2015 PALLADIUM BALANCED SCORECARD

HALL OF FAME
FOR EXECUTING STRATEGY® REPORT
2015 BSC
HALL OF FAME Dear Strategy Execution Leader,

It is with great satisfaction that Palladium shares with you

this report presenting the latest class of the Balanced

Table of Contents Scorecard Hall of Fame for Executing Strategy®. The

class of 2015 is comprised of ten diverse organisations
from around the world that have done what the vast
Bursagaz.................................................................. 4 majority of organisations have not: successfully executed
their strategies. The success of these organisations and
CHRISTUS Health.................................................... 7 their strategies is measured not just in market share,
but in value creation for customers and employees as
Club América.......................................................... 11 well. With our focus on catalysing the intentional and
enduring creation of economic and social value through
DeFacto................................................................. 16 our clients, projects, partners and investments, we are
especially excited about the impact of this Hall of Fame
Janalakshmi Financial Services............................... 20 class on various stakeholder groups, including their
local communities, patients, the urban poor and the
PlayCity Casino...................................................... 24 unemployed.

Portuguese Navy.................................................... 27 Since Drs. Robert Kaplan and David Norton launched
the Balanced Scorecard Hall of Fame programme at the
turn of the millennium, hundreds of organisations have
Renault Australia..................................................... 31
demonstrated the power of the Balanced Scorecard
framework and the criticality of core strategy execution
City Government of San Fernando.......................... 35 principles. Once again this most recent class of
inductees provides support for the idea that successful
Wanxin Media (Anhui Xinhua Media Co., Ltd).......... 39 strategy execution is enabled by strong leadership and
change management, clear strategic direction, aligned
organisation units and investments, engaged employees
and effective governance.
Among the similarities shared by evolved STRATEX model that includes I hope you enjoy reading about the
Hall of Fame organisations is that use of existing laws to ensure funding 2015 Palladium Balanced Scorecard
none of them are content following across fiscal years. At Renault Australia, Hall of Fame for Strategy Execution®
textbook methodology precisely as the CEO takes leadership commitment inductees as much as I enjoyed reading
espoused. Each inductee has the to strategy to the next level by having a their initial applications for the award.
ability to take the essence of a best one-on-one session with each new hire It is the successful track record of the
practice and innovate upon it so that it to explain the company’s strategy. In Balanced Scorecard, exemplified by
proves valuable to their organisation. the Philippine city of San Fernando, the these ten inductees, that has earned
CHRISTUS Health worked with city council makes strategy execution the framework distinction as one of the
Palladium to create an evolved method practices sustainable by legislating most widely used management tools in
for initiative portfolio creation that critical components like resourcing for the world.
quantitatively links initiative benefit to the Office of Strategy Management.
strategic targets. Club América created Regards,
a training course on the strategy that A new similarity you will observe in
each employee was required to take. this year’s inductees is an increasing
DeFacto recognised that fewer strategic trend towards making strategy creation
objectives than normal was essential to a democratised or highly inclusive
creating sufficient focus in an intensive process. For example, Bursagaz David McMillan
growth period. Janalakshmi, despite delegates strategy creation to a cross- Director, Hall of Fame Programme
being a for-profit entity, introduced functional team of employees, and
an additional perspective in their leadership plays a validation role.
strategy focused on social outcomes. The growing use of crowd-sourcing
PlayCity took a metred approach to tools has only served to enable such
cascading to ensure sustainability of the inclusivity in a more efficient way.
strategy management approach. The
Portuguese Navy protects resourcing
for strategic initiatives through an

2015 BSC Hall of Fame | 3

 Bursagaz
Established in 1989 by the state-owned BOTAŞ
Petroleum Pipeline Corporation and privatised in
2004, Bursagaz has a grid length of 5,496 km serving
650,000 customers in the Turkish city of Bursa.
With privatisation came a greater commitment to
strategy management and the introduction of its Balancing Stakeholder Needs
first-generation Balanced Scorecard system. In the The annual strategic planning process at Bursagaz begins with
ensuing years the continued growth and success of a Vision-Mission-Values survey of all stakeholders that considers
the organisation has been paralleled by a heightened areas such as corporate social responsibility, ethical behaviour
commitment to sustainability (economic, environmental and environmental awareness, alongside topics such as
customer and employee satisfaction.
and social) and the introduction of several innovative
approaches to strategy execution. The output of the survey is the input to a stakeholder expectation
Sustainability is of strategic importance at Bursagaz. balancing analysis, which balances the needs of shareholders,
customers, partners, society and employees, conducted jointly
‘Maintain Sustainable Performance’ is one of their by stakeholder representatives. This analysis defines, categorises
three strategic themes (or ‘top strategies’, as and prioritises the organisation’s strategic goals and activities
Bursagaz calls them) and houses objectives focused against social, environmental and economic dimensions, which
on sustainable results for shareholders, partners and then informs the content of the Balanced Scorecard system.
resource usage, among others. Moreover, Bursagaz
added ‘Sustainable Future’ as a fifth strategic
perspective on their Strategy Map.

