Balanced Scorecard Designer

10 questions to Balanced Scorecard Expert Jeroen De Flander – author Strategy Execution Heroes and director at The Performance Factory

1.    Please, summarize in few words what is your expertise and background with Balanced Scorecard.

I’m the co-founder of the performance factory – a company specialized in strategy execution and the author of Strategy Execution Heroes. And I have been working with the Balanced Scorecard right from the start in the ‘90 and implemented the technique in over 50 companies. I used to be the responsible manager worldwide of the Balanced Scorecard product line for Arthur D. Little – a leading strategy consulting firm.

2.    It is known that Balanced Scorecard is used by more than 50% of Fortune companies. Do you think this concept is for big companies only?

The Balanced Scorecard can – and should – be used by both small and large organizations. The concept however should be adapted to the needs of the organization. You don’t need a canon to kill a fly.

3.    While BSC concept is popular now, what other business performance measurement concepts can you recommend for companies to consider?

We promote the 8, a strategy execution framework that also includes the Balanced Scorecard. You can read more about the 8 on our website.

4.    Please, share your opinion about key ideas that should be kept in mind for successful implementation of BSC?

Many companies have gone through the process of introducing a scorecard. It’s a good idea to do some research to get a feeling for your organization’s particular situation. This will help you avoid some of the classic pitfalls.
Here’s my list of 8 typical mistakes you should avoid:

1. Senior management is not convinced and shows little commitment
2. The scorecard is developed by ‘the happy few’
3. The internal/external project members have limited or only theoretical knowledge
4. The scorecard is only used by top management
5. The scorecard stays too long in the development stage before it’s launched and used
6. There are not enough links to the strategy and planning processes
7. The content of the Balanced Scorecard is unrealistic
8. The scorecard is only used for remuneration purposes

5.    The BSC is a business performance measurement concept, but should only top managers and CEO use it? Or should it be used company-wide? Should BSC be implemented in all departments or for instance only in HR?

I would like to react on the question itself. A scorecard is a measurement instrument but it is much more than that. It’s also a process that helps managers and entrepreneurs translate an overall strategy into smaller chunks. All too often, this is forgotten.

6.    While there are certain benefits of BSC, do you see there any limitations or possible problems? Some areas where BSC does not work properly or is inefficient.

I never use the Balanced Scorecard on an individual performance level.
Also, if there is too much focus on the measuring part and not enough on the strategy part, the scorecard becomes too administrative.

7.    The BSC concept is discussed widely. What do you think, if most companies understand the importance of BSC development? Are they willing to invest in BSC? Is it hard to get decisions makers to conclusion that it is necessary to use BSC?

As you mentioned before, most organizations are using the scorecard principles in some way or another. The question today becomes much more: “What’s the best way to use the Balanced Scorecard in our organization.”

8.    The practical implementation is always as important as theory itself. There are a lot of ways to implement BSC from simple Excel files to software, web-based services and full integration with company business system. What do you think is the best implementation strategy in terms of quality/price? What type of tools would you use to do implementation?

The most important tip I can give is to have a clear vision on automation. I believe it’s a smart idea to automate the whole or part of your performance management process… but with care.

In many cases, the ambition to automate the process is the positive driver at the start of a Strategy Execution upgrade programme but the bottleneck the year after.

Let me give you an example.

Imagine that you want to automate part of the BSC process. You start by selecting a software package. You launch an expensive IT project to customise the solution. Nine months later, you receive many suggestions (and complaints) from managers regarding the user-friendliness of the software. After a closer look, you decide they are right and agree the underlying process needs to change. But that would demand, yet again, some quite extensive IT system changes. You find it inappropriate to launch a new IT project as the previous one was more expensive than anticipated. So you decide to wait.

I would suggest you either choose a standard software solution and change your process or postpone automation until you are 100 percent happy with the underlying process.

9.    There are companies that already use BSC, we read about them in business magazines, we read their case-studies and success stories.  What advice would you give companies that just start considering the implementation of Balanced Scorecard concept?

The Balanced Scorecard is a great instrument that helps you execute your strategy. But without a solid vision on the overall execution process and philosophy in your organization, you might just add more work.
So start with the overall execution approach and then see how a scorecard can add value within the total picture.

10.    Thank you very much for your answers. I think our readers would like to know more about your company and service you provide. If possible share also your detailed experience with Balanced Scorecard here.

The Performance Factory helps managers, future managers and organizations increase performance through best-in-class Strategy Execution.

We offer 4 services to our clients.

The Strategy Execution Barometer – Get a clear view on your Strategy Execution strengths and weaknesses. You can buy our benchmark report (1100+ companies) on Amazon.com and compare yourself with the market and your competitors. Or you can set-up a tailor-made survey to obtain the Strategy Execution insights you need.

Execution support – Receive practical expert coaching on your desired Strategy Execution topic (including the BSC). Get a second opinion on your initiative portfolio, strategy communication, or other Strategy Execution challenges. Add a seasoned professional to your execution team.

Training & Coaching – Review the effectiveness and efficiency of your existing Strategy Execution training and coaching programme. Get some guidance on the engineering of a new programme. Evaluate the quality and cost of your training partners. Deliver high-quality, high-volume skills booster programmes across the globe.

Speeches & Master classes − To date, we have delivered a wide variety of speeches, programmes and classes in 16 countries around the world − ranging from a 45-minute keynote speech, to a 1-day BSC programme, to specialised multi-day seminars and master classes on a variety of Strategy Execution topics.

Also Download two free chapters of
Jeroen’s book – Strategy Execution Heroes at http://jeroen-de-flander.com

Find more interviews with BSC experts in our “Interviews” section

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10 questions to Balanced Scorecard Expert Thomas MG, Business-IT Consultant
at CXO Dashboards

1.    Please, summarize in few words what is your expertise and background with Balanced Scorecard.

I implemented Balanced Scorecard first in my previous organization, a mid size software development organization. I have developed comprehensive Dashboards for various functions, as part of the organization wide initiatives such as ISO 9000, CMMI, People CMM and Balanced Scorecard. During this journey, I gained deep insights as a practitioner of Balanced Scorecard before starting my consulting services. Now I offer end-to-end services that combine Balanced Scorecard methodology and dashboard solutions.

