Scorecard
ABCABC HR ToolsHR Tools
(V11) November 2001 Introducing the Balanced ScorecardPage 27
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Support two-way communication of strategyhellip
Fuzzy objectivesFuzzy objectives
Unjustified trust in informal
Unjustified trust in informal
feedback systems
feedback systemsEntren
ched m
easure
ment
Entren
ched m
easure
ment
system
s
system
s
BSC
(V11) November 2001 Introducing the Balanced ScorecardPage 28
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
Comm
unica
tion Com
munication
Board levelScorecard
process
OperationalScorecard
process
Support function Scorecard
process
Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets
Take action
Create amend
strategic vision
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
Communication
(V11) November 2001 Introducing the Balanced ScorecardPage 29
2GCActive
Managementcopy 2GC Limited 2001
Success criteria
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 30
2GCActive
Managementcopy 2GC Limited 2001
Key success factorsCultural building blocks of Scorecard success
bullInclusive design process building on consensus seeking amp involvement
bullParticipative management style focused on learning open discussion and creative thinking
bullSponsorship and commitment from entire management team -top management in particular
bullldquoEmbeddingrdquo of management processes to use refresh and renew the Balanced Scorecard over time
(V11) November 2001 Introducing the Balanced ScorecardPage 31
2GCActive
Managementcopy 2GC Limited 2001
Introducing the Balanced ScorecardTo find out morehellip
bullVisit 2GCrsquos Web Sitendash We focus specifically on strategic
control and performance measurement issues and have a wide range of working papers FAQs and presentations to download on these topics
ndash The site also has a recommended reading list that covers relevant topics and the ldquoWeblinksrdquo database of relevant Internet sites
bullContact 2GCndash Let us know if you have a question
you canrsquot answer wersquoll do what we can to helphellip
bull info2gccouk
- Introducing the Balanced Scorecard
- Structure of presentation
- General management issuesWhat is this all about
- General management issuesImplementing Strategic Goals
- General management issuesBarriers to effective performance management
- General management issuesRealising the need to change
- What is Balanced Scorecard
- What is a Balanced Scorecard
- What is a Balanced ScorecardBackground amp underlying philosophy
- What is a Balanced ScorecardDo what needs to get donehellip
- What is a Balanced ScorecardDifferent applications for Balanced Scorecard
- What is a Balanced ScorecardStrategic control vs Management control
- What is the Balanced Scorecard The latest Balanced Scorecard thinking
- What is Balanced ScorecardMore than just a set of goals amp measures
- Balanced Scorecard design
- Balanced Scorecard designWhere to go an how to get there
- Balanced Scorecard designMonitor progress in achieving goals
- Balanced Scorecard designThe components of a Strategic Balanced Scorecard
- Balanced Scorecard roll-out
- Balanced Scorecard Development Development within the organisation
- Balanced Scorecard DevelopmentDevelopment within the organisation
- Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
- Balanced Scorecard deployment
- Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
- Balanced Scorecard deployment Strategic alignment amp goal setting
- Balanced Scorecard deployment Align existing management control tools with strategy
- Balanced Scorecard deployment Support two-way communication of strategyhellip
- Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
- Success criteria
- Key success factorsCultural building blocks of Scorecard success
- Introducing the Balanced ScorecardTo find out morehellip
-
(V11) November 2001 Introducing the Balanced ScorecardPage 8
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced Scorecard
bullldquoThe idea of the Scorecard is to describe the essential ingredients of business successrdquo(Olve et al ldquoPerformance Driversrdquo)
bullldquoBalanced Scorecard is one of the 15 most important management concepts ever introduced in Harvard Business Reviewrdquo(Harvard Business Review 75th Anniversary issue)
bull50 of North American companies claim to be using Balanced Scorecard(Recent survey by Bain amp Company)
One of the most dangerous forms of human error is forgetting what one is trying to to achievePaul Nitze
(V11) November 2001 Introducing the Balanced ScorecardPage 9
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardBackground amp underlying philosophy
bullWhat is itndash Strategic communication and
performance measurement toolbullOrigins
ndash Developed from a tool developed in 1980s but some similarities with other pre-existing tools
ndash Introduced to wider audience in early 1990rsquos by R Kaplan amp D Norton in series of articles in Harvard Business Review
bullUnderlying philosophyndash Clear communication of goals and
prioritiesndash Learning amp team-working
Internal PerspectiveInternal Perspective
Learning amp Growth PerspectiveLearning amp Growth Perspective
Financial PerspectiveFinancial Perspective
Customer PerspectiveCustomer Perspective
Act
iviti
esO
utco
mes
Act
iviti
esO
utco
mes
Out
com
esO
utco
mes
Act
iviti
esA
ctiv
ities
(V11) November 2001 Introducing the Balanced ScorecardPage 10
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardDo what needs to get donehellip
Are we doing what we set out to do
What do we want to achieve and what must we do to achieve it
Take action
Create amend strategic vision
Createchange linked strategic
objectives
Review results and cause amp effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
(V11) November 2001 Introducing the Balanced ScorecardPage 11
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardDifferent applications for Balanced Scorecard
bullldquoManagement Controlrdquo
ndash Maintain the temperature
bullldquoStrategic Controlrdquondash What temperature
7060 80
D A Y amp N I G H T
HOT OFF COOL
Assess Outcome
Set TargetHeater Run if room is below target temp
Thermostat Compare with
Target
MeasureRoom Temp
(V11) November 2001 Introducing the Balanced ScorecardPage 12
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardStrategic control vs Management control
Organisational hierarchy
Strat
egic
emph
asis
Operational emphasis
(V11) November 2001 Introducing the Balanced ScorecardPage 13
2GCActive
Managementcopy 2GC Limited 2001
What is the Balanced Scorecard The latest Balanced Scorecard thinking
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 6
2GCActive
M anagementcopy 2GC Lim ited 1999
Balanced Scorecard DocumentationObjective M easure Supporting Initiatives
I1 Drive trade term s by channel W e will develop clear trading terms for different custom er groups W e will achieve our targetlevels of availability visibility and trade su pport via these trading terms
bull Trade customers adhering to trade standard terms amongst a sam ple of top XX customers
bull Develop standard trading terms (GG)
I2 Deliver custom er service standards Deliver timely f irst class service to the trade an d retailers
bull Cases delivered in full against order quantity
bull Orders delivered on time
bull Logistics Project (RS)bull SAP Project (PH)
I3 Im plem ent m ajor account m anagem ent programm e W e will continue to treat our custom ers as business partners W e will establish an account developm ent model to ensure high quality relationships exist w ith key account customers
bull of major accounts with a business plan bull Define ldquomajorrdquo accounts (AC)
I4 Deliver exce llent consum er propositions W e must meet consum er needs through the development and communication of an integrated brand proposition In the NPD sector we will launch new products only after they h ave m et pre-agreed qu ality image need and volume criteria
bull Brand Systems signed off by OE bull Develop core brand propositions (AC)bull NPD Process Improvement (ACAD)bull Cream ing project (AD)
I5 Deliver exce llent internal custom er service W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull SLA Qualitative Evaluations by SLA ow ners bull Logistics Project (RS)bull Factory Cost Reduction (DL)
I6 Effective m anagem ent of com pany assets W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull Total working capitalbull Fixed Asset Utilisationbull Outstanding Debtor Da ys
bull Plant ration alisation (AD)bull L4 L2 (DL)bull SAP (RS)
I7 Effective control of the business (No Surprises) W e will heighten our efforts to streamline the organisation to h elpdrive sound asset managem ent and cost reduction W e will invoke a cost conscious culture to complem ent our stream lining efforts
bull ldquoNo surprisesrdquo evaluation of actual performance against budget or forecast for- stock cover per city- sales per city- national costs
bull Analyse Risk project (PS)
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 6
2GCActive
M anagementcopy 2GC Lim ited 1999
Balanced Scorecard DocumentationObjective M easure Supporting Initiatives
I1 Drive trade term s by channel W e will develop clear trading terms for different custom er groups W e will achieve our targetlevels of availability visibility and trade su pport via these trading terms
bull Trade customers adhering to trade standard terms amongst a sam ple of top XX customers
bull Develop standard trading terms (GG)
I2 Deliver custom er service standards Deliver timely f irst class service to the trade an d retailers
bull Cases delivered in full against order quantity
bull Orders delivered on time
bull Logistics Project (RS)bull SAP Project (PH)
I3 Im plem ent m ajor account m anagem ent programm e W e will continue to treat our custom ers as business partners W e will establish an account developm ent model to ensure high quality relationships exist w ith key account customers
bull of major accounts with a business plan bull Define ldquomajorrdquo accounts (AC)
I4 Deliver exce llent consum er propositions W e must meet consum er needs through the development and communication of an integrated brand proposition In the NPD sector we will launch new products only after they h ave m et pre-agreed qu ality image need and volume criteria
bull Brand Systems signed off by OE bull Develop core brand propositions (AC)bull NPD Process Improvement (ACAD)bull Cream ing project (AD)
I5 Deliver exce llent internal custom er service W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull SLA Qualitative Evaluations by SLA ow ners bull Logistics Project (RS)bull Factory Cost Reduction (DL)
I6 Effective m anagem ent of com pany assets W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull Total working capitalbull Fixed Asset Utilisationbull Outstanding Debtor Da ys
bull Plant ration alisation (AD)bull L4 L2 (DL)bull SAP (RS)
I7 Effective control of the business (No Surprises) W e will heighten our efforts to streamline the organisation to h elpdrive sound asset managem ent and cost reduction W e will invoke a cost conscious culture to complem ent our stream lining efforts
bull ldquoNo surprisesrdquo evaluation of actual performance against budget or forecast for- stock cover per city- sales per city- national costs
bull Analyse Risk project (PS)
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 5
2GCActive
M anagementcopy 2GC Limited 1999
Strategic Linkage M odel
Fina
ncia
l Pe
rspe
ctiv
eC
usto
mer
Per
spec
tive
Lear
ning
amp G
row
th
Pe
rspe
ctiv
eIn
tern
al
Per
spec
tive
DBX Understands and Responds to m y Needs
DBX Products are m y First Choice Products
DBX Products are Good Value for Money
DBX Products are V isible and Availab le
DBX has an Excellent Consumer Franchise
Drive Trade Term s by Channel
Im plem ent Major Account Managem ent
Program m e
Effective Control of Business (No Surprises)
Sales Growth (by City by P roduct)
Gross Contribution (After City Sales and
Marketing)Asset Turn Overheads as a of
NSV
Improved Shareh older Value (ROCE)
I Have a Good Relationship with DBX
Develop Better W ork P ractices and IS
Develop and Retain P rofessional M anagers
Develop Service Agreem ents
Effective M anagem ent o f Com pany Assets
Deliver Excellent In ternal Custom er
ServiceDeliver Custom er
Service Standards
Develop Professional Custom er Oriented Skilled
Sales Force
Deliver Excellent Consum er
Propositions
Understand Im pact O f Various M arketing Levers
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 5
2GCActive
M anagementcopy 2GC Limited 1999
Strategic Linkage M odel
Fina
ncia
l Pe
rspe
ctiv
eC
usto
mer
Per
spec
tive
Lear
ning
amp G
row
th
Pe
rspe
ctiv
eIn
tern
al
Per
spec
tive
DBX Understands and Responds to m y Needs
DBX Products are m y First Choice Products
DBX Products are Good Value for Money
DBX Products are V isible and Availab le
DBX has an Excellent Consumer Franchise
Drive Trade Term s by Channel
Im plem ent Major Account Managem ent
Program m e
Effective Control of Business (No Surprises)
Sales Growth (by City by P roduct)
Gross Contribution (After City Sales and
Marketing)Asset Turn Overheads as a of
NSV
Improved Shareh older Value (ROCE)
I Have a Good Relationship with DBX
Develop Better W ork P ractices and IS
Develop and Retain P rofessional M anagers
Develop Service Agreem ents
Effective M anagem ent o f Com pany Assets
Deliver Excellent In ternal Custom er
ServiceDeliver Custom er
Service Standards
Develop Professional Custom er Oriented Skilled
Sales Force
Deliver Excellent Consum er
Propositions
Understand Im pact O f Various M arketing Levers
21 November 2001 2GC Limited Introduction to 2GC Active ManagementPage 4
2GCActive
M anagem entcopy 2GC Limited 1999
Destination Statem entSales Volume50000 MT
Distribution50 Cities
Sales Revenue pound 50 M illion
One M anufacturing Site
ROCE 7Capital Em ployed No m ore th an pound45 million
Product Manager
Marketing Director
Factory Director
Manufacturing Director
Regional Sales Manager
Sales Director
Managing Director
No m ore than 6 Core Brand ProductsMinimum sales volum esndash 5000 MT for each core brandndash 2000M T for each m ajor product
Employer of Choice ( 1 in industry and ranked in FM CG top 10)
Marketing SalesBranding Clear brand propositions systems
established for the six core brandsbull DBX has two of th e top five category product brandsbull Producthouse brand awaren ess targets in DBX city
strategies achievedM edia and promotional strategy City market share
targets achieved within agreed budgetbull M odels and measures of th e relative impact of all
m arketing levers available to assist in th e evaluation targeting of m arketing activity
Im proved Skills and Processes Standardised and transparent m arketing processes developed and agreed within DBX and with Group
bull M arketing team skills targets (b ased on extern al benchmark com parisons) achieved through training and recruitment (where applicable)
Overall DBX seen as one of top 10 FMCG Corsquos servicing key accounts in th e country (and 1 in category)
Customer M arket Focus Sales s taff achieving set targ ets in line with city s trategies for focus on custom er and market issues
bull Assess using distribution by chann el visib ility and trade prom otions
Im proved Skills and Processes Standardised and transp arent sales processes develop ed and agreed within DBX and with Group
bull Sales team skills targets (based on extern al b enchm ark comparisons) achieved through training and recruitment (where applicable)
Organisational Structurebull Clear scope and role statements exis t for all functions (including Sales
amp Marketing)bull Supporting functions (includ ing supply chain) will be achieving all
agreed service level targets with sales amp marketing
Supply ChainCost efficient supp ly chain based on flexib le p roduction lines will deliverbull Increased responsiveness to market dem ands bull Lower cycle timesbull Product channel freshness targe ts
Inform ation System sAppropriate in form ation systems that w ill meet DB Xrsquos needsbull All necessary m anagement inform ation p roduced within p re-agreed tim elines and scales
M anagementbull Senior m anagement w ill be com mitted to working on stra teg y and evalua ted on their
ab ility to coach advise guide and ensure tha t tasks are delega ted effectivelybull Professional m iddle management will exist that w ill be able to ac t m ore independently
within de fined guidelines and have the skills required for their job rolendash Succession plans for key positions wi ll existndash Recruiting and training policies will aim to raise middle manage ment competence to
meet internationa l standards
21 November 2001 2GC Limited Introduction to 2GC Active ManagementPage 4
2GCActive
M anagem entcopy 2GC Limited 1999
Destination Statem entSales Volume50000 MT
Distribution50 Cities
Sales Revenue pound 50 M illion
One M anufacturing Site
ROCE 7Capital Em ployed No m ore th an pound45 million
Product Manager
Marketing Director
Factory Director
Manufacturing Director
Regional Sales Manager
Sales Director
Managing Director
No m ore than 6 Core Brand ProductsMinimum sales volum esndash 5000 MT for each core brandndash 2000M T for each m ajor product
Employer of Choice ( 1 in industry and ranked in FM CG top 10)
Marketing SalesBranding Clear brand propositions systems
established for the six core brandsbull DBX has two of th e top five category product brandsbull Producthouse brand awaren ess targets in DBX city
strategies achievedM edia and promotional strategy City market share
targets achieved within agreed budgetbull M odels and measures of th e relative impact of all
m arketing levers available to assist in th e evaluation targeting of m arketing activity
Im proved Skills and Processes Standardised and transparent m arketing processes developed and agreed within DBX and with Group
bull M arketing team skills targets (b ased on extern al benchmark com parisons) achieved through training and recruitment (where applicable)
Overall DBX seen as one of top 10 FMCG Corsquos servicing key accounts in th e country (and 1 in category)
Customer M arket Focus Sales s taff achieving set targ ets in line with city s trategies for focus on custom er and market issues
bull Assess using distribution by chann el visib ility and trade prom otions
Im proved Skills and Processes Standardised and transp arent sales processes develop ed and agreed within DBX and with Group
bull Sales team skills targets (based on extern al b enchm ark comparisons) achieved through training and recruitment (where applicable)
Organisational Structurebull Clear scope and role statements exis t for all functions (including Sales
amp Marketing)bull Supporting functions (includ ing supply chain) will be achieving all
agreed service level targets with sales amp marketing
Supply ChainCost efficient supp ly chain based on flexib le p roduction lines will deliverbull Increased responsiveness to market dem ands bull Lower cycle timesbull Product channel freshness targe ts
Inform ation System sAppropriate in form ation systems that w ill meet DB Xrsquos needsbull All necessary m anagement inform ation p roduced within p re-agreed tim elines and scales
M anagementbull Senior m anagement w ill be com mitted to working on stra teg y and evalua ted on their
ab ility to coach advise guide and ensure tha t tasks are delega ted effectivelybull Professional m iddle management will exist that w ill be able to ac t m ore independently
within de fined guidelines and have the skills required for their job rolendash Succession plans for key positions wi ll existndash Recruiting and training policies will aim to raise middle manage ment competence to
meet internationa l standards
bullThe ldquoobjective drivenrdquoBalanced Scorecard has emerged as best practice
(V11) November 2001 Introducing the Balanced ScorecardPage 14
2GCActive
Managementcopy 2GC Limited 2001
What is Balanced ScorecardMore than just a set of goals amp measures
Balanced Scorecard design
Balanced Scorecard development
Balanced Scorecard deployment
bull Value from first application
bull Business model reflected in relationship between strategic goals
bull Corporate strategic measurement amp management tool
ndash divisionsndash business unitsndash functions
bull All management Systems aligned with strategy
bull Drive strategic behaviour into everyday decisions and operations
(V11) November 2001 Introducing the Balanced ScorecardPage 15
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard design
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 16
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designWhere to go an how to get there
bullBest practice is to use a development group that comprises the the likely users of the Balanced Scorecard
bullDesign choices should be based on jointly held perception of a strategic ldquoDestinationrdquo
bullThe design should measure progress against the organisationrsquos key strategic objectives (activities and outcomes)
bullLinks between strategic objectives should be articulated ndash these express the management teamrsquos beliefs about which activities drive which outcomes
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 17
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designMonitor progress in achieving goals
bullDevelopment of measures follow clarification and agreement of strategic objectives becausehellip
bullMeasures track progress in achieving those objectives against agreed targets
bullIdentify and monitor extraordinary activities and projects furthering achievement of objectives
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Out
com
es
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development A
ctiv
ities
Act
iviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
Financial Perspective
Objectives Measures Targets Initiatives
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets Initiatives
(V11) November 2001 Introducing the Balanced ScorecardPage 18
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designThe components of a Strategic Balanced Scorecard
bull Financial Marketndash Total NSV pound120m (nominal) ndashndash Has achieved 10 CAGR on NSndash Operating Margin gt10ndash Controllable overheads less thndash Operating Profit pound12m (nomin
Destination StatementDescription of how the organisation will be at some specific future date if the management teamrsquos strategies are successful
Fin
anci
alCu
stom
er
Best value for money
The leading and most innovative
brand
Drive Increased Demand
Profitable Sales Growth
Strategic Linkage Model (SLM)Graphic illustration of ldquocause and effectrdquo relationships between the strategic goals that must be achieved if the organisation is to reach its destination state
ObjectiveObjective DescriptionDescription
Total Shareholder Return is above Groups cost of equity over the medium to long term
Total Shareholder Return is above Groups cost of equity over the medium to long term
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means better than equivalent payments by known Group
Measures (Freq)Measures (Freq)
bull CAGR of Total ShareholdeReturn
bull ROIC (Target gt WACC)
bull CAGR of Total ShareholderReturn
bull ROIC (Target gt WACC)
bull PampL account net tax chargea of profit for financial ye
bull WACC
bull PampL account net tax chargeda of profit for financial yea
bull WACC
Group Strategy Delivers Value
Achieve Optimum Tax Rate amp WACC
F1
F2
Objective and Measure Documentation
ndashClear and concise description of strategic objectives and the measures chosen to track their achievement
F11
F12
-30p
8
150p
18Dividend expected kept a1000 pence leading to loprevious years
Measure Value Target PerfObjective Status
Outperform capital markets
F21 200 185Increasing cash inflow froCash amp a sset
F21 200 185Increasing cash inflow froCash amp a sset
t
Progress Reporting FormatsIllustration of how (and by whom) Scorecard information will be communicated
o Initiative overviewOverview of which initiatives support which Scorecard objectives incl owners and deadlines for finalisation
(V11) November 2001 Introducing the Balanced ScorecardPage 19
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard roll-out
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 20
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard Development Development within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
The optimal role-out
sequence is ldquoTop Downrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 21
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentDevelopment within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
Corporate Balanced Scorecard
Co-ordinatingBalanced Scorecard
Support Function Balanced Scorecard
Operating Unit Balanced Scorecard
Departmental Balanced ScorecardTeam Level
Balanced Scorecard
(V11) November 2001 Introducing the Balanced ScorecardPage 22
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
What
How
What
Board level ScorecardBoard level Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Overall VisionOverall Vision
Subordinate ScorecardSubordinate Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Local VisionLocal Vision
How
TeamIndividual ScorecardTeamIndividual Scorecard
Objectives
Measures amp Targets
Initiatives
TeamIndividual Vision
TeamIndividual Vision
Strategic direction
Strategic direction
Strategy implementation
Strategy implementation
(V11) November 2001 Introducing the Balanced ScorecardPage 23
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 24
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 25
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Strategic alignment amp goal setting
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 26
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Align existing management control tools with strategy
SVA amp EVASVA amp EVAB
udge
tsB
udge
ts
BEMBEMBalanced Scorecard
ABCABC HR ToolsHR Tools
(V11) November 2001 Introducing the Balanced ScorecardPage 27
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Support two-way communication of strategyhellip
Fuzzy objectivesFuzzy objectives
Unjustified trust in informal
Unjustified trust in informal
feedback systems
feedback systemsEntren
ched m
easure
ment
Entren
ched m
easure
ment
system
s
system
s
BSC
(V11) November 2001 Introducing the Balanced ScorecardPage 28
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
Comm
unica
tion Com
munication
Board levelScorecard
process
OperationalScorecard
process
Support function Scorecard
process
Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets
Take action
Create amend
strategic vision
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
Communication
(V11) November 2001 Introducing the Balanced ScorecardPage 29
2GCActive
Managementcopy 2GC Limited 2001
Success criteria
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 30
2GCActive
Managementcopy 2GC Limited 2001
Key success factorsCultural building blocks of Scorecard success
bullInclusive design process building on consensus seeking amp involvement
bullParticipative management style focused on learning open discussion and creative thinking
bullSponsorship and commitment from entire management team -top management in particular
bullldquoEmbeddingrdquo of management processes to use refresh and renew the Balanced Scorecard over time
(V11) November 2001 Introducing the Balanced ScorecardPage 31
2GCActive
Managementcopy 2GC Limited 2001
Introducing the Balanced ScorecardTo find out morehellip
bullVisit 2GCrsquos Web Sitendash We focus specifically on strategic
control and performance measurement issues and have a wide range of working papers FAQs and presentations to download on these topics
ndash The site also has a recommended reading list that covers relevant topics and the ldquoWeblinksrdquo database of relevant Internet sites
bullContact 2GCndash Let us know if you have a question
you canrsquot answer wersquoll do what we can to helphellip
bull info2gccouk
- Introducing the Balanced Scorecard
- Structure of presentation
- General management issuesWhat is this all about
- General management issuesImplementing Strategic Goals
- General management issuesBarriers to effective performance management
- General management issuesRealising the need to change
- What is Balanced Scorecard
- What is a Balanced Scorecard
- What is a Balanced ScorecardBackground amp underlying philosophy
- What is a Balanced ScorecardDo what needs to get donehellip
- What is a Balanced ScorecardDifferent applications for Balanced Scorecard
- What is a Balanced ScorecardStrategic control vs Management control
- What is the Balanced Scorecard The latest Balanced Scorecard thinking
- What is Balanced ScorecardMore than just a set of goals amp measures
- Balanced Scorecard design
- Balanced Scorecard designWhere to go an how to get there
- Balanced Scorecard designMonitor progress in achieving goals
- Balanced Scorecard designThe components of a Strategic Balanced Scorecard
- Balanced Scorecard roll-out
- Balanced Scorecard Development Development within the organisation
- Balanced Scorecard DevelopmentDevelopment within the organisation
- Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
- Balanced Scorecard deployment
- Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
- Balanced Scorecard deployment Strategic alignment amp goal setting
- Balanced Scorecard deployment Align existing management control tools with strategy
- Balanced Scorecard deployment Support two-way communication of strategyhellip
- Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
- Success criteria
- Key success factorsCultural building blocks of Scorecard success
- Introducing the Balanced ScorecardTo find out morehellip
-
(V11) November 2001 Introducing the Balanced ScorecardPage 9
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardBackground amp underlying philosophy
bullWhat is itndash Strategic communication and
performance measurement toolbullOrigins
ndash Developed from a tool developed in 1980s but some similarities with other pre-existing tools
ndash Introduced to wider audience in early 1990rsquos by R Kaplan amp D Norton in series of articles in Harvard Business Review
bullUnderlying philosophyndash Clear communication of goals and
prioritiesndash Learning amp team-working
Internal PerspectiveInternal Perspective
Learning amp Growth PerspectiveLearning amp Growth Perspective
Financial PerspectiveFinancial Perspective
Customer PerspectiveCustomer Perspective
Act
iviti
esO
utco
mes
Act
iviti
esO
utco
mes
Out
com
esO
utco
mes
Act
iviti
esA
ctiv
ities
(V11) November 2001 Introducing the Balanced ScorecardPage 10
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardDo what needs to get donehellip
Are we doing what we set out to do
What do we want to achieve and what must we do to achieve it
Take action
Create amend strategic vision
Createchange linked strategic
objectives
Review results and cause amp effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
(V11) November 2001 Introducing the Balanced ScorecardPage 11
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardDifferent applications for Balanced Scorecard
bullldquoManagement Controlrdquo
ndash Maintain the temperature
bullldquoStrategic Controlrdquondash What temperature
7060 80
D A Y amp N I G H T
HOT OFF COOL
Assess Outcome
