Balanced Scorecard

Balanced Scorecard Strategic Planning & Performance Management January 10, 2017 Gaetano Lombardi PMO@HCL

PMI-NIC© - Tutti i diritti riservati

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Purpose • Give a short introduction on Balanced

Scorecard • Quick guide on how to apply Balanced Scorecard in Project/Program Management


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Content • Dashboard and Balanced Scorecard • Balanced Scorecard as Management Tool • Balanced Scorecard • Balanced Scorecard Application in Project

Management


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Dashboard Project Portfolio Dashboard

Project Dashboard


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Dashboard vs Balanced Scorecard Project Dashboard

Balanced Scorecard

Identify goals of the dashboard and metrics

Map business goals with a cause and effect link

Design a visual interface with charts and diagram

Define & Align KPI with business objectives

Monitor performance regularly

Define an action plan

Performance Monitoring

is used for

Strategic Planning & Performance Management

Operational

is more oriented to

Strategic

Source: adapted from www.BSCDesigner.com


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Balanced Scorecard The Balanced Scorecard is a strategic planning and performance management system that is used extensively in business

and

industry,

government,

and

nonprofit

organizations worldwide • to align business activities to the vision and strategy of

the organization, • improve internal and external communications, • and monitor organization performance against strategic

goals. Source: Balanced Scorecard Institute PMI-NIC© - Tutti i diritti riservati

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Conceptual Foundations It was originated in 1992

[1]

by Drs. Robert Kaplan

(Harvard Business School) and David Norton as a performance measurement framework that added

strategic non-financial performance measures to traditional financial metrics to give managers and executives a more

'balanced' view of organizational performance.

Ref [1]: Kaplan RS and Norton DP, "The Balanced Scorecard - Measures that drive performance", Harvard Business Review, 1992 Jan/Feb, pp71-79


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BSC: Usage and satisfaction quadrant

Source: Management Tools and Trends 2015, Bain & Company


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BSC: Usage and Satisfaction historical

Source: Management Tools 2015 – An Executive’s Guide, Darrell K. Rigby, Bain & Company


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Balanced Scorecard: success reasons • It has been a breakpoint in management culture

• It’s simple, as concept, to understand • Provide an easy way to communicate strategy and

business goals • Cascade and align organization • Performance Management

On the other hand • Effective implementation not so easy


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BSC high level conceptual process steps Formalizing Business Goals

Mission What we are today. The purpose of the company Formalizing Company’s Strategy

Vision

Business Goals

A top-level goal of the company

List or a map of business goals

Objectives

Strategy Map Cause-and-Effect connected objectives

Activities a company needs to follow

KPI for

KPI for

Actions

Progress Tracking

Progress Monitoring

Action Plan and Objectives

Source: adapted from www.BSCDesigner.com


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Balance Scorecard structure Management Part

Measurement Part

Mission / Vision / Values / Strategic Themes / Results Strategy Map/Objectives

Measures

Targets

Financial Perspective Customer Perspective Internal Perspective Learning & Growth


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Initiative

Four Perspectives


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Four Perspectives

Financial: If we succeed, how will we look to our shareholders? Customer: To achieve our vision, what customer needs must we serve? Internal: To satisfy our customers and shareholders, at which processes must be excel?

Learning and Growth: To excel in our processes, what must organization learn? PMI-NIC© - Tutti i diritti riservati

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Strategy Map – Classic Kaplan/Norton Productivity Strategy

Growth Strategy

Financial Perspective

Long-Term Shareholder Value Improve Cost Structure

Customer Perspective

Increase Asset Utilisation

Expand Revenue Opportunities

Customer Value Proposition Price

Quality

Availability

Selection

Function

Service

Product / Service Attributes

Internal Perspective

Enhance Customer Value

Partnership

Relationship

Brand

Image

Operations Management Processes

Customer Management Processes

Innovative Processes

Regulatory and Social Processes

Supply Production Distribution Risk Management

Selection Acquisition Retention Growth

Opportunity Identification R&D Portfolio Design / Develop Launch

Environment Safety and Health Employment Community

Learning & Growth Perspective

Human Capital Information Capital Organisational Capital Culture


Leadership

Alignment

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Teamwork

Strategy Map: Example Vision Perspectives

Strategic Themes

Objectives

KPI

Financial Perspectives

If we succeed, how will we look to our shareholders?

Make project profitable according to budgeted PM of xx %


To achieve our vision, what customer needs must we serve?

Increase Customer Satisfaction Through Superior Quality


To satisfy our customers and shareholders, at which prcesses must be excel?

Minimize Rework

Learning & Growth

LEAN Culture

To excel in our processes, what must organization learn?


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Target

Initiatives

Performance Management: KPI

Mission / Vision / Values / Strategic Themes / Results Strategy Map/Objectives

Measures

Targets

Financial Perspective Customer Perspective Internal Perspective Learning & Growth

Key Performance

Indicator PMI-NIC© - Tutti i diritti riservati

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Initiative

KPI: SMART

S

Specific: The KPI is clear and focused toward performance targets

M

Measurable: The KPI can be expressed quantitatively

A

Attainable: the KPI targets are reasonable and achievable

R

Realistic: The KPI is directly pertinent to the work being done

T

Time-Based: The KPI can be measured in a given time period


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KPI Example Vision Perspectives

Strategic Themes

Objectives

KPI

Target

Initiatives









Reduce Fault Slipping Through from Design to Test by… Fault Slipping Through is computed as …

