A Full &
Exhaustive
Balanced
Scorecard
Example
TED JACKSON | JUNE 30, 2015
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The Balanced Scorecard (BSC),
in my humble opinion, is one of
the best management reporting
frameworks available. Ive worked
with countless clients to integrate
the BSC, and know it like the
back of my hand.
But if youve landed on this page,
Im guessing you arent looking
for a simple, detail-less, contrite
description of what a scorecard is
and how to use it. You can find
those all over the internet. You
are probably wanting less of a
simple definition, and more of an
easy-to-digest, full and
comprehensive example.
So Ive created one.
Im going to break down what a
Balanced Scorecard isfrom
strategy mapping, to initiatives
and describe its intricacies in
detail.
Ive done my best to leave the
shop talk at the curb, and
explain this strategic methodology
in plain English. By the end, Im
sure youll have a better idea as
to what the Balanced Scorecard
is and whether or not it can help
your organization.
What Is A
Balanced
Scorecard?
You obviously cant determine if a
Balanced Scorecard will be able
to aid your organization until you
truly understand what it is.
A Balanced Scorecardoften
abbreviated as BSC is a
strategy management
framework.
Download Now:
Balanced Scorecard
Excel Template
Youll find plenty of more complex
definitions, but thats the extent of
what you need to know for now.
Before we go any further, its
important to note that creating a
Balanced Scorecard is only
possible if you already have an
organization-wide strategy in
place. The BSC doesnt actually
create the strategy for youit
simply acts as a strategy holder,
if you will.
The strategy youve created is
then organized in a strategy map,
which gives you and your
organization insight into your
strategy in a visual and concise
format. The creation of this
strategy map isnt quite as simple
as just dragging and dropping,
though. It is a fairly long and
detailed process. Lucky for you,
weve detailed every step of that
process in our Strategy Execution
Toolkit.
If you have a partial strategy (or
some people think you have a
strategy, but not everyone is
comfortable with it), then the
process of creating a Balanced
Scorecard will really help. You will
see the gaps in your thinking or
where your team is not on the
same page, and allow you to
integrate the strategy across all
departments.
Definition
Cheat Sheet
If youre just starting to learn
about the Balanced Scorecard,
youre going to see the words
objective, measure, and
initiative used regularly. Youve
probably heard them used before,
but heres a quick refresher
course on what they mean.
Objectives are high-level
organizational goals. When you
create an objective, you should
focus on what your organization
is trying to accomplish
strategically. A very general
example would be: Become an
internationally-recognized brand.
The typical BSC has 10-15
strategic objectives.
Measures help you understand
if youre accomplishing your
objectives strategically. They
force you to question things like,
How do I know that Im becoming
an internationally-recognized
brand? (Hint: Your measures
might change, but your objectives
will remain the same.) You might
have 1-2 measures per objective,
so you are aiming to come up
with 15-25 measures at the
enterprise level of your strategy.
Initiatives are key action
programs developed to achieve
your objectives. Youll see
initiatives referred as projects,
actions, or activities outside of
the Balanced Scorecard. Most
organizations will have 0-2
initiatives underway for every
objective (with a total of 5-15
strategic initiatives).
Action items typically arise
from review meetings, and are
tasks typically delegated to one
person or a small team. They
are technically not part of the
BSC framework, but they are part
of the management process as a
whole; they help to achieve key
initiatives in a timely and
organized fashion.
In Summary
You have a high-level goal in
mind, which is your objective.
The measures say, How will I
know that Im achieving the
objective? (In other words, they
allow you to see if youre meeting
your goals.) Then, the initiatives
are put in place to answer the
question, What actions am I
taking to accomplish the
objective? And finally, action
items help delegate out small jobs
that will allow you to complete
your initiatives. Keep in mind, you
may have multiple initiatives
focused on improving your
measures and achieving your
objective. And, if your projects are
not helping you improve in these
areas, you may need to rethink
your overall strategy.
Why Build A
Balanced
Scorecard?
There are many reasons why you
should implement the Balanced
Scorecard, but here is one way to
look at it.
Your leadership team is
responsible to some group of
people: either stakeholders,
shareholders, a board of
directors, a council, citizens, etc.
This depends entirely on the type
of organization. In order to
answer to this group, your team
needs to ask two important
backward- and forward-looking
questions:
1. How did we perform this past
month, quarter, and year?
2. How are we going to do next
month, quarter, and year?
In order to answer these two
broad questions, you need a
management system that is able
to to look backward and forward
(with leading and lagging
indicators). You not only need to
know todays performance and
predict tomorrows performance,
but you need to be able to
demonstrate how your spending
on strategic projects today will
help you improve your impact in
the future. The Balanced
Scorecard is the closest
management tool to a crystal ball
as you will find.
With that in mind, lets dive right
in to an example of what a
Balanced Scorecard looks like in
practice.
A Full &
Exhaustive
Balanced
Scorecard:
Upward Airlines
Reading A Balanced
Scorecard Strategy
Map
A Balanced Scorecard is more
than just a strategy map, but the
strategy map is an important
element. Essentially, mapping
allows you to put your strategy on
one page, in a language that
everyone can understand.
For this example, were going to
look at Upward Airlines, a
hypothetical airline loosely based
on Southwest Airlines strategy in
the early 2000s. I like to use
Upward Airlines as a teaching
example, because most people
have flown on an airplane (and
thus understand the objectives
listed in the map).
Want to see some
sample Balanced
Scorecard strategy
maps? Download this
free ebook with five
examples.
Reading a strategy map isnt at all
complicated, but if you havent
done it before, its good to know
where to start and what youre
looking at!
First, notice the vertical text on
the left side of the strategy map.