Set TargetHeater Run if room is below target temp
Thermostat Compare with
Target
MeasureRoom Temp
(V11) November 2001 Introducing the Balanced ScorecardPage 12
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardStrategic control vs Management control
Organisational hierarchy
Strat
egic
emph
asis
Operational emphasis
(V11) November 2001 Introducing the Balanced ScorecardPage 13
2GCActive
Managementcopy 2GC Limited 2001
What is the Balanced Scorecard The latest Balanced Scorecard thinking
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 6
2GCActive
M anagementcopy 2GC Lim ited 1999
Balanced Scorecard DocumentationObjective M easure Supporting Initiatives
I1 Drive trade term s by channel W e will develop clear trading terms for different custom er groups W e will achieve our targetlevels of availability visibility and trade su pport via these trading terms
bull Trade customers adhering to trade standard terms amongst a sam ple of top XX customers
bull Develop standard trading terms (GG)
I2 Deliver custom er service standards Deliver timely f irst class service to the trade an d retailers
bull Cases delivered in full against order quantity
bull Orders delivered on time
bull Logistics Project (RS)bull SAP Project (PH)
I3 Im plem ent m ajor account m anagem ent programm e W e will continue to treat our custom ers as business partners W e will establish an account developm ent model to ensure high quality relationships exist w ith key account customers
bull of major accounts with a business plan bull Define ldquomajorrdquo accounts (AC)
I4 Deliver exce llent consum er propositions W e must meet consum er needs through the development and communication of an integrated brand proposition In the NPD sector we will launch new products only after they h ave m et pre-agreed qu ality image need and volume criteria
bull Brand Systems signed off by OE bull Develop core brand propositions (AC)bull NPD Process Improvement (ACAD)bull Cream ing project (AD)
I5 Deliver exce llent internal custom er service W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull SLA Qualitative Evaluations by SLA ow ners bull Logistics Project (RS)bull Factory Cost Reduction (DL)
I6 Effective m anagem ent of com pany assets W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull Total working capitalbull Fixed Asset Utilisationbull Outstanding Debtor Da ys
bull Plant ration alisation (AD)bull L4 L2 (DL)bull SAP (RS)
I7 Effective control of the business (No Surprises) W e will heighten our efforts to streamline the organisation to h elpdrive sound asset managem ent and cost reduction W e will invoke a cost conscious culture to complem ent our stream lining efforts
bull ldquoNo surprisesrdquo evaluation of actual performance against budget or forecast for- stock cover per city- sales per city- national costs
bull Analyse Risk project (PS)
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 6
2GCActive
M anagementcopy 2GC Lim ited 1999
Balanced Scorecard DocumentationObjective M easure Supporting Initiatives
I1 Drive trade term s by channel W e will develop clear trading terms for different custom er groups W e will achieve our targetlevels of availability visibility and trade su pport via these trading terms
bull Trade customers adhering to trade standard terms amongst a sam ple of top XX customers
bull Develop standard trading terms (GG)
I2 Deliver custom er service standards Deliver timely f irst class service to the trade an d retailers
bull Cases delivered in full against order quantity
bull Orders delivered on time
bull Logistics Project (RS)bull SAP Project (PH)
I3 Im plem ent m ajor account m anagem ent programm e W e will continue to treat our custom ers as business partners W e will establish an account developm ent model to ensure high quality relationships exist w ith key account customers
bull of major accounts with a business plan bull Define ldquomajorrdquo accounts (AC)
I4 Deliver exce llent consum er propositions W e must meet consum er needs through the development and communication of an integrated brand proposition In the NPD sector we will launch new products only after they h ave m et pre-agreed qu ality image need and volume criteria
bull Brand Systems signed off by OE bull Develop core brand propositions (AC)bull NPD Process Improvement (ACAD)bull Cream ing project (AD)
I5 Deliver exce llent internal custom er service W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull SLA Qualitative Evaluations by SLA ow ners bull Logistics Project (RS)bull Factory Cost Reduction (DL)
I6 Effective m anagem ent of com pany assets W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull Total working capitalbull Fixed Asset Utilisationbull Outstanding Debtor Da ys
bull Plant ration alisation (AD)bull L4 L2 (DL)bull SAP (RS)
I7 Effective control of the business (No Surprises) W e will heighten our efforts to streamline the organisation to h elpdrive sound asset managem ent and cost reduction W e will invoke a cost conscious culture to complem ent our stream lining efforts
bull ldquoNo surprisesrdquo evaluation of actual performance against budget or forecast for- stock cover per city- sales per city- national costs
bull Analyse Risk project (PS)
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 5
2GCActive
M anagementcopy 2GC Limited 1999
Strategic Linkage M odel
Fina
ncia
l Pe
rspe
ctiv
eC
usto
mer
Per
spec
tive
Lear
ning
amp G
row
th
Pe
rspe
ctiv
eIn
tern
al
Per
spec
tive
DBX Understands and Responds to m y Needs
DBX Products are m y First Choice Products
DBX Products are Good Value for Money
DBX Products are V isible and Availab le
DBX has an Excellent Consumer Franchise
Drive Trade Term s by Channel
Im plem ent Major Account Managem ent
Program m e
Effective Control of Business (No Surprises)
Sales Growth (by City by P roduct)
Gross Contribution (After City Sales and
Marketing)Asset Turn Overheads as a of
NSV
Improved Shareh older Value (ROCE)
I Have a Good Relationship with DBX
Develop Better W ork P ractices and IS
Develop and Retain P rofessional M anagers
Develop Service Agreem ents
Effective M anagem ent o f Com pany Assets
Deliver Excellent In ternal Custom er
ServiceDeliver Custom er
Service Standards
Develop Professional Custom er Oriented Skilled
Sales Force
Deliver Excellent Consum er
Propositions
Understand Im pact O f Various M arketing Levers
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 5
2GCActive
M anagementcopy 2GC Limited 1999
Strategic Linkage M odel
Fina
ncia
l Pe
rspe
ctiv
eC
usto
mer
Per
spec
tive
Lear
ning
amp G
row
th
Pe
rspe
ctiv
eIn
tern
al
Per
spec
tive
DBX Understands and Responds to m y Needs
DBX Products are m y First Choice Products
DBX Products are Good Value for Money
DBX Products are V isible and Availab le
DBX has an Excellent Consumer Franchise
Drive Trade Term s by Channel
Im plem ent Major Account Managem ent
Program m e
Effective Control of Business (No Surprises)
Sales Growth (by City by P roduct)
Gross Contribution (After City Sales and
Marketing)Asset Turn Overheads as a of
NSV
Improved Shareh older Value (ROCE)
I Have a Good Relationship with DBX
Develop Better W ork P ractices and IS
Develop and Retain P rofessional M anagers
Develop Service Agreem ents
Effective M anagem ent o f Com pany Assets
Deliver Excellent In ternal Custom er
ServiceDeliver Custom er
Service Standards
Develop Professional Custom er Oriented Skilled
Sales Force
Deliver Excellent Consum er
Propositions
Understand Im pact O f Various M arketing Levers
21 November 2001 2GC Limited Introduction to 2GC Active ManagementPage 4
2GCActive
M anagem entcopy 2GC Limited 1999
Destination Statem entSales Volume50000 MT
Distribution50 Cities
Sales Revenue pound 50 M illion
One M anufacturing Site
ROCE 7Capital Em ployed No m ore th an pound45 million
Product Manager
Marketing Director
Factory Director
Manufacturing Director
Regional Sales Manager
Sales Director
Managing Director
No m ore than 6 Core Brand ProductsMinimum sales volum esndash 5000 MT for each core brandndash 2000M T for each m ajor product
Employer of Choice ( 1 in industry and ranked in FM CG top 10)
Marketing SalesBranding Clear brand propositions systems
established for the six core brandsbull DBX has two of th e top five category product brandsbull Producthouse brand awaren ess targets in DBX city
strategies achievedM edia and promotional strategy City market share
targets achieved within agreed budgetbull M odels and measures of th e relative impact of all
m arketing levers available to assist in th e evaluation targeting of m arketing activity
Im proved Skills and Processes Standardised and transparent m arketing processes developed and agreed within DBX and with Group
bull M arketing team skills targets (b ased on extern al benchmark com parisons) achieved through training and recruitment (where applicable)
Overall DBX seen as one of top 10 FMCG Corsquos servicing key accounts in th e country (and 1 in category)
Customer M arket Focus Sales s taff achieving set targ ets in line with city s trategies for focus on custom er and market issues
bull Assess using distribution by chann el visib ility and trade prom otions
Im proved Skills and Processes Standardised and transp arent sales processes develop ed and agreed within DBX and with Group
bull Sales team skills targets (based on extern al b enchm ark comparisons) achieved through training and recruitment (where applicable)
Organisational Structurebull Clear scope and role statements exis t for all functions (including Sales
amp Marketing)bull Supporting functions (includ ing supply chain) will be achieving all
agreed service level targets with sales amp marketing
Supply ChainCost efficient supp ly chain based on flexib le p roduction lines will deliverbull Increased responsiveness to market dem ands bull Lower cycle timesbull Product channel freshness targe ts
Inform ation System sAppropriate in form ation systems that w ill meet DB Xrsquos needsbull All necessary m anagement inform ation p roduced within p re-agreed tim elines and scales
M anagementbull Senior m anagement w ill be com mitted to working on stra teg y and evalua ted on their
ab ility to coach advise guide and ensure tha t tasks are delega ted effectivelybull Professional m iddle management will exist that w ill be able to ac t m ore independently
within de fined guidelines and have the skills required for their job rolendash Succession plans for key positions wi ll existndash Recruiting and training policies will aim to raise middle manage ment competence to
meet internationa l standards
21 November 2001 2GC Limited Introduction to 2GC Active ManagementPage 4
2GCActive
M anagem entcopy 2GC Limited 1999
Destination Statem entSales Volume50000 MT
Distribution50 Cities
Sales Revenue pound 50 M illion
One M anufacturing Site
ROCE 7Capital Em ployed No m ore th an pound45 million
Product Manager
Marketing Director
Factory Director
Manufacturing Director
Regional Sales Manager
Sales Director
Managing Director
No m ore than 6 Core Brand ProductsMinimum sales volum esndash 5000 MT for each core brandndash 2000M T for each m ajor product
Employer of Choice ( 1 in industry and ranked in FM CG top 10)
Marketing SalesBranding Clear brand propositions systems
established for the six core brandsbull DBX has two of th e top five category product brandsbull Producthouse brand awaren ess targets in DBX city
strategies achievedM edia and promotional strategy City market share
targets achieved within agreed budgetbull M odels and measures of th e relative impact of all
m arketing levers available to assist in th e evaluation targeting of m arketing activity
Im proved Skills and Processes Standardised and transparent m arketing processes developed and agreed within DBX and with Group
bull M arketing team skills targets (b ased on extern al benchmark com parisons) achieved through training and recruitment (where applicable)
Overall DBX seen as one of top 10 FMCG Corsquos servicing key accounts in th e country (and 1 in category)
Customer M arket Focus Sales s taff achieving set targ ets in line with city s trategies for focus on custom er and market issues
bull Assess using distribution by chann el visib ility and trade prom otions
Im proved Skills and Processes Standardised and transp arent sales processes develop ed and agreed within DBX and with Group
bull Sales team skills targets (based on extern al b enchm ark comparisons) achieved through training and recruitment (where applicable)
Organisational Structurebull Clear scope and role statements exis t for all functions (including Sales
amp Marketing)bull Supporting functions (includ ing supply chain) will be achieving all
agreed service level targets with sales amp marketing
Supply ChainCost efficient supp ly chain based on flexib le p roduction lines will deliverbull Increased responsiveness to market dem ands bull Lower cycle timesbull Product channel freshness targe ts
Inform ation System sAppropriate in form ation systems that w ill meet DB Xrsquos needsbull All necessary m anagement inform ation p roduced within p re-agreed tim elines and scales
M anagementbull Senior m anagement w ill be com mitted to working on stra teg y and evalua ted on their
ab ility to coach advise guide and ensure tha t tasks are delega ted effectivelybull Professional m iddle management will exist that w ill be able to ac t m ore independently
within de fined guidelines and have the skills required for their job rolendash Succession plans for key positions wi ll existndash Recruiting and training policies will aim to raise middle manage ment competence to
meet internationa l standards
bullThe ldquoobjective drivenrdquoBalanced Scorecard has emerged as best practice
(V11) November 2001 Introducing the Balanced ScorecardPage 14
2GCActive
Managementcopy 2GC Limited 2001
What is Balanced ScorecardMore than just a set of goals amp measures
Balanced Scorecard design
Balanced Scorecard development
Balanced Scorecard deployment
bull Value from first application
bull Business model reflected in relationship between strategic goals
bull Corporate strategic measurement amp management tool
ndash divisionsndash business unitsndash functions
bull All management Systems aligned with strategy
bull Drive strategic behaviour into everyday decisions and operations
(V11) November 2001 Introducing the Balanced ScorecardPage 15
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard design
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 16
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designWhere to go an how to get there
bullBest practice is to use a development group that comprises the the likely users of the Balanced Scorecard
bullDesign choices should be based on jointly held perception of a strategic ldquoDestinationrdquo
bullThe design should measure progress against the organisationrsquos key strategic objectives (activities and outcomes)
bullLinks between strategic objectives should be articulated ndash these express the management teamrsquos beliefs about which activities drive which outcomes
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 17
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designMonitor progress in achieving goals
bullDevelopment of measures follow clarification and agreement of strategic objectives becausehellip
bullMeasures track progress in achieving those objectives against agreed targets
bullIdentify and monitor extraordinary activities and projects furthering achievement of objectives
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Out
com
es
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development A
ctiv
ities
Act
iviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
Financial Perspective
Objectives Measures Targets Initiatives
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets Initiatives
(V11) November 2001 Introducing the Balanced ScorecardPage 18
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designThe components of a Strategic Balanced Scorecard
bull Financial Marketndash Total NSV pound120m (nominal) ndashndash Has achieved 10 CAGR on NSndash Operating Margin gt10ndash Controllable overheads less thndash Operating Profit pound12m (nomin
Destination StatementDescription of how the organisation will be at some specific future date if the management teamrsquos strategies are successful
Fin
anci
alCu
stom
er
Best value for money
The leading and most innovative
brand
Drive Increased Demand
Profitable Sales Growth
Strategic Linkage Model (SLM)Graphic illustration of ldquocause and effectrdquo relationships between the strategic goals that must be achieved if the organisation is to reach its destination state
ObjectiveObjective DescriptionDescription
Total Shareholder Return is above Groups cost of equity over the medium to long term
Total Shareholder Return is above Groups cost of equity over the medium to long term
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means better than equivalent payments by known Group
Measures (Freq)Measures (Freq)
bull CAGR of Total ShareholdeReturn
bull ROIC (Target gt WACC)
bull CAGR of Total ShareholderReturn
bull ROIC (Target gt WACC)
bull PampL account net tax chargea of profit for financial ye
bull WACC
bull PampL account net tax chargeda of profit for financial yea
bull WACC
Group Strategy Delivers Value
Achieve Optimum Tax Rate amp WACC
F1
F2
Objective and Measure Documentation
ndashClear and concise description of strategic objectives and the measures chosen to track their achievement
F11
F12
-30p
8
150p
18Dividend expected kept a1000 pence leading to loprevious years
Measure Value Target PerfObjective Status
Outperform capital markets
F21 200 185Increasing cash inflow froCash amp a sset
F21 200 185Increasing cash inflow froCash amp a sset
t
Progress Reporting FormatsIllustration of how (and by whom) Scorecard information will be communicated
o Initiative overviewOverview of which initiatives support which Scorecard objectives incl owners and deadlines for finalisation
(V11) November 2001 Introducing the Balanced ScorecardPage 19
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard roll-out
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 20
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard Development Development within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
The optimal role-out
sequence is ldquoTop Downrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 21
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentDevelopment within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
Corporate Balanced Scorecard
Co-ordinatingBalanced Scorecard
Support Function Balanced Scorecard
Operating Unit Balanced Scorecard
Departmental Balanced ScorecardTeam Level
Balanced Scorecard
(V11) November 2001 Introducing the Balanced ScorecardPage 22
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
What
How
What
Board level ScorecardBoard level Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Overall VisionOverall Vision
Subordinate ScorecardSubordinate Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Local VisionLocal Vision
How
TeamIndividual ScorecardTeamIndividual Scorecard
Objectives
Measures amp Targets
Initiatives
TeamIndividual Vision
TeamIndividual Vision
Strategic direction
Strategic direction
Strategy implementation
Strategy implementation
(V11) November 2001 Introducing the Balanced ScorecardPage 23
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 24
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 25
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Strategic alignment amp goal setting
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 26
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Align existing management control tools with strategy
SVA amp EVASVA amp EVAB
udge
tsB
udge
ts
BEMBEMBalanced Scorecard
ABCABC HR ToolsHR Tools
(V11) November 2001 Introducing the Balanced ScorecardPage 27
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Support two-way communication of strategyhellip
Fuzzy objectivesFuzzy objectives
Unjustified trust in informal
Unjustified trust in informal
feedback systems
feedback systemsEntren
ched m
easure
ment
Entren
ched m
easure
ment
system
s
system
s
BSC
(V11) November 2001 Introducing the Balanced ScorecardPage 28
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
Comm
unica
tion Com
munication
Board levelScorecard
process
OperationalScorecard
process
Support function Scorecard
process
Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets
Take action
Create amend
strategic vision
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
Communication
(V11) November 2001 Introducing the Balanced ScorecardPage 29
2GCActive
Managementcopy 2GC Limited 2001
Success criteria
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 30
2GCActive
Managementcopy 2GC Limited 2001
Key success factorsCultural building blocks of Scorecard success
bullInclusive design process building on consensus seeking amp involvement
bullParticipative management style focused on learning open discussion and creative thinking
bullSponsorship and commitment from entire management team -top management in particular
bullldquoEmbeddingrdquo of management processes to use refresh and renew the Balanced Scorecard over time
(V11) November 2001 Introducing the Balanced ScorecardPage 31
2GCActive
Managementcopy 2GC Limited 2001
Introducing the Balanced ScorecardTo find out morehellip
bullVisit 2GCrsquos Web Sitendash We focus specifically on strategic
control and performance measurement issues and have a wide range of working papers FAQs and presentations to download on these topics
ndash The site also has a recommended reading list that covers relevant topics and the ldquoWeblinksrdquo database of relevant Internet sites
bullContact 2GCndash Let us know if you have a question
you canrsquot answer wersquoll do what we can to helphellip
bull info2gccouk
- Introducing the Balanced Scorecard
- Structure of presentation
- General management issuesWhat is this all about
- General management issuesImplementing Strategic Goals
- General management issuesBarriers to effective performance management
- General management issuesRealising the need to change
- What is Balanced Scorecard
- What is a Balanced Scorecard
- What is a Balanced ScorecardBackground amp underlying philosophy
- What is a Balanced ScorecardDo what needs to get donehellip
- What is a Balanced ScorecardDifferent applications for Balanced Scorecard
- What is a Balanced ScorecardStrategic control vs Management control
- What is the Balanced Scorecard The latest Balanced Scorecard thinking
- What is Balanced ScorecardMore than just a set of goals amp measures
- Balanced Scorecard design
- Balanced Scorecard designWhere to go an how to get there
- Balanced Scorecard designMonitor progress in achieving goals
- Balanced Scorecard designThe components of a Strategic Balanced Scorecard
- Balanced Scorecard roll-out
- Balanced Scorecard Development Development within the organisation
- Balanced Scorecard DevelopmentDevelopment within the organisation
- Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
- Balanced Scorecard deployment
- Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
- Balanced Scorecard deployment Strategic alignment amp goal setting
- Balanced Scorecard deployment Align existing management control tools with strategy
- Balanced Scorecard deployment Support two-way communication of strategyhellip
- Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
- Success criteria
- Key success factorsCultural building blocks of Scorecard success
- Introducing the Balanced ScorecardTo find out morehellip
-
(V11) November 2001 Introducing the Balanced ScorecardPage 10
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardDo what needs to get donehellip
Are we doing what we set out to do
What do we want to achieve and what must we do to achieve it
Take action
Create amend strategic vision
Createchange linked strategic
objectives
Review results and cause amp effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
(V11) November 2001 Introducing the Balanced ScorecardPage 11
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardDifferent applications for Balanced Scorecard
bullldquoManagement Controlrdquo
ndash Maintain the temperature
bullldquoStrategic Controlrdquondash What temperature
7060 80
D A Y amp N I G H T
HOT OFF COOL
Assess Outcome
Set TargetHeater Run if room is below target temp
Thermostat Compare with
Target
MeasureRoom Temp
(V11) November 2001 Introducing the Balanced ScorecardPage 12
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardStrategic control vs Management control
Organisational hierarchy
Strat
egic
emph
asis
Operational emphasis
(V11) November 2001 Introducing the Balanced ScorecardPage 13
2GCActive
Managementcopy 2GC Limited 2001
What is the Balanced Scorecard The latest Balanced Scorecard thinking
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 6
2GCActive
M anagementcopy 2GC Lim ited 1999
Balanced Scorecard DocumentationObjective M easure Supporting Initiatives
I1 Drive trade term s by channel W e will develop clear trading terms for different custom er groups W e will achieve our targetlevels of availability visibility and trade su pport via these trading terms
bull Trade customers adhering to trade standard terms amongst a sam ple of top XX customers
bull Develop standard trading terms (GG)
I2 Deliver custom er service standards Deliver timely f irst class service to the trade an d retailers
bull Cases delivered in full against order quantity
bull Orders delivered on time
bull Logistics Project (RS)bull SAP Project (PH)
I3 Im plem ent m ajor account m anagem ent programm e W e will continue to treat our custom ers as business partners W e will establish an account developm ent model to ensure high quality relationships exist w ith key account customers
bull of major accounts with a business plan bull Define ldquomajorrdquo accounts (AC)
I4 Deliver exce llent consum er propositions W e must meet consum er needs through the development and communication of an integrated brand proposition In the NPD sector we will launch new products only after they h ave m et pre-agreed qu ality image need and volume criteria
bull Brand Systems signed off by OE bull Develop core brand propositions (AC)bull NPD Process Improvement (ACAD)bull Cream ing project (AD)
I5 Deliver exce llent internal custom er service W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull SLA Qualitative Evaluations by SLA ow ners bull Logistics Project (RS)bull Factory Cost Reduction (DL)
I6 Effective m anagem ent of com pany assets W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull Total working capitalbull Fixed Asset Utilisationbull Outstanding Debtor Da ys
bull Plant ration alisation (AD)bull L4 L2 (DL)bull SAP (RS)
I7 Effective control of the business (No Surprises) W e will heighten our efforts to streamline the organisation to h elpdrive sound asset managem ent and cost reduction W e will invoke a cost conscious culture to complem ent our stream lining efforts
bull ldquoNo surprisesrdquo evaluation of actual performance against budget or forecast for- stock cover per city- sales per city- national costs
bull Analyse Risk project (PS)
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 6
2GCActive
M anagementcopy 2GC Lim ited 1999
Balanced Scorecard DocumentationObjective M easure Supporting Initiatives
I1 Drive trade term s by channel W e will develop clear trading terms for different custom er groups W e will achieve our targetlevels of availability visibility and trade su pport via these trading terms
bull Trade customers adhering to trade standard terms amongst a sam ple of top XX customers
bull Develop standard trading terms (GG)
I2 Deliver custom er service standards Deliver timely f irst class service to the trade an d retailers
bull Cases delivered in full against order quantity
bull Orders delivered on time
bull Logistics Project (RS)bull SAP Project (PH)
I3 Im plem ent m ajor account m anagem ent programm e W e will continue to treat our custom ers as business partners W e will establish an account developm ent model to ensure high quality relationships exist w ith key account customers
bull of major accounts with a business plan bull Define ldquomajorrdquo accounts (AC)
I4 Deliver exce llent consum er propositions W e must meet consum er needs through the development and communication of an integrated brand proposition In the NPD sector we will launch new products only after they h ave m et pre-agreed qu ality image need and volume criteria
bull Brand Systems signed off by OE bull Develop core brand propositions (AC)bull NPD Process Improvement (ACAD)bull Cream ing project (AD)
I5 Deliver exce llent internal custom er service W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull SLA Qualitative Evaluations by SLA ow ners bull Logistics Project (RS)bull Factory Cost Reduction (DL)
I6 Effective m anagem ent of com pany assets W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull Total working capitalbull Fixed Asset Utilisationbull Outstanding Debtor Da ys
bull Plant ration alisation (AD)bull L4 L2 (DL)bull SAP (RS)
I7 Effective control of the business (No Surprises) W e will heighten our efforts to streamline the organisation to h elpdrive sound asset managem ent and cost reduction W e will invoke a cost conscious culture to complem ent our stream lining efforts
bull ldquoNo surprisesrdquo evaluation of actual performance against budget or forecast for- stock cover per city- sales per city- national costs
bull Analyse Risk project (PS)
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 5
2GCActive
M anagementcopy 2GC Limited 1999
Strategic Linkage M odel
Fina
ncia
l Pe
rspe
ctiv
eC
usto
mer
Per
spec
tive
Lear
ning
amp G
row
th
Pe
rspe
ctiv
eIn
tern
al
Per
spec
tive
DBX Understands and Responds to m y Needs
DBX Products are m y First Choice Products
DBX Products are Good Value for Money
DBX Products are V isible and Availab le
DBX has an Excellent Consumer Franchise
Drive Trade Term s by Channel
Im plem ent Major Account Managem ent
Program m e
Effective Control of Business (No Surprises)
Sales Growth (by City by P roduct)
Gross Contribution (After City Sales and
Marketing)Asset Turn Overheads as a of
NSV
Improved Shareh older Value (ROCE)
I Have a Good Relationship with DBX
Develop Better W ork P ractices and IS
Develop and Retain P rofessional M anagers
Develop Service Agreem ents
Effective M anagem ent o f Com pany Assets
Deliver Excellent In ternal Custom er
ServiceDeliver Custom er
Service Standards
Develop Professional Custom er Oriented Skilled
Sales Force
Deliver Excellent Consum er
Propositions
Understand Im pact O f Various M arketing Levers
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 5
2GCActive
M anagementcopy 2GC Limited 1999
Strategic Linkage M odel
Fina
ncia
l Pe
rspe
ctiv
eC
usto
mer
Per
spec
tive
Lear
ning
amp G
row
th
Pe
rspe
ctiv
eIn
tern
al
Per
spec
tive
DBX Understands and Responds to m y Needs
DBX Products are m y First Choice Products
DBX Products are Good Value for Money
DBX Products are V isible and Availab le
DBX has an Excellent Consumer Franchise
Drive Trade Term s by Channel
Im plem ent Major Account Managem ent
Program m e
Effective Control of Business (No Surprises)
Sales Growth (by City by P roduct)
