Challenges in Implementing the Balanced Scorecard in India/ Asia

Formerly Renaissance Worldwide

Cedar Experience

Sanjiv Anand Regional Director Asia/ Middle East International Management Consulting Practice Head

Cedar Plc Cedar House, 78, Portsmouth Road Cobham, Surrey KT 11 1HY Tel: +44 (0)1.932.584 000 Fax: +44(0).1.932. 584 001

Cedar Enterprise Solutions Pvt. Ltd. 703, Nirman Kendra, Off E. Moses Road Mahalaxmi, Bombay 400 011, India Tel: +91.22.4619800 Fax: +91.22.4619801

Cedar Enterprise Solutions Pte. Ltd. 8 Shenton Way #2304 Temasek Tower Singapore 068811 Tel: +65.372 1776 Fax: +65.323 7276

The enclosed material is confidential and proprietary to Cedar and is for the internal use of addressees only.

Cedar (formerly Renaissance) is a leading global management & IT consulting firm with offices in 9 countries. Cedar is owned by Alchemy Partners, UKs leading Private Equity firm with over 2 Billion Pounds of Capital under management. Cedar is a leader in the development & implementation of strategy using the Balanced Scorecard in the India, and Middle East region. In the last 3 years alone, Cedar has developed over 100 Scorecards for clients including Godrej-GE, BPL Group, RPG Cellular, Orange, Onida, Taj Group, Emirates Bank, etc. Cedar has developed Scorecards across a wide range of industry sectors including financial services, telecom, oil&gas, consumer products, software, hospitality and industrials.

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17 challenges stand between you and a successful Scorecard implementation.

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Challenges in implementing the Balanced Scorecard in 4 our region

Ability to Ability to Implement Implement

Design Design Phase Phase

Implementation Implementation Phase Phase

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Ability to Implement Ability to Implement

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Challenge # 1 Lack of Business Planning Process

9 of 10 companies cant implement can strategy. Business Planning Processes underdeveloped. underdeveloped. Takes a long time, nobody owns them. Worse, budget is a minor to a major fudge ! Strategic Planning guys are second class citizens.
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The Business Planning Cycle

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- Broaden Revenue Mix - Cross Selling Alignment Alignment with with Budgets Budgets Revenue Revenue Growth Growth

Entry Strategy Entry Strategy

Strategy Strategy Formulation Formulation

Strategy Strategy Implementation Implementation using Cedar using Cedar Balanced Balanced Scorecard Scorecard Objectives Objectives Measures Measures Targets Targets Initiatives Initiatives IT Strategy
Align Align Individual Individual Performance Performance Measures Measures

Market Market Competition Competition Products/ Products/ Pricing Distribution Distribution Regulatory Regulatory Issues

Financials Financials Customer Customer Strategy Internal Internal Processes Learning & Learning Growth

Risk Risk ManageManage- ManageManage ment ment - EBIDTA - RAROC - Credit Alignment Operating Operating Efficiency Efficiency - Business Transformation /BPR - Information Technology

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Challenge # 2 Confusion between BSC/ TQM/ EVA

Role of BSC compared to TQM and EVA. Tool versus measurement.

Integrate your BSC into your quality processes. Determine whether you need an EVA financial measurement or another relevant one.
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Challenge # 3 Do you have a strategy ?

Most Asian companies dont have a don complete strategy. They do have a financial and customer strategy, but little else. Lots of initiatives with no timelines & ownership.

Integrate your strategic planning and Scorecard Process. Complete it in 1 quarter or less every year.

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Challenge # 4 Who owns the process ?

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Finance versus HR versus Strategic Planning. Group versus Division, centralisation/ centralisation/ decentralisation. decentralisation. Everything has to be approved by the CEO ! Doesnt recognize the challenge in Doesn implementing the strategy.

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CEOs need to empower more.

Challenge # 5 High percentage of family owned businesses

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80% of corporations worldwide are family owned. Transition from Family Owned/Family Managed to Family Owned/Professionally Managed is a challenge. Inability of family members to get out of operations.

Scorecard will allow the family to better articulate their/shareholder expectations. Scorecard will allow the family to get a comprehensive view of organizational performance without having to deal with it everyday.

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Challenge # 6 Scared to be measured

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Measurement in our part of world, doesn often scares, doesnt motivate ! Less information is better. Annual performance review is in any case not linked to quantifiable performance, so why bother?

Scorecard will clearly define ownership at enterprise level. The Individual Performance measurement system can be made more effective as it is aligned to enterprise performance.

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Challenge # 7 Unwilling to spend

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Advertising spend effectiveness is not that quantifiable but thats OK! We all want to be strategy focused organizations. Initiative expenditure is OK, but strategy deployment is not?

Spend it. Payback is immediate !

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Design Phase Design Phase

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Challenge # 8 Selection of the wrong Scorecard coordinator and lack of resources

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Must be credible! Must be senior. Must have a comprehensive view of the organisation. Strong Analytics. Assign a team.

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Challenge # 9 Underdeveloped MIS systems/Data availability/Organisation charts

Lack of historical performance data.

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Updated Org. Charts are missing. Unwilling to do the hard work to get the data. Dont worry about 99.9% Don accuracy. If you cant get enough can information for the Balanced Scorecard, you are in trouble in any case.

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Challenge # 10 Unwilling to speak up ! And intelligently17

Sharing views openly in a meeting is risky. Easy to say it wont work. won work Worried more about the exception rather than the rule!

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Challenge # 11 Too many measures !

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Looking for the perfect measure. It doesn doesnt exist. 35-45 measures are chosen. Often it is 35too much. Cant get to agree on a sub-set of 20Can sub2025. Confused on frequency, and unit of measurement.
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Challenge # 12 Its raining projects !

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Too many projects. Ownership & value is suspect. Value to business is even more suspect. No inventory of projects exists.

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Implementation Phase Implementation Phase

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Challenge # 13 Lack of sustained CEO commitment. Whats important for the boss is important for me !

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Hes moved on to a new toy. He He says the wrong things. He doesnt act on lack of doesn performance. He tampers with the Scorecard to hide problems. Need to formally mandate the co-ordinator. Scorecard co-ordinator.
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Challenge # 14 Manual collection of data and Scorecard/budget numbers mismatch

Manual collection of data on a monthly basis becomes difficult.

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Need to automate the Scorecard. corecard. Difficulty in aligning Scorecard and budget numbers due to budget cycle. They need to match. Annual budget submission must be accompanied by Scorecard.
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Challenge # 15 Conduct the monthly review on time, keep the meeting focused and dont tamper with the Scorecard

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Even if the Scorecard is incomplete, substart with a sub-set and get going. Must have the monthly meeting, even if it is on the 10th, and some members are missing. Keep the meeting focused 3-4 hours. 3 Dont tamper with Scorecard design Don at every meeting. Focus on the right hand side the actual, targets/ projects. Annually review the Scorecard during planning process.

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Challenge # 16 Own & Communicate !

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Owners must own, take responsibility of both objective and project that is important to them. Dont expect the Scorecard Don coco-ordinator to do your job. Build a communication plan for the communication Scorecard. Communicate themes, create events/awards, creating a climate for action action.
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Challenge # 17 Stick with it

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For a successful implementation don of the Balanced Scorecard, dont treat it as another project. Only then will it help you implement your strategy knowledgably, measurably and rapidly.

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