Strategic Marketing: Planning and Control, Third Edition

The balanced scorecard widens the view managers have of the business
rather than concentrating purely on financial criteria. For each of these
perspectives the organisation has to create distinct objectives and at the
same time develop the accompanying performance measures. This
process also forces managers to understand many complex relationships
and to surmount some of the traditional functional barriers that hamper
strategic development (see Figure 7.4).

Strategic intent 145

Figure 7.4
The balanced scorecard (Source: Adapted from Kaplan and Norton, 1992, 1993)

The balanced scorecard approach also addresses one other potential
problem that of ensuring consistency between objectives. This can be dif-
ficult in practice because objectives are formed in a range of areas, at dif-
ferent levels and on different time scales (effectively objectives are formed
both horizontally and vertically through the organisation).

Strategic objectives Strategic measures

F.1 Return on capital :ROCE

F.2 Cash flow :Cash flow

F.3 Profitability :Net margin

F.4 Profitability growth :Volume growth rate versus industry

F.5 Reliability of performance :Profit forecast reliability

:Sales backlog

C.1 Value for money :Customer ranking survey

C.2 Competitive price :Pricing index

C.3 Customer satisfaction :Customer satisfaction index

:Mystery shopping rating

I.1 Marketing

• Product and service development :Pioneer percentage of product portfolio


• Shape customer requirement :Hours with customer on new work
  I.2Manufacturing


• Lower manufacturing cost :Total expenses per unit versus competition


• Improve project management :Safety incident index
  I.2 Logistics


• Reduce delivery costs :Delivered cost per unit


• Inventory management :Inventory level compared to plan and output rate
  I.4Quality :Rework
  I.L.1 Innovate products and services :Percentage revenue from pioneer products
  I.L.2 Time to market :Cycle time versus industry norm
  I.L.3 Empowered workforce :Staff attitude survey
  I.L.4 Access to strategic information :Strategic information availability
  I.L.5 Continuous improvement :Number of employee suggestions

Financial

Customer

Internal

Innovation and

Learning