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The Balanced Scorecard

Client Situation: Our client asked Endeavor Management to develop, for the division and for each business unit, business objectives and key measures visibly tied to corporate strategic goals, specifically addressing:

• The creation of new opportunities for increasing profitability
• Structure and maintenance of processes which add value to customers in a profitable way for the company
• The ability to track division revenue contributions by business unit (as part of division value chain)

A secondary objective was to improve the level of teamwork between the divisions.

Endeavor Management Solution: Endeavor worked with the Executive Team to devise an approach and process to provide the decision-makers with:

• Guidance, business perspective and understanding to put each "deal" into context of how it will contribute to overall profitability
• Critical information and skills to control profitability at the individual deal and enterprise level

The goal was to enable the organizations to make "best decisions" for the company shareholders, employees and its customers. Endeavor and the client team members focused on first clarifying responsibilities and accountability to ensure that there would be ownership of the decisions that would ultimately be made. In some cases, decisions being made by one group would have an impact on the performance measures of another group. This situation called for a mechanism to build trust and confidence between the parties in order to elicit support for implementing any significant changes in the current processes.  

The Balanced Scorecard was chosen as the technique to create an information-based management tool to translate the strategic objectives into a coherent set of performance measures. Working with the client's project leader, a Project Sponsor and Core Working Group was identified. The team elected to pursuing the project objectives through a series of Core Group sessions aimed at:

• Validating the division strategic objectives
• Defining and/or redefining division level business units required to implement the strategy
• Establishing business unit objectives and critical success factors
• Identifying key performance measures at both the division and business unit levels
• Setting short and long term performance targets for the division and business units

A variety of barriers were encountered. These included the existence of non-compatible systems, operational process differences and a history of mistrust. The team first focused on creating a common framework for conducting a meaningful dialogue and to enable consensus building.

To this end, Endeavor Management and the group developed a Balanced Scorecard template addressing financial, operational, customer-focused and learning measures for the company, business unit, sub-business units and individual.  Defining and rolling out the Scorecard elements was used across the organization as a forum to:

1. Communicate strategy for increasing profitability and performance
2. Link objectives to long term targets and annual budgets
3. Evaluate and align currently ongoing strategic business and change initiatives
4. Align departmental and personal performance goals to strategy
5. Clarify and gain consensus about required changes in operational processes
6. Obtain feedback to improve strategy comprehension within the organization

Having established an accepted Scorecard, the team then began the implementation process of. The implementation phase would require changes in operational procedures, information systems, management systems and resource allocations.

Results and Benefits: The project was recognized as one the first times that the organization was able to build a lasting consensus concerning strategic and operational issues related to ensuring profitability from the time a transaction is made to the time it is recognized at the corporate performance level.

Significant cultural issues perceived to be major barriers, were addressed and mitigated through the process.  This has helped to create a more credible environment for decision making where the impact is born by another part of the organization.

The balanced scorecard has been successfully implemented and continues to be supported.