Strategy Maps, Intangible Assets, and Governance: New Applications of the Balanced Scorecard

Strategy Maps, Intangible Assets, and Governance: New Applications of the Balanced Scorecard Robert S. Kaplan Marvin Bower Professor of Leadership Development HARVARD BUSINESS SCHOOL Chairman BALANCED SCORECARD COLLABORATIVE The Balanced Scorecard in 2004 Bi-monthly Newsletter January 1996 21 translations January - February 1992 September 2000 18 translations September 1993 11 translations 60% usage in Fortune 500 Harvard Business Review “Hall of Fame” February 2004 60,000+ BSC on-line members ©2004 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 2 Balanced Scorecard Hall of Fame Achieving Breakthrough Results Europe Engineering Polymers Information and Communication Mobile Royal Norwegian Air Force UK Ministry of Defence Asia Pacific Latin America Commercial Vehicle Business Unit North America BMW inancial Services North America Human Resources Marketing & Refining National Reconnaissance Office Saatchi & Saatchi US Army By Region ©2004 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 3 We Know How the Hall of Fame Organizations Succeeded The SFO Best Practices Chart of Accounts 1. MOBILIZE CHANGE THROUGH 2. TRANSLATE STRATEGY TO EXECUTIVE LEADERSHIP OPERATIONAL TERMS 1.1 Top leadership committed 2.1 Strategy map developed 1.2 Case for change clearly articulated 2.2 Balanced Scorecard created 1.3 Leadership team engaged 2.3 Targets established 1.4 Vision and strategy clarified 2.4 Initiatives rationalized 1.5 New way of managing understood 2.5 Accountability assigned 1.6 Program manager identified STRATEGY- FOCUSED ORGANIZATION 3. ALIGN THE ORGANIZATION 5. GOVERN TO MAKE STRATEGY TO THE STRATEGY A CONTINUAL PROCESS BEST 3.1 Corporate role defined 5.1 BSC reporting system established 3.2 Corporate – SBUs aligned PRACTICES 5.2 Strategic review meetings conducted 3.3 SBU – support units aligned 5.3 Planning, budgeting, and strategy integrated 3.4 SBU – external partners aligned 5.4 HR and IT planning linked to strategy 3.5 Board of directors aligned 5.5 Process management linked to strategy 5.6 Knowledge sharing linked to strategy 4. MOTIVATE TO MAKE 5.7 Strategic Management Office established STRATEGY EVERYONE’S JOB 4.1 Strategic awareness created 4.2 Personal goals aligned 4.3 Personal incentives aligned 4.4 Competency development aligned ©2004 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 4 Relationships Between Managerial Excellence and Levels of Benefits I– Hall of Fame 4.5 Companies II– “Breakthrough Results” Level of Excellence of Strategic High-Benefit Management Practices 4.0 Users III – “Operational Results” IV – “Organization 3.5 Benefits” Low-Benefit Users 3.0 Mobilization Translation Alignment Motivation Governance Practices Practices Practices Practices Practices ©2004 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved. 5 2004—SFO Best Practices Chart of Accounts 1. MOBILIZE CHANGE THROUGH 2. TRANSLATE STRATEGY TO EXECUTIVE LEADERSHIP OPERATIONAL TERMS 1.1 Top leadership committed 2.1 Strategy map developed 1.2 Case for change clearly articulated 2.2 Balanced Scorecard created 1.