"upgrade is needed" indicator for your business scorecard

“UPGRADE IS NEEDED” INDICATOR FOR YOUR

BALANCED SCORECARD Based onwww.bscdesigner.com/upgrade-is-needed-indicator-for-bsc.htm

By Aleksey Savkin

BSC DESIGNER

MOST STUFF HAS AN EXPIRATION DATE

• Milk’s “best before” date

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• Milk’s “best before” date

• Expiration date on the pack of medicine



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• Helps consumers to get a rough idea about the condition of the product



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• Helps consumers to get a rough idea about the condition of the product

• Avoid buying something spoiled



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• This idea can be applied to any product, especially to those ones that depend on changing environments.



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THE REASONS OF THIS IDEA

• The product design and functions are getting out of the date



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• User’s requirements change



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• User’s requirements change• Technologies suggest new opportunities



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EXAMPLES OF THIS IDEA

• According to analysis done by Infonetics, a brand new smart phone will be upgraded in 7-9 months (prepaid users) or in 18 to 20 months (postpaid users);



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EXAMPLES OF THIS IDEA

• According to analysis done by Infonetics, a brand new smart phone will be upgraded in 7-9 months (prepaid users) or in 18 to 20 months (postpaid users);

• According to Forbes an average car in the U.S. is now over 10 years old.



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WHAT ABOUT THE BALANCED SCORECARD?

• The implementation of the business system can have an expiration date as well.



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WHAT ABOUT THE BALANCED SCORECARD?

• The implementation of the business system can have an expiration date as well.

• A Balanced Scorecard, as any other product based on changing business conditions, has a “best before” date.



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A DETAILED UPDATED PLAN FOR THE BALANCED SCORECARD

Source: www.bscdesigner.com | Illustrations: pixabay.com

BALANCED SCORECARD CAR ANALOGY

1BSC prototypeMany companies start with a prototype of the business scorecard.

The car that you drove when you got your driving license




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2Operational update of the BSC Updating KPIs' values;Adding new action plans;Reporting back to the system.

Fill car's tank with fuel




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3Maintenance of the BSCAn upgrade of the KPIs to ones more suitable.

Check your engine and change oil




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3Maintenance of the BSCAn upgrade of the KPIs to ones more suitable.

Check your engine and change oil

4Rethink your scorecardUpdate a business strategy of your company and, as a result, you need to upgrade your Balanced Scorecard.

It is time to buy a new car!




WE’D BETTER CALL IT “UPGRADE DATE”

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• With consumer products “expiration” or “best before” date means that after this date the product is in a bad condition and you should not buy or use it.



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• In this sense the Balanced Scorecard (as a business concept) probably has some kind of expiration date, but

• it depends a lot on new breakthroughs in management science.



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• When we tell someone that the business scorecard is out of date we don’t mean that we need to get rid of it.



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• When we tell someone that the business scorecard is out of date we don’t mean that we need to get rid of it.

• What we mean is that this scorecard needs to be upgraded.



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• Let’s go ahead with a scorecard upgrade plan. An analogy with a car will help.



BSC PROTOTYPE. THE CAR THAT YOU DROVE WHEN YOU GOT YOUR DRIVING LICENSE.

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BSC PROTOTYPE

• Many companies start with a prototype of the business scorecard.



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BSC PROTOTYPE


• In most cases it is a spreadsheet in MS Excel.



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BSC PROTOTYPE


• In most cases it is a spreadsheet in MS Excel.• It is hard to maintain and is actually a set of

indicators focused on measurement, rather than on management.



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BSC PROTOTYPE

• You will find out that this scorecard doesn’t meet the growing requirements of your business.



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THE CAR THAT YOU DROVE WHEN YOU GOT YOUR DRIVING LICENSE

• It can be compared to a first car that one drives right after getting a driving license.



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• It can be compared to a first car that one drives right after getting a driving license.

• You sell your first car and buy a new one that is more suitable for a more experienced driver



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• If you started something in Excel it will be really hard to upgrade it to the professional performance management software



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• If you started something in Excel it will be really hard to upgrade it to the professional performance management software

• An upgrade is less painful if you started with a free BSC Designer Light, which can be later upgraded to Standard or Pro editions.



OPERATIONAL UPDATE OF THE BSC. FILL CAR’S TANK WITH FUEL.

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OPERATIONAL UPDATE OF THE BSC

• Updating KPIs’ values;



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• Updating KPIs’ values;• Adding new action plans;



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• Updating KPIs’ values;• Adding new action plans;• Reporting back to the system.