2.    It is known that Balanced Scorecard is used by more than 50% of Fortune companies. Do you think this concept is for big companies only?

Large organizations find Balanced Scorecard a great tool for managing complexity. However, even small organizations have their vision/mission, a strategy, a need to measure performance, and a need to accomplish goals with certainty. Since Balanced Scorecard aims to bring alignment of employees with the organizational strategy and goals, it is very much applicable for small organizations too. Small companies may not need sophisticated automated dashboards, and they can go for simple applications, Excel based scorecards or on-demand scorecard applications.

3.    While BSC concept is popular now, what other business performance measurement concepts can you recommend for companies to consider?

There are several performance measurement frameworks that an organization can choose from, some common ones are Performance Prism, Six Sigma, the GQM framework and elements of Malcolm Baldrige. However, none of these are mutually exclusive. I feel Balanced Scorecard is relatively simpler to understand and implement, and that BSC can be implemented effectively at multiple levels – the whole organization, a division or a department. In fact, I have successfully implemented BSC concepts in internal functions such as HR and IT, without an organization-wide implementation. This is helpful when there is reluctance to go for a full-fledged BSC implementation and the sponsor is a CXO other than a CEO. Quality improvement framework such as Six Sigma can complement BSC for driving initiatives that build specific organization capabilities.

4.    Please, share your opinion about key ideas that should be kept in mind for successful implementation of BSC?

One of the most important factors is the commitment from the CEO for the BSC. Clarity on the business pains that BSC will address and clarity on the potential benefits are important. The results of BSC should be made visible in a few months time. Typical techniques that are applicable for any change management initiative, need to be applied. BSC should be implemented primarily to improve business performance and not to judge people. Integrate BSC processes with the rest of the organization processes. An IT enabled dashboard for each key role in the organization will dramatically improve the effectiveness of the BSC implementation.

5.    The BSC is a business performance measurement concept, but should only top managers and CEO use it? Or should it be used company-wide? Should BSC be implemented in all departments or for instance only in HR?

If there are budget constraints, keep BSC at the top management level, to start with. If there are critical performance issues in just one department, BSC could be implemented there first (even though it is only a subset of the BSC). Scorecards are powerful feedback mechanisms and implementing it across the organization results in break-through productivity. Concepts of BSC can be drilled down to an individual performer – the performance management and appraisal system can be seamlessly integrated with BSC.

6.    While there are certain benefits of BSC, do you see there any limitations or possible problems? Some areas where BSC does not work properly or is inefficient.

BSC has been around for nearly two decades and it is pretty matured as a strategy execution framework. A few processes such as Strategic Risk Management is weak in BSC. It may not give detailed guideline on how to choose a measure or how to go about improving any specific business process. BSC is a top-down approach, yet there may be times when a bottom up approach is required since already an automated system is in place. For a greater success of BSC implementation, concepts such as process improvement, process automation, and dashboard design could be applied along with the BSC concepts. It has been found that the success of BSC is higher when the strategies of an organization and the inter-linkages between various strategies are clearly understood, otherwise, BSC becomes a glorified version of MIS reporting.

7.    The BSC concept is discussed widely. What do you think, if most companies understand the importance of BSC development? Are they willing to invest in BSC? Is it hard to get decisions makers to conclusion that it is necessary to use BSC?

Most CXOs I met agreed that they need a Business Dashboard based on BSC, for their effectiveness. However they have their view points on when they can afford to invest their time & money on a BSC initiative. When BSC is positioned as a solution to a very critical business problem, it is not difficult to get buy-in, provided the solution comes from a source of credibility. Of late I am seeing good interest in BSC from organizations that are coming out of the recession.

8.    The practical implementation is always as important as theory itself. There are a lot of ways to implement BSC from simple Excel files to software, web-based services and full integration with company business system. What do you think is the best implementation strategy in terms of quality/price? What type of tools would you use to do implementation?

This depends on their current investment in IT. For a micro organization, it is sufficient to have an Excel based BSC. For a small or mid-size organization, Scorecard applications are more suitable; ideally it should be usable without IT support. The more integration the scorecard application is having with the rest of the IT systems and processes, the better. For large organizations, I believe they will have some ERP system in place and the Scorecard/Dashboard applications need to be integrated well with the ERP system. Web based on-demand applications are suitable for budget conscious organizations; however they have usually user based licenses; for BSC to be effective, the scorecards need to be shared with the relevant stakeholders.

9.    There are companies that already use BSC, we read about them in business magazines, we read their case-studies and success stories.  What advice would you give companies that just start considering the implementation of Balanced Scorecard concept?

While starting a BSC implementation, go for a scorecard at strategy level first. This could be in Excel. Once you get clarity, you can extend its capabilities by building dashboards at strategy, operational and at tactic level. This will give you quick ROI (Return-on-Investment). Get the blue-print ready before deciding the scorecard application. While choosing a scorecard application, look for its ability to scale-up for the future requirements too.

10.    Thank you very much for your answers. I think our readers would like to know more about your company and service you provide. If possible share also your detailed experience with Balanced Scorecard here.

CXO Dashboards offers services in implementing Balanced Scorecard and building role specific dashboards primarily for the Services Industry. We also provide advisory services on process improvement and IT initiatives typically that result out of the BSC.

We are located in Chennai, India.

For more information, please contact me at thomas.mg@cxodashboards.com

Find more interviews with BSC experts in our “Interviews” section

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• Our team is experienced in practical usage of Balanced Scorecard;
• We experienced in Balanced Scorecard as we created BSC Designer, BSC software, recognized by users for its simplicity [more about BSC Designer];
• Our team developed more than 200 sets of KPIs for different industries [check KPIs list].
• We designed for customers with BSC Toolkit – e-product about Balanced Scorecard packed with information [check BSC Toolkit]

Please, find more information about balanced scorecard trainings.

