Balanced Scorecard Quick Guide April, 2010. Basics & Best Practices Terminologies Balanced Scorecard Quick Guide

Balanced Scorecard Quick Guide

April, 2010

Basics & Best Practices Terminologies


Booz & Company28 March 2009

In addition, Strategic & Business Planning relies on well-defined, best practice terminology

Strategic & Business Planning Process Key Terminology

Units

Key Performance Indicators (KPI)

Goal

Objective

Strategy

Initiative

Any Business or Functional Unit. According to the new organization structure, GACA has five Business Units (KKIA, KAIA, KFIA, Domestic Airports and ANS) and five Functional Units (Corporate Core, IT, Finance, Human Resources, Internal Audit) and a Safety and Economic Regulation function1

A measure used to monitor how well a business is achieving its quantifiable objectives. KPIs are found at both the strategic (assets turnover, customer satisfaction index) or operational levels (e.g. traffic volume)

Long-term target value (a number) of KPI; set to be attained after five years

Short-term target value (a number) of KPI; set to be attained in one year

A means or action that will lead to the achievement of a goal (five years ahead)

A means or action that will lead to the achievement of the objective (one years ahead). A set of initiatives form a strategy


Contents

• BSC general work flow• Internal Scanning Summary • External Analysis Summary • SWOT Analysis Summary • Strategy Mapping Summary • KPIs Setting Summary • Targets Setting Summary • Initiatives Setting Summary • BSC Dashboard Summary • Performance Assessment Summary


Now



One Of The Best Practices For BSC Work Flow

1. Internal Scanning

2. External Scanning

3. SWOT Analysis

4. Strategy Mapping

6. Targets Setting

5. KPIs Setting

7. Initiatives Setting

9. Performance Monitoring

8. BSC Dashboard


Now



Internal Scanning Summary

IntroductionInternal scanning is a strategic planning technique that helps in determining the firm’s strengths and weaknesses and any related issues inside the firm

Purpose• Knowing firm’s strengths and weaknesses• Getting exposed to the firm’s processes and chain of commands

Suitable Techniques

The following techniques are suitable to serve the internal scanning purpose:• Value Chain Analysis• Capability Assessment

Expected Outcomes

Once the internal scanning is done, it is expected to have:• Firm’s strengths • Firm’s weaknesses • Firm’s processes and value transferred from each process to another • potentials for improvements


Now

• BSC general work flow• Internal Scanning Summary

– Related Templates • External Analysis Summary • SWOT Analysis Summary • Strategy Mapping Summary • KPIs Setting Summary • Targets Setting Summary • Initiatives Setting Summary • BSC Dashboard Summary • Performance Assessment Summary


Value Chain Analysis

Activity A

Key Responsibilities




Activity B Activity C Activity D

Value transferred Value transferred Value transferred Value transferred

Template


Capability Assessment

Organization Readiness (%)

People Readiness (%)

Process Readiness (%)

System Readiness (%)

Evidence and Comments

Activity A

Activity B

Activity C

Activity D

Template


Now



External Scanning Summary

IntroductionExternal scanning is a strategic planning technique that helps in determining the firm’s opportunities and threats and any related issues outside the firm

Purpose• Knowing firm’s opportunities and threats • Getting exposed to the firm’s competitors and market changes

Suitable Techniques

The following techniques are suitable to serve the external scanning purpose:• Industry Trends• Porter 5 Forces Model

Expected Outcomes

Once the external scanning is done, it is expected to have:• Firm’s opportunities • Firm’s threats • New trends and demands • potentials for investments and competitive advantages


Now

• BSC general work flow• Internal Scanning Summary• External Analysis Summary

– Related Templates • SWOT Analysis Summary • Strategy Mapping Summary • KPIs Setting Summary • Targets Setting Summary • Initiatives Setting Summary • BSC Dashboard Summary • Performance Assessment Summary


