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Finance & Facilities Metrics & Reporting Instructors: LuAnn Stokke, Vincent Lau
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Finance & Facilities Metrics & Reporting Instructors: LuAnn Stokke, Vincent Lau The Balanced Scorecard (BSC) is an important tool that aligns business activities, improves communications, and measures organization performance against strategic goals. Attendees can expect to gain a good understanding of BSC principles and how BSC theory relates to real-life application in F2. This course will provide definitions and help demystify the relationship among operation, strategy, dashboard, scorecard, strategy maps, initiatives, values, mission, vision, and other terms. Balanced Scorecard 101August 18th, 2010
Agenda Background and Quality Improvement Infrastructure What is Balanced Scorecard? Vision to Operation Operational Dashboards Exercise 1 BREAK Strategy Map, Objectives & Initiatives Strategic Scorecards Exercise 2 Targets & Benchmarks
Introduction Welcome What have you heard? What would you like to know more about? - LEAN, QI, PI, PDCA, Deming, Strategy Map, BSC, Dashboard, Scorecards, Kaizen, Strategic Objectives, Initiatives, etc.
F2 QI Pyramid Vision Efficient Processes Delighted Customers Strategic Plans Leaders Staff Trustworthy Trustworthy Trusting of Others Trusting of Others Approachable, Inspiring Collaborative, Committed Quality Improvement System Trained Staff Recognition Data Analysis Customer Focus Empowered Staff Problem Solving Teamwork Quality Processes Measurement Systems
F2 9 Principles • What are the goals? 1. Customer Focus 2. Continuous Improvement How is it done? 3. Quality Definition 4. Work Process Focus 5. Prevention 6. Error-Free Attitude 7. Manage by Facts Who does it? 8. Participation / Empowerment 9. Total Involvement
What is Balanced Scorecard? More than a performance measurement tool: • Helps organizations effectively execute strategy. • Articulates strategy in actionable terms. • Serves as a roadmap for strategy execution. • Mobilizes and aligns leaders and staff to make strategy a continuous process. • Illustrates cause-and-effect relationships between actions and outcomes.
F2 Organization’s BSC Journey Different organizations have different journeys. There is no right or wrong way to implement continuous improvement. • BSC • QI • LEAN
Is it real? Timeframe Owners (F2 perspective) Also Known As Vision Conceptual Factual One day in the future Not yet clearly attainable? An ideal world UW President Board of Regents Executives Government Mission 5 – 10 years 40,000 ft point of view SVP / AVPs Controller Executives Leaders Strategy 3 – 5 years Leaders Managers Supervisors Staff 20,000 ft point of view Strategic Scorecard Operation Present – 1 year Managers Supervisors Staff Ground level point of view Operational Dashboard Cascading Vision to Operation Description Ideal State. A lofty dream. A common goal / future for the entire organization. What does the organization do? What type of business? Often interchangeably used as Vision Major Goals & Performance Objectives to achieve the Mission & Vision Specific actions to achieve work-level targets aligned with strategic goals.