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Exporting data from the BSC Designer project is an important function, widely used by our clients while maintaining the Balanced Scorecard concept within the company. The tool allows a wide range of easy to create and understandable reports, including several types of HTML – based reports (Export to HTML, HTML report for selected item, Overview report, Dashboard report for the whole project and for selected item, Strategy Map report), Microsoft Office Suite –based reports (Exporting data to MS PowerPoint and MS Excel). Those reports not only export data from the BSC Designer project (*.bsc file) but also build diagrams and charts, showing different aspects of data, presented in the project.

MS Excel report (“Export to Excel” function) with BSC Designer

This article is aimed to describe the most unusual and unique report, which in some way cannot even be called report, because it contains lots of digits, but no graphs or diagrams. MS Excel Report (or “Export to Excel” function) really has unique structure and the situations, it could be used successfully, might differ from the cases, the other reports (like HTML or MS PowerPoint) could be used. The purposes of Excel Report’s usage might be the following:

How to create MS PowerPoint Report with BSC Designer

Let’s create and explore the MS Excel report with BSC Designer to learn more about this powerful and unique function. A real example of creating MS PowerPoint report will be described and shown.

Launch BSC Designer (Standard or Pro version) and open one of the projects (the default one will be used in our case). Then change some of indicators maximal and minimal values – it will be needed to show the potential of Excel report. The next step to be recommended is filling the project with random values. This function also allows the report to show all its functionality by filing the project with values for the selected period of time. If you already had a chance to use time points in your project (if your project is already filled with values for different dates), it would be better for you to skip this step. Check out the article called “How to manage time points with BSC Designer” to learn more about the calendar function and time points management, it provides. To fill the project with random values, click on “Tools” button on the top menu and select “Fill with random values” sign. That is it, we have just filled our project with values for different time points within the selected period.

Now, when the project is filled up with the different values of the indicators and their parent categories, it could be presented in report. So it’s time to create the MS Excel report. Click on “Reports” button on the top menu and select “Export to MS Excel” sign. Please make sure you have MS Excel program (the part of the Microsoft Office suite) installed on your computer and registered, otherwise BSC Designer will not be able to export the information. After “Generate” button was clicked, MS Excel will be launched and the report, created by BSC Designer, will be opened. Congratulations! The report has just been created! Now every of its features will be shown and described. If you are not BSC Designer user yet and you are not able to create the report, you may download the full version of the report, described in this article.

The top field of MS Excel report with BSC Designer

The top field of the Excel report contains the basic information for the project. First of all it presents the project’s name (it is “Balanced Scorecard” in our case) and its description (in our case it is “The default project filled with random data created to show how to operate with BSC Designer software”). This information could be changed by the user manually while editing Excel file or, but also it could be changed in BSC Designer program, so this information will be exported correctly not only to MS Excel, but also to MS PowerPoint and HTML formats of reports. To change this information, open BSC Designer, click on “File” button on the top menu and select “Document Properties” sign. Then input the author’s name and type correct project’s name (for example, Financial Scorecard) instead of “Balanced Scorecard”. Press “OK” button to apply changes.

Then the report shows the performance values for the main categories and the whole project’s total performance. Please note, oppositely to other reports, showing performance values (Export to HTML, HTML report for selected item, Dashboard report for the whole project and for selected item, exporting to MS PowerPoint) MS Excel report does not ask user to select the reporting period – it shows the value only for the date, which is currently selected on the calendar (read more about the calendar function and time points management in the article: How to manage time points with BSC Designer).

Now let’s move to the “Help” field – it says: You can change the values in “weight” column, the value must be between 0 and 10; You can change the values in “Value” column; That is really one of the most important point of MS Excel report with BSC Designer – it actually could be used as an alternative tool to manage *.bsc projects. Changing the values and the weights, it will automatically recalculate the project’s performance. All the formulas to recalculate the performance already exist in the *.xls / *.xlsx file, created by BSC Designer. So the project might be operated with Excel even without using BSC Designer at all. Certainly, the functionality of using this configuration of Excel project is limited by values for indicators and weight management, but it could be enough in some cases. For example, this file could be shared with colleagues or other people involved (for example, outsourcers), who are not equipped with BSC Designer, but equipped with MS Office with MS Excel in it. Excel version of BSC Designer project, i.e. MS Excel report, does not support management of a time points and that is why the time dynamics cannot be displayed in it. We will show the example of changing values and weights directly in Excel (not BSC Designer) later, after the columns of data will be described.

The left part of the chart (the beginning)

Let’s start describing the chart, presenting one of the categories. All the columns, presented on the image are actually easy to understand: “Perspective” field shows the name of the category, “indicator” field shows the name of the indicators, “Description” field shows description for the categories and for the indicators. “Weight” column shows weight values for the elements: yellow color for the categories and green for the indicators; those values could be changed manually while editing MS Excel project, changes of weight values will cause the changes of their parent items (categories or subcategories) performance values: the more is the weight of the item (the range is from 0 to 10), the more important it appears to be for the parent category. For example, the category with the three indicators in it, having weight values of 1, 2 and 10: the changes of the first two indicators’ (weight = 1, weight = 2) values will have much less effect on the category’s performance, than any changes of the last indicator’s (weight = 10) value. “Value” column shows the values of the indicators and the calculated value of the categories. Changing the values of the indicators will affect the performance values of their parent categories and the whole project. The values, showing on this column are exact values, had been set in the BSC project (without linking to “Min” and “Max” values).

