Disney Balanced Scorecard

PREPARED BY GROUP 4:ANDREW MOLLOY

AMY MILLERMIKE ELICKER

The Balanced Scorecard: Customer Perspective,

Internal Processes, Learning and Growth

What is the balanced scorecard?

Developed in the early 1990’s by Dr. Robert Kaplan and David Norton "The balanced scorecard retains traditional financial

measures. But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation."


The Balanced scorecard is a management system that enables organizations to clarify their vision and strategy and translate them into action.

Provides an organization with feedback of both the internal business processes and external outcomes, which allows for continuous improvement of strategic performance and results.

Nerve center of an enterprise


The balanced scorecard is centered on four performance metrics or perspectives: Customers Internal processes Financial Learning and growth

When implemented properly, each one of these perspectives contains four subparts consisting of Objectives Measures Targets Initiatives


Objectives - what the strategy is to achieve in that perspective

Measures - how progress for that particular objective will be measured

Targets - refer to the target value that the company seeks to obtain for each measure

Initiatives - what will be done to facilitate the reaching of the target


The term “scorecard” signifies quantified performance measures and “balanced” signifies the system is balanced between: Short-term and long term objectives

Financial and non-financial measures

Lagging and leading indicators

Internal and external performance perspectives



Kaplan and Norton defined a four-step process that has been used across a wide range of organizations Defining the measurement architecture

For example will the system be used at the strategic business unit level rather than the corporate level.

Specify strategy objectives. These should be carefully decided upon and selected as

those deemed critical in achieving breakthrough competitive performance and limited in number to 15 to 20, or 3 to 4 in each perspective to avoid information overload.

Choose strategic measures These measures should be closely related to the actual

performance drivers and will later be used for evaluating the progress made toward achieving the objectives

Develop an implementation plan to integrate the scorecard into management.

Customer Needs

Who is your customer? What age, gender, group does our product appeal to?

What services or products do they expect from you? Do we provide personal services, do your products serve as

advertised? How do you listen to and learn from your customers?

Do we provide feedback calls or emails? How do you retain and acquire new customers?

Do we use new advertisement and how do we advertise? How do you meet customers’ needs?

Do we provide help lines and how can we provide help to customers? How do you measure customer satisfaction and dis-satisfaction?

Do we use surveys to find out how customers feel about us?

Customer Concerns

There are four major categories that managers need to address when concerning their customers.

Quality Are there often recalls or problems with defects with our products.

Time Do we save time by limiting defects and do we provide fast on time

delivery.

Performance and service Do we perform up to customers standards and do we provide fast and

adequate services.

Cost Do we try to minimize cost when dealing with ordering, scheduling

delivery, and paying for materials in order to lower cost of our products to our consumers.

Customer Perspective

With customer perspective managers and companies have to be careful and make sure they are setting up their balance scorecard to help customers.

Examples of things that don’t concern customers are profit per customer, revenue per customer, and improve profit per customer.

These objectives don’t necessarily protean to the customer perspective but rather the companies perspective of the customer.

Managers need to take a step back and look at how customers perceive your company and what they want to get out of your company.

Examples of Customers Perspective

Two main questions that a company should ask itself to protean to their customers are:

How should we appear to our customers Do we show a promising future Do we show a strong sense of concern

What is our differentiating value proposition to our targeted customers How are we different from our competitors What makes us better than our competitors

Perspectives of Kaplan and Norton

There are four broad categories that Kaplan and Norton base the customer perspective around.

Best buy Companies that supply services and products at low prices and fast

service.

Product leadership and innovation Companies that focus on customer that buy the newest and most

advanced cutting edge technology.

Customer complete solutions Companies that try to sell things like computers where customers

customize them to their liking.

Lock in Companies that will make a product then to buy accessories for that

product you have to buy the same brand name because other brands out work with that product.

Successful balanced Scorecards

When using critical thinking of strategy, objectives, and measures companies can get a feel for who their customers are and what they can offer them.

Strategy gurus, like Michael Porter stress the fact that it is more important to accomplish more with less.

Don’t try to please everyone when setting up your balanced scorecard because you can’t.

Internal Processes

Internal business process objectives address the question of which processes are the most critical for satisfying customers and shareholders A firm must concentrate its efforts to excel in these

areas

Metrics based on this prospective allow the managers to know how well their business is running and whether its products and services conform to customer requirements

Internal Process Examples

CostThroughput Quality

Objective Specific Measure

Manufacturing excellence Cycle time, yield

Increase design productivity Engineering efficiency

Reduce product launch delays Actual launch date vs. plan

Internal Processes

In addition to the strategic management process two kinds of business processes may be identified, these include:

Mission-oriented processes - special functions of government offices which often involve many unique problems in their processes

Support processes - more repetitive in nature.

Financial Performance

The financial performance perspective of the balanced scorecard addresses the question of how shareholders view the firm and which financial goals are desired from the shareholder’s perspective.

These financial goals are dependent on the company’s stage in the business life cycle.

Financial Performance: Business Life Cycle

There are three main stages to this cycle which include: Growth stage -goal of the company is growth

An example of a growth goal would be revenue growth. Sustain stage - the goal of the firm is profitability

Measures in this stage may include ROE, ROCE, and EVA. Harvest stage - the goal of the firm is cash flow and

reduction in capital requirements.

Financial Performance

Objective Specific Measure

Growth Revenue Growth

Profitability Return on equity

Cost Leadership Unit Cost

The table below outlines possible financial performance objectives and their metrics.

Learning & Growth

“How much a company must learn, improve, and innovate to meet objectives.”

Use of the scorecard:

To set objectivesTo determine measuresTo predict outcomesTo determine initiativesTo gain the big picture

Key performance indicators include:

Illness rate/days of absenceEmployee turnoverGender/racial ratiosInternal promotion %

A learning & growth example:

Objective: increase internal promotionsMeasure: bigger % of in house promotionsTarget: +10% in 2 yearsAdditional classes and training

“A balanced scorecard system provides a basis for executing good strategy well and managing change.”

-Howard Rohm

Learning & growth must focus on measurable outcomes to move the company forward.

Scorecard allows for actionable terms derived from company strategy.

Balanced Scorecard

Makes it easier for management to carry out strategy.

4 step process

Define measurement architectureSpecify strategic objectivesChoose strategic measuresDevelop implementation plan

Potential Benefits

Translation of strategy into measurable parameters

Communication of strategyAlignment of individual goals with strategic

objectivesFeedback of implementation results

Potential Disadvantages

Lack of a well defined strategyUse of only lagging measuresUse of generic metrics

Conclusion

Balanced scorecard is a performance management system that can be used in any size organization.

Allows management to measure financial and customer results, operations, and organization potential.

Documents

Disney Balanced Scorecard