GUIDELINES FOR BUSINESS STRATEGY IMPLEMENTATION THROUGH BALANCED SCORECARD: A LIFE CYCLE MANAGEMENT APPROACH FOR VALUE CREATION Diego Iritani*, Diogo Aparecido Lopes Silva, Fabio Puglieri, Aldo Ometto * Email address:
[email protected]
1. INTRODUCTION
3. METHODOLOGY
Life Cycle Management (LCM) has become increasingly popular in several business sector last years. Most of the success cases of its use include the application of Life Cycle Assessment into business practices, which allow improvement on products and services life cycle. However, there is a broad field to be explored about how to include LCM into business process, especially considering companies’ strategic objectives. Balanced Scorecard (BSC) is an approach that could fill this gap, since its purpose is the deployment of strategic goals into operational and measureable objectives [1,2]. Accordingly, BSC could be used as an approach to link business strategy with operations contributing to long-term goals achievement focused on sustainability [3]. Although some articles have shown the inclusion of sustainability into BSC, this topic is still underdeveloped, especially regarding LCM.
In this research, Design Research Methodology was adopted (see Figure 1). During descriptive study stage, a systematic literature review was conducted [4] in order to identify how BSC has been used including sustainability and LCM concepts. The research string used was “(balanced scorecard) AND (life cycle management OR sustain*)”. 9 from 176 articles were selected and used to develop the guidelines.
2. OBJECTIVES This research aims to propose guidelines to include LCM into business strategy implementation process through Balanced Scorecard framework. Figure 1. Design research methodology (adapted from [5]).
4. RESULTS AND DISCUSSION According to [6], any performance measurement system has two elements: structural framework (framework specifying a typology for performance measurement) and procedural framework (a step-by-step process for developing and management of performance measurement).
Procedural framework: performance management has four iterative phases (adapted from [8,9]). Figure 3 summarizes the Sustainable BSC guidelines in the context of one business unit. A prerequisite for SBSC is the inclusion of LCM into strategic planning process [10].
Structural framework: four options for sustainable BSC were founded in the literature of which 2 were combined with life cycle thinking concept (see Figure 2). 1. Inclusion of Market environmental and social inefficiencies are issues into traditional not considered perspectives of BSC [3].
Design
2. Inclusion of fifth Consider market perspective to include inefficiencies and strategic environmental and support innovation social issues not considered by market system [3] 3. Derivation of a second BSC for environmental and social aspects [3]. 4. Substitution of financial and customer by sustainability and stakeholder perspectives [7]
Figure 2. Sustainable BSC perspectives.
Define scope of LCM and products life cycle [adapted from 10]; Identify stakeholders along product life cycle [adapted from 12,13]; Analyze and priorize stakeholders requirements [12]; Identify environmental and social hotspots [adapted from 3,11] Elaborate strategic objectives considering hotspots and corporate strategy [12,15] Classify objectives according to Triple Bottom Line and BSC perspectives [16] Design indicators based on strategic objectives [11] Establish cause-and-effect relarionships of objectives and develop sustainable strategy map [11,15,16] • Elaborate and priorize action plans [12]
Implement
• • • •
Implement indicators and actions plan [8] Collect data [9] Implement routines, goals and tools into business units’ activities and structures [15] Link BSC with other management systems (e.g. ISO 14001, ISO 9001, ERP systems) [12, 14, 17]
Use and Review
• • • • •
Collect data [9] Critical analysis [8,9] Review improvements [8,9] Register of lesson learned [9] Review business unit strategy [8]
Complex approach
Sustainability and stakeholders’ issues are explained
• • • • • • • •
Figure 3. Sustainable BSC procedural framework.
5. CONCLUSIONS
REFERENCES
• This research proposes guidelines for inclusion of LCM into BSC framework focusing on business strategy implementation • Lack of studies considering life cycle perspective into BSC • Lack of recommendations for implementation, use and review phases of performance management • Lack of empirical studies • Guidelines require detailing and support tools • Guidelines have to be tested in real cases
[1] Kaplan R, Norton D. The Balanced Scorecard - measures that drive performance. Harvard Business Review 1992; January-Febraury:71-79. [2] Kaplan R, Norton D. Linking the balanced scorecard to strategy. California Management Review 1996, 39(1):53-79. [3] Figge et al. The sustainability balanced scorecard - Linking sustainability management to business strategy. Business Strategy and the Environment 2002, 11(5): 269-284. [4] Conforto E, Amaral DC, Silva S. Roteiro para revisão bibliográfica sistemática: aplicação no desenvolvimento de produtos e gerenciamento de projetos. 8º CBGDP 2011, Porto Alegre: Brasil. [5] Blessing L, Chakrabarti A. DRM: a design research methodology. Springer: London, 2009,13-38. [6] Folan P, Browne J. A review of performance measurement: towards performance management. Computers in industry 2005, 56(7): 663-680. [7] Hsu et al. Using the FDM and ANP to construct a sustainability BSC for the semiconductor industry. Expert Systems with Applications 2011, 38(10): 12891-12899. [8] Bourne et al. Designing, implementing and updating performance measurement systems. IJOPM 2000, 20(7): 754-771. [9] ISO 14031. Environmental Management – Environmental performance evaluation – Guidelines, 2000. [10] Puglieri F, Iritani D, Ometto A. Integration of strategi planning and life cycle management: a discussion based on a literature review. Proceedings of the 6th International Conference on Life Cycle Management. Gothenburg:Sweden 35-38. [11] Reefke H, Trocchi M. Balanced scorecard for sustainable supply chains: design and development guidelines, IJPPM 2013, 62(8): 805-826. [12] León-Soriano R, Muñoz-Torres M, Chalmeta-Rosaleñ R. Methodology for sustainability strategic planning and management. Industrial Management & Data Systems 2010, 110(2): 249-268. [13] Tsen M, Lim M, Wong WP. Sustainable supply chain management – A closed loop network hierarchical approach. Industrial Management & Data Systems 2015, 115(3): 436461. [14] Krivopacic Z, Jovanovic J. Using Balanced Scorecard to improve environmental management system. Journal of Mechanical Engineering 2009, 55(4): 262-271. [15] Fulop et al. Developing of sustainable balanced scorecard for the chemical industry: preliminary evidence from a case analysis. Engineering Economics 2014, 25(3): 341349. [16] Oliveira et al. Sustentabilidade: da evolução dos conceitos à implementação como estratégia nas organizações. Produção 2012, 22(1): 70-82. [17] Länsiluoto A, Järvenpää M. Integrating greenness into a balaced scorecard in a food processing company. The TQM Journal 2012, 24(5): 388-398.
ACKNOWLEDGEMENTS: The authors wish to express their gratitude towards Fundação de Amparo à Pesquisa do Estado de São Paulo (FAPESP 2013/06735-9) and Coodernação de Aperfeiçoamento de Pessoal de Nível Superior (CAPES) for the sponsorship.
Engineering School of Sao Carlos
Department of Production Engineering
Life Cycle Engineering and Management Research Group