The right part of the chart (the end of it)

Continuing describing the informative chart for the category, we are moving to the right part of it. The picture presents 4 more columns. “Target Value” column shows the goal for the indicator – the ideal number, which is needed to be reached in order for company to achieve the strategic goal (or part of it), measured by the indicator. It could be minimal number for the indicator or the maximal, depending on the optimization direction (read more about optimization direction of the indicator in the article “How to manage indicators and performance values with BSC Designer”). “Target Description” column presents the information from the same field of BSC Designer Project, located on the bottom panel for every of the indicators – this information does not participate in the calculations. “Absolute Weight” column shows the coefficient of weight value of the item, referring to the whole project’s performance. The numbers here depend on both the indicator’s own weight and its parent category’s weight. This column shows technical measuring information, which is not presented in BSC Designer’s project, but it is presented here in Excel Report to give users a possibility to improve the file or to link it to some other database if needed; usually such procedure is performed by technical professionals of the company or outsourcers. One more column, presenting technical information is named “Absolute Performance”. This is an absolute value, which depends on absolute weight value of the item, its current value, minimal and maximal values and the direction of the optimization and the formula of the optimization (read more about customizing formulas for the indicators in the article “ How to build performance formula with BSC Designer ”). For example, with maximizing direction of the optimization and the standard formula of calculation, the formula of calculating Absolute Performance value will be the following: (Absolute Weight) * ( Value – Min ) / ( Max – Min ). The value, opposite to target one is also presented in the chart, it is located under unnamed column, left to “Absolute Performance” column, lettered “M” in our example. This value is minimal when the maximizing direction of optimization is selected and maximal for minimization direction of optimization.

Editing file in MS Excel

We have promised to describe how to manage values of the items and their weights in MS Excel without using BSC Designer. First of all, let’s change the weights values for the indicators of the category called “Education and Growth Perspective”. When the report was created, the weights of the indicators were the following: 2, 7, 1. Their parent category’s value with those settings was “58.13”, % and the whole project’s value was “64.92”, %. Now we will change the weight values for the indicators to 4, 6, 9 directly in MS Excel. After the new weights are input, MS Excel project recalculates the performance of the category into “69.55”, % and the performance of the whole project into: “67.20”, %. The same way we could change the values for the indicators – after new value will be added, MS Excel will recalculate the performance values of the categories and for the whole project.

Editing weights – before changing

Editing weights – after changing

Here you may download the full version of MS Excel report, which had been shown in this article to look through it or it might be even better to create your own report using BSC Designer right now!

Alternatives

As you see, MS Excel report is not just a report but a project, living is own life. BSC Designer does not just transfer its data to MS Excel but also provide users with an opportunity to change weights and values so the project’s value will be automatically recalculated. Certainly, such MS Excel project does not provide users with an important function – time points. That is why it is not going to be easy to see the dynamics of values in time, using only MS Excel. MS Excel report is unique when it comes to creating some huge database on Excel project’s base or integrating data from BSC Designer project to the existing database of the company. It sure needs lots of knowledge referring to database management and SQL computer language and only a high ranking specialist could perform this.

AKS-Labs also provides its customers with one more alternative to paid versions of the tool. The free one is called BSC Designer Light and, oppositely to MS Excel project, it allows to work with time points. This version is limited by functionality but it still could be more useful in some cases, such as: sharing the project’s data with colleagues or other people involved (for example, outsourcers), who are not equipped with paid version of BSC Designer; changing the basic aspects of project’s data and perform simple indicators and categories management (including time points management) functions without paid version of BSC Designer. There is no opportunity in BSC Designer Light to create such informative reports as HTML report, PowerPoint report, Dashboard report, available in BSC Designer Standard and BSC Designer Pro and there are more limitations of functionality (check out the full chart, presenting the difference between functionality of versions on this page).

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10 questions to Balanced Scorecard Expert James Creelman, independent Balanced Scorecard consultant and author

1.    Please, summarize in few words what is your expertise and background with Balanced Scorecard.

I have been involved with the Balanced Scorecard since 1993. I am an author of many Balanced Scorecard books and advise clients throughout the world – several of which have achieved Hall of Fame status. Dr David Norton has called me “the foremost chronicler and historian of the Balanced Scorecard movement.”

2.    It is known that Balanced Scorecard is used by more than 50% of Fortune companies. Do you think this concept is for big companies only?

Absolutely not. The Balanced Scorecard is used successfully from companies of any size and in any industries or sectors. If you have a strategy you can successfully deploy the Balanced Scorecard.

3.    While BSC concept is popular now, what other business performance measurement concepts can you recommend for companies to consider?

There are several emerging versions of the Balanced Scorecard that are worth looking at: most notably in my opinion the Value Creation Map pioneered by the Advanced Performance Institute in the UK. The scorecard also works well alongside frameworks such as Malcolm Baldrige or EFQM.

4.    Please, share your opinion about key ideas that should be kept in mind for successful implementation of BSC?

The most important component of a Balanced Scorecard is the Strategy Map, followed by the strategic initiatives. They are then followed by KPIs/targets. Keep the Strategy Map simple; understand the difference between objectives and initiatives and recognize that cultural barriers will likely pose the greatest barrier to scorecard success.

5.    The BSC is a business performance measurement concept, but should only top managers and CEO use it? Or should it be used company-wide? Should BSC be implemented in all departments or for instance only in HR?

Firstly, the Balanced Scorecard is not a business performance measurement concept. It is a strategic performance management framework of which measurement is but one component. A scorecard can be used at most organizational levels from the corporate level down to departmental level. The important question is “what value had the scorecard at this level – how will it improve performance.” There are many examples of good function-level (HR, finance, etc) scorecards.

6.    While there are certain benefits of BSC, do you see there any limitations or possible problems? Some areas where BSC does not work properly or is inefficient.

Don’t expect too much of the scorecard – it will not answer all of your problems. And remember it is a strategy management framework not a system for managing operations – you need an operational dashboard for the latter, which is different to a Balanced Scorecard.

7.    The BSC concept is discussed widely. What do you think, if most companies understand the importance of BSC development? Are they willing to invest in BSC? Is it hard to get decisions makers to conclusion that it is necessary to use BSC?

Decision-makers will use the Balanced Scorecard if they can see the value. If not, why should they? What we need to do better is get the message across about the value. Remember, CEOs etc get bombarded with lots of ideas. The scorecard has to stand out from the crowd to be of interest. We have enough case studies etc now to make the argument.

