Balanced Score Card: The Strategic Management System

1. Balanced Score Card: The Strategic Management System • What is a Balanced Score Card? • Companies express grandiose Visions and exhort managers to • implement that • 2 Yet the linkages from Vision to formulation to implementation of strategy are lost • 3 Also, top managers never get to know the consequences of their investment decisions, that unfold only in the long run • 4 BSC provides a tool for internal analysis, in-process developments • out of the investments made in previous time periods, and clear • guidelines what is required next. • 5 In sum, it is an implementation and monitoring and target setting tool

2. The four perspectives of the BSC EVA FINANCIAL Profitability Growth Differentiation CUSTOMER Cost Leadership Quick Response Product Development OPERATIONS Demand Management Order Fulfillment Leadership ORGANISATIONAL Organisational Learning Ability to Change & Innovate

3. The BSC can be used to • Linking Strategic Vision and implementation; Growth and Productivity • Clarify and update Strategy • Communicate strategy throughout the company • Align unit and individual goals with strategy • Synergizing Short-term and long-term goals; budgets and resource allocation • Developing objectives, measures and target • Linking performance with objectives and rewards • 8. Identify and align strategic initiatives • 9. Conduct periodic performance reviews to learn about and • improve strategy

6. Power Grid Corp Mission and Objectives • Mission • Establishment and operation of Regional and National power grids to facilitate • Transfer of power within and across the regions with reliability, security, on sound • Commercial principles. • Objectives • The corporation has set following objectives in line with its mission and status as • ‘Central Transmission Utility’ • Undertake transmission of energy through inter-state transmission system • Discharge all functions of planning and co-ordination relating to inter-State • Transmission system with • i-ix (stakeholder bodies) • Exercise supervision and control over inter-state transmission system • Efficient operations and maintenance of transmission system • Quality Policy • Powergrid shall continuously strive to develop and maintain an efficient and • Effective ‘National Grid” with due regard to time, cost, technology, value addition • And social concerns in all its operations to the satisfaction of all the stakeholders.

7. Powergrid at a Glance • Incorporated in 1989, Started commercial production in 1992, notified in 1998 as CTU • Single Largest Transmission utility in the world: Carries 40% of power generated • and 1/3rd of the installed power in the country • Recognized as “Miniratna” by GOI • First utility to get ISO 9001 in the country • First PSU to establish and implement the Environmental and Social Policy • and Procedures (ESPP) • Obtained IP-II License from DoT, GOI for connecting 56 cities with 14000 km OFC • No. of Employees: 6877 • ULDC for real time monitoring • 99% availability • Excellent Emergency Restoration System (ERS) • Working to Catalyze private investment to the tune of Rs. 23,000 crores • Powergrid Intranet • Consistently begged Excellent MOU Award, Prime Minister’s award for two consecutive years

8. Growth Profile

9. Major Projects in Hand 800 kV Tehri Transmission System 2000 MW HVDC Link (1500 KM) Transmission Line between Talcher in Orissa and Kolar in Karanataka 500 MW Sasaram HVDC Back to Back Project 400 kV Naptha Jakhri Transmission System Unified Load Despatch Centre projects of Soutern, Northern, Eastern, Western and North Eastern regions Future Plans Development of Robust National Grid FORMATION OF SAARC GRID Performance Most of the projects are completed well ahead of Generation Projects even against the difficult terrain and climatic conditions e.g. URI, NER Projects, etc. Transmission system availability maintained consistently above 98% Rated "EXCELLENT" on MOU with MOP since 1993-94 Awarded with "PRIME MINISTER's MOU AWARD" since 1997-98  Disaster Management Evolved one of the Best Disaster Management System in Power Sector using Emergency Restoration System (ERS) Devastation caused by cyclone on Orissa in 1999, Gujarat in 1998 and Bhuj 2001 was attended by POWERGRID on war footing  400 KV DC Uri-Wagoora collapsed line in hilly and snowbound terrain restored in minimal time, using ERS

