Management Web Conference

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1 This document is 2GC Limited Better All rights reserved. Management Web Conference 3rd Generation : Practical Improvements to Facilitate Implementation and Maximize Success Answers to questions raised during / after the seminar GC Limited. All rights reserved. This document is protected under copyright by 2GC Limited. The following terms and conditions apply to its use: Photocopying - single photocopies may be made for personal use as allowed by national copyright laws. Permission from 2GC and payment of a fee is required for all other photocopying, including multiple or systematic copying, copying for advertising or promotional purposes, resale, and all forms of document delivery; Derivative Works Permission from 2GC is required for all derivative works, including compilations and translations; Electronic Storage or Usage - Permission from 2GC is required to store or use electronically any material contained in this document. Except as outlined above, no part of this document may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission of 2GC Limited. 2GC Limited Albany House Market Street Maidenhead Berkshire SL6 8BE UK +44 (0) info@2gc.co.uk

2 More information on 3 rd Generation? Rafael Rodriguez The presentation lacked clarity on 3rd generation. The slides were not that clear. Rafael Rodriguez Probably needs another session fully devoted to the details of 3rd generation. Milena Komitska Would you be so kind to send me more information about the 3rd generation Balanced Scorecard? Thanks. The 3 rd Generation concept is described in more detail in various papers and slide packs that can be downloaded from the 2GC web site. Top picks from the wide range available there are: Presentation: Performance Management & the 3rd Generation Document: The Development of Balanced Scorecard as a Strategic Management Tool Ask 2GC a question simply us at Ask2GC@2gc.co.uk and we ll send you a reply as soon as we can! We hope to offer additional web-seminars on aspects of 3 rd Generation design soon. 2GC also makes presentations at conferences, and you can attend 2GC Training Events. For details of forthcoming events, visit our events page: For regular updates on 2GC events, sign up for our update service: 2

3 On Destination Statements Rafael Rodriguez How different a destination statement is from Vision? All companies I know of, do have a clear destination. Managers know what they want to do, where they want to go, etc. How different is this from the destination statement? Zelia Carvalhais Could you explain again what is the novelty of the destination statement. I didn't get it Bette Francis I'm not clear how the destination statement supports the 4 (possibly more) perspectives of the balanced scorecard The leaders of most organisations declare that they have some long term goals for how the organisation will be at some point in the future - typically this vision is of an organisation that is different to the way it is today. Elements of such visions include views about strategic success, financial performance and organisational form, and are commonly used to provide stakeholders in the organisation (I.e. investors, customers, staff etc.) with some orientation concerning the nature of the organisation s goals. But typically visions are timeless (I.e. they don t include specific statements about when they will be achieved), and say little that is definitive about how the vision will be achieved. For example, a firm can have a vision to be market leader without being clear about how market leader is defined, when this achievement might be realised, or what it will need to do to achieve this aim. It turns out that the implications of a vision are often poorly understood even by those who wrote it: but such clarity is needed if you are going to decide how to monitor an organisation s progress towards it. A Destination Statement by contrast is a snapshot of what an organisation is expected to be like at a specific point in time: as the organisation works towards achieving the elements of its vision. Typically it is chosen for a date about 3-5 years into the future, but this does vary by industry and circumstance. The statement is very tangible and concrete, and describes to the best of the ability of the management team responsible for its achievement, what they are hoping to have achieved by then. Some elements of the Destination Statement are hard numerical targets - such as projected revenue / cost figures. Others are numerical, but deduced from the hard numbers (e.g. production capacity required to achieve forecast sales), and some elements are descriptive (of what the organisational culture will be like, perhaps). Typically only one Destination Statement is created, but in theory there could be many (for, say, several different years in the future). But what is common is that a Destination Statement is a much better starting point for Balanced Scorecard design - for many reasons. Destination Statements often are sub-divided into sections, each relating to a particular aspect of the future organisation - for example Financial Details, Work processes, Relationships with stakeholders etc. These headings are chosen to suit the context of the organisation designing the Destination Statement, but have strong parallels with the four perspectives found in 1st and 2nd Generation designs, and serve a similar purpose (to help managers focus on the issues that need to be reflected in the design). 3

4 On Use Mohamed Cassim What percentage of businesses do you see where the concept of the 3rd Gen has been implemented? Are you able to determine this by industry? Mirjana Mladic Are there any comparison available on improved implementation of strategy using 3rd Generation BSC? Guy Messer Can you give some telecom Balanced Scorecard examples? Surveys of organisations use of (and other Performance Management frameworks) are carried out periodically, but typically are not much use. The problem is not in carrying out the survey, it is in ensuring that the answers given are comparable. Some surveys have suggested that upwards of 60% of organisations in the US have implemented - but it is not known reliably what this actually means: either in terms of what the looks like, of how much of the organisation is using the, or if it still is being used. Anecdotal evidence suggests that the very large majority of s are 1st Generation designs, but most new designs have some 2nd Generation features - 9 years after 2nd Generation designs first emerged. 3rd Generation design ideas are beginning to take hold, but it is likely that it will be a few years before 3rd Generation designs become the norm. 2GC is currently writing two research papers that look at 3rd Generation implementation experience, to add to the case study already available from the 2GC Web Site (at One of these will look explicitly at the replacement of a 2nd Generation with a 3rd Generation design. To be kept informed on this paper s publication status, subscribe to the 2GC Update service at 2GC does not have any telecom case studies to share, but there are several available on the Internet. 4