Minimize Rework

Reduce fault slipping through from Design to Test

R: 15%, C: 20%, S: 30%

Improve Design Quality R: 15 % C: 20% S: 30%

Learning & Growth


LEAN Culture


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Improve testing activities in operation, Resp xx Report monthly statistical report on FST Design to FT, Resp xy

Align day to day work

Strategy

Vision & Mission

Strategic Objectives

Actions


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Cascading / Alignment

Tactics

Strategy

Tier1 Scorecard Tier 1

Strategy defined in a top level strategy map and scorecard

Tier 2 Scorecard Tier 2

Tier 2

Tier 2

Align strategy definition in business

Operation

and support unit scorecard

Tier 3 Scorecard Tier 3

Aligned personal objectives defined by job description and personal

objectives PMI-NIC© - Tutti i diritti riservati

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TIER 1 Example


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TIER 2 Example Vision Perspectives

Strategic Themes

Objectives

KPI

Target

Initiatives

R: 15%, C: 20%, S: 30%

Report monthly statistical report on FST Design to FT, Resp xy

0

Improve BUT by adding automated code inspection, Resp xx

x

Pilot and prepare training course and CI rule selection, Resp XX Plan and execute training, Resp XX








Improve Design Quality To satisfy our customers and shareholders, at which prcesses must be excel?

Improve Design Quality

BUT Effectiveness

BUT Effectiveness

Reduce fault slipping through from Design to Test by … Number of major CI violation recorded before release, equal to by

Learning & Growth


Reduce test cycle time by automated test


Trained Number of team in the use of xx tool by

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BSC Implementation: Project Manager/PMO • Organization widely uses BSC as Planning Management and Performance Measurement tool • It doesn’t


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Organization widely uses BSC


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BSC as management tool in Project / Program / Portfolio +

Optimism

+ Optimistic Replanning

Replanning

PM Intervention

+

+Project Delay + -

Forsake Low Visibility Tasks

Underestimation

+

+

+

Multitasking

+

Project Workload

Low quality

+ Quality of Work

+

Lower productivity

Productivity

Rework


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Example Vision Strategic Themes

Perspectives

Objectives

KPI

Target

Initiatives

Financial Perspectives Make project profitable according to budgeted PM of xx %




Increase customer / stakeholder confidence in our financial planning




Increase feature development predicability & ensure High priorities features delivery

Reinforce Architectural framework to enhance quick feature development

Ensure Delivery of High Priority Features as agreed in Product backlog

Effective AB studies proposal and selection Learning & Growth Enhance Estimation skills capability To excel in our processes, what must organization learn?

Enhance Feature Estimation Capability Develop Organization Performance DB for benchmarking

Improve Product Architectural Framework Performance

Must User Stories as in Sprint backlog releaseble by each sprint Must Feature as agreed at Wave planning releasable by each official Release Number AB Studies to be finalized to first Release Number AB Studies to be executed in first Release All developers trained to apply SPID technique by … Identify and share in project best practices / good examples in applying SPID by … Return of Investment computed as saved TR cost vs AB investment study by

Review in Sprint Retrospective the effectiveness of SPID estimation technique, Resp xx

95%

95% Prepare RCA on Architectural weakness based on identified stinker areas, Resp xx

3

Staff and execute studies, Resp xx

1

identification of Scrum Team and early involvment to refine AB improvement Product backlog items, Resp xx

100% Collect all Sprint Retrospective results and analyze SPID application, Resp.xx

2 30%

Involve PM and stakeholders to get AB funding for AB studies to be finalized in first release, Res

Establish Architectural Board

SPID Statistically Planned Incremental Deliveries, E. Miranda PMI-NIC© - Tutti i diritti riservati

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Summary • BSC it’s one of the most used technique for Strategic Planning and Performance Management. • It’s as much effective when it is used to plan /

communicate / align strategy of an organization, BUT it could be used for planning/align strategy for PMO or large program.

• BTW it can be used as well as Performance Management technique, even to address tactic /

operational level (project) PMI-NIC© - Tutti i diritti riservati

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Dashboard or Balanced Scorecard ?

Project Dashboard


Balanced Scorecard

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References • Articles –

Ref [1]: Kaplan RS and Norton DP, "The Balanced Scorecard - Measures that drive performance", Harvard Business Review, 1992 Jan/Feb, pp71-79.

–

Ref [2]: Kaplan RS and Norton DP. "Putting the Balanced Scorecard to Work, Harvard Business Review, September-October 1993. pp134-147 (Presents a series of cases about the balanced scorecard. Also documents Kaplan and Norton's process for developing a balanced scorecard.)

–

Ref [3]: Kaplan RS and Norton DP. "Using the Balanced Scorecard as a Strategic Management System". Harvard Business Review, January-February 1996 pp75-85 (Presents Kaplan and Norton's thoughts on how the balanced scorecard can be used as a strategic management system.)

• Books –

Kaplan, Robert S. and Norton, David P. The Balanced Scorecard: Translating Strategy into Action, Boston: Harvard Business Press, 1996.

–

Niven, Paul R. Balanced Scorecard Step by Step. New York: Wiley, 2006.

–

The Balanced Scorecard applied at Ericsson AB, Seminar paper, Anna Lena Bischoff

• Resources –

Balanced Scorecard Institute www.balancedscorecard.org

–

BSC Designer Professional Balanced Scorecard Software and Training http://www.bscdesigner.com/


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grazie!

Gaetano Lombardi Project Portfolio Business Manager @ HCL linkedin: https://www.linkedin.com/in/gaetano-lombardi-8239505?trk=hpidentity-name


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