8.    The practical implementation is always as important as theory itself. There are a lot of ways to implement BSC from simple Excel files to software, web-based services and full integration with company business system. What do you think is the best implementation strategy in terms of quality/price? What type of tools would you use to do implementation?

Start with office tools, etc. After a year or so, migrate to a scorecard automation tool.
Automation enables a company to get the best out of the scorecard – progress tracking and reporting, best practice sharing, etc.

9.    There are companies that already use BSC, we read about them in business magazines, we read their case-studies and success stories.  What advice would you give companies that just start considering the implementation of Balanced Scorecard concept?

Keep it simple. Understand the importance of strategy maps and that the maps should comprise objectives and not initiatives. Also people will only buy-in to the idea if they can see how it will make their job easier – if it’s just one more thing to do then they will resist: and rightly do. Also remember that the scorecard is not a measurement system – this is the biggest mistake that companies make and stop them securing the real benefits of the approach – which is around step-change, breakthrough performance improvement.

10.    Thank you very much for your answers. I think our readers would like to know more about your company and service you provide. If possible share also your detailed experience with Balanced Scorecard here.

Have written 20 management books/reports, eight of which are on the Balanced Scorecard. I hace three new scorecard books due for publication this year.
I run workshops and conduct consulting assignments for companies throughout the word: two companies that I have advised have received Balanced Scorecard Happ of Fame awards from Drs Kaplan and Norton.

I can be reached at james.creelman@googlemail.com

Find more interviews with BSC experts in our “Interviews” section

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Reports play significant role in Balanced Scorecard system maintenance. There are lots of ways to show the information, measured by the dashboard to the one who created the exact task and knows every detail of it, but what if it comes to the need of presenting information to the investor or the shareholder, who might not know all the detail of the process?

First of all, when it comes to presentation, the first tool that comes to mind of most of MS Windows OS users is certainly MS PowerPoint, the part of the Microsoft Office suite. PowerPoint is widely used by business people, educators, students, and trainers because of its availability, simplicity and usability.

The second thing is when the tool is determined, it needs to export the information to it and in most of cases, and just copying the data from the dashboard and pasting it to PowerPoint does not make lots of sense. It sure is much better when the dashboard has its own function to export the information to PowerPoint the way, it could already be presented.

That is why BSC Designer allows the function of exporting the information to MS PowerPoint (also called “PowerPoint report”). This function could be really helpful in the following cases:

• To report about the activity’s performance to senior managers;
• To keep the report files in achieves for internal or external inspections needs;
• To make clear and informative presentations of the activity’s performance to the top management, management company as well as to shareholders and investors.

How to create MS PowerPoint Report with BSC Designer

Now let’s try to create MS PowerPoint report to see what it contains. A real example of creating MS PowerPoint report will be described and shown.

Launch BSC Designer (Standard or Pro version) and open one of the projects (the default one will be used in our case). The next step to be recommended is filling the project with random values. This function allows the reports to show all its functionality by filing the project with values for the selected period of time. If you already had a chance to use time points in your project (if your project is already filled with values for different dates), it would be better for you to skip this step. Check out the article called “How to manage time points with BSC Designer” to learn more about the calendar function and time points management, it provides. To fill the project with random values, click on “Tools” button on the top menu and select “Fill with random values” sign. All right, we have just filled our project with values for different time points within the selected period.

Now, when the project is filled up with values of indicators for different dates, the dynamics appeared for the project, so it could be presented in report. Now let’s create the PowerPoint report. Click on “Reports” button on the top menu and select “Export to MS PowerPoint” sign. The new dialog window will appear; select the reporting time period (it will be “last week” in our case) and click on “Generate” button. Please make sure you have MS PowerPoint program (the part of the Microsoft Office suite) installed on your computer and registered, otherwise BSC Designer will not be able to export the information. After “Generate” button was clicked, MS PowerPoint will be launched and the report, created by BSC Designer, will be opened. Congratulations! The report has just been created! Now every important slide of it will be described in details.

What does MS PowerPoint Report contain

Now when the report is ready let’s see what it contains and where does the information come from. Please note, if the report, created by you is not alike the one, that is shown below, it means you have an old version of BSC Designer Program. In this case, it is recommended to download the latest version of the program directly from our site and reinstall the software. The download page could be found here. Now we will start with MS PowerPoint presentation slides.

The first slide shows the general information: the name of the project reporting, the reporting time period and the author’s name. The name of the project and the author’s name could be changed manually in PowerPoint, but also it could be changed in BSC Designer program, so this information will be exported correctly not only to MS PowerPoint, but also to MS Excel and HTML formats of reports. To change this information, open BSC Designer, click on “File” button on the top menu and select “Document Properties” sign. Then input the author’s name and type correct project’s name (for example, Financial Scorecard) instead of “Balanced Scorecard”. Press “OK” button to apply changes and recreate the report (“Reports” -> “Export to MS PowerPoint”), if needed, so it could present correct information.

The second slide of the MS PowerPoint report presents the overview for the project. It actually contains the same image, the Overview Report presents (read more about Overview Report in the article: Reports with BSC Designer: Overview and Dashboard). To be short, both the Overview Report and the second slide of the MS PowerPoint report show the map of the elements (categories, subcategories and indicators), the project contains, mentioning their names and descriptions. This chart does not contain any information concerning performance values (BSC Designer and even the describing report allows several other tools to present the performance values) but shows only the overview for the project to provide better orientation and understanding the reporting project. If you want to change the information presented in this slide (or in the Overview Report), change the names and the descriptions for categories and indicators, your project contains and recreate the report (“Reports” -> “Export to MS PowerPoint”).

The third slide starts the report of the main category (the whole project; it is named “Balanced Scorecard” by default). It contains the general information concerning the performance values presented in textual format, including:

• Start Value – the value, the category had at the beginning of the reporting period;
• End Value – the value, the category had at the end of the reporting period;
• Dynamics – the difference between the Start Value and the End Value (Dynamics = End Value – Start Value).

Also there is a chart presented on the slide, which shows the performance data overview for every of the elements, included in the reporting category.