These are the four perspectives
of the Balanced
Scorecard: Financial, Customer,
Internal, and L&G (Learning &
Growth). These perspectives
make the BSC unique, because
traditional reporting frameworks
typically only look at the financial
perspective.
The 15 bubbles youre looking at
are Upward Airlines objectives
they are all filed under one of the
four aforementioned
perspectives.
Strategy maps are read from top
to bottom. The objectives are
listed in order of importance. So,
youll notice that the top goal of
Upward is their financial goal,
which is Increase Shareholder
Value.
Beneath the financial perspective
is the customer perspective. This
is because Upward believes that
the way theyre going to meet
their number one goal of
increasing shareholder value is
by making their customers happy.
So what makes the customers
happy? Well, Very Low Ticket
Prices and Frequent Reliable
Departures certainly do. And, the
cost and experience need to
beComparable To Other Travel,
like cars, trains, or buses.
Upward knows that to meet
financial goals and make
customers happy, they need to
focus on Innovation by
offering Fast Ground
Turnaround, Good Locations that
better serve their customers,
and Direct Routes to big cities.
Theyll foster good relationships
by creating Fun
Experiences where everyone is
treated well, and emphasize No
Elites, because they believe all of
their passengers are equals.
Finally, theyll focus on Cost
Effectiveness, by focusing on No
Frills, Standard Fleet, and High
Utilization. By not offering fancy
upgrades, keeping the planes
simple, and filling the flights
completely, theyre able to offer
affordable flights.
In order to execute all of this,
Upward looks at their final
perspective, which is Learning
and Growth. They believe in
offering High
Compensation, Flexible Union
Contracts, and want to
achieve High Employee
Ownership of the company.
So as you can see, each of these
perspectives directly relates to
the next, offering a ground-up
approach to strategy
management. For Upward
Airlines, this strategy is very
effective, and helps them ensure
that they continue to add value to
their firm.
Understanding A
Scorecard
(At this point, its important to
note that there are several ways
you can put together a BSCyou
can use a program like Excel,
Google Sheets, or PowerPoint, or
you can use reporting software.
For the sake of example, were
going to show you a BSC
in ClearPoints reporting
software format.)
What youre seeing in the image
above is what youd call a
scorecard view. It is less visual
than the strategy map, but
provides more detail into the
measures and initiatives that are
tied to each objective. Notice that
in the scorecard view and in the
strategy map, theres either a red,
yellow, and green indicator next
to the objective, measure, or
initiative. Green typically indicates
that everything is going as
planned, while yellow and red
indicate that there are various
degrees of trouble with whatever
is being looked at.
Now that you know how to
decode a strategy map, this
scorecard view requires little
explanation. Now, were going to
break down the details of an
objective, measure, and initiative.
Objectives
As previously mentioned,
objectives are high-level
organizational goals. That is why
they are listed on the scorecard.
They are typically the 10-15
strategic goals that your company
would like to see achieved.
When you click on an objective in
Balanced Scorecard software
say youre looking at High
Compensations in the L&G
sectionthis is what youll find:
Here are a few of the elements
youre looking at:
Owner: Youll notice that Mark
Cutler is the owner of this
objective, and is thus responsible
for it.
Description: This is the
company-specific description of
how Upward Airlines plans to
achieve the objective. In this case,
theres a pyramid-breakdown of
employee pay and benefits.
Average Wage: This is a way
to measure progress of how
Upward Air is doing. This chart
helps you understand what the
company is trying to achieve, and
what theyre actually achieving. (If
you click on the chart, youre able
to drill down into the details of the
measure.)
Children: Here we can see
how the divisions align to this
objective. This is a common
approach for bigger organizations
that have scorecards in their
divisions and departments.
Initiatives: This section allows
you to see how initiatives link to the
objective.
Measures
Measures help you understand if
youre accomplishing your
objectives strategically. The
measure tied to High
Compensation is Average Wage.
The Measure & Goal
Evaluation Toolkit
(Free Download)
Heres a look at the measureview in BSC software:
Youll notice some similar fields
and some that are different. Once
again, you have an owner and a
chart analyzing the target and
actual numbers for average wage
to better understand whether
goals are being met.
Here, youll also see a section for
Measure Data. This is important
because without data, an
organizations measures cant be,
well, measured. (Note: If youre
creating a BSC using a reporting
software, it will likely harvest data
both automatically and manually,
saving you time and effort in the
the long run.)
Initiatives
Initiatives, as I mentioned earlier,
are key action programs
developed to achieve your
objectives. They are often
referred to as projects outside of
BSC circles. One of the initiatives
tied to the Average
Wage measure and High
Compensation objective is
Redesign Employee Satisfaction
Survey:
Aside from some of the fields
youve already been familiarized
with, there are several additions
here:
Description, Analysis, &
Recommendation: This offers more
insight into why the initiative is
important, what its examining, and
how its should be accomplished.
Start & End Date, Budget:
These are specific to an initiative,
and must be noted.
Milestones: This helps
measure the progress toward
achieving this initiative.
Milestone Gantt Chart: This is
a visual way to understand where
Upward Air is at with their
milestones, which helps measure
initiative progress.
In Conclusion
This process has now come full
circle. You can see how every
objective listed on the strategy
map above is only going to be
met when measures, initiatives,
and action items are delivered
correctly and accurately.
So, if you walk away from this
article only learning one thing, let
it be this:
The Balanced Scorecard is
only useful if you report on it.
What I mean is, simple having a
scorecard doesnt help you
execute your strategyyou have
to actually put it to work. When
you integrate the scorecard
throughout your entire
organization, hold every report
owner accountable for being
timely and accurate, report
regularly, and make adjustments
as needed, youll see great things
happen.
