Different Strategies Lead to Different Scorecards

Recall that while Chipset follows a cost-leadership strategy, its competitor, Visilog, follows a product-differentiation strategy by designing custom chips for modems and communication networks. Visilog designs its balanced scorecard to fit its product-differentiation strategy. For example, in the financial perspective, Visilog evaluates how much of its operating income comes from charging premium prices for its products. In the customer perspective, Visilog measures the percentage of its revenues from new products and new customers. In the internal-business-process perspective, Visilog measures the number of new products introduced and new product development time. In the learning-and-growth perspective, Visilog measures the development of advanced manufacturing capabilities to produce custom chips.

Visilog also uses some of the measures described in Chipset’s balanced scorecard in Exhibit 13-3. For example, revenue growth, customer satisfaction ratings, order-delivery time, on-time delivery, percentage of frontline workers empowered to manage processes, and employee-satisfaction ratings are also important measures under the product-differentiation strategy.* Exhibit 13-4 presents some common measures found in company scorecards in the service, retail, and manufacturing sectors.

Exhibit 13-4

Frequently Cited Balanced Scorecard Measures

Exhibit shows frequently cited balanced scorecard measures.

Details are as follows: Financial Perspective Income measures: Operating income, gross margin percentage Revenue and cost measures: Revenue growth, revenues from new products, cost reductions in key areas Income and investment measures: Economic value added(This measure is described in Chapter 24) (EVA),return on investment. Customer Perspective Market share, customer satisfaction, customer-retention percentage, time taken to fulfill customers’ requests, number of customer complaints Internal-Business-Process Perspective Innovation Process: Percentage of processes with advanced controls, number of new products or services, new-product development times, and number of new patents Operations Process: Yield, defect rates, percentage of on-time deliveries, average time taken to respond to orders, setup time, manufacturing downtime. Post-sales Service Process: Time taken to replace or repair defective products, hours of customer training for using the product Learning-and-Growth Perspective Employee measures: Employee education and skill levels, employee-satisfaction ratings, employee turnover rates, percentage of employee suggestions implemented, percentage of compensation based on individual and team incentives Technology measures: Information system availability, percentage of processes with real-time feedback.