There are no maximal and minimal values in this slide because all the categories in BSC Designer are calculated within minimal value of ”0” and maximal value of “100” and the measure unit for the them can only be “%”. That does not mean you cannot select measure units at all but the functions, allowing editing performance values’ details, are available for the indicators (read more about editing performance values for the indicators in the article “How to manage KPIs using BSC Designer’s functions”). The categories, on the other hand, are aimed to automatically calculate the performance of the indicators and subcategories they include and show this information in a form of a point in the range from 0 percent to 100 percent.

The next slide continues the report of the main category. It presents the time performance chart for the category within the reporting period. More information about the time chart could be found in the article “How to visualize data with BSC Designer: diagrams and charts”. Time chart clearly shows the dynamics of the category’s performance and looks much more presentable, then just digits.

As for the colors of borders, they could be green, yellow and red. “Good” performance values area is marked with green light, red area is for “bad” performance and yellow area shows that the performance is not “bad” already but is not yet “good”. Certainly both “bad” and “good” terms have their own performance percentage value. By default, green area are covers the graph within the interval of 80 – 100, %%, yellow color is for 21 – 79, %% and red colored area covers the graph within the interval of 0 – 20, %%. Those boarders could be changed by the user, find out how to do this in the paragraph named “Stop Lights” of the article “ How to visualize data with BSC Designer: signal icons ”.

This slide finishes the report for the main category with the second graph, presented for it – the gauge diagram. This slide is also aimed to present the information for the category’s performance value in a form of understandable image, to make it more clear and presentable. Definitely, Gauge diagram shows the percentage of performance value for any item of the tree (both the categories and the indicators). The hand shows current performance value (End Value of reporting period to be exact) comparing to “min” (the left starting point; it is 0 percent in our case) and “max” (the right finishing point; it is 100 percent in our case) values. Read more about Gauge diagram in the article: “Gauge diagram added! HTML reports updated!” The colors boarders of gauge diagram could be managed the same way as it was described above.

This slide is an overview for the part of report, presenting one of the indicators value. Just like the same slide for the category, this one contains Start Value, End Value and Dynamics. But the indicator’s slide also shows: Score (the value of the indicator, measured with its own measure units without referring to determined minimal and maximal values), “Min” and “Max” values (oppositely to categories, indicators might have any minimal and maximal values set by the user), “Parent” field (shows the category or subcategory, which is parent for the indicator), Measure unit (it could be %, Score or any other measure unit added and selected by the user), Optimization method (also called Optimization Direction: shows the direction, the indicator’s value aims to; read more about optimization directions for the indicators in the article “ How to manage indicators and performance values with BSC Designer ”) There are also time performance chart and gauge diagram slides, presented in MS PowerPoint report for indicators. We won’t describe them in detail, because they are almost the same as for the categories.

Here you may download the full version of MS PowerPoint report, which had been shown in this article to look through it or it might be even better to create your own report using BSC Designer right now!

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Balanced Scorecard on all organizational levels

Connect, Collaborate and Control with the Balanced Scorecard

Presentation that covers the most important questions about Balanced Scorecard and its implementation on all organizational levels.

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Presentation: Balanced Scorecard on all organizational levels

Why use the Balanced Scorecard?

• Opinions from Balanced Scorecard experts
• Use the Balanced Scorecard to improve business performance
• Implement Balanced Scorecard on all levels
• Collaborate and improve business performance

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10 questions to Balanced Scorecard Expert Henry Killackey, Jr., Managing Partner and Educational Services Manager at Global Institute for Management

1.    Please, summarize in few words what is your expertise and background with Balanced Scorecard.

I have instructed large and small companies on how to construct strategy maps and Balanced Scorecards. I have created e-learning courses covering the fundamentals of strategic planning and establishing performance measures. I have authored several articles describing the role of the Balanced Scorecard in improving business process management and risk management. Also, I served as a conference producer for the Palladium Group / Balanced Scorecard Collaborative.

2.    It is known that Balanced Scorecard is used by more than 50% of Fortune companies. Do you think this concept is for big companies only?

Absolutely not. CEOs of large companies and small companies are unified by their common need to execute strategy. It has been reported that nine out of ten companies fail to execute their strategy. Much of this problem has been due to the fact that companies typically do a poor job communicating and translating the strategy to managers and frontline employees. The Balanced Scorecard is a tool that facilitates strategic execution through serving the organization as a management system, a means of communicating business results and a process of change.

3.    While BSC concept is popular now, what other business performance measurement concepts can you recommend for companies to consider?

For performance measurement, companies can always turn to dashboards. However, what must be understood about dashboards is that they report tactical (not strategic) business information. In other words, dashboards measure the performance of business processes and typically do not have a clear link to the organizational strategy. The Balanced Scorecard, in contrast, is tied directly to strategy. The strategy is articulated through a strategy map which shows the direct linkages between strategic objectives within the four perspectives (financial, customer, internal process, learning/growth) of the Balanced Scorecard. Performance measures, targets, and initiatives emerge out of each of the strategic objectives of the strategy map.

4.    Please, share your opinion about key ideas that should be kept in mind for successful implementation of BSC?

First, upper management has to fully support and sponsor the BSC. If their support for this system is lukewarm, then its implementation will fail. Second, management needs to take the time to articulate and translate the organizational strategy. Patience is required with building and establishing consensus around the strategy map. There is often a temptation to shop around for a reporting tool right away but the problem with rushing to the process of building measures is that hastily built measures do not have a firm strategic foundation to stand on. A properly constructed strategy map is a solid foundation on which to build meaningful performance measures and initiatives that effectively assess the organization’s progress in executing its strategy.

5.    The BSC is a business performance measurement concept, but should only top managers and CEO use it? Or should it be used company-wide? Should BSC be implemented in all departments or for instance only in HR?

For the BSC to be effective in facilitating the execution of strategy, it needs to be cascaded throughout the organization. Cascading requires the participation of managers at all levels of the organization to translate the strategy and articulate the relevance of strategic objectives to each department, team and individual. Cascading can and should result in the alignment (or connectivity) of the corporate, departmental, and individual levels of the organization. It is important to remember that strategy is communicated from top to bottom (executives to frontline employees) and that execution begins with the individual.

