Use Balanced Scorecard Template with BSC Designer

The Balanced Scorecard is about:

  • Strategic objectives that are prioritized and located on the strategy map;
  • Action plan that is aligned with each objective;
  • KPIs with benchmarking values that tell us if we are on the right track.

Now, I’m going to use a Balanced Scorecard Template from BSC Designer Online, a professional Balanced Scorecard software. And I’ll show how one could use it for his own business. My intention is to demonstrate a Balanced Scorecard approach using a real template with a strategic objectives and strategy map, not just with a set of some KPIs.

Step 1. Open a balanced scorecard template project

I’m following the link to open a Balanced Scorecard template project. I’m using Chrome browser, but you can use any web-browser, including browsers of an iPad or Android device.

Balanced Scorecard template project in BSC Designer

I’m waiting a few seconds until BSC Designer Online loads all the data. It is also possible to download and use BSC Designer PRO for Windows if you like to work offline.

Step 2. Copy a template project to my account

The followed link is not my project yet. I need to open an account with BSC Designer Online. For this demonstration I’ll use one that I already have. If you don’t have an account you can open it at www.webbsc.com, you will have a free 30-day trial, no credit card is required to try it.

I need to log-in into my account and click “Save to my account as…” button.

Save BSC template to my account

Now among my projects I have this new template.

Step 3. Examine a template

Let’s have a look at what we have in the template. You have a “Strategy Map” tab where major business goals are located,

Strategy map tab with a template

and “Business Goals” tab that is used for business objectives.

Business Goals Tab - Business Objectives Template

Finally, there is a “KPIs” tab, where measures and benchmarks are placed.

KPI template in BSC Designer Online

Step 4. Map strategic objectives

The Balanced Scorecard process starts with a strategic analysis and mapping of major business goals.

Strategy map tab

I’m switching to the “Strategy map” tab. There we have 4 perspectives of the Balanced Scorecard and some text blocks that represent business objectives.

4 perspectives of the Balanced Scorecard

Map objectives in Financial perspective

For my example, I won’t change the first 3 blocks as “Improve Profits,” “Improve Revenue” and “Control Costs” are general business goals.

Financial perspective on the strategy map

These objectives will work fine for my example.

Map objectives in Customers perspective

We have “Customer Objective 1″ on the map. It is linked with cause-and-effect connection with “Improve Revenue” objective. In other words we need to answer a question: “What should we offer to our customers to be able to improve revenue?”

 Customer objective 1

For example, our product is good enough, but customers still prefer some other products. The objective might be “Improve customer engagement.”

In BSC Designer Online I go to the “Business Goals” tab, find “Customer Objective 1″ record,

Customer objective in business goals

click on it and change it to “Improve customer engagement.”

 Updated business objective

By the way, the toolbar above allows you to add any business goal or business solution if you need it.

I’m switching back to “Strategy Map.” The text box with the strategic objective was updated automatically, now it is “Improve customer engagement.”

Business goal updated on the strategy map

If on the “Business Goals” tab I have created some new objective that was not listed on the strategy map before, and then on the strategy map tab I could add this objective to the map. For this purpose I can use the “Add business element” button.

Add new business item

Map objectives in Internal business processes perspective

The next block “Internal Business Objective 1″ is the next element in a cause-and-effect connection. What business system do we need to be able to achieve improvement in customer engagement? For sure, the answer depends on the specific kind of business.

In the template there are blocks “Internal Business Objective 1″ and “Internal Business Objective 2.”Internal business objectives

For this example I will modify them to reflect my strategic objectives. In a real business you might not be able to come up with a business objective right away and some additional research might be needed.

In this example, for the first objective I’ll use is “Focus marketing on customer’s benefits,” and the second might be “Develop competitive advantages in a product.” I now can go to the “Business Goals” tab again to enter these modifications.

Updated internal business objectives

Map objectives in Learning and growth perspective

Finally, what should a company learn to be able to deliver these changes in its business system? To be able to focus marketing on customer needs, we need to know what the drivers of customer engagement are, a company might need to analyze reports of some research house, or conduct its own survey. I’ll mark this business goal as “Research customer’s engagement drivers.”

In order to achieve the second objective “Develop competitive advantages in a product,” a company needs to do a “Comprehensive competitive research” first. This will be our second objective within an “Education and growth” perspective.

Learning and growth objectives updated

Step 5. Add initiatives to the Balanced Scorecard

We are now done with business objectives. Now let me show you the first way to add an action plan to your objectives.

I’m switching again to the “Business Goals” tab. I want to add more actionable details to the “Do comprehensive competitive research” business objective.

1. I select this business objective, and click button “Add business solution” on the toolbar.

Add a new business solution

2. I’m adding a new business solution: “Define a profile of qualified competitor”

3. In the description field I’ll put something like, “Create a list of parameters that we will use to differentiate qualified competitors from similar non-competing businesses.”

4. Then we will need to conduct research, so I’m adding another business solution: “Analyze 10 of qualified competitors.”

New business solutions added

This is the first way to add an action plan. As you can see here you have to be short and add just the most important details.

By now we have a strategic objective of “Do comprehensive competitive research,” which is linked by a cause-and-effect connection back to the major financial objective (“improving revenue”). There are two business solutions attached to this objective.

Step 6. Adding KPIs to business solutions

To make the complete Balanced Scorecard we need to be able to track our progress. It’s time for the Key Performance Indicators.

I’m switching to the KPI tab. In the “Education and growth” category there are some template KPIs, which I’ll modify according to my needs.

Update KPIs in the template

I need to come up with KPIs for:

  • “Analyze 10 of qualified competitors”
  • “Define a profile of qualified competitor”
  • “Focus marketing on customer’s benefits”
  • “Improve customer engagement”

Ideally, my KPIs should be linked to results, not to the process.

