Reframe Case

CROSSHOUSE

Overview of CROSSHOUSE

This case study looks at the Balanced Scorecard implementation experiences of a European multi-national fast moving customer goods (FMCG) business. CROSSHOUSE is the name given to the organization examined in this case study. The identity of the organization has been disguised.

The case study analyses the implementation of the Balanced Scorecard of CROSSHOUSE from seven aspects; Standards, Application, Simplification, Management Information for the center, Growth and Diversity, Ownership and Space and Software.

Why Balanced Scorecards?

CROSSHOUSE decided to implement BSC to change its approach to strategic management. Changes to strategic activities including Planning, Communication and Performance Reporting were essential to trigger the implementation.

Balanced Scorecards Implementation

Initial pilot project was implemented for the design of the Balanced Scorecards. After that, CROSSHOUSE has designed 16 Balanced Scorecards. Standard BSC approach and implementation plan was developed (with minor changes). The developed Balanced Scorecards were one of the first to include the "destination" statement (part of the 3rd generation BSC).

CROSSHOUSE goal was clearly identified as to create Balanced Scorecard based management system to become a replacement for the organization's existing strategic and operational review processes

The documentation produced by the Balanced Scorecard design process become a strategic contract between the unit and centre. Achievement of the strategic contract would then be monitored by reference to the Balanced Scorecard measures and targets chosen by the unit managers.

Changes to the strategic planning and budgeting processes were applied to introduce greater clarity and focus concerning how discretionary projects would be initiated and approved. Capital spending approval process, for example, was modified so that approval became dependant upon showing how the associated project would contribute to the delivery of an agreed Balanced Scorecard objective.

CROSSHOUSE introduced Balanced Scorecards as part of a wider program to review and evaluate the strategic and operational processes.

The Balanced Scorecards were used as the main source of collecting information for managers and decision makers. Where a measure was out of a tolerance range, additional information about why and the likely actions to correct the performance were asked.

CROSSHOUSE designed and implemented BSC to promote increased clarity of purpose and communication quality between operating units and support functions on topics relating to the achievement of an overall strategy for the firm

All relevant managers were included in the design of the Balanced Scorecards. The project facilitation team in CROSSHOUSE trained up a member of the organizational unit to become the local 'Balanced Scorecard Support'. This person was given functional training in how to facilitate and maintain the Balanced Scorecard design. The project's internal facilitators were encouraged to emphasize during design meetings with managers the need to focus more on strategic action based on Balanced Scorecard measurement information and less on financial history. Relevant objectives, measures and targets were included in some scorecards addressing this particular part of the management process.

The Balanced Scorecards developed during this project were not automated using conventional management information reporting tools. For most of the design and deployment phases, specialized software was not used at all where Project documentation were created using standard office software and reported in paper format.

CROSSHOUSE found the cost of the software available was prohibitive when considering the expected usage and likely value gained. A simple but effective data capture / reporting tool was created. This tool provided limited functionality, but was technically fit for the task required of it. The project process did assume that managers would complete measure definition and target setting for their Balanced Scorecard by entering data into the software system

Benefits realized by applying Balanced Scorecards management system

The standard approach used when designing and implementing the Balanced Scorecards system facilitated the auditing of the balanced Scorecards design work. It built a common vocabulary within the organization to describe elements of the Balanced Scorecards.

Balanced Scorecards promoted internal discussions concerning strategy and helped managers transferring from department to another to learn about their new unit's strategy and performance.

Balanced Scorecard based management system, and associated changes to internal processes, were strongly favored by the unit management teams. Managers perceived changes as giving them a stronger authorization for local action without 'interference'.