Corporate Industry Trends

Trend Description Supporting Evidence ImplicationsTrend A

Trend B

Trend A

Trend B

Trend A

Trend B

Trend A

Trend B

Trend A

Trend B

Com

petiti

ve

Tren

dsM

arke

t Tr

ends

Regu

lato

ry

Tren

dsTe

chno

logy

Tr

ends

Oth

er

Tren

ds

Template


FocalFirm

Buyers

Suppliers

Entry

Rivalry

Substitutes

Complementors

DemographicTrends

TechnologicalChange

CulturalTrends

EconomicClimate

Legal/PoliticalConditions

SpecificInternational

Events

Industry

General External Environment

Template


Now



SWOT Summary

Introduction SWOT is a strategic planning technique that helps in determining the firm’s strategic directions and priories

PurposeKnowing what strategies will sustain the growth of the firm and what will be done in order to extract advantaged over the competitors

Suitable Techniques

The following techniques are suitable to serve the SWOT purpose:• SWOT Matching

Expected Outcomes

Once the SWOT is done, it is expected to have:• Firm’s strategic directions and priorities


Now

• BSC general work flow• Internal Scanning Summary• External Analysis Summary • SWOT Analysis Summary

– Related Templates • Strategy Mapping Summary • KPIs Setting Summary • Targets Setting Summary • Initiatives Setting Summary • BSC Dashboard Summary • Performance Assessment Summary


SWOT SummaryEx

tern

al F

acto

rsO

ppor

tuni

ties

Thre

ats

Internal FactorsStrengths Weaknesses

1. Internal Strengths Matched with External Opportunities … … … …

2. Internal Weaknesses Relative to External Opportunities … … … …

3. Internal Strengths Matched with External Threats … … … …

4. Internal Weaknesses Relative to External Threats … … … …

Template


Leverage the planned expansion for Jeddah airport to attract the growing charter market in the region

SO1

SO2

SO1

WO1

WO2

WO3

WT2

SWOT Analysis

Explore New Market Segments

to Expand Revenue Base

Strategic Priorities1

2

3

SO ST

WO WT

WO4

WO5

WO6

Template


Now



Strategy Mapping Summary

IntroductionStrategy mapping is a strategic planning technique that helps in representing the firm’s strategies in such a way that shows the cause and effect of each strategy

PurposeTo ensure that each strategy does really serve a specific other strategy, and the overall strategies serve and feed the firm's vision

Suitable Techniques

The following techniques are suitable to serve the strategy mapping purpose:• Strategy Map

Expected Outcomes

Once the strategy mapping is done, it is expected to have:• Firm’s strategy map


Now

• BSC general work flow• Internal Scanning Summary• External Analysis Summary • SWOT Analysis Summary • Strategy Mapping Summary

– Related Templates • KPIs Setting Summary • Targets Setting Summary • Initiatives Setting Summary • BSC Dashboard Summary • Performance Assessment Summary


LEARNING AND GROWTHPERSPECTIVE

INTERNALPERSPECTIVE

CUSTOMERPERSPECTIVE

FINANCIALPERSPECTIVE

VISION

Template


Now



KPIs Setting Summary

IntroductionKPIs (Key Performance Indicators) are measures that indicate how is the progress of strategic objectives and targets achievements

PurposeTo indicate and alarm the management for strategy and targets achievements or deviations

Suitable Techniques

•KPIs Profile• Benchmarking • KPIs Libraries

Expected Outcomes

Once the KPIs setting is done, it is expected to have:• Firm’s KPIs• KPIs definitions & frequency of review •KPIs formulas • Strategic objectives that are measures by specific KPIs• KPIs owners


Now

• BSC general work flow• Internal Scanning Summary• External Analysis Summary • SWOT Analysis Summary • Strategy Mapping Summary• KPIs Setting Summary

– Related Templates • Targets Setting Summary • Initiatives Setting Summary • BSC Dashboard Summary • Performance Assessment Summary


Definition

Definition

Definition

Definition

KPI Definition

X+Y = Z

X+Y = Z

X+Y = Z

X+Y = Z

KPI Formula

W/M/Q/S/A

W/M/Q/S/A

W/M/Q/S/A

W/M/Q/S/A

Frequency

Name / Dept.

Name / Dept.

Name / Dept.

Name / Dept.