Gross Contribution (After City Sales and
Marketing)Asset Turn Overheads as a of
NSV
Improved Shareh older Value (ROCE)
I Have a Good Relationship with DBX
Develop Better W ork P ractices and IS
Develop and Retain P rofessional M anagers
Develop Service Agreem ents
Effective M anagem ent o f Com pany Assets
Deliver Excellent In ternal Custom er
ServiceDeliver Custom er
Service Standards
Develop Professional Custom er Oriented Skilled
Sales Force
Deliver Excellent Consum er
Propositions
Understand Im pact O f Various M arketing Levers
21 November 2001 2GC Limited Introduction to 2GC Active ManagementPage 4
2GCActive
M anagem entcopy 2GC Limited 1999
Destination Statem entSales Volume50000 MT
Distribution50 Cities
Sales Revenue pound 50 M illion
One M anufacturing Site
ROCE 7Capital Em ployed No m ore th an pound45 million
Product Manager
Marketing Director
Factory Director
Manufacturing Director
Regional Sales Manager
Sales Director
Managing Director
No m ore than 6 Core Brand ProductsMinimum sales volum esndash 5000 MT for each core brandndash 2000M T for each m ajor product
Employer of Choice ( 1 in industry and ranked in FM CG top 10)
Marketing SalesBranding Clear brand propositions systems
established for the six core brandsbull DBX has two of th e top five category product brandsbull Producthouse brand awaren ess targets in DBX city
strategies achievedM edia and promotional strategy City market share
targets achieved within agreed budgetbull M odels and measures of th e relative impact of all
m arketing levers available to assist in th e evaluation targeting of m arketing activity
Im proved Skills and Processes Standardised and transparent m arketing processes developed and agreed within DBX and with Group
bull M arketing team skills targets (b ased on extern al benchmark com parisons) achieved through training and recruitment (where applicable)
Overall DBX seen as one of top 10 FMCG Corsquos servicing key accounts in th e country (and 1 in category)
Customer M arket Focus Sales s taff achieving set targ ets in line with city s trategies for focus on custom er and market issues
bull Assess using distribution by chann el visib ility and trade prom otions
Im proved Skills and Processes Standardised and transp arent sales processes develop ed and agreed within DBX and with Group
bull Sales team skills targets (based on extern al b enchm ark comparisons) achieved through training and recruitment (where applicable)
Organisational Structurebull Clear scope and role statements exis t for all functions (including Sales
amp Marketing)bull Supporting functions (includ ing supply chain) will be achieving all
agreed service level targets with sales amp marketing
Supply ChainCost efficient supp ly chain based on flexib le p roduction lines will deliverbull Increased responsiveness to market dem ands bull Lower cycle timesbull Product channel freshness targe ts
Inform ation System sAppropriate in form ation systems that w ill meet DB Xrsquos needsbull All necessary m anagement inform ation p roduced within p re-agreed tim elines and scales
M anagementbull Senior m anagement w ill be com mitted to working on stra teg y and evalua ted on their
ab ility to coach advise guide and ensure tha t tasks are delega ted effectivelybull Professional m iddle management will exist that w ill be able to ac t m ore independently
within de fined guidelines and have the skills required for their job rolendash Succession plans for key positions wi ll existndash Recruiting and training policies will aim to raise middle manage ment competence to
meet internationa l standards
21 November 2001 2GC Limited Introduction to 2GC Active ManagementPage 4
2GCActive
M anagem entcopy 2GC Limited 1999
Destination Statem entSales Volume50000 MT
Distribution50 Cities
Sales Revenue pound 50 M illion
One M anufacturing Site
ROCE 7Capital Em ployed No m ore th an pound45 million
Product Manager
Marketing Director
Factory Director
Manufacturing Director
Regional Sales Manager
Sales Director
Managing Director
No m ore than 6 Core Brand ProductsMinimum sales volum esndash 5000 MT for each core brandndash 2000M T for each m ajor product
Employer of Choice ( 1 in industry and ranked in FM CG top 10)
Marketing SalesBranding Clear brand propositions systems
established for the six core brandsbull DBX has two of th e top five category product brandsbull Producthouse brand awaren ess targets in DBX city
strategies achievedM edia and promotional strategy City market share
targets achieved within agreed budgetbull M odels and measures of th e relative impact of all
m arketing levers available to assist in th e evaluation targeting of m arketing activity
Im proved Skills and Processes Standardised and transparent m arketing processes developed and agreed within DBX and with Group
bull M arketing team skills targets (b ased on extern al benchmark com parisons) achieved through training and recruitment (where applicable)
Overall DBX seen as one of top 10 FMCG Corsquos servicing key accounts in th e country (and 1 in category)
Customer M arket Focus Sales s taff achieving set targ ets in line with city s trategies for focus on custom er and market issues
bull Assess using distribution by chann el visib ility and trade prom otions
Im proved Skills and Processes Standardised and transp arent sales processes develop ed and agreed within DBX and with Group
bull Sales team skills targets (based on extern al b enchm ark comparisons) achieved through training and recruitment (where applicable)
Organisational Structurebull Clear scope and role statements exis t for all functions (including Sales
amp Marketing)bull Supporting functions (includ ing supply chain) will be achieving all
agreed service level targets with sales amp marketing
Supply ChainCost efficient supp ly chain based on flexib le p roduction lines will deliverbull Increased responsiveness to market dem ands bull Lower cycle timesbull Product channel freshness targe ts
Inform ation System sAppropriate in form ation systems that w ill meet DB Xrsquos needsbull All necessary m anagement inform ation p roduced within p re-agreed tim elines and scales
M anagementbull Senior m anagement w ill be com mitted to working on stra teg y and evalua ted on their
ab ility to coach advise guide and ensure tha t tasks are delega ted effectivelybull Professional m iddle management will exist that w ill be able to ac t m ore independently
within de fined guidelines and have the skills required for their job rolendash Succession plans for key positions wi ll existndash Recruiting and training policies will aim to raise middle manage ment competence to
meet internationa l standards
bullThe ldquoobjective drivenrdquoBalanced Scorecard has emerged as best practice
(V11) November 2001 Introducing the Balanced ScorecardPage 14
2GCActive
Managementcopy 2GC Limited 2001
What is Balanced ScorecardMore than just a set of goals amp measures
Balanced Scorecard design
Balanced Scorecard development
Balanced Scorecard deployment
bull Value from first application
bull Business model reflected in relationship between strategic goals
bull Corporate strategic measurement amp management tool
ndash divisionsndash business unitsndash functions
bull All management Systems aligned with strategy
bull Drive strategic behaviour into everyday decisions and operations
(V11) November 2001 Introducing the Balanced ScorecardPage 15
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard design
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 16
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designWhere to go an how to get there
bullBest practice is to use a development group that comprises the the likely users of the Balanced Scorecard
bullDesign choices should be based on jointly held perception of a strategic ldquoDestinationrdquo
bullThe design should measure progress against the organisationrsquos key strategic objectives (activities and outcomes)
bullLinks between strategic objectives should be articulated ndash these express the management teamrsquos beliefs about which activities drive which outcomes
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 17
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designMonitor progress in achieving goals
bullDevelopment of measures follow clarification and agreement of strategic objectives becausehellip
bullMeasures track progress in achieving those objectives against agreed targets
bullIdentify and monitor extraordinary activities and projects furthering achievement of objectives
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Out
com
es
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development A
ctiv
ities
Act
iviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
Financial Perspective
Objectives Measures Targets Initiatives
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets Initiatives
(V11) November 2001 Introducing the Balanced ScorecardPage 18
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designThe components of a Strategic Balanced Scorecard
bull Financial Marketndash Total NSV pound120m (nominal) ndashndash Has achieved 10 CAGR on NSndash Operating Margin gt10ndash Controllable overheads less thndash Operating Profit pound12m (nomin
Destination StatementDescription of how the organisation will be at some specific future date if the management teamrsquos strategies are successful
Fin
anci
alCu
stom
er
Best value for money
The leading and most innovative
brand
Drive Increased Demand
Profitable Sales Growth
Strategic Linkage Model (SLM)Graphic illustration of ldquocause and effectrdquo relationships between the strategic goals that must be achieved if the organisation is to reach its destination state
ObjectiveObjective DescriptionDescription
Total Shareholder Return is above Groups cost of equity over the medium to long term
Total Shareholder Return is above Groups cost of equity over the medium to long term
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means better than equivalent payments by known Group
Measures (Freq)Measures (Freq)
bull CAGR of Total ShareholdeReturn
bull ROIC (Target gt WACC)
bull CAGR of Total ShareholderReturn
bull ROIC (Target gt WACC)
bull PampL account net tax chargea of profit for financial ye
bull WACC
bull PampL account net tax chargeda of profit for financial yea
bull WACC
Group Strategy Delivers Value
Achieve Optimum Tax Rate amp WACC
F1
F2
Objective and Measure Documentation
ndashClear and concise description of strategic objectives and the measures chosen to track their achievement
F11
F12
-30p
8
150p
18Dividend expected kept a1000 pence leading to loprevious years
Measure Value Target PerfObjective Status
Outperform capital markets
F21 200 185Increasing cash inflow froCash amp a sset
F21 200 185Increasing cash inflow froCash amp a sset
t
Progress Reporting FormatsIllustration of how (and by whom) Scorecard information will be communicated
o Initiative overviewOverview of which initiatives support which Scorecard objectives incl owners and deadlines for finalisation
(V11) November 2001 Introducing the Balanced ScorecardPage 19
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard roll-out
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 20
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard Development Development within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
The optimal role-out
sequence is ldquoTop Downrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 21
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentDevelopment within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
Corporate Balanced Scorecard
Co-ordinatingBalanced Scorecard
Support Function Balanced Scorecard
Operating Unit Balanced Scorecard
Departmental Balanced ScorecardTeam Level
Balanced Scorecard
(V11) November 2001 Introducing the Balanced ScorecardPage 22
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
What
How
What
Board level ScorecardBoard level Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Overall VisionOverall Vision
Subordinate ScorecardSubordinate Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Local VisionLocal Vision
How
TeamIndividual ScorecardTeamIndividual Scorecard
Objectives
Measures amp Targets
Initiatives
TeamIndividual Vision
TeamIndividual Vision
Strategic direction
Strategic direction
Strategy implementation
Strategy implementation
(V11) November 2001 Introducing the Balanced ScorecardPage 23
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 24
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 25
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Strategic alignment amp goal setting
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 26
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Align existing management control tools with strategy
SVA amp EVASVA amp EVAB
udge
tsB
udge
ts
BEMBEMBalanced Scorecard
ABCABC HR ToolsHR Tools
(V11) November 2001 Introducing the Balanced ScorecardPage 27
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Support two-way communication of strategyhellip
Fuzzy objectivesFuzzy objectives
Unjustified trust in informal
Unjustified trust in informal
feedback systems
feedback systemsEntren
ched m
easure
ment
Entren
ched m
easure
ment
system
s
system
s
BSC
(V11) November 2001 Introducing the Balanced ScorecardPage 28
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
Comm
unica
tion Com
munication
Board levelScorecard
process
OperationalScorecard
process
Support function Scorecard
process
Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets
Take action
Create amend
strategic vision
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
Communication
(V11) November 2001 Introducing the Balanced ScorecardPage 29
2GCActive
Managementcopy 2GC Limited 2001
Success criteria
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 30
2GCActive
Managementcopy 2GC Limited 2001
Key success factorsCultural building blocks of Scorecard success
bullInclusive design process building on consensus seeking amp involvement
bullParticipative management style focused on learning open discussion and creative thinking
bullSponsorship and commitment from entire management team -top management in particular
bullldquoEmbeddingrdquo of management processes to use refresh and renew the Balanced Scorecard over time
(V11) November 2001 Introducing the Balanced ScorecardPage 31
2GCActive
Managementcopy 2GC Limited 2001
Introducing the Balanced ScorecardTo find out morehellip
bullVisit 2GCrsquos Web Sitendash We focus specifically on strategic
control and performance measurement issues and have a wide range of working papers FAQs and presentations to download on these topics
ndash The site also has a recommended reading list that covers relevant topics and the ldquoWeblinksrdquo database of relevant Internet sites
bullContact 2GCndash Let us know if you have a question
you canrsquot answer wersquoll do what we can to helphellip
bull info2gccouk
- Introducing the Balanced Scorecard
- Structure of presentation
- General management issuesWhat is this all about
- General management issuesImplementing Strategic Goals
- General management issuesBarriers to effective performance management
- General management issuesRealising the need to change
- What is Balanced Scorecard
- What is a Balanced Scorecard
- What is a Balanced ScorecardBackground amp underlying philosophy
- What is a Balanced ScorecardDo what needs to get donehellip
- What is a Balanced ScorecardDifferent applications for Balanced Scorecard
- What is a Balanced ScorecardStrategic control vs Management control
- What is the Balanced Scorecard The latest Balanced Scorecard thinking
- What is Balanced ScorecardMore than just a set of goals amp measures
- Balanced Scorecard design
- Balanced Scorecard designWhere to go an how to get there
- Balanced Scorecard designMonitor progress in achieving goals
- Balanced Scorecard designThe components of a Strategic Balanced Scorecard
- Balanced Scorecard roll-out
- Balanced Scorecard Development Development within the organisation
- Balanced Scorecard DevelopmentDevelopment within the organisation
- Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
- Balanced Scorecard deployment
- Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
- Balanced Scorecard deployment Strategic alignment amp goal setting
- Balanced Scorecard deployment Align existing management control tools with strategy
- Balanced Scorecard deployment Support two-way communication of strategyhellip
- Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
- Success criteria
- Key success factorsCultural building blocks of Scorecard success
- Introducing the Balanced ScorecardTo find out morehellip
-
(V11) November 2001 Introducing the Balanced ScorecardPage 11
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardDifferent applications for Balanced Scorecard
bullldquoManagement Controlrdquo
ndash Maintain the temperature
bullldquoStrategic Controlrdquondash What temperature
7060 80
D A Y amp N I G H T
HOT OFF COOL
Assess Outcome
Set TargetHeater Run if room is below target temp
Thermostat Compare with
Target
MeasureRoom Temp
(V11) November 2001 Introducing the Balanced ScorecardPage 12
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardStrategic control vs Management control
Organisational hierarchy
Strat
egic
emph
asis
Operational emphasis
(V11) November 2001 Introducing the Balanced ScorecardPage 13
2GCActive
Managementcopy 2GC Limited 2001
What is the Balanced Scorecard The latest Balanced Scorecard thinking
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 6
2GCActive
M anagementcopy 2GC Lim ited 1999
Balanced Scorecard DocumentationObjective M easure Supporting Initiatives
I1 Drive trade term s by channel W e will develop clear trading terms for different custom er groups W e will achieve our targetlevels of availability visibility and trade su pport via these trading terms
bull Trade customers adhering to trade standard terms amongst a sam ple of top XX customers
bull Develop standard trading terms (GG)
I2 Deliver custom er service standards Deliver timely f irst class service to the trade an d retailers
bull Cases delivered in full against order quantity
bull Orders delivered on time
bull Logistics Project (RS)bull SAP Project (PH)
I3 Im plem ent m ajor account m anagem ent programm e W e will continue to treat our custom ers as business partners W e will establish an account developm ent model to ensure high quality relationships exist w ith key account customers
bull of major accounts with a business plan bull Define ldquomajorrdquo accounts (AC)
I4 Deliver exce llent consum er propositions W e must meet consum er needs through the development and communication of an integrated brand proposition In the NPD sector we will launch new products only after they h ave m et pre-agreed qu ality image need and volume criteria
bull Brand Systems signed off by OE bull Develop core brand propositions (AC)bull NPD Process Improvement (ACAD)bull Cream ing project (AD)
I5 Deliver exce llent internal custom er service W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull SLA Qualitative Evaluations by SLA ow ners bull Logistics Project (RS)bull Factory Cost Reduction (DL)
I6 Effective m anagem ent of com pany assets W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull Total working capitalbull Fixed Asset Utilisationbull Outstanding Debtor Da ys
bull Plant ration alisation (AD)bull L4 L2 (DL)bull SAP (RS)
I7 Effective control of the business (No Surprises) W e will heighten our efforts to streamline the organisation to h elpdrive sound asset managem ent and cost reduction W e will invoke a cost conscious culture to complem ent our stream lining efforts
bull ldquoNo surprisesrdquo evaluation of actual performance against budget or forecast for- stock cover per city- sales per city- national costs
bull Analyse Risk project (PS)
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 6
2GCActive
M anagementcopy 2GC Lim ited 1999
Balanced Scorecard DocumentationObjective M easure Supporting Initiatives
I1 Drive trade term s by channel W e will develop clear trading terms for different custom er groups W e will achieve our targetlevels of availability visibility and trade su pport via these trading terms
bull Trade customers adhering to trade standard terms amongst a sam ple of top XX customers
bull Develop standard trading terms (GG)
I2 Deliver custom er service standards Deliver timely f irst class service to the trade an d retailers
bull Cases delivered in full against order quantity
bull Orders delivered on time
bull Logistics Project (RS)bull SAP Project (PH)
I3 Im plem ent m ajor account m anagem ent programm e W e will continue to treat our custom ers as business partners W e will establish an account developm ent model to ensure high quality relationships exist w ith key account customers
bull of major accounts with a business plan bull Define ldquomajorrdquo accounts (AC)
I4 Deliver exce llent consum er propositions W e must meet consum er needs through the development and communication of an integrated brand proposition In the NPD sector we will launch new products only after they h ave m et pre-agreed qu ality image need and volume criteria
bull Brand Systems signed off by OE bull Develop core brand propositions (AC)bull NPD Process Improvement (ACAD)bull Cream ing project (AD)
I5 Deliver exce llent internal custom er service W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull SLA Qualitative Evaluations by SLA ow ners bull Logistics Project (RS)bull Factory Cost Reduction (DL)
I6 Effective m anagem ent of com pany assets W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull Total working capitalbull Fixed Asset Utilisationbull Outstanding Debtor Da ys
bull Plant ration alisation (AD)bull L4 L2 (DL)bull SAP (RS)
I7 Effective control of the business (No Surprises) W e will heighten our efforts to streamline the organisation to h elpdrive sound asset managem ent and cost reduction W e will invoke a cost conscious culture to complem ent our stream lining efforts
bull ldquoNo surprisesrdquo evaluation of actual performance against budget or forecast for- stock cover per city- sales per city- national costs
bull Analyse Risk project (PS)
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 5
2GCActive
M anagementcopy 2GC Limited 1999
Strategic Linkage M odel
Fina
ncia
l Pe
rspe
ctiv
eC
usto
mer
Per
spec
tive
Lear
ning
amp G
row
th
Pe
rspe
ctiv
eIn
tern
al
Per
spec
tive
DBX Understands and Responds to m y Needs
DBX Products are m y First Choice Products
DBX Products are Good Value for Money
DBX Products are V isible and Availab le
DBX has an Excellent Consumer Franchise
Drive Trade Term s by Channel
Im plem ent Major Account Managem ent
Program m e
Effective Control of Business (No Surprises)
Sales Growth (by City by P roduct)
Gross Contribution (After City Sales and
Marketing)Asset Turn Overheads as a of
NSV
Improved Shareh older Value (ROCE)
I Have a Good Relationship with DBX
Develop Better W ork P ractices and IS
Develop and Retain P rofessional M anagers
Develop Service Agreem ents
Effective M anagem ent o f Com pany Assets
Deliver Excellent In ternal Custom er
ServiceDeliver Custom er
Service Standards
Develop Professional Custom er Oriented Skilled
Sales Force
Deliver Excellent Consum er
Propositions
Understand Im pact O f Various M arketing Levers
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 5
2GCActive
M anagementcopy 2GC Limited 1999
Strategic Linkage M odel
Fina
ncia
l Pe
rspe
ctiv
eC
usto
mer
Per
spec
tive
Lear
ning
amp G
row
th
Pe
rspe
ctiv
eIn
tern
al
Per
spec
tive
DBX Understands and Responds to m y Needs
DBX Products are m y First Choice Products
DBX Products are Good Value for Money
DBX Products are V isible and Availab le
DBX has an Excellent Consumer Franchise
Drive Trade Term s by Channel
Im plem ent Major Account Managem ent
Program m e
Effective Control of Business (No Surprises)
Sales Growth (by City by P roduct)
Gross Contribution (After City Sales and
Marketing)Asset Turn Overheads as a of
NSV
Improved Shareh older Value (ROCE)
I Have a Good Relationship with DBX
Develop Better W ork P ractices and IS
Develop and Retain P rofessional M anagers
Develop Service Agreem ents
Effective M anagem ent o f Com pany Assets
Deliver Excellent In ternal Custom er
ServiceDeliver Custom er
Service Standards
Develop Professional Custom er Oriented Skilled
Sales Force
Deliver Excellent Consum er
Propositions
Understand Im pact O f Various M arketing Levers
21 November 2001 2GC Limited Introduction to 2GC Active ManagementPage 4
2GCActive
M anagem entcopy 2GC Limited 1999
Destination Statem entSales Volume50000 MT
Distribution50 Cities
Sales Revenue pound 50 M illion
One M anufacturing Site
ROCE 7Capital Em ployed No m ore th an pound45 million
Product Manager
Marketing Director
Factory Director
Manufacturing Director
Regional Sales Manager
Sales Director
Managing Director
No m ore than 6 Core Brand ProductsMinimum sales volum esndash 5000 MT for each core brandndash 2000M T for each m ajor product
Employer of Choice ( 1 in industry and ranked in FM CG top 10)
Marketing SalesBranding Clear brand propositions systems
established for the six core brandsbull DBX has two of th e top five category product brandsbull Producthouse brand awaren ess targets in DBX city
strategies achievedM edia and promotional strategy City market share
targets achieved within agreed budgetbull M odels and measures of th e relative impact of all
m arketing levers available to assist in th e evaluation targeting of m arketing activity
Im proved Skills and Processes Standardised and transparent m arketing processes developed and agreed within DBX and with Group
bull M arketing team skills targets (b ased on extern al benchmark com parisons) achieved through training and recruitment (where applicable)
Overall DBX seen as one of top 10 FMCG Corsquos servicing key accounts in th e country (and 1 in category)
Customer M arket Focus Sales s taff achieving set targ ets in line with city s trategies for focus on custom er and market issues
bull Assess using distribution by chann el visib ility and trade prom otions
Im proved Skills and Processes Standardised and transp arent sales processes develop ed and agreed within DBX and with Group
bull Sales team skills targets (based on extern al b enchm ark comparisons) achieved through training and recruitment (where applicable)
Organisational Structurebull Clear scope and role statements exis t for all functions (including Sales
amp Marketing)bull Supporting functions (includ ing supply chain) will be achieving all
agreed service level targets with sales amp marketing
Supply ChainCost efficient supp ly chain based on flexib le p roduction lines will deliverbull Increased responsiveness to market dem ands bull Lower cycle timesbull Product channel freshness targe ts
Inform ation System sAppropriate in form ation systems that w ill meet DB Xrsquos needsbull All necessary m anagement inform ation p roduced within p re-agreed tim elines and scales
M anagementbull Senior m anagement w ill be com mitted to working on stra teg y and evalua ted on their
ab ility to coach advise guide and ensure tha t tasks are delega ted effectivelybull Professional m iddle management will exist that w ill be able to ac t m ore independently
within de fined guidelines and have the skills required for their job rolendash Succession plans for key positions wi ll existndash Recruiting and training policies will aim to raise middle manage ment competence to
meet internationa l standards
21 November 2001 2GC Limited Introduction to 2GC Active ManagementPage 4
2GCActive
M anagem entcopy 2GC Limited 1999
Destination Statem entSales Volume50000 MT
Distribution50 Cities
Sales Revenue pound 50 M illion
One M anufacturing Site
ROCE 7Capital Em ployed No m ore th an pound45 million
Product Manager
Marketing Director
Factory Director
Manufacturing Director
Regional Sales Manager
Sales Director
Managing Director
No m ore than 6 Core Brand ProductsMinimum sales volum esndash 5000 MT for each core brandndash 2000M T for each m ajor product
Employer of Choice ( 1 in industry and ranked in FM CG top 10)
Marketing SalesBranding Clear brand propositions systems
established for the six core brandsbull DBX has two of th e top five category product brandsbull Producthouse brand awaren ess targets in DBX city
strategies achievedM edia and promotional strategy City market share
targets achieved within agreed budgetbull M odels and measures of th e relative impact of all
m arketing levers available to assist in th e evaluation targeting of m arketing activity
Im proved Skills and Processes Standardised and transparent m arketing processes developed and agreed within DBX and with Group
bull M arketing team skills targets (b ased on extern al benchmark com parisons) achieved through training and recruitment (where applicable)
Overall DBX seen as one of top 10 FMCG Corsquos servicing key accounts in th e country (and 1 in category)
Customer M arket Focus Sales s taff achieving set targ ets in line with city s trategies for focus on custom er and market issues
bull Assess using distribution by chann el visib ility and trade prom otions
Im proved Skills and Processes Standardised and transp arent sales processes develop ed and agreed within DBX and with Group
bull Sales team skills targets (based on extern al b enchm ark comparisons) achieved through training and recruitment (where applicable)
Organisational Structurebull Clear scope and role statements exis t for all functions (including Sales
amp Marketing)bull Supporting functions (includ ing supply chain) will be achieving all
agreed service level targets with sales amp marketing
Supply ChainCost efficient supp ly chain based on flexib le p roduction lines will deliverbull Increased responsiveness to market dem ands bull Lower cycle timesbull Product channel freshness targe ts
Inform ation System sAppropriate in form ation systems that w ill meet DB Xrsquos needsbull All necessary m anagement inform ation p roduced within p re-agreed tim elines and scales
M anagementbull Senior m anagement w ill be com mitted to working on stra teg y and evalua ted on their
ab ility to coach advise guide and ensure tha t tasks are delega ted effectivelybull Professional m iddle management will exist that w ill be able to ac t m ore independently
within de fined guidelines and have the skills required for their job rolendash Succession plans for key positions wi ll existndash Recruiting and training policies will aim to raise middle manage ment competence to
meet internationa l standards
bullThe ldquoobjective drivenrdquoBalanced Scorecard has emerged as best practice
(V11) November 2001 Introducing the Balanced ScorecardPage 14
2GCActive
Managementcopy 2GC Limited 2001
What is Balanced ScorecardMore than just a set of goals amp measures
Balanced Scorecard design
Balanced Scorecard development
Balanced Scorecard deployment
bull Value from first application
bull Business model reflected in relationship between strategic goals
bull Corporate strategic measurement amp management tool
ndash divisionsndash business unitsndash functions
bull All management Systems aligned with strategy
bull Drive strategic behaviour into everyday decisions and operations