10. Diversification in Telecom Embarked upon a mission to establish a National Backbone of Telecom Network and synergise its Power Transmission Networks to telecom super highways in a phased manner In Phase-1, excess capacity available in ULDC scheme will be utilised In Phase -2, extend telecom network to 56 cities of the country by the year 2002-03. Plan to enter telecom business as National Long Distance Operator Consultancy POWERGRID is executing total turnkey consultancy contracts of over Rs. 25 crores ( US $ 7 million) Consultancy Projects M/s West Bengal Power Development Corporation Ltd. (WBPDCL): Merz & Mclellan ( M&M) : Electricity department, Govt. of Pondicherry : Karnataka Electricity Board (KEB) Delhi Vidyut Board (DVB) National Hydro Power Corporation (NHPC) Andhra Pradesh State Electricity Board (APSEB) Haryana State Electricity Board (HSEB) System Studies Independent Power Producers (IPPs) Indo-Bangladesh Interconnection West Bengal State Electricity Board (WBSEB)

11. ARTICULATE A VISION FOR THE CORPORATION • Mission • Establishment and operation of Regional and National power grids to facilitate • Transfer of power within and across the regions with reliability, security, on sound • Commercial principles. • Financial Perspective: Improve ROI by 20% • PRODUCTIVITY STRATEGY • Improve productivity by better asset utilization 10% • Improve productivity of human resources 10% • Gain government financial assistance for additional resources from • multilateral funding agencies • GROWTH STRAEGY • Add sources of revenue by putting up infrastructure in the existing • business 10% • Add new sources of revenue from telecom business 5% • Cover more national geographies by adding 10% every year in profitable zones • Add newer activities to yield 20% better results during next 5 years

12. CUSTOMER PERSPECTIVE • Solve customer problems through advice and consulting • DO ABC customer analysis and identify profitable customers and their needs • Advice on financial matters to customers with outstanding dues problems. • Use relationships with the suppliers to help SEBs • Restructure loans to help improve customer health • Develop customer responsiveness • Tie up with other agencies like NTPC to integrate the national grid • Develop relationships with IPPs • Manage distribution in select areas for your customers at a price

13. INTERNAL PROCESS PERSPECTIVE • Develop relationship in the Ministry of Power at critical functional decisions • Develop consortium type relations with customers, investors, suppliers and • competitors • Develop Newer services for customers • Develop capabilities to handle customer request responsibly and responsively • Generate demand for power for bulk users • Manage grids while keeping environmental concerns at the forefront • Improve through technology the crisis and disaster management for • Develop Information and Knowledge management systems • Develop data base on customers and competitors for real time decision making • Develop excellence in project management areas • Align projects with suppliers in a timely manner • Minimize time and cost over runs at every cost • Develop power-related competencies for advisory services • Set up a group for locating newer opportunities in telecommunication and grid • management • Continuously improve quality standards in tasks, processes and relationships

14. ORGANISATIONAL LEARNING AND GROWTH PERSPECTIVE • Develop performance measures for individuals, centres, regions, and • corporate entities • Link rewards like bonuses and incentives, promotions to • performance measures • Identify technical, managerial and behavioral profile for each level • of management • 4. Identify skill gaps and train people or recruit from outside • Motivate and develop people in newer skills in low-ranked employees • Sensitize each employee about environmental and safety concerns • Sensitize every one on the need to keep the grid in near perfect operating • conditions and the impact of failure on the customers, users and its financial • and strategic consequences • Manage alliance in new areas like telecommunications or acquire newer • skills through training and/ or fresh recruitment • Train people in boundary relationship management, in particular legal, • statutory, and government bodies and public relations management • Develop Measures and Targets (quantitative/ Qualitative) For Each Item • In Each Perspective

15. The Balanced Scorecard Strategy Map Improve Shareholder Value * share price * return on capital employed Revenue Growth Strategy Financial Perspective Productivity Strategy Build the franchise Increase value to customers Improve cost structure Improve use of assets * Revenue from new sources * customer profitability * operating cost per unit produced * asset utilization Customer Perspective Customer Value Propositions Product Leadership   Customer Intimacy   • Customer acquisition, retention &satisfaction Internal Process Perspective Build the franchise through innovations Increase customer value through customer customer management processes Achieve operational excellence through operations and logistics processes Become a good corporate citizen through regulatory and environmental process Employee competencies technology Corporate culture Learning and Growth Perspective

16. Customer Value Proposition Strategies Operational Excellence Product/Service Attribute Relationships Image Price Time Smart Shopper Quality Selection Companies excel at Competitive Pricing, Product quality and on-time delivery Customer Intimacy Customer Intimacy Product/Service Attribute Image Relationships Service Customer Relations Image Companies excel at offering personalized service to Customers and at building long-term relations with them General Requirement Customer Intimacy Customer Intimacy Diffentiator Product/Service Attribute Image Relationships time Best in Class functionality Companies excel at creating unique Products that push the envelope