Chadwick Balanced Scorecard
1 - Chadwick Balanced Scorecard introduction. The balanced score card approach and the measure everything and you might get what you want approach are very different. A measure everything approach is very unorganized and inefficient. Time and resources will be wasted measuring things that are not important to that particular organization. If everything is measured it will be hard to analyze and focus the information into useful data. The balanced score card approach to measurement is much more efficient and effective.
According to the Evans and Lindsey book the purpose of a balanced scorecard is to “translate strategy into measures that uniquely communicate your vision to the organization. The scorecard should consist of four perspectives: financial, internal, customer, and innovation and learning. These perspectives provide focus to the measurement and ensure that the organization captures the information that they need. The scorecard also organized the measures into leading and lagging. Lagging measures tell what has happened and leading measures predict what will happen.
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2. I feel that all of the parts of business strategy can be included in the portfolio of measurements. They can all be translated into operational measurements. Satisfying customer needs can be measured by market share and customer complaint rate. Minimizing cost to executing existing business base can be measured by operating profit after taxes. Investment in discovery of new compounds should be measured by analyzing working capital. Return/yield on development spending can be translated into an operational measure with net contribution and revenue from new products.
Other measures include: cost index for technical compounds, capital turnover, and inventory turns. There are a few measures that are still missing. First they have been having a problem releasing new products quickly. There should be a measure of new product development time. There could also be a measure on the impact of products that are suggested by the sales people. In the strategy there is a focus on employee training. This could be measured by hours spent on training and development and the impact on product lines. 3. The score cards from the divisions will and should be very different.
If the products are different then the measures should be different. For example in the pharmaceutical division more measures are placed on product development then would be in a less innovative division. I think there will be conflicts between the division’s scorecards and corporate. Corporate only wants hard numbers. But if only hard numbers are included then very important measures such as customer satisfaction would be missed. This should be resolved by the divisional leaders showing how soft data can be analyzed and should be used as a measure.