Lecture Illustration: Balanced Scorecard for an Athletic apparel company such as Reebok Source: Dr. J. Foreman adapted from the formats used in the following articles which are readings under Learning Material for this semester: 1. Kaplan, R.S., and Norton, D.P., Using the Balanced Scorecard as a Strategic Management System, Harvard Business Review, July-August 2007, pp.150-161. 2. Kaplan, R.S., and Norton, D.P., The Balanced Scorecard: Measures that Drive Performance, Harvard Business Review, July-August 2005, pp.172-180. The following scorecard is an illustration of using the Balanced Scorecard as a strategic performance measurement system. The format is outlined in the above articles. Some key points need to be made about the content. Firstly, an objective needs to be SMART, that is, Specific; Measureable; Achievable; Realistic; and Time bounded. A specific objective is one where it is easy to determine how to measure it. Achievable and Realistic are determined through external and internal analysis. That is given the challenges that the organisation faces from external forces, and given its capabilities what is a realistic objective. No objective is useful unless we state some time frame for example: To increase Total Shareholder Return by 10% in 5 years. The measures in the scorecard below are obvious from the objective. If it is too hard to come up with a measure chances are the objective is too wishy washy. Although most organisations will have an overriding Corporate Financial Objective, I always start my Scorecard from the Customer perspective. As you can see from the Scorecard below, the initiatives for the Financial Perspective are built up from the other perspectives and only finance related issues such as Debt have their own initiatives.  Customer Objectives Measures Targets Initiatives (Strategies) To increase Customer Satisfaction % customer satisfaction or Cust satisfaction rating Examples: To reduce supply lead times To develop co-operative advertising To retain customers Number of customers lost To create a customer relationship team To increase market share Market share Expand to new international markets such as South America Become apparel company for high profile sports such as NFL Acquire other shoe companies Internal Business Process Objectives Measures Targets Initiatives (Strategies) To reduce production cost Actual production cost Examples Outsource to SE Asian lower cost countries such as Phillipines and Vietnam To meet quality standards Number of defects Number of ‘good’ products Eg 100% Conduct third party quality audits To reduce production times Actual production time Co-locate production with supply of raw material Learning & Growth Objectives Measures Targets Initiatives (Strategies) To increase number of successful patent applications Number of successful patent applications Acquire an apparel technology company Invest in Reasearch and Development To develop new products Number of new products launched Sales from new products Increase participation in trade shows Financial Objectives Measures Targets Initiatives (Strategies) To increase revenue Actual revenue Customer initiatives To increase profit Actual profit Both Customer and IBP To reduce cost Actual cost Internal Business Process initiaitives To reduce debt Debt to Assets ratio Divest underperforming assets