KPI for “Analyze 10 of qualified competitors”

For the business goal “Analyze 10 of qualified competitors” the process-type KPI would be something like “The number of qualified competitors reviewed.” But what we really need after a competitive analysis is a list of ideas that we could implement in our product.

For this example case I’ll add a KPI such as “The number of insights found.” In the description field I’ll add what it means: “We need to find at least 10 new ideas that form competitive advantage of other brands.” For the “target” value I’ll choose 10. The optimization direction is “Maximize.” The baseline should be 0, as we have not started yet.

 The number of insights, KPI

Another way to add initiatives

By the way, here is the second way to add an initiative. Click the “edit” button next to the KPI to add some additional details.

Add initiative button

For example, you can add requirements for the competitive research here.

Add initiative dialog

Align KPI to a business solution

I can align this new KPI with my business solution. To do this I go to the “Business Goals” tab, select a business solution “Analyze 10 of qualified competitors” and click “Add KPI item” button.

Add KPI item to the business solution

In this way my employees can know what KPI is used to measure their progress according to this business objective and business solution.

 KPI added to the business goal

KPI for “Define a profile of qualified competitor”

The next business objective that we need to align with KPI is “Define a profile of qualified competitor.” The process-oriented KPI would be something like “The number of parameters found for the profile of qualified customer,” but this KPI won’t help much. Let me try to come up with a result-oriented KPI.

What we need within this business objective is to develop a list of parameters that will distinguish our direct competitors from other companies in our niche, who are not competitors. Representative KPI in this case could be “The number of parameters found that is shared between several competitors.”

With this approach we could ensure a good quality of research. Persons responsible for the research will have to actually compare and contrast various sides of a competitors’ business. For example, a shared parameter might be target groups of customers or a marketing channel used by both competitors.

KPI for “Focus marketing on customer’s benefits”

This business objective is from “Internal business process” perspective. How can we measure our progress on focusing marketing on the right thing? Well, let’s try to use here some simple KPI like “The number of research insights implemented.” These insights will come from research that our employees will do according to objectives specified in  the “Education and growth” perspective.

KPI for “Improve customer engagement”

I’d like to add a KPI to one of the most important business objectives – “Improve customer engagement.” How can we measure an engagement? I was writing about the problems associated with quantifying and measurement of feelings (such as engagement). You could use such classical tools as a customer’s survey, or add several objective KPIs.

  • In my previous article I was talking about employee engagement and came up with some important KPIs. If you need to measure customer or employee engagement in your project, then you can use some insights from my article.

For this demonstration I’d like to measure the “% of new customers who shares feedback” as a KPI:

  • If customers are happy with your product and engaged they will send you ideas for improvement.
  • If customers are not happy with your product, but still engaged, they will send you many problem reports.
  • If the level of feedback is going down, then most likely your customers are less engaged.

This is a very rough model, but for this demonstration it will work fine.

Step 7. Adding a benchmark

Now let me show you how to add a benchmark value. We have a KPI “% of new customers who shares feedback.” It means that there are a certain percentage of new customers who respond to our feedback questionnaires.

We need some numbers to get an idea about what is a good value of this KPI and what is a poor value.

Current value of KPI

We could check what the current value of this KPI is. For example, only 5% of customers respond to the questionnaires that we send them by email. This is our starting point.

Feedback KPI

In BSC Designer Online I select “% of new customers who shares feedback” and in the “baseline” field I enter “5.”

What about our target value? Here we could use some benchmark from the industry or from our own experience.

For example, after a call to my friend who runs a similar business, I know that their response rate is 12%. I want to perform even better, so as a target I could set it at 20%, which might not sound realistic, but we need to have a big goal to follow.

I enter 20% in the “target” field of the KPI.

 Engagement KPI details

As you can see there are also “Min” and “Max” fields. These are theoretically possible values. Well, theoretically, it is possible that 100% of customers will give you a feedback, especially, if you deal with a customer for a long time, so I use the range suggested by default, which is 0% for min and 100% for max.

Step 8. KPIs aligned to business objective

The KPIs described above might not make much sense to you. This is just an example, in practice everything should be aligned with specific business goal and specific business. Your employees should participate in the design of KPIs so you could come up with some measures that make sense for your objectives.

What is important is that KPIs are added to the Balanced Scorecard to measure your progress of achieving a very specific objective. We could find and copy more KPIs that are supposed to measure employee engagement, but as long as they have nothing to do with your objectives, you don’t need them.

Step 9. Updating a big picture

Now, let’s get back to the Strategy Map tab.

The strategy map was updated with my business objectives.

What I could do now is to add some business solutions and KPIs to the strategy map. Normally, you won’t do this, as you simply won’t have enough space on your main strategy map, but you can create a separate strategy map for a specific business unit and add all the details there.

If you need to add an additional strategy map then you can use the “Add strategy map” button on the left.

Add strategy map button

 

And use a drop list there to switch between available maps.

In this example I have enough space on my main map, so I’ll use it and add some additional items.

1. To do this I click “Add KPI” button

Add KPI to the strategy map

and select the KPI I need.

2. Then I click on the strategy map to put a new item there.
3. To add a business solution, I click “Add business element” button and select the solution from the list.
4. I move the text block that appeared on the strategy map to the correct location.
5. For better visual effect I could link them to the business objective.

Now, if I or my employee updates a KPI, the changes will be reflected on the strategy map. For a manager it’s a great way to have a big picture of what is going on.

 KPIs on the strategy map

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Aleksey Savkin is a business performance expert at BSC Designer. His areas of expertise are Balanced Scorecard, KPIs, Business Performance Management. Aleksey is the author of a number of articles and books on Balanced Scorecard.

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