6.    While there are certain benefits of BSC, do you see there any limitations or possible problems? Some areas where BSC does not work properly or is inefficient.

Over the last three years, the topic of initiative management has gained importance. The BSC has been brought into many organizations where other management systems such as lean, Six Sigma and TQM are used. When multiple management systems come together, there can be a problem with information overload amongst employees. This clash of management systems, in many instances, can result in a growing list of initiatives for driving business performance. Each of these management systems can drive action, but they do not always integrate to ensure organizational alignment. Integration can cause confusion at times because operations and process managers who work with Six Sigma have to get used to monitoring the Balanced Scorecard. Senior managers who use the Balanced Scorecard for assessing strategy execution have to understand Six Sigma as a means of achieving strategic objectives. While the BSC does lead the organization to generate strategy-focused initiatives, it does not provide a consistent method for prioritizing initiatives. Executives and managers have to take responsibility in organizing and prioritizing initiatives which is something the BSC cannot do on its own.

7.    The BSC concept is discussed widely. What do you think, if most companies understand the importance of BSC development? Are they willing to invest in BSC? Is it hard to get decisions makers to conclusion that it is necessary to use BSC?

The process of buy-in takes time. Without buy-in, there can be no successful implementation or usage of the BSC. From an organization’s executives and managers, there has to be a realization that there is a need to execute strategy.

Leaders have to ask themselves why they are truly considering the BSC. Has the organization lost its competitiveness through following an outdated strategy? Has strategy become too complicated for the organization to understand? Or does the organization simply need to better understand the performance of its business processes to diagnose problems? If an organization truly understands its strategic needs, then buy-in for the BSC has a higher likelihood. But if the organization is looking to fix its business processes and is not sure of its strategic needs, then buy-in for the BSC does not have a favorable likelihood. There is no purpose in selling the BSC to a company that really needs a dashboard for gauging process performance. An organization truly has to understand its own needs.

8.    The practical implementation is always as important as theory itself. There are a lot of ways to implement BSC from simple Excel files to software, web-based services and full integration with company business system. What do you think is the best implementation strategy in terms of quality/price? What type of tools would you use to do implementation?

The type of tool that is used should be determined by the size and budget of the company that is having its BSC implemented. A small company, for instance, with 100 employees and a very limited budget can use Excel or it can purchase one of the many affordable web-based services that have emerged in the last two to three years. Many of the web-based services have monthly “pay-as-you-go” subscription plans that spare the client from the obligation of a contract. What I’ve noticed about some of the web-based services is that they have a high level of user friendliness (data can be easy to find and objectives can be easily built) which is ideal for a small company that may have limited experience with business performance management solutions. A Fortune 500 company, on the other hand, has more options at its disposal. This type of company is going to be concerned with such issues as cascading scorecards and having access to real-time performance information to name a few. The name brand software solutions are going to offer more choices in terms of scorecard adaptability, integration, and performance reporting.

9.    There are companies that already use BSC, we read about them in business magazines, we read their case-studies and success stories.  What advice would you give companies that just start considering the implementation of Balanced Scorecard concept?

My advice to companies that are just starting out with a BSC implementation is to not just perceive the BSC as a reporting tool. Your BSC will do more for the organization than just show business results. It is a management system that gets managers and stakeholders focused on action through initiatives. It is a process of collaboration that requires feedback from managers, business units, and individual employees for the formulation of strategic actions and initiatives. The BSC is also a facilitator of change. A company cannot move toward achieving objectives unless it is willing to adapt and evolve. If you can think of the BSC as something more than a reporting tool, you will realize that the BSC is worth the effort required with implementation.

10.    Thank you very much for your answers. I think our readers would like to know more about your company and service you provide. If possible share also your detailed experience with Balanced Scorecard here.

The Global Institute for Management (GIM) is the leading provider of educational services that enable organizations to overcome the challenges that prevent the achievement of optimal performance. Our core competencies include strategy management, risk management and organizational leadership. We provide educational products that come in a variety of formats which include e-learning, live workshops and in-house training.

Here are a few samples of our thought leadership:

The Balanced Approach to Managing Risk (featured in Information Management)

Seeing Red: Integrating Balanced Scorecard and Six Sigma (featured in iSixSigma)

Bringing the Balanced Scorecard Back to Life (featured in iSixSigma)

We are able to help you build your BSC. Visit us at www.gimanagement.com

Find more interviews with BSC experts in our “Interviews” section

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Cascading: conclusion

Indicative and Imperative KPIs

It is not a secret that in practice the system of budgetary management receives unflattering recalls and censures for the completely avoidance a company strategy, i.e. there is no direct connection of the budget of development (constituted on three – five years for fulfillment of KPIs of the Innovation and Learning and Internal Process Perspectives) and the master budget (the system of the interconnected budgets approved for no more than a year). At the same time, if the process of construction of budgetary management model is performed in coordination with the strategy, formulated in terms of KPIs, such system is really capable to solve the problems facing to top management of the company, referring to the corporate administration. To implement the model of KPIs to the multi level companies’ management systems (with the need of organizing cascading: the process of distribution of authorities and responsibilities for indicators among the lower hierarchy level subsystems’ managers and specialists) it is rational to divide KPIs into the following groups:

• “Indicative” indicators;
• Imperative (control) indicators.

The quantity indicative KPIs correlates with the purposes and processes of the services and divisions, associated with them. Examples of such KPIs could be: “Quantity of document circulation per week”, “Quantity of specialized exhibitions per season” and others. So “indicative” indicators can be both leading, and lagging.