5 Questions on Design Poonam Makkar J Mullen When you have a large organization with multiple business units, should you create measures and objectives at the top level and cascade it down or should you involve managers at the various levels and in each Business unit to create their own BSC? How long should the design process take? David MacGill What is the typical time in educating and implementing the balanced scorecard? Rachell Peterson What is your recommendation as to the best way to get management to understand that a scorecard takes time to implement. What if a scorecard has already been implemented but is not working? What are your recommendations? For various reasons, it is much easier and better to design Balanced Scorecards in complex organisations from the top down. Other levels of management typically develop their own Balanced Scorecards taking a starting point in the top-level Balanced Scorecard. Cascading of s will feature in a future Bettermanagement.com web seminar, but you can also read about it in the 2GC Paper Performance management system design in a devolved organisation that can be downloaded from the 2GC Web site ( To find out about future 2GC web-seminars, sign up for the 2GC Update service, at As noted in the presentation, design takes about three months. See page 32 of this presentation for more details. The lead up to the design of a can take up to six months (in our experience). The time is partly due to the time needed to educate top managers about the process they will need to follow to get good results, and partly due to having to wait for the best time (e.g. don t try and do a Balanced Scorecard design during financial year-end ). Our experience suggests that the best way to get managers engaged is to be open and candid about the issues that can help address, and about the full extent of their participation that will be needed to realise these benefits. The involvement of external specialists in these discussions (such as 2GC) can help greatly - but such involvement needs to be complemented by committed people within the organisation who have an interest in seeing best practice performance management being introduced. If an existing is failing, the best approach is to get someone to do an Audit of the tool, diagnose the problems, and come up with a plan to fix them. 2GC (naturally) offers such a service. In general it is much better to try and fix an failing Balanced Scorecard incrementally than to discard it and start again - as few existing s have no valuable features at all 5

6 Questions on Design Snezha Atanassova Ric Davies Aidan Clarke If a newly initiated into the knowledge of the BSc company would like to implement it, which is the right approach for the implementation process - to start from the 1st generation and to do it step by step or could possibly implement 3rd generation BSc from the very beginning. Does planning need to be detailed process or iterative process? Kaplan & Norton gave primacy to the financial perspective. I came across a multinational giving primacy to the customer perspective in a local subsidiary. I had hoped this seminar would resolve if the customer experience should get primacy, and what is the role of financial measures in these circumstances. If you don t have a currently, you should implement 3rd Generation designs in your organisation. 3rd Generation designs are simply better than those that went before: if you are going to go to the trouble of building a, you would be wise to give it the best possible chance of success by implementing a best practice solution design needs to be carefully planned to ensure that the process is tailored to deliver the outcome that best satisfies the reasons why the programme was initiated in the first place. Once designed, use of the has to be carefully planned and integrated with existing planning and control tools. Regular review meetings for monitoring progress in achieving objectives and discussing required management intervention have to be integrated with the existing management team meeting schedule. Reviews of the design also has to be scheduled and integrated with existing planning processes. To decide which perspective to put on top of the hierarchy; Financial or Customers, try asking yourself who are the masters that ultimately you serve; shareholders or customers? The Financial perspective is on top because it reflects the interests of the shareholders or owners. In commercial organisations they are usually the ones you need to satisfy in order for them to keep funding the organisation. Many government organisations put customers on top or next to the Financial perspective (Governance or Outcome perspective as many prefer to call it). This is not recommended because public sector organisations also have to satisfy first of all an authorising environment providing them with the funds to operate, be it a Department, a Minister or the Government as such. The best example of why it has to like that is the Tax Department, imagine if they had customer interests as top priority.. 6

7 This document is 2GC Limited All rights reserved. Preparing for implementation How 2GC can help If you are exploring for the 1st time we can help: Build a case for change - Give basic training - Provide management briefings If you are starting a project we can help: Supply advanced training - Design the project/programme Give presentations and briefings - Provide facilitation / project support If you already have a we can help: Give briefings on trends - Audit existing s Redesign / reset existing s - Providing coaching support Link to other management systems - Advise on software selection 7

8 This document is 2GC Limited All rights reserved. 3rd Generation To find out more Meet 2GC ( Conferences / Presentations March May SAS Forum Warsaw, Poland Forum Stavanger, Norway Training Events IPSM Conference United Kingdom March Lebanon April Malaysia, Singapore May United Kingdom, Malaysia 2GC Performance Management Resources ( Contact 2GC Presentations, FAQs, Case Studies, White Papers, Internet Links, Software Vendor database all free to access Let us know if you have a question you can t answer, we ll do what we can to help to Ask2GC@2gc.co.uk or call on +44 (0)