stratergy maps

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Building Balanced ScorecardBuilding Balanced Scorecard

Strategy MapsStrategy Maps

A Strategic Communication Tool A Strategic Communication Tool

Memphis Area Engineering and Sciences ConferenceMemphis Area Engineering and Sciences Conference

May 11, 2001May 11, 2001

Paul Babin & DougPaul Babin & Doug GeyerGeyer



BSCBSC -- Management TrendManagement Trend

❂❂ Popular (Popular (BestsellingBestselling) book by Norton &) book by Norton &Kaplan published by Harvard BusinessKaplan published by Harvard Business

❂❂ Latest book “The Strategy FocusedLatest book “The Strategy FocusedOrganization” on the must read listOrganization” on the must read list

❂❂ Useful tool for Strategy DeploymentUseful tool for Strategy Deployment

❂❂ Useful also for the rest of us to understandUseful also for the rest of us to understand

the strategy and where we fit in.the strategy and where we fit in.



What is the BSC ?What is the BSC ?

❂❂ The Balanced ScorecardThe Balanced Scorecard•• A strategic management tool A strategic management tool

•• Enhances traditional company performanceEnhances traditional company performance

system with four perspectives:system with four perspectives:

– – FinancialFinancial

– – CustomerCustomer

– – Internal Business ProcessInternal Business Process

– – Learning & GrowthLearning & Growth



II. StrategyII. Strategy

❂❂ Hypothesis of cause and effectHypothesis of cause and effect

•• If we improve our on time deliveryIf we improve our on time delivery -- then thethen thecustomer will come to depend on uscustomer will come to depend on us -- andand

become a loyal customer.become a loyal customer.

•• Customer loyalty will help improve ourCustomer loyalty will help improve ourprofitability.profitability.



The Strategy MapThe Strategy Map

Improve

Profitability

Improve

Profitability

Customer

Loyalty

Customer

Loyalty

On TimeDelivery

On TimeDelivery

BSC Perspectives

Financial

Customer

Internal Business Process

Learning & Growth



BSC Strategy MapBSC Strategy Map

Measurements Targets InitiativesStrategy



Interactive IllustrationInteractive Illustration

❂❂ Strategy Maps look complicatedStrategy Maps look complicated -- unlessunless

you created them you created them -- then they look clear!then they look clear!

❂❂ Lets create one together:Lets create one together:

❂❂ Company : A growing publicly heldCompany : A growing publicly held

overnight package delivery serviceovernight package delivery service -- with with

big plansbig plans



Financial PerspectiveFinancial Perspective

❂❂ Brainstorm : 1 minuteBrainstorm : 1 minute

❂❂ What are the important FinancialWhat are the important Financial

Perspective Objectives for this servicePerspective Objectives for this servicecompany ?company ?



Customer PerspectiveCustomer Perspective

❂❂ BrainstormBrainstorm -- 1 minute1 minute

❂❂ What are the important strategies we needWhat are the important strategies we need

in place to achieve our financial goal ofin place to achieve our financial goal of

profitability growth ?profitability growth ?



Internal Business ProcessInternal Business Process

PerspectivePerspective

❂❂ BrainstormBrainstorm -- 2 minutes2 minutes

❂❂ What are the Internal Business ProcessesWhat are the Internal Business Processes

at which we need to excel to be able toat which we need to excel to be able to

build Customer Loyalty through Onbuild Customer Loyalty through On--timetime

Delivery ?Delivery ?



Learning & Growth PerspectiveLearning & Growth Perspective

❂❂ BrainstormBrainstorm -- 2 minutes2 minutes

❂❂ What are the Learning and GrowthWhat are the Learning and Growth

objectives we need to be able to improveobjectives we need to be able to improve

process quality and process cycle time (toprocess quality and process cycle time (to

allow onallow on--time delivery to build customertime delivery to build customerloyalty and profitable growth) ?loyalty and profitable growth) ?



Finished Strategy MapFinished Strategy Mapsimplifiedsimplified

Profitable Growth

Customer Loyalty

On-time Delivery

ProcessCycle Time

ProcessQuality

Employee Skills



Completing the BSC StrategyCompleting the BSC Strategy

MapMap

❂❂ Take the strategyTake the strategy

❂❂ Identify Measures & TargetsIdentify Measures & Targets

❂❂ Organize Improvement Initiatives to driveOrganize Improvement Initiatives to drive

improvements that will be visible in theimprovements that will be visible in themeasures.measures.



Developing MeasuresDeveloping Measures

❂❂ For each important strategic “piece”For each important strategic “piece”❂❂ Identify measuresIdentify measures

•• Lead & LagLead & Lag

❂❂ This will require analysisThis will require analysis

Cycle Time

Queue Speed Interferences VA/NVA Study



Developing InitiativesDeveloping Initiatives

❂❂ Pick projects with high leveragePick projects with high leverage -- highhighimpact to the strategic initiativeimpact to the strategic initiative

Interference

Study

Capital

Equipment

Operator

Training

Cycle Time



BSC Strategy MapBSC Strategy Map

Measurements Targets InitiativesStrategy

Cycle

Time

Cycle

Time

•Queue Size (Lag)

•Speed (Lag)

•Interferences (Lead)

•Interference

Study

•Operator Training



What have we got with theWhat have we got with the

completed Strategy Map ?completed Strategy Map ?

❂❂ A way to tie initiatives to what’s important A way to tie initiatives to what’s important

to the company.to the company.

❂❂ A clear way to understand the context of the A clear way to understand the context of the

strategy.strategy.

❂❂ A clear way to communicate the impact of A clear way to communicate the impact of

this initiative.this initiative.



BSC Strategy Map ConclusionBSC Strategy Map Conclusion

❂❂ A simple graphical tool A simple graphical tool

❂❂ Appeal to engineers Appeal to engineers

❂❂ Cause and effectCause and effect

❂❂ Understand and communicate the strategyUnderstand and communicate the strategy

❂❂ Show how what we’re doing fits inShow how what we’re doing fits in

❂❂ Fun and easy!Fun and easy!

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