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FILL CAR’S TANK WITH FUEL

• You just need to keep an eye on its fuel level and fill the car’s tank with fuel (feed your BSC with data) regularly.



MAINTENANCE OF THE BSC. CHECK YOUR ENGINE AND CHANGE OIL.

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CHECK YOUR ENGINE AND CHANGE OIL

• Car manufacturers suggest that trained mechanics should examine your car regularly.



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CHECK YOUR ENGINE AND CHANGE OIL

• Car manufacturers suggest that trained mechanics should examine your car regularly.

• Any complex system needs to be revised regularly.



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MAINTENANCE OF THE BSC

• Upgrade of the KPIs to ones more suitable



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MAINTENANCE OF THE BSC

• Upgrade of the KPIs to ones more suitable• Upgrade of guiding policies derived from

strategy



RETHINK YOUR BUSINESS SCORECARD. IT IS TIME TO BUY A NEW CAR!

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IT IS TIME TO BUY A NEW CAR

• A better paid job, a new house, or need to participate in school run program



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IT IS TIME TO BUY A NEW CAR

• A better paid job, a new house, or need to participate in school run program

• Your environment and priorities have changed, so you think about buying a new car.



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RETHINK YOUR BUSINESS SCORECARD

• You need to update a business strategy of your company and, as a result, you need to upgrade your Balanced Scorecard.



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Besides major market shakes there are some less obvious drivers of the strategy change:



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• It might be as simple as the complete execution of the current strategic plan or…



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• It might be as simple as the complete execution of the current strategic plan or…

• New people with new points of view came into your team; you need to upgrade your strategy taking in account their experience.



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WHAT BUSINESS TOOL DO YOU USE TO MAKE DECISIONS?

• If you find that your team uses BSC less and less, then the scorecard needs to be upgraded.



HOW OFTEN DO YOUR UPGRADE YOUR SCORECARD? HOW OFTEN DO YOU BUY A NEW

CAR?

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HOW OFTEN DO YOUR UPGRADE YOUR SCORECARD?

• Frequent upgrades of the BSC are the sign that the scorecard is not “strategic” enough.



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HOW OFTEN DO YOUR UPGRADE YOUR SCORECARD?

• Frequent upgrades of the BSC are the sign that the scorecard is not “strategic” enough.

• The general recommendation would be to look at major market shakes and their regularity.



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ONLINE BUSINESS EXAMPLE

• In the online business rules change fast.• It makes sense to revise your with each major

Google upgrade.• At least the parts that are responsible for

content and search engine marketing



“UPGRADE NEEDED” INDICATOR FOR YOUR SCORECARD

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YOUR CAR TELLS YOU WHEN THE MAINTENANCE IS NEEDED

Your car tells you when the maintenance is needed.




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YOUR CAR TELLS YOU WHEN THE MAINTENANCE IS NEEDED

Incorporate an "update needed" indicator in your scorecard.

Your car tells you when the maintenance is needed.




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INCORPORATE AN “UPDATE NEEDED” INDICATOR IN YOUR SCORECARD

• It might be programmed to attract your attention in a 12 month period



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• You might want to have an alert when selected KPIs achieve their specified values.



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• You might want to have an alert when selected KPIs achieve their specified values.

• Adding a kind of a “time capsule” in the description field of this indicator.



MAIN TAKEAWAYS

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MAIN TAKEAWAYS

• Balanced scorecard has an expiration date; it need to be revised and upgraded regularly;



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MAIN TAKEAWAYS

• Balanced scorecard has an expiration date; it need to be revised and upgraded regularly;

• Balanced scorecard is a derivative of a strategy; once the strategy is revised, the scorecard needs to be revised as well;



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MAIN TAKEAWAYS

• When things change, there might be external factors (competitors, market regulators, technologies) as well as internal ones (your team, new experience);



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MAIN TAKEAWAYS

• When things change, there might be external factors (competitors, market regulators, technologies) as well as internal ones (your team, new experience);

• Add an “Upgrade is needed” indicator to your scorecard with a “time capsule” in the description; in this way you will be prepared for the next upgrade.



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MORE ABOUT THE BALANCED SCORECARD

Find more insightful articles about the Balanced Scorecard in ”Articles” section at www.bscdesigner.com

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http://www.bscdesigner.com/balanced-scorecard-articles.htm



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THANK YOU!

Feel free to send us your questions using the contact form at www.bscdesigner.com



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