(V11) November 2001 Introducing the Balanced ScorecardPage 15
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard design
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 16
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designWhere to go an how to get there
bullBest practice is to use a development group that comprises the the likely users of the Balanced Scorecard
bullDesign choices should be based on jointly held perception of a strategic ldquoDestinationrdquo
bullThe design should measure progress against the organisationrsquos key strategic objectives (activities and outcomes)
bullLinks between strategic objectives should be articulated ndash these express the management teamrsquos beliefs about which activities drive which outcomes
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 17
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designMonitor progress in achieving goals
bullDevelopment of measures follow clarification and agreement of strategic objectives becausehellip
bullMeasures track progress in achieving those objectives against agreed targets
bullIdentify and monitor extraordinary activities and projects furthering achievement of objectives
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Out
com
es
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development A
ctiv
ities
Act
iviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
Financial Perspective
Objectives Measures Targets Initiatives
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets Initiatives
(V11) November 2001 Introducing the Balanced ScorecardPage 18
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designThe components of a Strategic Balanced Scorecard
bull Financial Marketndash Total NSV pound120m (nominal) ndashndash Has achieved 10 CAGR on NSndash Operating Margin gt10ndash Controllable overheads less thndash Operating Profit pound12m (nomin
Destination StatementDescription of how the organisation will be at some specific future date if the management teamrsquos strategies are successful
Fin
anci
alCu
stom
er
Best value for money
The leading and most innovative
brand
Drive Increased Demand
Profitable Sales Growth
Strategic Linkage Model (SLM)Graphic illustration of ldquocause and effectrdquo relationships between the strategic goals that must be achieved if the organisation is to reach its destination state
ObjectiveObjective DescriptionDescription
Total Shareholder Return is above Groups cost of equity over the medium to long term
Total Shareholder Return is above Groups cost of equity over the medium to long term
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means better than equivalent payments by known Group
Measures (Freq)Measures (Freq)
bull CAGR of Total ShareholdeReturn
bull ROIC (Target gt WACC)
bull CAGR of Total ShareholderReturn
bull ROIC (Target gt WACC)
bull PampL account net tax chargea of profit for financial ye
bull WACC
bull PampL account net tax chargeda of profit for financial yea
bull WACC
Group Strategy Delivers Value
Achieve Optimum Tax Rate amp WACC
F1
F2
Objective and Measure Documentation
ndashClear and concise description of strategic objectives and the measures chosen to track their achievement
F11
F12
-30p
8
150p
18Dividend expected kept a1000 pence leading to loprevious years
Measure Value Target PerfObjective Status
Outperform capital markets
F21 200 185Increasing cash inflow froCash amp a sset
F21 200 185Increasing cash inflow froCash amp a sset
t
Progress Reporting FormatsIllustration of how (and by whom) Scorecard information will be communicated
o Initiative overviewOverview of which initiatives support which Scorecard objectives incl owners and deadlines for finalisation
(V11) November 2001 Introducing the Balanced ScorecardPage 19
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard roll-out
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 20
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard Development Development within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
The optimal role-out
sequence is ldquoTop Downrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 21
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentDevelopment within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
Corporate Balanced Scorecard
Co-ordinatingBalanced Scorecard
Support Function Balanced Scorecard
Operating Unit Balanced Scorecard
Departmental Balanced ScorecardTeam Level
Balanced Scorecard
(V11) November 2001 Introducing the Balanced ScorecardPage 22
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
What
How
What
Board level ScorecardBoard level Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Overall VisionOverall Vision
Subordinate ScorecardSubordinate Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Local VisionLocal Vision
How
TeamIndividual ScorecardTeamIndividual Scorecard
Objectives
Measures amp Targets
Initiatives
TeamIndividual Vision
TeamIndividual Vision
Strategic direction
Strategic direction
Strategy implementation
Strategy implementation
(V11) November 2001 Introducing the Balanced ScorecardPage 23
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 24
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 25
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Strategic alignment amp goal setting
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 26
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Align existing management control tools with strategy
SVA amp EVASVA amp EVAB
udge
tsB
udge
ts
BEMBEMBalanced Scorecard
ABCABC HR ToolsHR Tools
(V11) November 2001 Introducing the Balanced ScorecardPage 27
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Support two-way communication of strategyhellip
Fuzzy objectivesFuzzy objectives
Unjustified trust in informal
Unjustified trust in informal
feedback systems
feedback systemsEntren
ched m
easure
ment
Entren
ched m
easure
ment
system
s
system
s
BSC
(V11) November 2001 Introducing the Balanced ScorecardPage 28
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
Comm
unica
tion Com
munication
Board levelScorecard
process
OperationalScorecard
process
Support function Scorecard
process
Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets
Take action
Create amend
strategic vision
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
Communication
(V11) November 2001 Introducing the Balanced ScorecardPage 29
2GCActive
Managementcopy 2GC Limited 2001
Success criteria
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 30
2GCActive
Managementcopy 2GC Limited 2001
Key success factorsCultural building blocks of Scorecard success
bullInclusive design process building on consensus seeking amp involvement
bullParticipative management style focused on learning open discussion and creative thinking
bullSponsorship and commitment from entire management team -top management in particular
bullldquoEmbeddingrdquo of management processes to use refresh and renew the Balanced Scorecard over time
(V11) November 2001 Introducing the Balanced ScorecardPage 31
2GCActive
Managementcopy 2GC Limited 2001
Introducing the Balanced ScorecardTo find out morehellip
bullVisit 2GCrsquos Web Sitendash We focus specifically on strategic
control and performance measurement issues and have a wide range of working papers FAQs and presentations to download on these topics
ndash The site also has a recommended reading list that covers relevant topics and the ldquoWeblinksrdquo database of relevant Internet sites
bullContact 2GCndash Let us know if you have a question
you canrsquot answer wersquoll do what we can to helphellip
bull info2gccouk
- Introducing the Balanced Scorecard
- Structure of presentation
- General management issuesWhat is this all about
- General management issuesImplementing Strategic Goals
- General management issuesBarriers to effective performance management
- General management issuesRealising the need to change
- What is Balanced Scorecard
- What is a Balanced Scorecard
- What is a Balanced ScorecardBackground amp underlying philosophy
- What is a Balanced ScorecardDo what needs to get donehellip
- What is a Balanced ScorecardDifferent applications for Balanced Scorecard
- What is a Balanced ScorecardStrategic control vs Management control
- What is the Balanced Scorecard The latest Balanced Scorecard thinking
- What is Balanced ScorecardMore than just a set of goals amp measures
- Balanced Scorecard design
- Balanced Scorecard designWhere to go an how to get there
- Balanced Scorecard designMonitor progress in achieving goals
- Balanced Scorecard designThe components of a Strategic Balanced Scorecard
- Balanced Scorecard roll-out
- Balanced Scorecard Development Development within the organisation
- Balanced Scorecard DevelopmentDevelopment within the organisation
- Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
- Balanced Scorecard deployment
- Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
- Balanced Scorecard deployment Strategic alignment amp goal setting
- Balanced Scorecard deployment Align existing management control tools with strategy
- Balanced Scorecard deployment Support two-way communication of strategyhellip
- Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
- Success criteria
- Key success factorsCultural building blocks of Scorecard success
- Introducing the Balanced ScorecardTo find out morehellip
-
(V11) November 2001 Introducing the Balanced ScorecardPage 12
2GCActive
Managementcopy 2GC Limited 2001
What is a Balanced ScorecardStrategic control vs Management control
Organisational hierarchy
Strat
egic
emph
asis
Operational emphasis
(V11) November 2001 Introducing the Balanced ScorecardPage 13
2GCActive
Managementcopy 2GC Limited 2001
What is the Balanced Scorecard The latest Balanced Scorecard thinking
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 6
2GCActive
M anagementcopy 2GC Lim ited 1999
Balanced Scorecard DocumentationObjective M easure Supporting Initiatives
I1 Drive trade term s by channel W e will develop clear trading terms for different custom er groups W e will achieve our targetlevels of availability visibility and trade su pport via these trading terms
bull Trade customers adhering to trade standard terms amongst a sam ple of top XX customers
bull Develop standard trading terms (GG)
I2 Deliver custom er service standards Deliver timely f irst class service to the trade an d retailers
bull Cases delivered in full against order quantity
bull Orders delivered on time
bull Logistics Project (RS)bull SAP Project (PH)
I3 Im plem ent m ajor account m anagem ent programm e W e will continue to treat our custom ers as business partners W e will establish an account developm ent model to ensure high quality relationships exist w ith key account customers
bull of major accounts with a business plan bull Define ldquomajorrdquo accounts (AC)
I4 Deliver exce llent consum er propositions W e must meet consum er needs through the development and communication of an integrated brand proposition In the NPD sector we will launch new products only after they h ave m et pre-agreed qu ality image need and volume criteria
bull Brand Systems signed off by OE bull Develop core brand propositions (AC)bull NPD Process Improvement (ACAD)bull Cream ing project (AD)
I5 Deliver exce llent internal custom er service W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull SLA Qualitative Evaluations by SLA ow ners bull Logistics Project (RS)bull Factory Cost Reduction (DL)
I6 Effective m anagem ent of com pany assets W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull Total working capitalbull Fixed Asset Utilisationbull Outstanding Debtor Da ys
bull Plant ration alisation (AD)bull L4 L2 (DL)bull SAP (RS)
I7 Effective control of the business (No Surprises) W e will heighten our efforts to streamline the organisation to h elpdrive sound asset managem ent and cost reduction W e will invoke a cost conscious culture to complem ent our stream lining efforts
bull ldquoNo surprisesrdquo evaluation of actual performance against budget or forecast for- stock cover per city- sales per city- national costs
bull Analyse Risk project (PS)
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 6
2GCActive
M anagementcopy 2GC Lim ited 1999
Balanced Scorecard DocumentationObjective M easure Supporting Initiatives
I1 Drive trade term s by channel W e will develop clear trading terms for different custom er groups W e will achieve our targetlevels of availability visibility and trade su pport via these trading terms
bull Trade customers adhering to trade standard terms amongst a sam ple of top XX customers
bull Develop standard trading terms (GG)
I2 Deliver custom er service standards Deliver timely f irst class service to the trade an d retailers
bull Cases delivered in full against order quantity
bull Orders delivered on time
bull Logistics Project (RS)bull SAP Project (PH)
I3 Im plem ent m ajor account m anagem ent programm e W e will continue to treat our custom ers as business partners W e will establish an account developm ent model to ensure high quality relationships exist w ith key account customers
bull of major accounts with a business plan bull Define ldquomajorrdquo accounts (AC)
I4 Deliver exce llent consum er propositions W e must meet consum er needs through the development and communication of an integrated brand proposition In the NPD sector we will launch new products only after they h ave m et pre-agreed qu ality image need and volume criteria
bull Brand Systems signed off by OE bull Develop core brand propositions (AC)bull NPD Process Improvement (ACAD)bull Cream ing project (AD)
I5 Deliver exce llent internal custom er service W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull SLA Qualitative Evaluations by SLA ow ners bull Logistics Project (RS)bull Factory Cost Reduction (DL)
I6 Effective m anagem ent of com pany assets W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull Total working capitalbull Fixed Asset Utilisationbull Outstanding Debtor Da ys
bull Plant ration alisation (AD)bull L4 L2 (DL)bull SAP (RS)
I7 Effective control of the business (No Surprises) W e will heighten our efforts to streamline the organisation to h elpdrive sound asset managem ent and cost reduction W e will invoke a cost conscious culture to complem ent our stream lining efforts
bull ldquoNo surprisesrdquo evaluation of actual performance against budget or forecast for- stock cover per city- sales per city- national costs
bull Analyse Risk project (PS)
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 5
2GCActive
M anagementcopy 2GC Limited 1999
Strategic Linkage M odel
Fina
ncia
l Pe
rspe
ctiv
eC
usto
mer
Per
spec
tive
Lear
ning
amp G
row
th
Pe
rspe
ctiv
eIn
tern
al
Per
spec
tive
DBX Understands and Responds to m y Needs
DBX Products are m y First Choice Products
DBX Products are Good Value for Money
DBX Products are V isible and Availab le
DBX has an Excellent Consumer Franchise
Drive Trade Term s by Channel
Im plem ent Major Account Managem ent
Program m e
Effective Control of Business (No Surprises)
Sales Growth (by City by P roduct)
Gross Contribution (After City Sales and
Marketing)Asset Turn Overheads as a of
NSV
Improved Shareh older Value (ROCE)
I Have a Good Relationship with DBX
Develop Better W ork P ractices and IS
Develop and Retain P rofessional M anagers
Develop Service Agreem ents
Effective M anagem ent o f Com pany Assets
Deliver Excellent In ternal Custom er
ServiceDeliver Custom er
Service Standards
Develop Professional Custom er Oriented Skilled
Sales Force
Deliver Excellent Consum er
Propositions
Understand Im pact O f Various M arketing Levers
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 5
2GCActive
M anagementcopy 2GC Limited 1999
Strategic Linkage M odel
Fina
ncia
l Pe
rspe
ctiv
eC
usto
mer
Per
spec
tive
Lear
ning
amp G
row
th
Pe
rspe
ctiv
eIn
tern
al
Per
spec
tive
DBX Understands and Responds to m y Needs
DBX Products are m y First Choice Products
DBX Products are Good Value for Money
DBX Products are V isible and Availab le
DBX has an Excellent Consumer Franchise
Drive Trade Term s by Channel
Im plem ent Major Account Managem ent
Program m e
Effective Control of Business (No Surprises)
Sales Growth (by City by P roduct)
Gross Contribution (After City Sales and
Marketing)Asset Turn Overheads as a of
NSV
Improved Shareh older Value (ROCE)
I Have a Good Relationship with DBX
Develop Better W ork P ractices and IS
Develop and Retain P rofessional M anagers
Develop Service Agreem ents
Effective M anagem ent o f Com pany Assets
Deliver Excellent In ternal Custom er
ServiceDeliver Custom er
Service Standards
Develop Professional Custom er Oriented Skilled
Sales Force
Deliver Excellent Consum er
Propositions
Understand Im pact O f Various M arketing Levers
21 November 2001 2GC Limited Introduction to 2GC Active ManagementPage 4
2GCActive
M anagem entcopy 2GC Limited 1999
Destination Statem entSales Volume50000 MT
Distribution50 Cities
Sales Revenue pound 50 M illion
One M anufacturing Site
ROCE 7Capital Em ployed No m ore th an pound45 million
Product Manager
Marketing Director
Factory Director
Manufacturing Director
Regional Sales Manager
Sales Director
Managing Director
No m ore than 6 Core Brand ProductsMinimum sales volum esndash 5000 MT for each core brandndash 2000M T for each m ajor product
Employer of Choice ( 1 in industry and ranked in FM CG top 10)
Marketing SalesBranding Clear brand propositions systems
established for the six core brandsbull DBX has two of th e top five category product brandsbull Producthouse brand awaren ess targets in DBX city
strategies achievedM edia and promotional strategy City market share
targets achieved within agreed budgetbull M odels and measures of th e relative impact of all
m arketing levers available to assist in th e evaluation targeting of m arketing activity
Im proved Skills and Processes Standardised and transparent m arketing processes developed and agreed within DBX and with Group
bull M arketing team skills targets (b ased on extern al benchmark com parisons) achieved through training and recruitment (where applicable)
Overall DBX seen as one of top 10 FMCG Corsquos servicing key accounts in th e country (and 1 in category)
Customer M arket Focus Sales s taff achieving set targ ets in line with city s trategies for focus on custom er and market issues
bull Assess using distribution by chann el visib ility and trade prom otions
Im proved Skills and Processes Standardised and transp arent sales processes develop ed and agreed within DBX and with Group
bull Sales team skills targets (based on extern al b enchm ark comparisons) achieved through training and recruitment (where applicable)
Organisational Structurebull Clear scope and role statements exis t for all functions (including Sales
amp Marketing)bull Supporting functions (includ ing supply chain) will be achieving all
agreed service level targets with sales amp marketing
Supply ChainCost efficient supp ly chain based on flexib le p roduction lines will deliverbull Increased responsiveness to market dem ands bull Lower cycle timesbull Product channel freshness targe ts
Inform ation System sAppropriate in form ation systems that w ill meet DB Xrsquos needsbull All necessary m anagement inform ation p roduced within p re-agreed tim elines and scales
M anagementbull Senior m anagement w ill be com mitted to working on stra teg y and evalua ted on their
ab ility to coach advise guide and ensure tha t tasks are delega ted effectivelybull Professional m iddle management will exist that w ill be able to ac t m ore independently
within de fined guidelines and have the skills required for their job rolendash Succession plans for key positions wi ll existndash Recruiting and training policies will aim to raise middle manage ment competence to
meet internationa l standards
21 November 2001 2GC Limited Introduction to 2GC Active ManagementPage 4
2GCActive
M anagem entcopy 2GC Limited 1999
Destination Statem entSales Volume50000 MT
Distribution50 Cities
Sales Revenue pound 50 M illion
One M anufacturing Site
ROCE 7Capital Em ployed No m ore th an pound45 million
Product Manager
Marketing Director
Factory Director
Manufacturing Director
Regional Sales Manager
Sales Director
Managing Director
No m ore than 6 Core Brand ProductsMinimum sales volum esndash 5000 MT for each core brandndash 2000M T for each m ajor product
Employer of Choice ( 1 in industry and ranked in FM CG top 10)
Marketing SalesBranding Clear brand propositions systems
established for the six core brandsbull DBX has two of th e top five category product brandsbull Producthouse brand awaren ess targets in DBX city
strategies achievedM edia and promotional strategy City market share
targets achieved within agreed budgetbull M odels and measures of th e relative impact of all
m arketing levers available to assist in th e evaluation targeting of m arketing activity
Im proved Skills and Processes Standardised and transparent m arketing processes developed and agreed within DBX and with Group
bull M arketing team skills targets (b ased on extern al benchmark com parisons) achieved through training and recruitment (where applicable)
Overall DBX seen as one of top 10 FMCG Corsquos servicing key accounts in th e country (and 1 in category)
Customer M arket Focus Sales s taff achieving set targ ets in line with city s trategies for focus on custom er and market issues
bull Assess using distribution by chann el visib ility and trade prom otions
Im proved Skills and Processes Standardised and transp arent sales processes develop ed and agreed within DBX and with Group
bull Sales team skills targets (based on extern al b enchm ark comparisons) achieved through training and recruitment (where applicable)
Organisational Structurebull Clear scope and role statements exis t for all functions (including Sales
amp Marketing)bull Supporting functions (includ ing supply chain) will be achieving all
agreed service level targets with sales amp marketing
Supply ChainCost efficient supp ly chain based on flexib le p roduction lines will deliverbull Increased responsiveness to market dem ands bull Lower cycle timesbull Product channel freshness targe ts
Inform ation System sAppropriate in form ation systems that w ill meet DB Xrsquos needsbull All necessary m anagement inform ation p roduced within p re-agreed tim elines and scales
M anagementbull Senior m anagement w ill be com mitted to working on stra teg y and evalua ted on their
ab ility to coach advise guide and ensure tha t tasks are delega ted effectivelybull Professional m iddle management will exist that w ill be able to ac t m ore independently
within de fined guidelines and have the skills required for their job rolendash Succession plans for key positions wi ll existndash Recruiting and training policies will aim to raise middle manage ment competence to
meet internationa l standards
bullThe ldquoobjective drivenrdquoBalanced Scorecard has emerged as best practice
(V11) November 2001 Introducing the Balanced ScorecardPage 14
2GCActive
Managementcopy 2GC Limited 2001
What is Balanced ScorecardMore than just a set of goals amp measures
Balanced Scorecard design
Balanced Scorecard development
Balanced Scorecard deployment
bull Value from first application
bull Business model reflected in relationship between strategic goals
bull Corporate strategic measurement amp management tool
ndash divisionsndash business unitsndash functions
bull All management Systems aligned with strategy
bull Drive strategic behaviour into everyday decisions and operations
(V11) November 2001 Introducing the Balanced ScorecardPage 15
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard design
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 16
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designWhere to go an how to get there
bullBest practice is to use a development group that comprises the the likely users of the Balanced Scorecard
bullDesign choices should be based on jointly held perception of a strategic ldquoDestinationrdquo
bullThe design should measure progress against the organisationrsquos key strategic objectives (activities and outcomes)
bullLinks between strategic objectives should be articulated ndash these express the management teamrsquos beliefs about which activities drive which outcomes
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 17
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designMonitor progress in achieving goals
bullDevelopment of measures follow clarification and agreement of strategic objectives becausehellip
bullMeasures track progress in achieving those objectives against agreed targets
bullIdentify and monitor extraordinary activities and projects furthering achievement of objectives
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Out
com
es
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development A
ctiv
ities
Act
iviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
Financial Perspective
Objectives Measures Targets Initiatives
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets Initiatives
(V11) November 2001 Introducing the Balanced ScorecardPage 18
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designThe components of a Strategic Balanced Scorecard
bull Financial Marketndash Total NSV pound120m (nominal) ndashndash Has achieved 10 CAGR on NSndash Operating Margin gt10ndash Controllable overheads less thndash Operating Profit pound12m (nomin
Destination StatementDescription of how the organisation will be at some specific future date if the management teamrsquos strategies are successful
Fin
anci
alCu
stom
er
Best value for money
The leading and most innovative
brand
Drive Increased Demand
Profitable Sales Growth
Strategic Linkage Model (SLM)Graphic illustration of ldquocause and effectrdquo relationships between the strategic goals that must be achieved if the organisation is to reach its destination state
ObjectiveObjective DescriptionDescription
Total Shareholder Return is above Groups cost of equity over the medium to long term
Total Shareholder Return is above Groups cost of equity over the medium to long term
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means better than equivalent payments by known Group
Measures (Freq)Measures (Freq)
bull CAGR of Total ShareholdeReturn
bull ROIC (Target gt WACC)
bull CAGR of Total ShareholderReturn
bull ROIC (Target gt WACC)
bull PampL account net tax chargea of profit for financial ye
bull WACC
bull PampL account net tax chargeda of profit for financial yea
bull WACC
Group Strategy Delivers Value
Achieve Optimum Tax Rate amp WACC
F1
F2
Objective and Measure Documentation
ndashClear and concise description of strategic objectives and the measures chosen to track their achievement
F11
F12
-30p
8
150p
18Dividend expected kept a1000 pence leading to loprevious years
Measure Value Target PerfObjective Status
Outperform capital markets
F21 200 185Increasing cash inflow froCash amp a sset
F21 200 185Increasing cash inflow froCash amp a sset
t
Progress Reporting FormatsIllustration of how (and by whom) Scorecard information will be communicated
o Initiative overviewOverview of which initiatives support which Scorecard objectives incl owners and deadlines for finalisation
(V11) November 2001 Introducing the Balanced ScorecardPage 19
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard roll-out
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 20
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard Development Development within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
The optimal role-out
sequence is ldquoTop Downrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 21
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentDevelopment within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
Corporate Balanced Scorecard
Co-ordinatingBalanced Scorecard
Support Function Balanced Scorecard
Operating Unit Balanced Scorecard
Departmental Balanced ScorecardTeam Level
Balanced Scorecard
(V11) November 2001 Introducing the Balanced ScorecardPage 22
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
What
How
What
Board level ScorecardBoard level Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Overall VisionOverall Vision
Subordinate ScorecardSubordinate Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Local VisionLocal Vision
How
TeamIndividual ScorecardTeamIndividual Scorecard
Objectives
Measures amp Targets
Initiatives
TeamIndividual Vision
TeamIndividual Vision
Strategic direction
Strategic direction
Strategy implementation
Strategy implementation
(V11) November 2001 Introducing the Balanced ScorecardPage 23
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 24
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 25
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Strategic alignment amp goal setting
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 26
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Align existing management control tools with strategy
SVA amp EVASVA amp EVAB
udge
tsB
udge
ts
BEMBEMBalanced Scorecard
ABCABC HR ToolsHR Tools
(V11) November 2001 Introducing the Balanced ScorecardPage 27
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Support two-way communication of strategyhellip
Fuzzy objectivesFuzzy objectives
Unjustified trust in informal
Unjustified trust in informal
feedback systems
feedback systemsEntren
ched m
easure
ment
Entren
ched m
easure
ment
system
s
system
s
BSC
(V11) November 2001 Introducing the Balanced ScorecardPage 28
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
Comm
unica
tion Com
munication
Board levelScorecard
process
OperationalScorecard
process
Support function Scorecard
process
Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets
Take action
Create amend
strategic vision
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
Communication
(V11) November 2001 Introducing the Balanced ScorecardPage 29
2GCActive
Managementcopy 2GC Limited 2001
Success criteria
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 30
2GCActive
Managementcopy 2GC Limited 2001
Key success factorsCultural building blocks of Scorecard success
bullInclusive design process building on consensus seeking amp involvement
bullParticipative management style focused on learning open discussion and creative thinking
bullSponsorship and commitment from entire management team -top management in particular
bullldquoEmbeddingrdquo of management processes to use refresh and renew the Balanced Scorecard over time
(V11) November 2001 Introducing the Balanced ScorecardPage 31
2GCActive
Managementcopy 2GC Limited 2001
Introducing the Balanced ScorecardTo find out morehellip
bullVisit 2GCrsquos Web Sitendash We focus specifically on strategic
control and performance measurement issues and have a wide range of working papers FAQs and presentations to download on these topics
ndash The site also has a recommended reading list that covers relevant topics and the ldquoWeblinksrdquo database of relevant Internet sites
bullContact 2GCndash Let us know if you have a question
you canrsquot answer wersquoll do what we can to helphellip
bull info2gccouk
- Introducing the Balanced Scorecard
- Structure of presentation
- General management issuesWhat is this all about
- General management issuesImplementing Strategic Goals
- General management issuesBarriers to effective performance management