Owner

Template


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Targets Setting Summary

Introduction Targets are those values (determined in each KPI) that the management wants to achieve within a certain time

PurposeTo make the KPIs and the measurement more quantifiable and measureable

Suitable Techniques

• Benchmarking • Forecasting • Feasibility studies • Market Research

Expected Outcomes

Once the targets setting is done, it is expected to have:• KPIs targets • Targets values & units


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Initiatives Setting Summary

Introduction Are those actions that are predesigned and dedicated to achieve the determined targets and to activate specific KPIs

Purpose To help the firm achieving strategic objectives

Suitable Techniques

• Benchmarking •Feasibility studies • Market Research • R&D

Expected Outcomes

Once the initiatives setting is done, it is expected to have:• Strategic plan initiatives • Owners


Now

• BSC general work flow• Internal Scanning Summary• External Analysis Summary • SWOT Analysis Summary • Strategy Mapping Summary• KPIs Setting Summary • Targets Setting Summary • Initiatives Setting Summary

– Related Templates • BSC Dashboard Summary • Performance Assessment Summary


Strategic Priority A

Strategic Priority B

Strategic Priority C

Strategic Priority D

Strategic Priority

1. KPI12. KPI23. KPI3




KPI

VALUE (unit)

VALUE (unit)

VALUE (unit)

VALUE (unit)

Target

1. Action A2. Action B3. Action C




Initiative

Template


Now



BSC Dashboard Summary

Introduction It is a simple visualization of the firm’s performance

Purpose To help the management taking decisions and being up to date with the firm’s overall performance

Suitable Techniques

• MS Power Point Presentation • MS Excel• other software

Expected Outcomes

Once the BSC dashboard is done, it is expected to have:• Projected BSC perspectives and firm's strategic priorities with notifying designs


Now

• BSC general work flow• Internal Scanning Summary• External Analysis Summary • SWOT Analysis Summary • Strategy Mapping Summary• KPIs Setting Summary • Targets Setting Summary • Initiatives Setting Summary • BSC Dashboard Summary

– Related Templates • Performance Assessment Summary


Internal Processes Dimension Indicators


% (Actual / Target)

% (Actual / Target)

Learning & Growth Dimension Indicators

Learning & Growth Dimension Indicators

% (Actual / Target)

% (Actual / Target)

Financial Dimension Indicators

Financial Dimension Indicators

Actual < 90% of Target

90% of Target < Actual < 100% of Target

Actual >= 100% of Target

% (Actual / Target)

% (Actual / Target)



% (Actual / Target)

% (Actual / Target)

Template


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Performance Assessment Summary

Introduction It is a systematic examination of the whole strategic plan and its achievements and implications

Purpose Contiguous learning and improvement

Suitable Techniques

• Cause& Effect • systematic inspections and assessment• Corrective planning • Preventive planning • Lessons Learned

Expected Outcomes

Once the performance assessment is done, it is expected to have:• Performance assessment reports


Now

• BSC general work flow• Internal Scanning Summary• External Analysis Summary • SWOT Analysis Summary • Strategy Mapping Summary• KPIs Setting Summary • Targets Setting Summary • Initiatives Setting Summary • BSC Dashboard Summary • Performance Assessment Summary

– Related Templates Balanced Scorecard

Quick Guide

External FactorsExternal Factors DescriptionDescriptionAA

XX

Internal FactorsInternal Factors

Operational LeverOperational Lever Root CauseRoot Cause Corrective Action PlanCorrective Action Plan11

22

XX

% Plan Completed% Plan Completed

30%

04/0909/08

33%

01/0911/08

80%

w%

dd/yydd/yy

Template


KPI(Target Unit)KPI(Target Unit)

6 5 48

30

0

10

20

30

40

M-3 M-2 M-1 Current Month Cumulative To Date0

10

20

30

40

Actual Target

CommentsComments

Summary of drivers for performance

Summary of actions taken to rectify any variance

Summary of drivers for performance

Summary of actions taken to rectify any variance

Overall StatusOverall Status

Based on both current performance and on cumulative-to-date performanceBased on both current performance and on cumulative-to-date performance

Gap =< -10% of Target -10% of Target < Gap < 0% of Target Gap >= 0% of Target

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Balanced Scorecard Quick Guide April, 2010. Basics & Best Practices Terminologies Balanced Scorecard Quick Guide