Imperative (control) indicators are creating by the top hierarchy levels of management and their quantity is the same as the quantity of Perspectives, the top level categories, including the overall sum of the subcategories and KPIs. All the imperative indicators are actually lagging ones. These indicators are needed for top management (it also can be a management company) to control the performance of lower level management (it also can be an enterprise or a factory). Thus it is supposed that target values of control indicators are formed by the higher level management (or company) in an exclusive order and “lowers” them downwards for fulfillment. The purpose of lower level management is to form the target values of indicative KPIs the way, so: on the one hand, their achievement will be directly connected and aimed to achieve the imperative KPIs target values; from the other hand, they could direct the resources (Human, Financial and others) to full-scale realization of strategic goals. At the same time, to maintain of integrity of the management system, the overall set of indicative and control KPIs needs to be determined for all chain of management beforehand. such managerial technique promotes realization of a principles of Management by objectives (МВО). MBO concept’s important statement is all levels of management hierarchy to be involved in process of achieving strategic goals, using the language of KPI as all – fits – one to organize well functioning cascading and both ways feedback (for example, orders <-> reports).

The map of the article

• Part 1: This part introduces the basic statements of KPI based management. Also it defines the term KPI;
• Part 2: BSC management system’s methodology;
• Part 3: Leading and Lagging indicators concept as an inherent part of KPI based management;
• Part 4: This part presents the basic criteria of what KPI to include in the map;
• Part 5: Cause and effect relations between KPIs;
• Part 6: The beginning of Cascading description: classification of indicators for management according to their importance
• Part 7: Conclusion of Cascading description: Indicative and Imperative KPIs

Expert_KPI Articles, Balanced Scorecard Theory balanced scorecard, BSC, key performance indicator, kpi, strategy, studies, theory

Cascading

One of the most important purposes of management is performing well organized cascading. Cascading could be determined as the process of distribution of authorities and responsibilities for indicators among the lower hierarchy level subsystems’ managers and specialists.

It needs to be mentioned that the cause and effect relations between indicators, presented in the map of KPIs, are mostly not function (can not be presented in a way of mathematical formulas). For example, the achievement of desired performance value for such budgeting indicator as “the percentage of innovation investment” (a part of Innovation and Learning perspective) does not cause directly improvement of the value of such indicator as “Cleanliness of metal fusion” (Internal Process

Perspective), but it creates «strategic base» to achieve this improvement. It means, it usually needs a lot of managerial work to focus human resources as well as other type of resources (and for example, financial) to achieve the target value of some indicator.

Classification of indicators for management according to their importance

While creating a model of KPI based management for the certain company, it needs KPIs for management to be divided into the following groups according to their importance*:

• KPI of strategic type;
• KPI of standard type.

KPI of strategic type are linked directly with the company’s strategy. The achievement of target values of such indicators cause significant changes in the whole company. It needs for managers to initiate and monitor the set of complex activities, usually in different hierarchy levels, to achieve the target values. It needs active management’s initiatives: the actions leading to essential “break” of one of process aspects (for example, product’s quality, automation, department and operation group management system construction, and others). Strategic KPIs usually show the nature of Strategic Plan referring to the language of measurement, being whole company’s first – priority. The last but not the least is that Strategic KPIs’ target values present the competitive advantage, the company is aimed to.

As for standard type of KPIs, its values could be supported by managers to be frozen within some particular interval in short term period. Oppositely to strategic KPIs, standard ones are linked directly neither to the strategy, nor to operational management. A good example of such KPI could be “current liquidity coefficient” indicator; its value could easily be supported by managers to be limited within the interval from 2 to 2.25.

In needs to be noticed that considering indicator to belong to standard or strategic depends on the strategic plan, top managers created and approved. The more important the KPI is, referring to strategic plan, the closer it comes to be considered strategic. The process of division the indicators into those two groups is an important company’s activity, because it needs a well optimized resources distribution for the strategy to be realized. Considering every indicator to be strategic, the company might face shortage of resources when it comes up to realize the strategic goals via directed operational activities. A good example of the importance of resources distribution according to the company’s strategic goals could be a work of subsystem of budgeting. Read more about cooperation of BSC (a type of KPIs based management concept) and the subsystem of budgeting in the article: “BSC and the systems of management: BSC and the Budgeting system”.

Plans (budgets) in the given context are meant as plans in the quantitative expression, displaying achievement of KPIs. Since the model of the interconnected plans and budgets needs to guarantee the consistency of the information in budgets, this instrument should be implemented to the process of balancing target values in model KPI. Thereupon the expanded demands are needed to be made to a planning and budgeting subsystem, integrated in the company: this subsystem should become the basic instrument of quantitative planning and modeling within the whole company. For example, the standard indicator of the “turn-around time of a debt receivable” can be calculated on the basis of the given operating budgets. In turn, it is necessary to form a special development budget, in addition to basic types of budgetary management subsystems, for the monitoring of KPI’s values of strategic type (for example, “The market share”, “Cleanliness of metal fusion”) could be performed as well. This special development budget (for example, the budget of investments, the budget of capital investments) needs to be aimed to realization of long-term projects with the established budgets (in contrast with achievement of certain target significances of data KPI).

(*) The importance of KPIs could also be presented and measured using a weight value parameter. Most of dashboards, aimed to support KPI and BSC management concept, provide weight values management as a necessary attribute of KPIs. Knowing weights of indicators, presenting on the dashboard or some type of report, helps resource distribution (for example, budgeting plan) to proceed according to the strategic plan, providing most important activities with more assets. Also weight values presence on a dashboard directs the attention of managers to the indicators, important for the priority strategic goals to be achieved and makes them to provide more initiatives to the activities, associated with those indicators.

The map of the article

• Part 1: This part introduces the basic statements of KPI based management. Also it defines the term KPI;
• Part 2: BSC management system’s methodology;
• Part 3: Leading and Lagging indicators concept as an inherent part of KPI based management;
• Part 4: This part presents the basic criteria of what KPI to include in the map;
• Part 5: Cause and effect relations between KPIs;
• Part 6: The beginning of Cascading description: classification of indicators for management according to their importance
• Part 7: Conclusion of Cascading description: Indicative and Imperative KPIs

Expert_KPI Articles, Balanced Scorecard Theory balanced scorecard, BSC, key performance indicator, kpi, strategy, studies, theory