- General management issuesRealising the need to change
- What is Balanced Scorecard
- What is a Balanced Scorecard
- What is a Balanced ScorecardBackground amp underlying philosophy
- What is a Balanced ScorecardDo what needs to get donehellip
- What is a Balanced ScorecardDifferent applications for Balanced Scorecard
- What is a Balanced ScorecardStrategic control vs Management control
- What is the Balanced Scorecard The latest Balanced Scorecard thinking
- What is Balanced ScorecardMore than just a set of goals amp measures
- Balanced Scorecard design
- Balanced Scorecard designWhere to go an how to get there
- Balanced Scorecard designMonitor progress in achieving goals
- Balanced Scorecard designThe components of a Strategic Balanced Scorecard
- Balanced Scorecard roll-out
- Balanced Scorecard Development Development within the organisation
- Balanced Scorecard DevelopmentDevelopment within the organisation
- Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
- Balanced Scorecard deployment
- Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
- Balanced Scorecard deployment Strategic alignment amp goal setting
- Balanced Scorecard deployment Align existing management control tools with strategy
- Balanced Scorecard deployment Support two-way communication of strategyhellip
- Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
- Success criteria
- Key success factorsCultural building blocks of Scorecard success
- Introducing the Balanced ScorecardTo find out morehellip
-
(V11) November 2001 Introducing the Balanced ScorecardPage 13
2GCActive
Managementcopy 2GC Limited 2001
What is the Balanced Scorecard The latest Balanced Scorecard thinking
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 6
2GCActive
M anagementcopy 2GC Lim ited 1999
Balanced Scorecard DocumentationObjective M easure Supporting Initiatives
I1 Drive trade term s by channel W e will develop clear trading terms for different custom er groups W e will achieve our targetlevels of availability visibility and trade su pport via these trading terms
bull Trade customers adhering to trade standard terms amongst a sam ple of top XX customers
bull Develop standard trading terms (GG)
I2 Deliver custom er service standards Deliver timely f irst class service to the trade an d retailers
bull Cases delivered in full against order quantity
bull Orders delivered on time
bull Logistics Project (RS)bull SAP Project (PH)
I3 Im plem ent m ajor account m anagem ent programm e W e will continue to treat our custom ers as business partners W e will establish an account developm ent model to ensure high quality relationships exist w ith key account customers
bull of major accounts with a business plan bull Define ldquomajorrdquo accounts (AC)
I4 Deliver exce llent consum er propositions W e must meet consum er needs through the development and communication of an integrated brand proposition In the NPD sector we will launch new products only after they h ave m et pre-agreed qu ality image need and volume criteria
bull Brand Systems signed off by OE bull Develop core brand propositions (AC)bull NPD Process Improvement (ACAD)bull Cream ing project (AD)
I5 Deliver exce llent internal custom er service W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull SLA Qualitative Evaluations by SLA ow ners bull Logistics Project (RS)bull Factory Cost Reduction (DL)
I6 Effective m anagem ent of com pany assets W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull Total working capitalbull Fixed Asset Utilisationbull Outstanding Debtor Da ys
bull Plant ration alisation (AD)bull L4 L2 (DL)bull SAP (RS)
I7 Effective control of the business (No Surprises) W e will heighten our efforts to streamline the organisation to h elpdrive sound asset managem ent and cost reduction W e will invoke a cost conscious culture to complem ent our stream lining efforts
bull ldquoNo surprisesrdquo evaluation of actual performance against budget or forecast for- stock cover per city- sales per city- national costs
bull Analyse Risk project (PS)
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 6
2GCActive
M anagementcopy 2GC Lim ited 1999
Balanced Scorecard DocumentationObjective M easure Supporting Initiatives
I1 Drive trade term s by channel W e will develop clear trading terms for different custom er groups W e will achieve our targetlevels of availability visibility and trade su pport via these trading terms
bull Trade customers adhering to trade standard terms amongst a sam ple of top XX customers
bull Develop standard trading terms (GG)
I2 Deliver custom er service standards Deliver timely f irst class service to the trade an d retailers
bull Cases delivered in full against order quantity
bull Orders delivered on time
bull Logistics Project (RS)bull SAP Project (PH)
I3 Im plem ent m ajor account m anagem ent programm e W e will continue to treat our custom ers as business partners W e will establish an account developm ent model to ensure high quality relationships exist w ith key account customers
bull of major accounts with a business plan bull Define ldquomajorrdquo accounts (AC)
I4 Deliver exce llent consum er propositions W e must meet consum er needs through the development and communication of an integrated brand proposition In the NPD sector we will launch new products only after they h ave m et pre-agreed qu ality image need and volume criteria
bull Brand Systems signed off by OE bull Develop core brand propositions (AC)bull NPD Process Improvement (ACAD)bull Cream ing project (AD)
I5 Deliver exce llent internal custom er service W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull SLA Qualitative Evaluations by SLA ow ners bull Logistics Project (RS)bull Factory Cost Reduction (DL)
I6 Effective m anagem ent of com pany assets W e will monitor service level agreem ents between the support functions and sales and m arketing W e will develop a su pport organisation that will drive the achievement of marketin g an d sales objectives
bull Total working capitalbull Fixed Asset Utilisationbull Outstanding Debtor Da ys
bull Plant ration alisation (AD)bull L4 L2 (DL)bull SAP (RS)
I7 Effective control of the business (No Surprises) W e will heighten our efforts to streamline the organisation to h elpdrive sound asset managem ent and cost reduction W e will invoke a cost conscious culture to complem ent our stream lining efforts
bull ldquoNo surprisesrdquo evaluation of actual performance against budget or forecast for- stock cover per city- sales per city- national costs
bull Analyse Risk project (PS)
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 5
2GCActive
M anagementcopy 2GC Limited 1999
Strategic Linkage M odel
Fina
ncia
l Pe
rspe
ctiv
eC
usto
mer
Per
spec
tive
Lear
ning
amp G
row
th
Pe
rspe
ctiv
eIn
tern
al
Per
spec
tive
DBX Understands and Responds to m y Needs
DBX Products are m y First Choice Products
DBX Products are Good Value for Money
DBX Products are V isible and Availab le
DBX has an Excellent Consumer Franchise
Drive Trade Term s by Channel
Im plem ent Major Account Managem ent
Program m e
Effective Control of Business (No Surprises)
Sales Growth (by City by P roduct)
Gross Contribution (After City Sales and
Marketing)Asset Turn Overheads as a of
NSV
Improved Shareh older Value (ROCE)
I Have a Good Relationship with DBX
Develop Better W ork P ractices and IS
Develop and Retain P rofessional M anagers
Develop Service Agreem ents
Effective M anagem ent o f Com pany Assets
Deliver Excellent In ternal Custom er
ServiceDeliver Custom er
Service Standards
Develop Professional Custom er Oriented Skilled
Sales Force
Deliver Excellent Consum er
Propositions
Understand Im pact O f Various M arketing Levers
29 February 2000 2GC Limited Introduction to 2GC Active ManagementPage 5
2GCActive
M anagementcopy 2GC Limited 1999
Strategic Linkage M odel
Fina
ncia
l Pe
rspe
ctiv
eC
usto
mer
Per
spec
tive
Lear
ning
amp G
row
th
Pe
rspe
ctiv
eIn
tern
al
Per
spec
tive
DBX Understands and Responds to m y Needs
DBX Products are m y First Choice Products
DBX Products are Good Value for Money
DBX Products are V isible and Availab le
DBX has an Excellent Consumer Franchise
Drive Trade Term s by Channel
Im plem ent Major Account Managem ent
Program m e
Effective Control of Business (No Surprises)
Sales Growth (by City by P roduct)
Gross Contribution (After City Sales and
Marketing)Asset Turn Overheads as a of
NSV
Improved Shareh older Value (ROCE)
I Have a Good Relationship with DBX
Develop Better W ork P ractices and IS
Develop and Retain P rofessional M anagers
Develop Service Agreem ents
Effective M anagem ent o f Com pany Assets
Deliver Excellent In ternal Custom er
ServiceDeliver Custom er
Service Standards
Develop Professional Custom er Oriented Skilled
Sales Force
Deliver Excellent Consum er
Propositions
Understand Im pact O f Various M arketing Levers
21 November 2001 2GC Limited Introduction to 2GC Active ManagementPage 4
2GCActive
M anagem entcopy 2GC Limited 1999
Destination Statem entSales Volume50000 MT
Distribution50 Cities
Sales Revenue pound 50 M illion
One M anufacturing Site
ROCE 7Capital Em ployed No m ore th an pound45 million
Product Manager
Marketing Director
Factory Director
Manufacturing Director
Regional Sales Manager
Sales Director
Managing Director
No m ore than 6 Core Brand ProductsMinimum sales volum esndash 5000 MT for each core brandndash 2000M T for each m ajor product
Employer of Choice ( 1 in industry and ranked in FM CG top 10)
Marketing SalesBranding Clear brand propositions systems
established for the six core brandsbull DBX has two of th e top five category product brandsbull Producthouse brand awaren ess targets in DBX city
strategies achievedM edia and promotional strategy City market share
targets achieved within agreed budgetbull M odels and measures of th e relative impact of all
m arketing levers available to assist in th e evaluation targeting of m arketing activity
Im proved Skills and Processes Standardised and transparent m arketing processes developed and agreed within DBX and with Group
bull M arketing team skills targets (b ased on extern al benchmark com parisons) achieved through training and recruitment (where applicable)
Overall DBX seen as one of top 10 FMCG Corsquos servicing key accounts in th e country (and 1 in category)
Customer M arket Focus Sales s taff achieving set targ ets in line with city s trategies for focus on custom er and market issues
bull Assess using distribution by chann el visib ility and trade prom otions
Im proved Skills and Processes Standardised and transp arent sales processes develop ed and agreed within DBX and with Group
bull Sales team skills targets (based on extern al b enchm ark comparisons) achieved through training and recruitment (where applicable)
Organisational Structurebull Clear scope and role statements exis t for all functions (including Sales
amp Marketing)bull Supporting functions (includ ing supply chain) will be achieving all
agreed service level targets with sales amp marketing
Supply ChainCost efficient supp ly chain based on flexib le p roduction lines will deliverbull Increased responsiveness to market dem ands bull Lower cycle timesbull Product channel freshness targe ts
Inform ation System sAppropriate in form ation systems that w ill meet DB Xrsquos needsbull All necessary m anagement inform ation p roduced within p re-agreed tim elines and scales
M anagementbull Senior m anagement w ill be com mitted to working on stra teg y and evalua ted on their
ab ility to coach advise guide and ensure tha t tasks are delega ted effectivelybull Professional m iddle management will exist that w ill be able to ac t m ore independently
within de fined guidelines and have the skills required for their job rolendash Succession plans for key positions wi ll existndash Recruiting and training policies will aim to raise middle manage ment competence to
meet internationa l standards
21 November 2001 2GC Limited Introduction to 2GC Active ManagementPage 4
2GCActive
M anagem entcopy 2GC Limited 1999
Destination Statem entSales Volume50000 MT
Distribution50 Cities
Sales Revenue pound 50 M illion
One M anufacturing Site
ROCE 7Capital Em ployed No m ore th an pound45 million
Product Manager
Marketing Director
Factory Director
Manufacturing Director
Regional Sales Manager
Sales Director
Managing Director
No m ore than 6 Core Brand ProductsMinimum sales volum esndash 5000 MT for each core brandndash 2000M T for each m ajor product
Employer of Choice ( 1 in industry and ranked in FM CG top 10)
Marketing SalesBranding Clear brand propositions systems
established for the six core brandsbull DBX has two of th e top five category product brandsbull Producthouse brand awaren ess targets in DBX city
strategies achievedM edia and promotional strategy City market share
targets achieved within agreed budgetbull M odels and measures of th e relative impact of all
m arketing levers available to assist in th e evaluation targeting of m arketing activity
Im proved Skills and Processes Standardised and transparent m arketing processes developed and agreed within DBX and with Group
bull M arketing team skills targets (b ased on extern al benchmark com parisons) achieved through training and recruitment (where applicable)
Overall DBX seen as one of top 10 FMCG Corsquos servicing key accounts in th e country (and 1 in category)
Customer M arket Focus Sales s taff achieving set targ ets in line with city s trategies for focus on custom er and market issues
bull Assess using distribution by chann el visib ility and trade prom otions
Im proved Skills and Processes Standardised and transp arent sales processes develop ed and agreed within DBX and with Group
bull Sales team skills targets (based on extern al b enchm ark comparisons) achieved through training and recruitment (where applicable)
Organisational Structurebull Clear scope and role statements exis t for all functions (including Sales
amp Marketing)bull Supporting functions (includ ing supply chain) will be achieving all
agreed service level targets with sales amp marketing
Supply ChainCost efficient supp ly chain based on flexib le p roduction lines will deliverbull Increased responsiveness to market dem ands bull Lower cycle timesbull Product channel freshness targe ts
Inform ation System sAppropriate in form ation systems that w ill meet DB Xrsquos needsbull All necessary m anagement inform ation p roduced within p re-agreed tim elines and scales
M anagementbull Senior m anagement w ill be com mitted to working on stra teg y and evalua ted on their
ab ility to coach advise guide and ensure tha t tasks are delega ted effectivelybull Professional m iddle management will exist that w ill be able to ac t m ore independently
within de fined guidelines and have the skills required for their job rolendash Succession plans for key positions wi ll existndash Recruiting and training policies will aim to raise middle manage ment competence to
meet internationa l standards
bullThe ldquoobjective drivenrdquoBalanced Scorecard has emerged as best practice
(V11) November 2001 Introducing the Balanced ScorecardPage 14
2GCActive
Managementcopy 2GC Limited 2001
What is Balanced ScorecardMore than just a set of goals amp measures
Balanced Scorecard design
Balanced Scorecard development
Balanced Scorecard deployment
bull Value from first application
bull Business model reflected in relationship between strategic goals
bull Corporate strategic measurement amp management tool
ndash divisionsndash business unitsndash functions
bull All management Systems aligned with strategy
bull Drive strategic behaviour into everyday decisions and operations
(V11) November 2001 Introducing the Balanced ScorecardPage 15
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard design
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 16
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designWhere to go an how to get there
bullBest practice is to use a development group that comprises the the likely users of the Balanced Scorecard
bullDesign choices should be based on jointly held perception of a strategic ldquoDestinationrdquo
bullThe design should measure progress against the organisationrsquos key strategic objectives (activities and outcomes)
bullLinks between strategic objectives should be articulated ndash these express the management teamrsquos beliefs about which activities drive which outcomes
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 17
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designMonitor progress in achieving goals
bullDevelopment of measures follow clarification and agreement of strategic objectives becausehellip
bullMeasures track progress in achieving those objectives against agreed targets
bullIdentify and monitor extraordinary activities and projects furthering achievement of objectives
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Out
com
es
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development A
ctiv
ities
Act
iviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
Financial Perspective
Objectives Measures Targets Initiatives
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets Initiatives
(V11) November 2001 Introducing the Balanced ScorecardPage 18
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designThe components of a Strategic Balanced Scorecard
bull Financial Marketndash Total NSV pound120m (nominal) ndashndash Has achieved 10 CAGR on NSndash Operating Margin gt10ndash Controllable overheads less thndash Operating Profit pound12m (nomin
Destination StatementDescription of how the organisation will be at some specific future date if the management teamrsquos strategies are successful
Fin
anci
alCu
stom
er
Best value for money
The leading and most innovative
brand
Drive Increased Demand
Profitable Sales Growth
Strategic Linkage Model (SLM)Graphic illustration of ldquocause and effectrdquo relationships between the strategic goals that must be achieved if the organisation is to reach its destination state
ObjectiveObjective DescriptionDescription
Total Shareholder Return is above Groups cost of equity over the medium to long term
Total Shareholder Return is above Groups cost of equity over the medium to long term
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means better than equivalent payments by known Group
Measures (Freq)Measures (Freq)
bull CAGR of Total ShareholdeReturn
bull ROIC (Target gt WACC)
bull CAGR of Total ShareholderReturn
bull ROIC (Target gt WACC)
bull PampL account net tax chargea of profit for financial ye
bull WACC
bull PampL account net tax chargeda of profit for financial yea
bull WACC
Group Strategy Delivers Value
Achieve Optimum Tax Rate amp WACC
F1
F2
Objective and Measure Documentation
ndashClear and concise description of strategic objectives and the measures chosen to track their achievement
F11
F12
-30p
8
150p
18Dividend expected kept a1000 pence leading to loprevious years
Measure Value Target PerfObjective Status
Outperform capital markets
F21 200 185Increasing cash inflow froCash amp a sset
F21 200 185Increasing cash inflow froCash amp a sset
t
Progress Reporting FormatsIllustration of how (and by whom) Scorecard information will be communicated
o Initiative overviewOverview of which initiatives support which Scorecard objectives incl owners and deadlines for finalisation
(V11) November 2001 Introducing the Balanced ScorecardPage 19
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard roll-out
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 20
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard Development Development within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
The optimal role-out
sequence is ldquoTop Downrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 21
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentDevelopment within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
Corporate Balanced Scorecard
Co-ordinatingBalanced Scorecard
Support Function Balanced Scorecard
Operating Unit Balanced Scorecard
Departmental Balanced ScorecardTeam Level
Balanced Scorecard
(V11) November 2001 Introducing the Balanced ScorecardPage 22
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
What
How
What
Board level ScorecardBoard level Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Overall VisionOverall Vision
Subordinate ScorecardSubordinate Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Local VisionLocal Vision
How
TeamIndividual ScorecardTeamIndividual Scorecard
Objectives
Measures amp Targets
Initiatives
TeamIndividual Vision
TeamIndividual Vision
Strategic direction
Strategic direction
Strategy implementation
Strategy implementation
(V11) November 2001 Introducing the Balanced ScorecardPage 23
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 24
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 25
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Strategic alignment amp goal setting
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 26
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Align existing management control tools with strategy
SVA amp EVASVA amp EVAB
udge
tsB
udge
ts
BEMBEMBalanced Scorecard
ABCABC HR ToolsHR Tools
(V11) November 2001 Introducing the Balanced ScorecardPage 27
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Support two-way communication of strategyhellip
Fuzzy objectivesFuzzy objectives
Unjustified trust in informal
Unjustified trust in informal
feedback systems
feedback systemsEntren
ched m
easure
ment
Entren
ched m
easure
ment
system
s
system
s
BSC
(V11) November 2001 Introducing the Balanced ScorecardPage 28
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
Comm
unica
tion Com
munication
Board levelScorecard
process
OperationalScorecard
process
Support function Scorecard
process
Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets
Take action
Create amend
strategic vision
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
Communication
(V11) November 2001 Introducing the Balanced ScorecardPage 29
2GCActive
Managementcopy 2GC Limited 2001
Success criteria
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 30
2GCActive
Managementcopy 2GC Limited 2001
Key success factorsCultural building blocks of Scorecard success
bullInclusive design process building on consensus seeking amp involvement
bullParticipative management style focused on learning open discussion and creative thinking
bullSponsorship and commitment from entire management team -top management in particular
bullldquoEmbeddingrdquo of management processes to use refresh and renew the Balanced Scorecard over time
(V11) November 2001 Introducing the Balanced ScorecardPage 31
2GCActive
Managementcopy 2GC Limited 2001
Introducing the Balanced ScorecardTo find out morehellip
bullVisit 2GCrsquos Web Sitendash We focus specifically on strategic
control and performance measurement issues and have a wide range of working papers FAQs and presentations to download on these topics
ndash The site also has a recommended reading list that covers relevant topics and the ldquoWeblinksrdquo database of relevant Internet sites
bullContact 2GCndash Let us know if you have a question
you canrsquot answer wersquoll do what we can to helphellip
bull info2gccouk
- Introducing the Balanced Scorecard
- Structure of presentation
- General management issuesWhat is this all about
- General management issuesImplementing Strategic Goals
- General management issuesBarriers to effective performance management
- General management issuesRealising the need to change
- What is Balanced Scorecard
- What is a Balanced Scorecard
- What is a Balanced ScorecardBackground amp underlying philosophy
- What is a Balanced ScorecardDo what needs to get donehellip
- What is a Balanced ScorecardDifferent applications for Balanced Scorecard
- What is a Balanced ScorecardStrategic control vs Management control
- What is the Balanced Scorecard The latest Balanced Scorecard thinking
- What is Balanced ScorecardMore than just a set of goals amp measures
- Balanced Scorecard design
- Balanced Scorecard designWhere to go an how to get there
- Balanced Scorecard designMonitor progress in achieving goals
- Balanced Scorecard designThe components of a Strategic Balanced Scorecard
- Balanced Scorecard roll-out
- Balanced Scorecard Development Development within the organisation
- Balanced Scorecard DevelopmentDevelopment within the organisation
- Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
- Balanced Scorecard deployment
- Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
- Balanced Scorecard deployment Strategic alignment amp goal setting
- Balanced Scorecard deployment Align existing management control tools with strategy
- Balanced Scorecard deployment Support two-way communication of strategyhellip
- Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
- Success criteria
- Key success factorsCultural building blocks of Scorecard success
- Introducing the Balanced ScorecardTo find out morehellip
-
(V11) November 2001 Introducing the Balanced ScorecardPage 14
2GCActive
Managementcopy 2GC Limited 2001
What is Balanced ScorecardMore than just a set of goals amp measures
Balanced Scorecard design
Balanced Scorecard development
Balanced Scorecard deployment
bull Value from first application
bull Business model reflected in relationship between strategic goals
bull Corporate strategic measurement amp management tool
ndash divisionsndash business unitsndash functions
bull All management Systems aligned with strategy
bull Drive strategic behaviour into everyday decisions and operations
(V11) November 2001 Introducing the Balanced ScorecardPage 15
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard design
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 16
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designWhere to go an how to get there
bullBest practice is to use a development group that comprises the the likely users of the Balanced Scorecard
bullDesign choices should be based on jointly held perception of a strategic ldquoDestinationrdquo
bullThe design should measure progress against the organisationrsquos key strategic objectives (activities and outcomes)
bullLinks between strategic objectives should be articulated ndash these express the management teamrsquos beliefs about which activities drive which outcomes
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 17
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designMonitor progress in achieving goals
bullDevelopment of measures follow clarification and agreement of strategic objectives becausehellip
bullMeasures track progress in achieving those objectives against agreed targets
bullIdentify and monitor extraordinary activities and projects furthering achievement of objectives
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Out
com
es
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development A
ctiv
ities
Act
iviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
Financial Perspective
Objectives Measures Targets Initiatives
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets Initiatives
(V11) November 2001 Introducing the Balanced ScorecardPage 18
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designThe components of a Strategic Balanced Scorecard
bull Financial Marketndash Total NSV pound120m (nominal) ndashndash Has achieved 10 CAGR on NSndash Operating Margin gt10ndash Controllable overheads less thndash Operating Profit pound12m (nomin
Destination StatementDescription of how the organisation will be at some specific future date if the management teamrsquos strategies are successful
Fin
anci
alCu
stom
er
Best value for money
The leading and most innovative
brand
Drive Increased Demand
Profitable Sales Growth
Strategic Linkage Model (SLM)Graphic illustration of ldquocause and effectrdquo relationships between the strategic goals that must be achieved if the organisation is to reach its destination state
ObjectiveObjective DescriptionDescription
Total Shareholder Return is above Groups cost of equity over the medium to long term
Total Shareholder Return is above Groups cost of equity over the medium to long term
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means better than equivalent payments by known Group
Measures (Freq)Measures (Freq)
bull CAGR of Total ShareholdeReturn
bull ROIC (Target gt WACC)
bull CAGR of Total ShareholderReturn
bull ROIC (Target gt WACC)
bull PampL account net tax chargea of profit for financial ye
bull WACC
bull PampL account net tax chargeda of profit for financial yea
bull WACC
Group Strategy Delivers Value
Achieve Optimum Tax Rate amp WACC
F1
F2
Objective and Measure Documentation
ndashClear and concise description of strategic objectives and the measures chosen to track their achievement
F11
F12
-30p
8
150p
18Dividend expected kept a1000 pence leading to loprevious years
Measure Value Target PerfObjective Status
Outperform capital markets
F21 200 185Increasing cash inflow froCash amp a sset
F21 200 185Increasing cash inflow froCash amp a sset
t
Progress Reporting FormatsIllustration of how (and by whom) Scorecard information will be communicated
o Initiative overviewOverview of which initiatives support which Scorecard objectives incl owners and deadlines for finalisation
(V11) November 2001 Introducing the Balanced ScorecardPage 19
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard roll-out
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 20
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard Development Development within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
The optimal role-out
sequence is ldquoTop Downrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 21
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentDevelopment within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
Corporate Balanced Scorecard
Co-ordinatingBalanced Scorecard
Support Function Balanced Scorecard
Operating Unit Balanced Scorecard
Departmental Balanced ScorecardTeam Level
Balanced Scorecard
(V11) November 2001 Introducing the Balanced ScorecardPage 22
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
What
How
What
Board level ScorecardBoard level Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Overall VisionOverall Vision
Subordinate ScorecardSubordinate Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Local VisionLocal Vision
How
TeamIndividual ScorecardTeamIndividual Scorecard
Objectives
Measures amp Targets
Initiatives
TeamIndividual Vision
TeamIndividual Vision
Strategic direction
Strategic direction
Strategy implementation
Strategy implementation
(V11) November 2001 Introducing the Balanced ScorecardPage 23
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 24
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 25
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Strategic alignment amp goal setting
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 26
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Align existing management control tools with strategy
SVA amp EVASVA amp EVAB
udge
tsB
udge
ts
BEMBEMBalanced Scorecard
ABCABC HR ToolsHR Tools
(V11) November 2001 Introducing the Balanced ScorecardPage 27
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Support two-way communication of strategyhellip
Fuzzy objectivesFuzzy objectives
