COMP 3001 Technology Management Professional Issues Project Management

COMP 3001 Technology Management & Professional Issues: Project Management Balanced Scorecard lecture 3 b Graham Collins, UCL graham. collins@ucl. ac. uk

The Balance Scorecard - Kaplan and Norton q Why- managers do not want to select between financial and operational- they want a balanced perspective q 4 measures, one financial and three operational (customer satisfaction, internal processes, and the organisation’s ability to learn) i. e. drivers behind financial performance. ©Graham Collins 2003

The Balanced Scorecard Links Performance Measures Financial Perspective How do customers see us? Goals Measures What must we excel at? Customer Perspective Goals How do we look to shareholders? Internal Business Perspective Measures Goals Measures Innovation and Learning Perspective Goals Measures Can we continue to improve and create value? ©Graham Collins 2003

Balanced Business Scorecard Financial Perspective Goals Measures Survive Cash flow Succeed Quarterly sales growth and operating income by division Prosper Increased market share and ROE ©Graham Collins 2003

Balanced Business Scorecard Customer Perspective Goals New products Measures Percentage of sales from new products Percentage of sales from proprietary products Responsive supply On-time delivery (defined by customer) Preferred supplier Share of key accounts’ purchases ©Graham Collins 2003

Strategic Objectives The vision Strategy ‘As our customers’ preferred provider, we shall be the industry leader’ Services that surpass needs customer satisfaction Continuous improvement. . . Financial Return on Capital, Cash flow, project profitability Customer Value for money, competitive price, innovation Internal Shape customer requirement, tender effectiveness Growth Continuous improvement, product and service innovation, empowered work force ©Graham Collins 2003

Begin by Linking Measurement to Strategy What is my vision of the future? If my vision succeeds, how will I differ? (perspectives) To my Shareholders Statement of vision To my Customers With my Internal Management Processes With my ability to innovate and grow The critical success factors What are the critical measurements? The Balanced Scorecard ©Graham Collins 2003

Building a Balanced Scorecard q Preparation q Interviews: First round q Executive workshop: First round q Interviews: Second round q Executive workshop: Second and third round q Implementation q Periodic reviews ©Graham Collins 2003

Translating Vision and Strategy: Four Perspectives To succeed financially, how should we appear to our shareholders? Measures Targets Financial Customer Vision and Strategy Objectives Initiatives Internal Business Process Learning and Growth ©Graham Collins 2003

Managing Strategy: Four Processes Translating the vision Clarifying the vision Gaining consensus Communicating and Linking Feedback and Learning Setting goals Articulating the shared vision, supplying strategic feedback Linking rewards to performance measures Facilitating strategy review and learning Communicating and educating Balanced Scorecard Business Planning Setting targets Aligning strategic initiatives Allocating resources ©Graham Collins 2003

Building a strategic management system 1. Clarify the vision 2. Communicate to middle managers 3. Develop business unit scorecards 4. Eliminate non-strategic investments 5. Launch corporate change programmes 6. Review business unit scorecards 7. Refine vision 8. Communicate the Balanced Scorecard to the entire company 9. Establish individual performance objectives 10. Update Long-range plan and budget 11. Conduct monthly and quarterly reviews 12. Conduct annual strategy review, link everyone’s performance to the balanced scorecard ©Graham Collins 2003

Further reading The Balanced Scorecard Robert Kaplan & David Norton Harvard Business School Press 1996 ISBN 0 -87584 -651 -3