We All Play a Role Rev. Dr. Martin Luther King Vision “I have a dream that all men will be judged by the merit of their character, not by the color of their skin.” • Dr. King’s vision/mission of equality is achievable with successful Strategy & Operations. • We all play a role/influence the success of an organization. • Successful Strategy is how to achieve Vision & Mission. • Successful Operation helps achieve Strategy (Strategic Objectives). Mission Eliminate racial injustice in American society Strategy • Establish national-public attention to racial injustice • Educate people about racial injustice • Governments establish civil rights for all citizens Operation • Speak at public events • March alongside civil-rights activists • Engage politicians at events • Object to and stand-up against racial injustice Values Utilize a passive/non-violent approach
We All Play a Role Vision / Mission / Values Strategy Operations / Tactics
We all Play a Role VISION / MISSION Set Direction • STEAM • Executives Work Teams / Measure Analysts Leaders Directors Supervisors Coordinators STRATEGY Systems; Cross-functional OPERATION Execution/Feedback
Examples of F2 Key Processes Value Added Tasks INPUT OUTPUT
BSC’s Four Perspectives According to Kaplan & Norton, long-term success is best gauged via a BALANCED perspective. For example, financial statements will not display intangible assets: cycle-time, knowledge management, staff capability, customer satisfaction, etc. A fully functioning Dashboard may consist of 20-25 measures, with a larger portion in Internal Process Customer (esp. important for Non-Profit) 20% of measures Financial • 20% of measures Internal Process 40% of measures Learning & Growth • 20% of measures
Example: Restaurant Dashboard Customer Average wait time (in minutes) for customer to receive order # of inaccurate orders per 1,000 Financial Annual % growth in revenue Average margin per order Internal Process # Days to develop new product % of food wasted Learning & Growth % of Staff cross-trained % of servers > 5 years with company
Exercise 1 - Operation Setting: • It is the year 2000, and you are the Blockbuster senior management team. • You are the industry leader in renting movies. • Your competitors include Hollywood Video, local video stores, and grocery stores. • Assignment: • Create the Blockbuster operational dashboard. • Using the four perspectives, what measures would you like to see that would show you know how well Blockbuster is doing? • Report out & debrief to class. • Dashboard attributes: • Measures key processes • Operational in nature • Displays day-to-day activities • Reinforces doing our job well • Analyzes performance • Provides baseline for improvement efforts Customer Financial Internal Process Learning & Growth
Intermission Trivia “A New Hope” was sub-titled to help distinguish from its prequel and sequel. But to this day, most remember the iconic movie as “Star Wars” • “A New Hope” • “Genesis” • “Anakin’s Vengeance” Star Wars episodes 5 & 6 were titled “Empire Strikes Back” and “Return of the Jedi” What was the title given to the original 1977 movie Star Wars? • “A New Hope” • “Genesis” • “Anakin’s Vengeance”
Intermission Trivia • Which is the most expensive movie to date? • Avatar $237M • Pirates of the Caribbean: At World's End $300M • Titanic $200M Which is the most expensive movie to date? • Avatar • Pirates of the Caribbean: At World's End • Titanic
Intermission Trivia Guess this science fiction movie: • Year is 2105 • Earth is covered in trash • Humans live on luxury Starliners • Trash compactor robot cleans Earth • Robot & movie titled “WALL• E”
We All Play a Role Vision / Mission / Values Strategy Operation / Tactics
Developing and Managing Strategy Strategy Map Balanced Scorecard Dashboards
Scorecard Now that you have a Strategy Map and Strategic Objectives, how would you know you are making progress in achieving it? A Scorecard tells the story of the strategy. Reviewing the Scorecard is a way to assess progress towards the Strategic Objectives on the Map. BSC scorecard vs. "metrics": BSC not a collection of measures, it's a description of the organization's strategy.
Exercise 2—Strategy It is the Year 2010, present time Your table is the senior management team of one of these assigned companies: Blockbuster, Netflix or Redbox. You all provide entertainment products to consumers, but using different business models. In the last 10 years, there have been significant changes within the industry • Internet technologies • Changing customer demographics • New business lines (e.g., game rentals, agreements with studios for exclusive movie release dates) • Hollywood Video bankrupt (formerly major Blockbuster rival) As the senior management team, craft a Strategy Map for your firm. Where is your company heading in the next 5 years, given what you know? Draft at least one scorecard measure for each perspective to help you understand whether you’re achieving your strategic objectives.
STRATEGY MAP TEMPLATE MISSION Deliver quality entertainment VISION Bringing quality of life anywhere, anytime FINANCIAL Double profits within 5 years. CUSTOMER INTERNAL PROCESS LEARNING & GROWTH
Benchmarking Defined “Benchmarking is the process of comparing one’s business processes and performance metrics to industry bests and/or best practices from other industries. Dimensions typically measured are quality, time, and cost. Improvements from learning mean doing things better, faster, and cheaper.”en.wikipedia.org/wiki/Benchmarking
How Benchmarking Works LEAN, CPI, BSC Remote Research/Analysis “STEP 1” “STEP 2” “STEP 3” BSC—either dashboard or scorecard
Developing and Managing Strategy Strategy Map Balanced Scorecard Dashboards
Thank you The Balanced Scorecard (BSC) aligns business activities, improves communications, and measures organization performance against strategic goals. What would you like to know more about? How to get involved? (classes, teams, dashboards & scorecards, etc.)
Time permitting How does operational dashboard link to scorecard and strategy map