Unjustified trust in informal
Unjustified trust in informal
feedback systems
feedback systemsEntren
ched m
easure
ment
Entren
ched m
easure
ment
system
s
system
s
BSC
(V11) November 2001 Introducing the Balanced ScorecardPage 28
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
Comm
unica
tion Com
munication
Board levelScorecard
process
OperationalScorecard
process
Support function Scorecard
process
Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets
Take action
Create amend
strategic vision
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
Communication
(V11) November 2001 Introducing the Balanced ScorecardPage 29
2GCActive
Managementcopy 2GC Limited 2001
Success criteria
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 30
2GCActive
Managementcopy 2GC Limited 2001
Key success factorsCultural building blocks of Scorecard success
bullInclusive design process building on consensus seeking amp involvement
bullParticipative management style focused on learning open discussion and creative thinking
bullSponsorship and commitment from entire management team -top management in particular
bullldquoEmbeddingrdquo of management processes to use refresh and renew the Balanced Scorecard over time
(V11) November 2001 Introducing the Balanced ScorecardPage 31
2GCActive
Managementcopy 2GC Limited 2001
Introducing the Balanced ScorecardTo find out morehellip
bullVisit 2GCrsquos Web Sitendash We focus specifically on strategic
control and performance measurement issues and have a wide range of working papers FAQs and presentations to download on these topics
ndash The site also has a recommended reading list that covers relevant topics and the ldquoWeblinksrdquo database of relevant Internet sites
bullContact 2GCndash Let us know if you have a question
you canrsquot answer wersquoll do what we can to helphellip
bull info2gccouk
- Introducing the Balanced Scorecard
- Structure of presentation
- General management issuesWhat is this all about
- General management issuesImplementing Strategic Goals
- General management issuesBarriers to effective performance management
- General management issuesRealising the need to change
- What is Balanced Scorecard
- What is a Balanced Scorecard
- What is a Balanced ScorecardBackground amp underlying philosophy
- What is a Balanced ScorecardDo what needs to get donehellip
- What is a Balanced ScorecardDifferent applications for Balanced Scorecard
- What is a Balanced ScorecardStrategic control vs Management control
- What is the Balanced Scorecard The latest Balanced Scorecard thinking
- What is Balanced ScorecardMore than just a set of goals amp measures
- Balanced Scorecard design
- Balanced Scorecard designWhere to go an how to get there
- Balanced Scorecard designMonitor progress in achieving goals
- Balanced Scorecard designThe components of a Strategic Balanced Scorecard
- Balanced Scorecard roll-out
- Balanced Scorecard Development Development within the organisation
- Balanced Scorecard DevelopmentDevelopment within the organisation
- Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
- Balanced Scorecard deployment
- Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
- Balanced Scorecard deployment Strategic alignment amp goal setting
- Balanced Scorecard deployment Align existing management control tools with strategy
- Balanced Scorecard deployment Support two-way communication of strategyhellip
- Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
- Success criteria
- Key success factorsCultural building blocks of Scorecard success
- Introducing the Balanced ScorecardTo find out morehellip
-
(V11) November 2001 Introducing the Balanced ScorecardPage 15
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard design
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 16
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designWhere to go an how to get there
bullBest practice is to use a development group that comprises the the likely users of the Balanced Scorecard
bullDesign choices should be based on jointly held perception of a strategic ldquoDestinationrdquo
bullThe design should measure progress against the organisationrsquos key strategic objectives (activities and outcomes)
bullLinks between strategic objectives should be articulated ndash these express the management teamrsquos beliefs about which activities drive which outcomes
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 17
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designMonitor progress in achieving goals
bullDevelopment of measures follow clarification and agreement of strategic objectives becausehellip
bullMeasures track progress in achieving those objectives against agreed targets
bullIdentify and monitor extraordinary activities and projects furthering achievement of objectives
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Out
com
es
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development A
ctiv
ities
Act
iviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
Financial Perspective
Objectives Measures Targets Initiatives
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets Initiatives
(V11) November 2001 Introducing the Balanced ScorecardPage 18
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designThe components of a Strategic Balanced Scorecard
bull Financial Marketndash Total NSV pound120m (nominal) ndashndash Has achieved 10 CAGR on NSndash Operating Margin gt10ndash Controllable overheads less thndash Operating Profit pound12m (nomin
Destination StatementDescription of how the organisation will be at some specific future date if the management teamrsquos strategies are successful
Fin
anci
alCu
stom
er
Best value for money
The leading and most innovative
brand
Drive Increased Demand
Profitable Sales Growth
Strategic Linkage Model (SLM)Graphic illustration of ldquocause and effectrdquo relationships between the strategic goals that must be achieved if the organisation is to reach its destination state
ObjectiveObjective DescriptionDescription
Total Shareholder Return is above Groups cost of equity over the medium to long term
Total Shareholder Return is above Groups cost of equity over the medium to long term
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means better than equivalent payments by known Group
Measures (Freq)Measures (Freq)
bull CAGR of Total ShareholdeReturn
bull ROIC (Target gt WACC)
bull CAGR of Total ShareholderReturn
bull ROIC (Target gt WACC)
bull PampL account net tax chargea of profit for financial ye
bull WACC
bull PampL account net tax chargeda of profit for financial yea
bull WACC
Group Strategy Delivers Value
Achieve Optimum Tax Rate amp WACC
F1
F2
Objective and Measure Documentation
ndashClear and concise description of strategic objectives and the measures chosen to track their achievement
F11
F12
-30p
8
150p
18Dividend expected kept a1000 pence leading to loprevious years
Measure Value Target PerfObjective Status
Outperform capital markets
F21 200 185Increasing cash inflow froCash amp a sset
F21 200 185Increasing cash inflow froCash amp a sset
t
Progress Reporting FormatsIllustration of how (and by whom) Scorecard information will be communicated
o Initiative overviewOverview of which initiatives support which Scorecard objectives incl owners and deadlines for finalisation
(V11) November 2001 Introducing the Balanced ScorecardPage 19
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard roll-out
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 20
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard Development Development within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
The optimal role-out
sequence is ldquoTop Downrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 21
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentDevelopment within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
Corporate Balanced Scorecard
Co-ordinatingBalanced Scorecard
Support Function Balanced Scorecard
Operating Unit Balanced Scorecard
Departmental Balanced ScorecardTeam Level
Balanced Scorecard
(V11) November 2001 Introducing the Balanced ScorecardPage 22
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
What
How
What
Board level ScorecardBoard level Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Overall VisionOverall Vision
Subordinate ScorecardSubordinate Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Local VisionLocal Vision
How
TeamIndividual ScorecardTeamIndividual Scorecard
Objectives
Measures amp Targets
Initiatives
TeamIndividual Vision
TeamIndividual Vision
Strategic direction
Strategic direction
Strategy implementation
Strategy implementation
(V11) November 2001 Introducing the Balanced ScorecardPage 23
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 24
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 25
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Strategic alignment amp goal setting
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 26
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Align existing management control tools with strategy
SVA amp EVASVA amp EVAB
udge
tsB
udge
ts
BEMBEMBalanced Scorecard
ABCABC HR ToolsHR Tools
(V11) November 2001 Introducing the Balanced ScorecardPage 27
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Support two-way communication of strategyhellip
Fuzzy objectivesFuzzy objectives
Unjustified trust in informal
Unjustified trust in informal
feedback systems
feedback systemsEntren
ched m
easure
ment
Entren
ched m
easure
ment
system
s
system
s
BSC
(V11) November 2001 Introducing the Balanced ScorecardPage 28
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
Comm
unica
tion Com
munication
Board levelScorecard
process
OperationalScorecard
process
Support function Scorecard
process
Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets
Take action
Create amend
strategic vision
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
Communication
(V11) November 2001 Introducing the Balanced ScorecardPage 29
2GCActive
Managementcopy 2GC Limited 2001
Success criteria
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 30
2GCActive
Managementcopy 2GC Limited 2001
Key success factorsCultural building blocks of Scorecard success
bullInclusive design process building on consensus seeking amp involvement
bullParticipative management style focused on learning open discussion and creative thinking
bullSponsorship and commitment from entire management team -top management in particular
bullldquoEmbeddingrdquo of management processes to use refresh and renew the Balanced Scorecard over time
(V11) November 2001 Introducing the Balanced ScorecardPage 31
2GCActive
Managementcopy 2GC Limited 2001
Introducing the Balanced ScorecardTo find out morehellip
bullVisit 2GCrsquos Web Sitendash We focus specifically on strategic
control and performance measurement issues and have a wide range of working papers FAQs and presentations to download on these topics
ndash The site also has a recommended reading list that covers relevant topics and the ldquoWeblinksrdquo database of relevant Internet sites
bullContact 2GCndash Let us know if you have a question
you canrsquot answer wersquoll do what we can to helphellip
bull info2gccouk
- Introducing the Balanced Scorecard
- Structure of presentation
- General management issuesWhat is this all about
- General management issuesImplementing Strategic Goals
- General management issuesBarriers to effective performance management
- General management issuesRealising the need to change
- What is Balanced Scorecard
- What is a Balanced Scorecard
- What is a Balanced ScorecardBackground amp underlying philosophy
- What is a Balanced ScorecardDo what needs to get donehellip
- What is a Balanced ScorecardDifferent applications for Balanced Scorecard
- What is a Balanced ScorecardStrategic control vs Management control
- What is the Balanced Scorecard The latest Balanced Scorecard thinking
- What is Balanced ScorecardMore than just a set of goals amp measures
- Balanced Scorecard design
- Balanced Scorecard designWhere to go an how to get there
- Balanced Scorecard designMonitor progress in achieving goals
- Balanced Scorecard designThe components of a Strategic Balanced Scorecard
- Balanced Scorecard roll-out
- Balanced Scorecard Development Development within the organisation
- Balanced Scorecard DevelopmentDevelopment within the organisation
- Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
- Balanced Scorecard deployment
- Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
- Balanced Scorecard deployment Strategic alignment amp goal setting
- Balanced Scorecard deployment Align existing management control tools with strategy
- Balanced Scorecard deployment Support two-way communication of strategyhellip
- Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
- Success criteria
- Key success factorsCultural building blocks of Scorecard success
- Introducing the Balanced ScorecardTo find out morehellip
-
(V11) November 2001 Introducing the Balanced ScorecardPage 16
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designWhere to go an how to get there
bullBest practice is to use a development group that comprises the the likely users of the Balanced Scorecard
bullDesign choices should be based on jointly held perception of a strategic ldquoDestinationrdquo
bullThe design should measure progress against the organisationrsquos key strategic objectives (activities and outcomes)
bullLinks between strategic objectives should be articulated ndash these express the management teamrsquos beliefs about which activities drive which outcomes
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 17
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designMonitor progress in achieving goals
bullDevelopment of measures follow clarification and agreement of strategic objectives becausehellip
bullMeasures track progress in achieving those objectives against agreed targets
bullIdentify and monitor extraordinary activities and projects furthering achievement of objectives
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Out
com
es
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development A
ctiv
ities
Act
iviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
Financial Perspective
Objectives Measures Targets Initiatives
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets Initiatives
(V11) November 2001 Introducing the Balanced ScorecardPage 18
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designThe components of a Strategic Balanced Scorecard
bull Financial Marketndash Total NSV pound120m (nominal) ndashndash Has achieved 10 CAGR on NSndash Operating Margin gt10ndash Controllable overheads less thndash Operating Profit pound12m (nomin
Destination StatementDescription of how the organisation will be at some specific future date if the management teamrsquos strategies are successful
Fin
anci
alCu
stom
er
Best value for money
The leading and most innovative
brand
Drive Increased Demand
Profitable Sales Growth
Strategic Linkage Model (SLM)Graphic illustration of ldquocause and effectrdquo relationships between the strategic goals that must be achieved if the organisation is to reach its destination state
ObjectiveObjective DescriptionDescription
Total Shareholder Return is above Groups cost of equity over the medium to long term
Total Shareholder Return is above Groups cost of equity over the medium to long term
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means better than equivalent payments by known Group
Measures (Freq)Measures (Freq)
bull CAGR of Total ShareholdeReturn
bull ROIC (Target gt WACC)
bull CAGR of Total ShareholderReturn
bull ROIC (Target gt WACC)
bull PampL account net tax chargea of profit for financial ye
bull WACC
bull PampL account net tax chargeda of profit for financial yea
bull WACC
Group Strategy Delivers Value
Achieve Optimum Tax Rate amp WACC
F1
F2
Objective and Measure Documentation
ndashClear and concise description of strategic objectives and the measures chosen to track their achievement
F11
F12
-30p
8
150p
18Dividend expected kept a1000 pence leading to loprevious years
Measure Value Target PerfObjective Status
Outperform capital markets
F21 200 185Increasing cash inflow froCash amp a sset
F21 200 185Increasing cash inflow froCash amp a sset
t
Progress Reporting FormatsIllustration of how (and by whom) Scorecard information will be communicated
o Initiative overviewOverview of which initiatives support which Scorecard objectives incl owners and deadlines for finalisation
(V11) November 2001 Introducing the Balanced ScorecardPage 19
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard roll-out
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 20
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard Development Development within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
The optimal role-out
sequence is ldquoTop Downrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 21
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentDevelopment within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
Corporate Balanced Scorecard
Co-ordinatingBalanced Scorecard
Support Function Balanced Scorecard
Operating Unit Balanced Scorecard
Departmental Balanced ScorecardTeam Level
Balanced Scorecard
(V11) November 2001 Introducing the Balanced ScorecardPage 22
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
What
How
What
Board level ScorecardBoard level Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Overall VisionOverall Vision
Subordinate ScorecardSubordinate Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Local VisionLocal Vision
How
TeamIndividual ScorecardTeamIndividual Scorecard
Objectives
Measures amp Targets
Initiatives
TeamIndividual Vision
TeamIndividual Vision
Strategic direction
Strategic direction
Strategy implementation
Strategy implementation
(V11) November 2001 Introducing the Balanced ScorecardPage 23
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 24
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 25
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Strategic alignment amp goal setting
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 26
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Align existing management control tools with strategy
SVA amp EVASVA amp EVAB
udge
tsB
udge
ts
BEMBEMBalanced Scorecard
ABCABC HR ToolsHR Tools
(V11) November 2001 Introducing the Balanced ScorecardPage 27
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Support two-way communication of strategyhellip
Fuzzy objectivesFuzzy objectives
Unjustified trust in informal
Unjustified trust in informal
feedback systems
feedback systemsEntren
ched m
easure
ment
Entren
ched m
easure
ment
system
s
system
s
BSC
(V11) November 2001 Introducing the Balanced ScorecardPage 28
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
Comm
unica
tion Com
munication
Board levelScorecard
process
OperationalScorecard
process
Support function Scorecard
process
Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets
Take action
Create amend
strategic vision
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
Communication
(V11) November 2001 Introducing the Balanced ScorecardPage 29
2GCActive
Managementcopy 2GC Limited 2001
Success criteria
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 30
2GCActive
Managementcopy 2GC Limited 2001
Key success factorsCultural building blocks of Scorecard success
bullInclusive design process building on consensus seeking amp involvement
bullParticipative management style focused on learning open discussion and creative thinking
bullSponsorship and commitment from entire management team -top management in particular
bullldquoEmbeddingrdquo of management processes to use refresh and renew the Balanced Scorecard over time
(V11) November 2001 Introducing the Balanced ScorecardPage 31
2GCActive
Managementcopy 2GC Limited 2001
Introducing the Balanced ScorecardTo find out morehellip
bullVisit 2GCrsquos Web Sitendash We focus specifically on strategic
control and performance measurement issues and have a wide range of working papers FAQs and presentations to download on these topics
ndash The site also has a recommended reading list that covers relevant topics and the ldquoWeblinksrdquo database of relevant Internet sites
bullContact 2GCndash Let us know if you have a question
you canrsquot answer wersquoll do what we can to helphellip
bull info2gccouk
- Introducing the Balanced Scorecard
- Structure of presentation
- General management issuesWhat is this all about
- General management issuesImplementing Strategic Goals
- General management issuesBarriers to effective performance management
- General management issuesRealising the need to change
- What is Balanced Scorecard
- What is a Balanced Scorecard
- What is a Balanced ScorecardBackground amp underlying philosophy
- What is a Balanced ScorecardDo what needs to get donehellip
- What is a Balanced ScorecardDifferent applications for Balanced Scorecard
- What is a Balanced ScorecardStrategic control vs Management control
- What is the Balanced Scorecard The latest Balanced Scorecard thinking
- What is Balanced ScorecardMore than just a set of goals amp measures
- Balanced Scorecard design
- Balanced Scorecard designWhere to go an how to get there
- Balanced Scorecard designMonitor progress in achieving goals
- Balanced Scorecard designThe components of a Strategic Balanced Scorecard
- Balanced Scorecard roll-out
- Balanced Scorecard Development Development within the organisation
- Balanced Scorecard DevelopmentDevelopment within the organisation
- Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
- Balanced Scorecard deployment
- Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
- Balanced Scorecard deployment Strategic alignment amp goal setting
- Balanced Scorecard deployment Align existing management control tools with strategy
- Balanced Scorecard deployment Support two-way communication of strategyhellip
- Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
- Success criteria
- Key success factorsCultural building blocks of Scorecard success
- Introducing the Balanced ScorecardTo find out morehellip
-
(V11) November 2001 Introducing the Balanced ScorecardPage 17
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designMonitor progress in achieving goals
bullDevelopment of measures follow clarification and agreement of strategic objectives becausehellip
bullMeasures track progress in achieving those objectives against agreed targets
bullIdentify and monitor extraordinary activities and projects furthering achievement of objectives
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Out
com
es
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development A
ctiv
ities
Act
iviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
Financial Perspective
Objectives Measures Targets Initiatives
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets
Financial Perspective
Objectives Measures Targets Initiatives
(V11) November 2001 Introducing the Balanced ScorecardPage 18
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designThe components of a Strategic Balanced Scorecard
bull Financial Marketndash Total NSV pound120m (nominal) ndashndash Has achieved 10 CAGR on NSndash Operating Margin gt10ndash Controllable overheads less thndash Operating Profit pound12m (nomin
Destination StatementDescription of how the organisation will be at some specific future date if the management teamrsquos strategies are successful
Fin
anci
alCu
stom
er
Best value for money
The leading and most innovative
brand
Drive Increased Demand
Profitable Sales Growth
Strategic Linkage Model (SLM)Graphic illustration of ldquocause and effectrdquo relationships between the strategic goals that must be achieved if the organisation is to reach its destination state
ObjectiveObjective DescriptionDescription
Total Shareholder Return is above Groups cost of equity over the medium to long term
Total Shareholder Return is above Groups cost of equity over the medium to long term
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means better than equivalent payments by known Group
Measures (Freq)Measures (Freq)
bull CAGR of Total ShareholdeReturn
bull ROIC (Target gt WACC)
bull CAGR of Total ShareholderReturn
bull ROIC (Target gt WACC)
bull PampL account net tax chargea of profit for financial ye
bull WACC
bull PampL account net tax chargeda of profit for financial yea
bull WACC
Group Strategy Delivers Value
Achieve Optimum Tax Rate amp WACC
F1
F2
Objective and Measure Documentation
ndashClear and concise description of strategic objectives and the measures chosen to track their achievement
F11
F12
-30p
8
150p
18Dividend expected kept a1000 pence leading to loprevious years
Measure Value Target PerfObjective Status
Outperform capital markets
F21 200 185Increasing cash inflow froCash amp a sset
F21 200 185Increasing cash inflow froCash amp a sset
t
Progress Reporting FormatsIllustration of how (and by whom) Scorecard information will be communicated
o Initiative overviewOverview of which initiatives support which Scorecard objectives incl owners and deadlines for finalisation
(V11) November 2001 Introducing the Balanced ScorecardPage 19
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard roll-out
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 20
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard Development Development within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
The optimal role-out
sequence is ldquoTop Downrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 21
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentDevelopment within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
Corporate Balanced Scorecard
Co-ordinatingBalanced Scorecard
Support Function Balanced Scorecard
Operating Unit Balanced Scorecard
Departmental Balanced ScorecardTeam Level
Balanced Scorecard
(V11) November 2001 Introducing the Balanced ScorecardPage 22
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
What
How
What
Board level ScorecardBoard level Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Overall VisionOverall Vision
Subordinate ScorecardSubordinate Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Local VisionLocal Vision
How
TeamIndividual ScorecardTeamIndividual Scorecard
Objectives
Measures amp Targets
Initiatives
TeamIndividual Vision
TeamIndividual Vision
Strategic direction
Strategic direction
Strategy implementation
Strategy implementation
(V11) November 2001 Introducing the Balanced ScorecardPage 23
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 24
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 25
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Strategic alignment amp goal setting
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 26
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Align existing management control tools with strategy
SVA amp EVASVA amp EVAB
udge
tsB
udge
ts
BEMBEMBalanced Scorecard
ABCABC HR ToolsHR Tools
(V11) November 2001 Introducing the Balanced ScorecardPage 27
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Support two-way communication of strategyhellip
Fuzzy objectivesFuzzy objectives
Unjustified trust in informal
Unjustified trust in informal
feedback systems
feedback systemsEntren
ched m
easure
ment
Entren
ched m
easure
ment
system
s
system
s
BSC
(V11) November 2001 Introducing the Balanced ScorecardPage 28
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
Comm
unica
tion Com
munication
Board levelScorecard
process
OperationalScorecard
process
Support function Scorecard
process
Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets
Take action
Create amend
strategic vision
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
Communication
(V11) November 2001 Introducing the Balanced ScorecardPage 29
2GCActive
Managementcopy 2GC Limited 2001
Success criteria
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 30
2GCActive
Managementcopy 2GC Limited 2001
Key success factorsCultural building blocks of Scorecard success
bullInclusive design process building on consensus seeking amp involvement
bullParticipative management style focused on learning open discussion and creative thinking
bullSponsorship and commitment from entire management team -top management in particular
bullldquoEmbeddingrdquo of management processes to use refresh and renew the Balanced Scorecard over time
(V11) November 2001 Introducing the Balanced ScorecardPage 31
2GCActive
Managementcopy 2GC Limited 2001
Introducing the Balanced ScorecardTo find out morehellip
bullVisit 2GCrsquos Web Sitendash We focus specifically on strategic
control and performance measurement issues and have a wide range of working papers FAQs and presentations to download on these topics
ndash The site also has a recommended reading list that covers relevant topics and the ldquoWeblinksrdquo database of relevant Internet sites
bullContact 2GCndash Let us know if you have a question
you canrsquot answer wersquoll do what we can to helphellip
bull info2gccouk
- Introducing the Balanced Scorecard
- Structure of presentation
- General management issuesWhat is this all about
- General management issuesImplementing Strategic Goals
- General management issuesBarriers to effective performance management
- General management issuesRealising the need to change
- What is Balanced Scorecard
- What is a Balanced Scorecard
- What is a Balanced ScorecardBackground amp underlying philosophy
- What is a Balanced ScorecardDo what needs to get donehellip
- What is a Balanced ScorecardDifferent applications for Balanced Scorecard
- What is a Balanced ScorecardStrategic control vs Management control
- What is the Balanced Scorecard The latest Balanced Scorecard thinking
- What is Balanced ScorecardMore than just a set of goals amp measures
- Balanced Scorecard design
- Balanced Scorecard designWhere to go an how to get there
- Balanced Scorecard designMonitor progress in achieving goals
- Balanced Scorecard designThe components of a Strategic Balanced Scorecard
- Balanced Scorecard roll-out
- Balanced Scorecard Development Development within the organisation
- Balanced Scorecard DevelopmentDevelopment within the organisation
- Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
- Balanced Scorecard deployment
- Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
- Balanced Scorecard deployment Strategic alignment amp goal setting
- Balanced Scorecard deployment Align existing management control tools with strategy
- Balanced Scorecard deployment Support two-way communication of strategyhellip
- Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
- Success criteria
- Key success factorsCultural building blocks of Scorecard success
- Introducing the Balanced ScorecardTo find out morehellip
-
(V11) November 2001 Introducing the Balanced ScorecardPage 18
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard designThe components of a Strategic Balanced Scorecard
bull Financial Marketndash Total NSV pound120m (nominal) ndashndash Has achieved 10 CAGR on NSndash Operating Margin gt10ndash Controllable overheads less thndash Operating Profit pound12m (nomin
Destination StatementDescription of how the organisation will be at some specific future date if the management teamrsquos strategies are successful
Fin
anci
alCu
stom
er
Best value for money
The leading and most innovative
brand
Drive Increased Demand
Profitable Sales Growth
Strategic Linkage Model (SLM)Graphic illustration of ldquocause and effectrdquo relationships between the strategic goals that must be achieved if the organisation is to reach its destination state
ObjectiveObjective DescriptionDescription
Total Shareholder Return is above Groups cost of equity over the medium to long term
Total Shareholder Return is above Groups cost of equity over the medium to long term
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means
Minimise net tax paid and WACC in the light of operational and commercial decisions concerning the nature and sphere of Groups activities and legal constraints Optimum means better than equivalent payments by known Group
Measures (Freq)Measures (Freq)
bull CAGR of Total ShareholdeReturn
bull ROIC (Target gt WACC)
bull CAGR of Total ShareholderReturn
bull ROIC (Target gt WACC)
bull PampL account net tax chargea of profit for financial ye
bull WACC
bull PampL account net tax chargeda of profit for financial yea
bull WACC
Group Strategy Delivers Value
Achieve Optimum Tax Rate amp WACC
F1
F2
Objective and Measure Documentation
ndashClear and concise description of strategic objectives and the measures chosen to track their achievement
F11
F12
-30p
8
150p
18Dividend expected kept a1000 pence leading to loprevious years
Measure Value Target PerfObjective Status
Outperform capital markets
F21 200 185Increasing cash inflow froCash amp a sset
F21 200 185Increasing cash inflow froCash amp a sset
t
Progress Reporting FormatsIllustration of how (and by whom) Scorecard information will be communicated
o Initiative overviewOverview of which initiatives support which Scorecard objectives incl owners and deadlines for finalisation
(V11) November 2001 Introducing the Balanced ScorecardPage 19
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard roll-out
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 20
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard Development Development within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
The optimal role-out
sequence is ldquoTop Downrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 21
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentDevelopment within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
Corporate Balanced Scorecard
Co-ordinatingBalanced Scorecard
Support Function Balanced Scorecard
Operating Unit Balanced Scorecard
Departmental Balanced ScorecardTeam Level
Balanced Scorecard
(V11) November 2001 Introducing the Balanced ScorecardPage 22
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
What
How
What
Board level ScorecardBoard level Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Overall VisionOverall Vision
Subordinate ScorecardSubordinate Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Local VisionLocal Vision
How
TeamIndividual ScorecardTeamIndividual Scorecard
Objectives
Measures amp Targets
Initiatives
TeamIndividual Vision
TeamIndividual Vision
Strategic direction
Strategic direction
Strategy implementation
Strategy implementation
(V11) November 2001 Introducing the Balanced ScorecardPage 23
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 24
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 25
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Strategic alignment amp goal setting
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 26
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Align existing management control tools with strategy
SVA amp EVASVA amp EVAB
udge
tsB
udge
ts
BEMBEMBalanced Scorecard
ABCABC HR ToolsHR Tools
(V11) November 2001 Introducing the Balanced ScorecardPage 27
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Support two-way communication of strategyhellip
Fuzzy objectivesFuzzy objectives
Unjustified trust in informal
Unjustified trust in informal
feedback systems
feedback systemsEntren
ched m
easure
ment
Entren
ched m
easure
ment
system
s
system
s
BSC
(V11) November 2001 Introducing the Balanced ScorecardPage 28
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
Comm
unica
tion Com
munication
Board levelScorecard
process
OperationalScorecard
process
Support function Scorecard
process
Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets
Take action
Create amend
strategic vision
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
Communication
(V11) November 2001 Introducing the Balanced ScorecardPage 29
2GCActive
Managementcopy 2GC Limited 2001
Success criteria
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 30
2GCActive
Managementcopy 2GC Limited 2001
Key success factorsCultural building blocks of Scorecard success
bullInclusive design process building on consensus seeking amp involvement
bullParticipative management style focused on learning open discussion and creative thinking
bullSponsorship and commitment from entire management team -top management in particular
bullldquoEmbeddingrdquo of management processes to use refresh and renew the Balanced Scorecard over time
(V11) November 2001 Introducing the Balanced ScorecardPage 31
2GCActive
Managementcopy 2GC Limited 2001
Introducing the Balanced ScorecardTo find out morehellip
bullVisit 2GCrsquos Web Sitendash We focus specifically on strategic
control and performance measurement issues and have a wide range of working papers FAQs and presentations to download on these topics
ndash The site also has a recommended reading list that covers relevant topics and the ldquoWeblinksrdquo database of relevant Internet sites
bullContact 2GCndash Let us know if you have a question
you canrsquot answer wersquoll do what we can to helphellip
bull info2gccouk
- Introducing the Balanced Scorecard
- Structure of presentation
- General management issuesWhat is this all about
- General management issuesImplementing Strategic Goals
- General management issuesBarriers to effective performance management
- General management issuesRealising the need to change
- What is Balanced Scorecard
- What is a Balanced Scorecard
- What is a Balanced ScorecardBackground amp underlying philosophy
- What is a Balanced ScorecardDo what needs to get donehellip
- What is a Balanced ScorecardDifferent applications for Balanced Scorecard
- What is a Balanced ScorecardStrategic control vs Management control
- What is the Balanced Scorecard The latest Balanced Scorecard thinking
- What is Balanced ScorecardMore than just a set of goals amp measures
- Balanced Scorecard design
- Balanced Scorecard designWhere to go an how to get there
- Balanced Scorecard designMonitor progress in achieving goals
- Balanced Scorecard designThe components of a Strategic Balanced Scorecard
- Balanced Scorecard roll-out
- Balanced Scorecard Development Development within the organisation
- Balanced Scorecard DevelopmentDevelopment within the organisation
- Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
- Balanced Scorecard deployment
- Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
- Balanced Scorecard deployment Strategic alignment amp goal setting
- Balanced Scorecard deployment Align existing management control tools with strategy
- Balanced Scorecard deployment Support two-way communication of strategyhellip
- Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
- Success criteria
- Key success factorsCultural building blocks of Scorecard success
- Introducing the Balanced ScorecardTo find out morehellip
-
(V11) November 2001 Introducing the Balanced ScorecardPage 19
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard roll-out
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 20
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard Development Development within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
The optimal role-out
sequence is ldquoTop Downrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 21
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentDevelopment within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
Corporate Balanced Scorecard
Co-ordinatingBalanced Scorecard
Support Function Balanced Scorecard
Operating Unit Balanced Scorecard
Departmental Balanced ScorecardTeam Level
Balanced Scorecard
(V11) November 2001 Introducing the Balanced ScorecardPage 22
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
What
How
What
Board level ScorecardBoard level Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Overall VisionOverall Vision
Subordinate ScorecardSubordinate Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Local VisionLocal Vision
How
TeamIndividual ScorecardTeamIndividual Scorecard
Objectives
Measures amp Targets
Initiatives
TeamIndividual Vision
TeamIndividual Vision
Strategic direction
Strategic direction
Strategy implementation
Strategy implementation
(V11) November 2001 Introducing the Balanced ScorecardPage 23
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 24
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 25
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Strategic alignment amp goal setting
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 26
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Align existing management control tools with strategy
SVA amp EVASVA amp EVAB
udge
tsB
udge
ts
BEMBEMBalanced Scorecard
ABCABC HR ToolsHR Tools
(V11) November 2001 Introducing the Balanced ScorecardPage 27
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Support two-way communication of strategyhellip
Fuzzy objectivesFuzzy objectives
Unjustified trust in informal
Unjustified trust in informal
feedback systems
feedback systemsEntren
ched m
easure
ment
Entren
ched m
easure
ment
system
s
system
s
BSC
(V11) November 2001 Introducing the Balanced ScorecardPage 28
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
Comm
unica
tion Com
munication
Board levelScorecard
process
OperationalScorecard
process
Support function Scorecard
process
Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets
Take action
Create amend
strategic vision
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
Communication
(V11) November 2001 Introducing the Balanced ScorecardPage 29
2GCActive
Managementcopy 2GC Limited 2001
Success criteria
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 30
2GCActive
Managementcopy 2GC Limited 2001
Key success factorsCultural building blocks of Scorecard success
bullInclusive design process building on consensus seeking amp involvement
bullParticipative management style focused on learning open discussion and creative thinking
bullSponsorship and commitment from entire management team -top management in particular
bullldquoEmbeddingrdquo of management processes to use refresh and renew the Balanced Scorecard over time
(V11) November 2001 Introducing the Balanced ScorecardPage 31
2GCActive
Managementcopy 2GC Limited 2001
Introducing the Balanced ScorecardTo find out morehellip
bullVisit 2GCrsquos Web Sitendash We focus specifically on strategic
control and performance measurement issues and have a wide range of working papers FAQs and presentations to download on these topics
ndash The site also has a recommended reading list that covers relevant topics and the ldquoWeblinksrdquo database of relevant Internet sites
bullContact 2GCndash Let us know if you have a question
you canrsquot answer wersquoll do what we can to helphellip
bull info2gccouk
- Introducing the Balanced Scorecard
- Structure of presentation
- General management issuesWhat is this all about
- General management issuesImplementing Strategic Goals
- General management issuesBarriers to effective performance management
- General management issuesRealising the need to change
- What is Balanced Scorecard
- What is a Balanced Scorecard
- What is a Balanced ScorecardBackground amp underlying philosophy
- What is a Balanced ScorecardDo what needs to get donehellip
- What is a Balanced ScorecardDifferent applications for Balanced Scorecard
- What is a Balanced ScorecardStrategic control vs Management control
- What is the Balanced Scorecard The latest Balanced Scorecard thinking
- What is Balanced ScorecardMore than just a set of goals amp measures
- Balanced Scorecard design
- Balanced Scorecard designWhere to go an how to get there
- Balanced Scorecard designMonitor progress in achieving goals
- Balanced Scorecard designThe components of a Strategic Balanced Scorecard
- Balanced Scorecard roll-out
- Balanced Scorecard Development Development within the organisation
- Balanced Scorecard DevelopmentDevelopment within the organisation
- Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
- Balanced Scorecard deployment
- Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
- Balanced Scorecard deployment Strategic alignment amp goal setting
- Balanced Scorecard deployment Align existing management control tools with strategy
- Balanced Scorecard deployment Support two-way communication of strategyhellip
- Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
- Success criteria
- Key success factorsCultural building blocks of Scorecard success
- Introducing the Balanced ScorecardTo find out morehellip
-
(V11) November 2001 Introducing the Balanced ScorecardPage 20
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard Development Development within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
The optimal role-out
sequence is ldquoTop Downrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 21
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentDevelopment within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
Corporate Balanced Scorecard
Co-ordinatingBalanced Scorecard
Support Function Balanced Scorecard
Operating Unit Balanced Scorecard
Departmental Balanced ScorecardTeam Level
Balanced Scorecard
(V11) November 2001 Introducing the Balanced ScorecardPage 22
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
What
How
What
Board level ScorecardBoard level Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Overall VisionOverall Vision
Subordinate ScorecardSubordinate Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Local VisionLocal Vision
How
TeamIndividual ScorecardTeamIndividual Scorecard
Objectives
Measures amp Targets
Initiatives
TeamIndividual Vision
TeamIndividual Vision
Strategic direction
Strategic direction
Strategy implementation
Strategy implementation
(V11) November 2001 Introducing the Balanced ScorecardPage 23
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 24
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 25
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Strategic alignment amp goal setting
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 26
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Align existing management control tools with strategy
SVA amp EVASVA amp EVAB
udge
tsB
udge
ts
BEMBEMBalanced Scorecard
ABCABC HR ToolsHR Tools
(V11) November 2001 Introducing the Balanced ScorecardPage 27
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Support two-way communication of strategyhellip
Fuzzy objectivesFuzzy objectives
Unjustified trust in informal
Unjustified trust in informal
feedback systems
feedback systemsEntren
ched m
easure
ment
Entren
ched m
easure
ment
system
s
system
s
BSC
(V11) November 2001 Introducing the Balanced ScorecardPage 28
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
Comm
unica
tion Com
munication
Board levelScorecard
process
OperationalScorecard
process
Support function Scorecard
process
Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets
Take action
Create amend
strategic vision
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
Communication
(V11) November 2001 Introducing the Balanced ScorecardPage 29
2GCActive
Managementcopy 2GC Limited 2001
Success criteria
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 30
2GCActive
Managementcopy 2GC Limited 2001
Key success factorsCultural building blocks of Scorecard success
bullInclusive design process building on consensus seeking amp involvement
bullParticipative management style focused on learning open discussion and creative thinking
bullSponsorship and commitment from entire management team -top management in particular
bullldquoEmbeddingrdquo of management processes to use refresh and renew the Balanced Scorecard over time
(V11) November 2001 Introducing the Balanced ScorecardPage 31
2GCActive
Managementcopy 2GC Limited 2001
Introducing the Balanced ScorecardTo find out morehellip
bullVisit 2GCrsquos Web Sitendash We focus specifically on strategic
control and performance measurement issues and have a wide range of working papers FAQs and presentations to download on these topics
ndash The site also has a recommended reading list that covers relevant topics and the ldquoWeblinksrdquo database of relevant Internet sites
bullContact 2GCndash Let us know if you have a question
you canrsquot answer wersquoll do what we can to helphellip
bull info2gccouk
- Introducing the Balanced Scorecard
- Structure of presentation
- General management issuesWhat is this all about
- General management issuesImplementing Strategic Goals
- General management issuesBarriers to effective performance management
- General management issuesRealising the need to change
- What is Balanced Scorecard
- What is a Balanced Scorecard
- What is a Balanced ScorecardBackground amp underlying philosophy
- What is a Balanced ScorecardDo what needs to get donehellip
- What is a Balanced ScorecardDifferent applications for Balanced Scorecard
- What is a Balanced ScorecardStrategic control vs Management control
- What is the Balanced Scorecard The latest Balanced Scorecard thinking
- What is Balanced ScorecardMore than just a set of goals amp measures
- Balanced Scorecard design
- Balanced Scorecard designWhere to go an how to get there
- Balanced Scorecard designMonitor progress in achieving goals
- Balanced Scorecard designThe components of a Strategic Balanced Scorecard
- Balanced Scorecard roll-out
- Balanced Scorecard Development Development within the organisation
- Balanced Scorecard DevelopmentDevelopment within the organisation
- Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
- Balanced Scorecard deployment
- Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
- Balanced Scorecard deployment Strategic alignment amp goal setting
- Balanced Scorecard deployment Align existing management control tools with strategy
- Balanced Scorecard deployment Support two-way communication of strategyhellip
- Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
- Success criteria
- Key success factorsCultural building blocks of Scorecard success
- Introducing the Balanced ScorecardTo find out morehellip
-
(V11) November 2001 Introducing the Balanced ScorecardPage 21
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentDevelopment within the organisation
Country 1 Country 2
Regional Cluster(Line Management)
Country 3
Dept 1
Team
Dept 2
Country 4
Regional ClusterLine Management
Shared Service(eg Supply Chain)
Group SupportLegal Finance HR IS
Main Board
Corporate Balanced Scorecard
Co-ordinatingBalanced Scorecard
Support Function Balanced Scorecard
Operating Unit Balanced Scorecard
Departmental Balanced ScorecardTeam Level
Balanced Scorecard
(V11) November 2001 Introducing the Balanced ScorecardPage 22
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
What
How
What
Board level ScorecardBoard level Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Overall VisionOverall Vision
Subordinate ScorecardSubordinate Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Local VisionLocal Vision
How
TeamIndividual ScorecardTeamIndividual Scorecard
Objectives
Measures amp Targets
Initiatives
TeamIndividual Vision
TeamIndividual Vision
Strategic direction
Strategic direction
Strategy implementation
Strategy implementation
(V11) November 2001 Introducing the Balanced ScorecardPage 23
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 24
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 25
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Strategic alignment amp goal setting
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 26
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Align existing management control tools with strategy
SVA amp EVASVA amp EVAB
udge
tsB
udge
ts
BEMBEMBalanced Scorecard
ABCABC HR ToolsHR Tools
(V11) November 2001 Introducing the Balanced ScorecardPage 27
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Support two-way communication of strategyhellip
Fuzzy objectivesFuzzy objectives
Unjustified trust in informal
Unjustified trust in informal
feedback systems
feedback systemsEntren
ched m
easure
ment
Entren
ched m
easure
ment
system
s
system
s
BSC
(V11) November 2001 Introducing the Balanced ScorecardPage 28
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
Comm
unica
tion Com
munication
Board levelScorecard
process
OperationalScorecard
process
Support function Scorecard
process
Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets
Take action
Create amend
strategic vision
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
Communication
(V11) November 2001 Introducing the Balanced ScorecardPage 29
2GCActive
Managementcopy 2GC Limited 2001
Success criteria
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 30
2GCActive
Managementcopy 2GC Limited 2001
Key success factorsCultural building blocks of Scorecard success
bullInclusive design process building on consensus seeking amp involvement
bullParticipative management style focused on learning open discussion and creative thinking
bullSponsorship and commitment from entire management team -top management in particular
bullldquoEmbeddingrdquo of management processes to use refresh and renew the Balanced Scorecard over time
(V11) November 2001 Introducing the Balanced ScorecardPage 31
2GCActive
Managementcopy 2GC Limited 2001
Introducing the Balanced ScorecardTo find out morehellip
bullVisit 2GCrsquos Web Sitendash We focus specifically on strategic
control and performance measurement issues and have a wide range of working papers FAQs and presentations to download on these topics
ndash The site also has a recommended reading list that covers relevant topics and the ldquoWeblinksrdquo database of relevant Internet sites
bullContact 2GCndash Let us know if you have a question
you canrsquot answer wersquoll do what we can to helphellip
bull info2gccouk
- Introducing the Balanced Scorecard
- Structure of presentation
- General management issuesWhat is this all about
- General management issuesImplementing Strategic Goals
- General management issuesBarriers to effective performance management
- General management issuesRealising the need to change
- What is Balanced Scorecard
- What is a Balanced Scorecard
- What is a Balanced ScorecardBackground amp underlying philosophy
- What is a Balanced ScorecardDo what needs to get donehellip
- What is a Balanced ScorecardDifferent applications for Balanced Scorecard
- What is a Balanced ScorecardStrategic control vs Management control
- What is the Balanced Scorecard The latest Balanced Scorecard thinking
- What is Balanced ScorecardMore than just a set of goals amp measures
- Balanced Scorecard design
- Balanced Scorecard designWhere to go an how to get there
- Balanced Scorecard designMonitor progress in achieving goals
- Balanced Scorecard designThe components of a Strategic Balanced Scorecard
- Balanced Scorecard roll-out
- Balanced Scorecard Development Development within the organisation
- Balanced Scorecard DevelopmentDevelopment within the organisation
- Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
- Balanced Scorecard deployment
- Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
- Balanced Scorecard deployment Strategic alignment amp goal setting
- Balanced Scorecard deployment Align existing management control tools with strategy
- Balanced Scorecard deployment Support two-way communication of strategyhellip
- Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
- Success criteria
- Key success factorsCultural building blocks of Scorecard success
- Introducing the Balanced ScorecardTo find out morehellip
-
(V11) November 2001 Introducing the Balanced ScorecardPage 22
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
What
How
What
Board level ScorecardBoard level Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Overall VisionOverall Vision
Subordinate ScorecardSubordinate Scorecard
Objectives
Measures amp Targets
Initiatives
Objectives
Measures amp Targets
Initiatives
Local VisionLocal Vision
How
TeamIndividual ScorecardTeamIndividual Scorecard
Objectives
Measures amp Targets
Initiatives
TeamIndividual Vision
TeamIndividual Vision
Strategic direction
Strategic direction
Strategy implementation
Strategy implementation
(V11) November 2001 Introducing the Balanced ScorecardPage 23
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 24
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 25
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Strategic alignment amp goal setting
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 26
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Align existing management control tools with strategy
SVA amp EVASVA amp EVAB
udge
tsB
udge
ts
BEMBEMBalanced Scorecard
ABCABC HR ToolsHR Tools
(V11) November 2001 Introducing the Balanced ScorecardPage 27
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Support two-way communication of strategyhellip
Fuzzy objectivesFuzzy objectives
Unjustified trust in informal
Unjustified trust in informal
feedback systems
feedback systemsEntren
ched m
easure
ment
Entren
ched m
easure
ment
system
s
system
s
BSC
(V11) November 2001 Introducing the Balanced ScorecardPage 28
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
Comm
unica
tion Com
munication
Board levelScorecard
process
OperationalScorecard
process
Support function Scorecard
process
Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets
Take action
Create amend
strategic vision
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
Communication
(V11) November 2001 Introducing the Balanced ScorecardPage 29
2GCActive
Managementcopy 2GC Limited 2001
Success criteria
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 30
2GCActive
Managementcopy 2GC Limited 2001
Key success factorsCultural building blocks of Scorecard success
bullInclusive design process building on consensus seeking amp involvement
bullParticipative management style focused on learning open discussion and creative thinking
bullSponsorship and commitment from entire management team -top management in particular
bullldquoEmbeddingrdquo of management processes to use refresh and renew the Balanced Scorecard over time
(V11) November 2001 Introducing the Balanced ScorecardPage 31
2GCActive
Managementcopy 2GC Limited 2001
Introducing the Balanced ScorecardTo find out morehellip
bullVisit 2GCrsquos Web Sitendash We focus specifically on strategic
control and performance measurement issues and have a wide range of working papers FAQs and presentations to download on these topics
ndash The site also has a recommended reading list that covers relevant topics and the ldquoWeblinksrdquo database of relevant Internet sites
bullContact 2GCndash Let us know if you have a question
you canrsquot answer wersquoll do what we can to helphellip
bull info2gccouk
- Introducing the Balanced Scorecard
- Structure of presentation
- General management issuesWhat is this all about
- General management issuesImplementing Strategic Goals
- General management issuesBarriers to effective performance management
- General management issuesRealising the need to change
- What is Balanced Scorecard
- What is a Balanced Scorecard
- What is a Balanced ScorecardBackground amp underlying philosophy
- What is a Balanced ScorecardDo what needs to get donehellip
- What is a Balanced ScorecardDifferent applications for Balanced Scorecard
- What is a Balanced ScorecardStrategic control vs Management control
- What is the Balanced Scorecard The latest Balanced Scorecard thinking
- What is Balanced ScorecardMore than just a set of goals amp measures
- Balanced Scorecard design
- Balanced Scorecard designWhere to go an how to get there
- Balanced Scorecard designMonitor progress in achieving goals
- Balanced Scorecard designThe components of a Strategic Balanced Scorecard
- Balanced Scorecard roll-out
- Balanced Scorecard Development Development within the organisation
- Balanced Scorecard DevelopmentDevelopment within the organisation
- Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
- Balanced Scorecard deployment
- Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
- Balanced Scorecard deployment Strategic alignment amp goal setting
- Balanced Scorecard deployment Align existing management control tools with strategy
- Balanced Scorecard deployment Support two-way communication of strategyhellip
- Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
- Success criteria
- Key success factorsCultural building blocks of Scorecard success
- Introducing the Balanced ScorecardTo find out morehellip
-
(V11) November 2001 Introducing the Balanced ScorecardPage 23
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 24
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 25
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Strategic alignment amp goal setting
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 26
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Align existing management control tools with strategy
SVA amp EVASVA amp EVAB
udge
tsB
udge
ts
BEMBEMBalanced Scorecard
ABCABC HR ToolsHR Tools
(V11) November 2001 Introducing the Balanced ScorecardPage 27
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Support two-way communication of strategyhellip
Fuzzy objectivesFuzzy objectives
Unjustified trust in informal
Unjustified trust in informal
feedback systems
feedback systemsEntren
ched m
easure
ment
Entren
ched m
easure
ment
system
s
system
s
BSC
(V11) November 2001 Introducing the Balanced ScorecardPage 28
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
Comm
unica
tion Com
munication
Board levelScorecard
process
OperationalScorecard
process
Support function Scorecard
process
Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets
Take action
Create amend
strategic vision
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
Communication
(V11) November 2001 Introducing the Balanced ScorecardPage 29
2GCActive
Managementcopy 2GC Limited 2001
Success criteria
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 30
2GCActive
Managementcopy 2GC Limited 2001
Key success factorsCultural building blocks of Scorecard success
bullInclusive design process building on consensus seeking amp involvement
bullParticipative management style focused on learning open discussion and creative thinking
bullSponsorship and commitment from entire management team -top management in particular
bullldquoEmbeddingrdquo of management processes to use refresh and renew the Balanced Scorecard over time
(V11) November 2001 Introducing the Balanced ScorecardPage 31
2GCActive
Managementcopy 2GC Limited 2001
Introducing the Balanced ScorecardTo find out morehellip
bullVisit 2GCrsquos Web Sitendash We focus specifically on strategic
control and performance measurement issues and have a wide range of working papers FAQs and presentations to download on these topics
ndash The site also has a recommended reading list that covers relevant topics and the ldquoWeblinksrdquo database of relevant Internet sites
bullContact 2GCndash Let us know if you have a question
you canrsquot answer wersquoll do what we can to helphellip
bull info2gccouk
- Introducing the Balanced Scorecard
- Structure of presentation
- General management issuesWhat is this all about
- General management issuesImplementing Strategic Goals
- General management issuesBarriers to effective performance management
- General management issuesRealising the need to change
- What is Balanced Scorecard
- What is a Balanced Scorecard
- What is a Balanced ScorecardBackground amp underlying philosophy
- What is a Balanced ScorecardDo what needs to get donehellip
- What is a Balanced ScorecardDifferent applications for Balanced Scorecard
- What is a Balanced ScorecardStrategic control vs Management control
- What is the Balanced Scorecard The latest Balanced Scorecard thinking
- What is Balanced ScorecardMore than just a set of goals amp measures
- Balanced Scorecard design
- Balanced Scorecard designWhere to go an how to get there
- Balanced Scorecard designMonitor progress in achieving goals
- Balanced Scorecard designThe components of a Strategic Balanced Scorecard
- Balanced Scorecard roll-out
- Balanced Scorecard Development Development within the organisation
- Balanced Scorecard DevelopmentDevelopment within the organisation
- Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
- Balanced Scorecard deployment
- Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
- Balanced Scorecard deployment Strategic alignment amp goal setting
- Balanced Scorecard deployment Align existing management control tools with strategy
- Balanced Scorecard deployment Support two-way communication of strategyhellip
- Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
- Success criteria
- Key success factorsCultural building blocks of Scorecard success
- Introducing the Balanced ScorecardTo find out morehellip
-
(V11) November 2001 Introducing the Balanced ScorecardPage 24
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
(V11) November 2001 Introducing the Balanced ScorecardPage 25
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Strategic alignment amp goal setting
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 26
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Align existing management control tools with strategy
SVA amp EVASVA amp EVAB
udge
tsB
udge
ts
BEMBEMBalanced Scorecard
ABCABC HR ToolsHR Tools
(V11) November 2001 Introducing the Balanced ScorecardPage 27
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Support two-way communication of strategyhellip
Fuzzy objectivesFuzzy objectives
Unjustified trust in informal
Unjustified trust in informal
feedback systems
feedback systemsEntren
ched m
easure
ment
Entren
ched m
easure
ment
system
s
system
s
BSC
(V11) November 2001 Introducing the Balanced ScorecardPage 28
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
Comm
unica
tion Com
munication
Board levelScorecard
process
OperationalScorecard
process
Support function Scorecard
process
Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets
Take action
Create amend
strategic vision
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
Communication
(V11) November 2001 Introducing the Balanced ScorecardPage 29
2GCActive
Managementcopy 2GC Limited 2001
Success criteria
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 30
2GCActive
Managementcopy 2GC Limited 2001
Key success factorsCultural building blocks of Scorecard success
bullInclusive design process building on consensus seeking amp involvement
bullParticipative management style focused on learning open discussion and creative thinking
bullSponsorship and commitment from entire management team -top management in particular
bullldquoEmbeddingrdquo of management processes to use refresh and renew the Balanced Scorecard over time
(V11) November 2001 Introducing the Balanced ScorecardPage 31
2GCActive
Managementcopy 2GC Limited 2001
Introducing the Balanced ScorecardTo find out morehellip
bullVisit 2GCrsquos Web Sitendash We focus specifically on strategic
control and performance measurement issues and have a wide range of working papers FAQs and presentations to download on these topics
ndash The site also has a recommended reading list that covers relevant topics and the ldquoWeblinksrdquo database of relevant Internet sites
bullContact 2GCndash Let us know if you have a question
you canrsquot answer wersquoll do what we can to helphellip
bull info2gccouk
- Introducing the Balanced Scorecard
- Structure of presentation
- General management issuesWhat is this all about
- General management issuesImplementing Strategic Goals
- General management issuesBarriers to effective performance management
- General management issuesRealising the need to change
- What is Balanced Scorecard
- What is a Balanced Scorecard
- What is a Balanced ScorecardBackground amp underlying philosophy
- What is a Balanced ScorecardDo what needs to get donehellip
- What is a Balanced ScorecardDifferent applications for Balanced Scorecard
- What is a Balanced ScorecardStrategic control vs Management control
- What is the Balanced Scorecard The latest Balanced Scorecard thinking
- What is Balanced ScorecardMore than just a set of goals amp measures
- Balanced Scorecard design
- Balanced Scorecard designWhere to go an how to get there
- Balanced Scorecard designMonitor progress in achieving goals
- Balanced Scorecard designThe components of a Strategic Balanced Scorecard
- Balanced Scorecard roll-out
- Balanced Scorecard Development Development within the organisation
- Balanced Scorecard DevelopmentDevelopment within the organisation
- Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
- Balanced Scorecard deployment
- Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
- Balanced Scorecard deployment Strategic alignment amp goal setting
- Balanced Scorecard deployment Align existing management control tools with strategy
- Balanced Scorecard deployment Support two-way communication of strategyhellip
- Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
- Success criteria
- Key success factorsCultural building blocks of Scorecard success
- Introducing the Balanced ScorecardTo find out morehellip
-
(V11) November 2001 Introducing the Balanced ScorecardPage 25
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Strategic alignment amp goal setting
Customer PerspectivePerceptions of price service quality
Customer PerspectivePerceptions of price service quality O
utco
mes
Internal PerspectiveCycle time productivity processes
Internal PerspectiveCycle time productivity processes
Learning amp Growth PerspectiveKnowledge product development
Learning amp Growth PerspectiveKnowledge product development Ac
tiviti
es
Financial PerspectiveProfitability growth valueFinancial PerspectiveProfitability growth value
VisionVision
StrategyStrategy
Out
com
esAc
tiviti
es
(V11) November 2001 Introducing the Balanced ScorecardPage 26
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Align existing management control tools with strategy
SVA amp EVASVA amp EVAB
udge
tsB
udge
ts
BEMBEMBalanced Scorecard
ABCABC HR ToolsHR Tools
(V11) November 2001 Introducing the Balanced ScorecardPage 27
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Support two-way communication of strategyhellip
Fuzzy objectivesFuzzy objectives
Unjustified trust in informal
Unjustified trust in informal
feedback systems
feedback systemsEntren
ched m
easure
ment
Entren
ched m
easure
ment
system
s
system
s
BSC
(V11) November 2001 Introducing the Balanced ScorecardPage 28
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
Comm
unica
tion Com
munication
Board levelScorecard
process
OperationalScorecard
process
Support function Scorecard
process
Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets
Take action
Create amend
strategic vision
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
Communication
(V11) November 2001 Introducing the Balanced ScorecardPage 29
2GCActive
Managementcopy 2GC Limited 2001
Success criteria
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 30
2GCActive
Managementcopy 2GC Limited 2001
Key success factorsCultural building blocks of Scorecard success
bullInclusive design process building on consensus seeking amp involvement
bullParticipative management style focused on learning open discussion and creative thinking
bullSponsorship and commitment from entire management team -top management in particular
bullldquoEmbeddingrdquo of management processes to use refresh and renew the Balanced Scorecard over time
(V11) November 2001 Introducing the Balanced ScorecardPage 31
2GCActive
Managementcopy 2GC Limited 2001
Introducing the Balanced ScorecardTo find out morehellip
bullVisit 2GCrsquos Web Sitendash We focus specifically on strategic
control and performance measurement issues and have a wide range of working papers FAQs and presentations to download on these topics
ndash The site also has a recommended reading list that covers relevant topics and the ldquoWeblinksrdquo database of relevant Internet sites
bullContact 2GCndash Let us know if you have a question
you canrsquot answer wersquoll do what we can to helphellip
bull info2gccouk
- Introducing the Balanced Scorecard
- Structure of presentation
- General management issuesWhat is this all about
- General management issuesImplementing Strategic Goals
- General management issuesBarriers to effective performance management
- General management issuesRealising the need to change
- What is Balanced Scorecard
- What is a Balanced Scorecard
- What is a Balanced ScorecardBackground amp underlying philosophy
- What is a Balanced ScorecardDo what needs to get donehellip
- What is a Balanced ScorecardDifferent applications for Balanced Scorecard
- What is a Balanced ScorecardStrategic control vs Management control
- What is the Balanced Scorecard The latest Balanced Scorecard thinking
- What is Balanced ScorecardMore than just a set of goals amp measures
- Balanced Scorecard design
- Balanced Scorecard designWhere to go an how to get there
- Balanced Scorecard designMonitor progress in achieving goals
- Balanced Scorecard designThe components of a Strategic Balanced Scorecard
- Balanced Scorecard roll-out
- Balanced Scorecard Development Development within the organisation
- Balanced Scorecard DevelopmentDevelopment within the organisation
- Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
- Balanced Scorecard deployment
- Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
- Balanced Scorecard deployment Strategic alignment amp goal setting
- Balanced Scorecard deployment Align existing management control tools with strategy
- Balanced Scorecard deployment Support two-way communication of strategyhellip
- Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
- Success criteria
- Key success factorsCultural building blocks of Scorecard success
- Introducing the Balanced ScorecardTo find out morehellip
-
(V11) November 2001 Introducing the Balanced ScorecardPage 26
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Align existing management control tools with strategy
SVA amp EVASVA amp EVAB
udge
tsB
udge
ts
BEMBEMBalanced Scorecard
ABCABC HR ToolsHR Tools
(V11) November 2001 Introducing the Balanced ScorecardPage 27
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Support two-way communication of strategyhellip
Fuzzy objectivesFuzzy objectives
Unjustified trust in informal
Unjustified trust in informal
feedback systems
feedback systemsEntren
ched m
easure
ment
Entren
ched m
easure
ment
system
s
system
s
BSC
(V11) November 2001 Introducing the Balanced ScorecardPage 28
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
Comm
unica
tion Com
munication
Board levelScorecard
process
OperationalScorecard
process
Support function Scorecard
process
Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets
Take action
Create amend
strategic vision
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
Communication
(V11) November 2001 Introducing the Balanced ScorecardPage 29
2GCActive
Managementcopy 2GC Limited 2001
Success criteria
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 30
2GCActive
Managementcopy 2GC Limited 2001
Key success factorsCultural building blocks of Scorecard success
bullInclusive design process building on consensus seeking amp involvement
bullParticipative management style focused on learning open discussion and creative thinking
bullSponsorship and commitment from entire management team -top management in particular
bullldquoEmbeddingrdquo of management processes to use refresh and renew the Balanced Scorecard over time
(V11) November 2001 Introducing the Balanced ScorecardPage 31
2GCActive
Managementcopy 2GC Limited 2001
Introducing the Balanced ScorecardTo find out morehellip
bullVisit 2GCrsquos Web Sitendash We focus specifically on strategic
control and performance measurement issues and have a wide range of working papers FAQs and presentations to download on these topics
ndash The site also has a recommended reading list that covers relevant topics and the ldquoWeblinksrdquo database of relevant Internet sites
bullContact 2GCndash Let us know if you have a question
you canrsquot answer wersquoll do what we can to helphellip
bull info2gccouk
- Introducing the Balanced Scorecard
- Structure of presentation
- General management issuesWhat is this all about
- General management issuesImplementing Strategic Goals
- General management issuesBarriers to effective performance management
- General management issuesRealising the need to change
- What is Balanced Scorecard
- What is a Balanced Scorecard
- What is a Balanced ScorecardBackground amp underlying philosophy
- What is a Balanced ScorecardDo what needs to get donehellip
- What is a Balanced ScorecardDifferent applications for Balanced Scorecard
- What is a Balanced ScorecardStrategic control vs Management control
- What is the Balanced Scorecard The latest Balanced Scorecard thinking
- What is Balanced ScorecardMore than just a set of goals amp measures
- Balanced Scorecard design
- Balanced Scorecard designWhere to go an how to get there
- Balanced Scorecard designMonitor progress in achieving goals
- Balanced Scorecard designThe components of a Strategic Balanced Scorecard
- Balanced Scorecard roll-out
- Balanced Scorecard Development Development within the organisation
- Balanced Scorecard DevelopmentDevelopment within the organisation
- Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
- Balanced Scorecard deployment
- Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
- Balanced Scorecard deployment Strategic alignment amp goal setting
- Balanced Scorecard deployment Align existing management control tools with strategy
- Balanced Scorecard deployment Support two-way communication of strategyhellip
- Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
- Success criteria
- Key success factorsCultural building blocks of Scorecard success
- Introducing the Balanced ScorecardTo find out morehellip
-
(V11) November 2001 Introducing the Balanced ScorecardPage 27
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Support two-way communication of strategyhellip
Fuzzy objectivesFuzzy objectives
Unjustified trust in informal
Unjustified trust in informal
feedback systems
feedback systemsEntren
ched m
easure
ment
Entren
ched m
easure
ment
system
s
system
s
BSC
(V11) November 2001 Introducing the Balanced ScorecardPage 28
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
Comm
unica
tion Com
munication
Board levelScorecard
process
OperationalScorecard
process
Support function Scorecard
process
Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets
Take action
Create amend
strategic vision
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
Communication
(V11) November 2001 Introducing the Balanced ScorecardPage 29
2GCActive
Managementcopy 2GC Limited 2001
Success criteria
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 30
2GCActive
Managementcopy 2GC Limited 2001
Key success factorsCultural building blocks of Scorecard success
bullInclusive design process building on consensus seeking amp involvement
bullParticipative management style focused on learning open discussion and creative thinking
bullSponsorship and commitment from entire management team -top management in particular
bullldquoEmbeddingrdquo of management processes to use refresh and renew the Balanced Scorecard over time
(V11) November 2001 Introducing the Balanced ScorecardPage 31
2GCActive
Managementcopy 2GC Limited 2001
Introducing the Balanced ScorecardTo find out morehellip
bullVisit 2GCrsquos Web Sitendash We focus specifically on strategic
control and performance measurement issues and have a wide range of working papers FAQs and presentations to download on these topics
ndash The site also has a recommended reading list that covers relevant topics and the ldquoWeblinksrdquo database of relevant Internet sites
bullContact 2GCndash Let us know if you have a question
you canrsquot answer wersquoll do what we can to helphellip
bull info2gccouk
- Introducing the Balanced Scorecard
- Structure of presentation
- General management issuesWhat is this all about
- General management issuesImplementing Strategic Goals
- General management issuesBarriers to effective performance management
- General management issuesRealising the need to change
- What is Balanced Scorecard
- What is a Balanced Scorecard
- What is a Balanced ScorecardBackground amp underlying philosophy
- What is a Balanced ScorecardDo what needs to get donehellip
- What is a Balanced ScorecardDifferent applications for Balanced Scorecard
- What is a Balanced ScorecardStrategic control vs Management control
- What is the Balanced Scorecard The latest Balanced Scorecard thinking
- What is Balanced ScorecardMore than just a set of goals amp measures
- Balanced Scorecard design
- Balanced Scorecard designWhere to go an how to get there
- Balanced Scorecard designMonitor progress in achieving goals
- Balanced Scorecard designThe components of a Strategic Balanced Scorecard
- Balanced Scorecard roll-out
- Balanced Scorecard Development Development within the organisation
- Balanced Scorecard DevelopmentDevelopment within the organisation
- Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
- Balanced Scorecard deployment
- Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
- Balanced Scorecard deployment Strategic alignment amp goal setting
- Balanced Scorecard deployment Align existing management control tools with strategy
- Balanced Scorecard deployment Support two-way communication of strategyhellip
- Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
- Success criteria
- Key success factorsCultural building blocks of Scorecard success
- Introducing the Balanced ScorecardTo find out morehellip
-
(V11) November 2001 Introducing the Balanced ScorecardPage 28
2GCActive
Managementcopy 2GC Limited 2001
Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
Comm
unica
tion Com
munication
Board levelScorecard
process
OperationalScorecard
process
Support function Scorecard
process
Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets Take action
Vision
ObjectivesReview ObjectivesReview
Balanced Scorecard
Measures amp targets
Take action
Create amend
strategic vision
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Createchange linked
strategic objectives
Review results and cause amp
effect assumptions
Balanced Scorecard
Developrevise measures amp
targets
Communication
(V11) November 2001 Introducing the Balanced ScorecardPage 29
2GCActive
Managementcopy 2GC Limited 2001
Success criteria
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 30
2GCActive
Managementcopy 2GC Limited 2001
Key success factorsCultural building blocks of Scorecard success
bullInclusive design process building on consensus seeking amp involvement
bullParticipative management style focused on learning open discussion and creative thinking
bullSponsorship and commitment from entire management team -top management in particular
bullldquoEmbeddingrdquo of management processes to use refresh and renew the Balanced Scorecard over time
(V11) November 2001 Introducing the Balanced ScorecardPage 31
2GCActive
Managementcopy 2GC Limited 2001
Introducing the Balanced ScorecardTo find out morehellip
bullVisit 2GCrsquos Web Sitendash We focus specifically on strategic
control and performance measurement issues and have a wide range of working papers FAQs and presentations to download on these topics
ndash The site also has a recommended reading list that covers relevant topics and the ldquoWeblinksrdquo database of relevant Internet sites
bullContact 2GCndash Let us know if you have a question
you canrsquot answer wersquoll do what we can to helphellip
bull info2gccouk
- Introducing the Balanced Scorecard
- Structure of presentation
- General management issuesWhat is this all about
- General management issuesImplementing Strategic Goals
- General management issuesBarriers to effective performance management
- General management issuesRealising the need to change
- What is Balanced Scorecard
- What is a Balanced Scorecard
- What is a Balanced ScorecardBackground amp underlying philosophy
- What is a Balanced ScorecardDo what needs to get donehellip
- What is a Balanced ScorecardDifferent applications for Balanced Scorecard
- What is a Balanced ScorecardStrategic control vs Management control
- What is the Balanced Scorecard The latest Balanced Scorecard thinking
- What is Balanced ScorecardMore than just a set of goals amp measures
- Balanced Scorecard design
- Balanced Scorecard designWhere to go an how to get there
- Balanced Scorecard designMonitor progress in achieving goals
- Balanced Scorecard designThe components of a Strategic Balanced Scorecard
- Balanced Scorecard roll-out
- Balanced Scorecard Development Development within the organisation
- Balanced Scorecard DevelopmentDevelopment within the organisation
- Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
- Balanced Scorecard deployment
- Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
- Balanced Scorecard deployment Strategic alignment amp goal setting
- Balanced Scorecard deployment Align existing management control tools with strategy
- Balanced Scorecard deployment Support two-way communication of strategyhellip
- Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
- Success criteria
- Key success factorsCultural building blocks of Scorecard success
- Introducing the Balanced ScorecardTo find out morehellip
-
(V11) November 2001 Introducing the Balanced ScorecardPage 29
2GCActive
Managementcopy 2GC Limited 2001
Success criteria
General General management management issuesissues
What is What is Balanced Balanced ScorecardScorecard
Balanced Balanced Scorecard Scorecard designdesign
Balanced Balanced Scorecard Scorecard developmentdevelopment
Balanced Balanced Scorecard Scorecard deploymentdeployment
Success Success criteriacriteria
(V11) November 2001 Introducing the Balanced ScorecardPage 30
2GCActive
Managementcopy 2GC Limited 2001
Key success factorsCultural building blocks of Scorecard success
bullInclusive design process building on consensus seeking amp involvement
bullParticipative management style focused on learning open discussion and creative thinking
bullSponsorship and commitment from entire management team -top management in particular
bullldquoEmbeddingrdquo of management processes to use refresh and renew the Balanced Scorecard over time
(V11) November 2001 Introducing the Balanced ScorecardPage 31
2GCActive
Managementcopy 2GC Limited 2001
Introducing the Balanced ScorecardTo find out morehellip
bullVisit 2GCrsquos Web Sitendash We focus specifically on strategic
control and performance measurement issues and have a wide range of working papers FAQs and presentations to download on these topics
ndash The site also has a recommended reading list that covers relevant topics and the ldquoWeblinksrdquo database of relevant Internet sites
bullContact 2GCndash Let us know if you have a question
you canrsquot answer wersquoll do what we can to helphellip
bull info2gccouk
- Introducing the Balanced Scorecard
- Structure of presentation
- General management issuesWhat is this all about
- General management issuesImplementing Strategic Goals
- General management issuesBarriers to effective performance management
- General management issuesRealising the need to change
- What is Balanced Scorecard
- What is a Balanced Scorecard
- What is a Balanced ScorecardBackground amp underlying philosophy
- What is a Balanced ScorecardDo what needs to get donehellip
- What is a Balanced ScorecardDifferent applications for Balanced Scorecard
- What is a Balanced ScorecardStrategic control vs Management control
- What is the Balanced Scorecard The latest Balanced Scorecard thinking
- What is Balanced ScorecardMore than just a set of goals amp measures
- Balanced Scorecard design
- Balanced Scorecard designWhere to go an how to get there
- Balanced Scorecard designMonitor progress in achieving goals
- Balanced Scorecard designThe components of a Strategic Balanced Scorecard
- Balanced Scorecard roll-out
- Balanced Scorecard Development Development within the organisation
- Balanced Scorecard DevelopmentDevelopment within the organisation
- Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
- Balanced Scorecard deployment
- Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
- Balanced Scorecard deployment Strategic alignment amp goal setting
- Balanced Scorecard deployment Align existing management control tools with strategy
- Balanced Scorecard deployment Support two-way communication of strategyhellip
- Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
- Success criteria
- Key success factorsCultural building blocks of Scorecard success
- Introducing the Balanced ScorecardTo find out morehellip
-
(V11) November 2001 Introducing the Balanced ScorecardPage 30
2GCActive
Managementcopy 2GC Limited 2001
Key success factorsCultural building blocks of Scorecard success
bullInclusive design process building on consensus seeking amp involvement
bullParticipative management style focused on learning open discussion and creative thinking
bullSponsorship and commitment from entire management team -top management in particular
bullldquoEmbeddingrdquo of management processes to use refresh and renew the Balanced Scorecard over time
(V11) November 2001 Introducing the Balanced ScorecardPage 31
2GCActive
Managementcopy 2GC Limited 2001
Introducing the Balanced ScorecardTo find out morehellip
bullVisit 2GCrsquos Web Sitendash We focus specifically on strategic
control and performance measurement issues and have a wide range of working papers FAQs and presentations to download on these topics
ndash The site also has a recommended reading list that covers relevant topics and the ldquoWeblinksrdquo database of relevant Internet sites
bullContact 2GCndash Let us know if you have a question
you canrsquot answer wersquoll do what we can to helphellip
bull info2gccouk
- Introducing the Balanced Scorecard
- Structure of presentation
- General management issuesWhat is this all about
- General management issuesImplementing Strategic Goals
- General management issuesBarriers to effective performance management
- General management issuesRealising the need to change
- What is Balanced Scorecard
- What is a Balanced Scorecard
- What is a Balanced ScorecardBackground amp underlying philosophy
- What is a Balanced ScorecardDo what needs to get donehellip
- What is a Balanced ScorecardDifferent applications for Balanced Scorecard
- What is a Balanced ScorecardStrategic control vs Management control
- What is the Balanced Scorecard The latest Balanced Scorecard thinking
- What is Balanced ScorecardMore than just a set of goals amp measures
- Balanced Scorecard design
- Balanced Scorecard designWhere to go an how to get there
- Balanced Scorecard designMonitor progress in achieving goals
- Balanced Scorecard designThe components of a Strategic Balanced Scorecard
- Balanced Scorecard roll-out
- Balanced Scorecard Development Development within the organisation
- Balanced Scorecard DevelopmentDevelopment within the organisation
- Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
- Balanced Scorecard deployment
- Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
- Balanced Scorecard deployment Strategic alignment amp goal setting
- Balanced Scorecard deployment Align existing management control tools with strategy
- Balanced Scorecard deployment Support two-way communication of strategyhellip
- Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
- Success criteria
- Key success factorsCultural building blocks of Scorecard success
- Introducing the Balanced ScorecardTo find out morehellip
-
(V11) November 2001 Introducing the Balanced ScorecardPage 31
2GCActive
Managementcopy 2GC Limited 2001
Introducing the Balanced ScorecardTo find out morehellip
bullVisit 2GCrsquos Web Sitendash We focus specifically on strategic
control and performance measurement issues and have a wide range of working papers FAQs and presentations to download on these topics
ndash The site also has a recommended reading list that covers relevant topics and the ldquoWeblinksrdquo database of relevant Internet sites
bullContact 2GCndash Let us know if you have a question
you canrsquot answer wersquoll do what we can to helphellip
bull info2gccouk
- Introducing the Balanced Scorecard
- Structure of presentation
- General management issuesWhat is this all about
- General management issuesImplementing Strategic Goals
- General management issuesBarriers to effective performance management
- General management issuesRealising the need to change
- What is Balanced Scorecard
- What is a Balanced Scorecard
- What is a Balanced ScorecardBackground amp underlying philosophy
- What is a Balanced ScorecardDo what needs to get donehellip
- What is a Balanced ScorecardDifferent applications for Balanced Scorecard
- What is a Balanced ScorecardStrategic control vs Management control
- What is the Balanced Scorecard The latest Balanced Scorecard thinking
- What is Balanced ScorecardMore than just a set of goals amp measures
- Balanced Scorecard design
- Balanced Scorecard designWhere to go an how to get there
- Balanced Scorecard designMonitor progress in achieving goals
- Balanced Scorecard designThe components of a Strategic Balanced Scorecard
- Balanced Scorecard roll-out
- Balanced Scorecard Development Development within the organisation
- Balanced Scorecard DevelopmentDevelopment within the organisation
- Balanced Scorecard DevelopmentldquoContractualrdquo agreement between management teams
- Balanced Scorecard deployment
- Balanced Scorecard deploymentldquoAchieving strategic goals requires activityrdquo
- Balanced Scorecard deployment Strategic alignment amp goal setting
- Balanced Scorecard deployment Align existing management control tools with strategy
- Balanced Scorecard deployment Support two-way communication of strategyhellip
- Balanced Scorecard deployment Everybody crafts amp monitors strategy all the timehellip
- Success criteria
- Key success factorsCultural building blocks of Scorecard success
- Introducing the Balanced ScorecardTo find out morehellip
-