4 | 2015 BSC Hall of Fame

Building a Strategy Kitchen extends to the overall model for integrating Supporting Strategy Execution with
The Balanced Scorecard assumed a broader strategy and planning. The Strategy Kitchen Process Scorecards
stakeholder focus at Bursagaz in 2010, when approach integrates many performance In addition to Balanced Scorecard systems
a participant in one of their regular Strategy improvement frameworks, such as Great at the corporate, departmental and individual
Kitchen meetings suggested exploring Place to Work, Investors in People, levels, Bursagaz also employs Process
critical success factors and reshaping the EFQM (European Foundation for Quality Scorecards. Using ARIS business process
Strategy Map perspectives accordingly. This Management) ISO 31000 Risk Management workflow, Bursagaz rewrites each strategic
suggestion resulted in five perspectives that guidelines, SAP GRC Methodology and objective in process terms and translates
more closely aligned to the organisation’s Sustainability Models, with the Balanced them into process-based objectives and
critical drivers of success and that, as one Scorecard system, which provides a strategic corresponding measures (named process
delegate put it, ‘reflected the real Bursagaz focus for the other models. Bursagaz has indicators to differentiate them from strategic
and not the Balanced Scorecard of another achieved great success against other model key performance indicators), targets and
company.’ Such tailoring greatly enhanced criteria: with a published score of 810 out of initiatives. They then score the correlation
employee buy-in. a possible 1000, Bursagaz is recognised as between strategic objectives and processes
a world-class benchmark organisation by the using a process integration and improvement
The Strategy Kitchen concept is itself an EFQM, and they were the first company from gap scoring matrix.
innovation to encourage employee buy-in and Turkey ranked in Europe’s top 50 companies
ownership of the strategy. Sixteen people to work for. For each of the highest-scoring strategy/
(six permanent and ten rotating annually) process correlations, they determine the
from different organisational layers dedicate current and desired process statuses and
42 workdays per year to the ‘kitchen’, where launch initiatives to close any significant gaps.
they work closely with the leadership team Inter-correlating process objectives ensures
to design and implement the strategic the initiatives in these scorecards behave like
management process. Indeed, in the last process operations.
iteration the leadership team accepted about
97% of kitchen recommendations without
any, or only minor, changes. A centralised
Office of Strategy Management, consisting of
three staff, manages the Strategy Kitchen.
Moreover, the Strategy Kitchen terminology

2015 BSC Hall of Fame | 5

 Using Technology to Enable Enhanced Performance Execution Premium
Applied use of technology has also been a critical enabler of strategic success Results from 2004-2014
at Bursagaz. In 2014, they shifted all manual inputs and outputs into an SAP- • Net profit rose from USD 2.8 million to USD 8.2 million
SSM strategy management module, making the interaction among strategies, • Gas volume increased from 324 million m3 to
objectives, perspectives and strategic and process models and initiatives more 3.1 billion m3
meaningful and visible to employees at each level. Data integration within the • Number of subscribers rose from 223,354 to 840,418
Business Warehouse, Business Planning and Consolidation modules provides • Customer satisfaction jumped from 56% to 90%
real-time data on strategic plan outcomes. • Employee satisfaction rates rose from 56% to 72.8%
• Emergency arrival time fell from 25 minutes to
Lessons Learned Along the Way 15.6 minutes
Now a decade into their scorecard journey, Bursagaz can point to a number of
key challenges they have successfully overcome. As an early scorecard adopter Future Focus
in Turkey, they lacked local expertise or other local companies to learn from. • Shift all individual scorecards onto Success Factors
Unsurprisingly, they experienced several common scorecard pitfalls: too many (SAP’s platform for HR management) and create a link
strategic objectives and measures, making it difficult to fully understand or even between Success Factors and SAP-SSM
monitor performance; lack of a clearly defined strategic business flow; and early • Increase the integration of SSM-BW and increase the
issues with managerial and employee commitment. They were also constrained percentage of automated strategic and process measures
by attempting to force their own strategic needs and thinking through the • Play a key role in integrating all of the EWE Turkey Holding
conventional four-perspective Balanced Scorecard model and terminology, which Group companies’ strategies into a single system to view
they eventually customised appropriately. Understanding that such flexibility is a the interaction among the group measures
key strength of the Balanced Scorecard system significantly improved strategic
focus and buy-in across the organisation.

6 | 2015 BSC Hall of Fame

CHRISTUS Health
CHRISTUS Health, a not-for-profit Catholic
healthcare system, has worked for nearly a century
and a half to advance its mission to ‘extend the
healing ministry of Jesus Christ’. By the late 2000s,
their geographic dispersion had evolved into a
regional structure, decentralised management, Opportunity Knocks
silos and even different vocabulary for talking about CHRISTUS Health’s heritage dates to 1867 with the establishment
the organisation and its strategy, all factors that of the first Catholic hospital in Texas. Over more than 140 years,
CHRISTUS Health grew into a major health network operating
detracted from their ability to fulfil their mission.
more than 60 hospitals and 175 clinics across multiple US
Beyond these internal factors, the major legislative states and in several locations in Chile and Mexico. Though the
changes that came with the 2010 passage of the organisation had been successful in the past, to continue that
Affordable Care Act, plus increasing competitive success it would need to operate more effectively, navigate the
pressures, forced the organisation to change. competitive landscape and grow strategically.

Jeff Puckett, EVP of Strategic Alliances and Group Operations,

summarised the mandate for change simply: to thrive in an
increasingly challenging environment, they must increase their
speed to results and improve their ability to have a positive
impact on their patients. He believed that by using the Balanced
Scorecard methodology (BSC) to create a direct line of sight
between the corporate, regional and individual facility strategies,
as well as to align those strategies with individual employees’
professional development goals, they would be positioned for
success.

2015 BSC Hall of Fame | 7

 Creating a Culture Shift One Company, One Language
Jeff recognised that fundamentally changing the way CHRISTUS managed Given CHRISTUS’ geographic dispersion and largely
strategy would require a shift from a holding company mentality to an operating decentralised management, individual business units
company mentality. Whereas previously individual units formulated and executed were used to a high degree of autonomy. The Strategy
their strategies largely independently, with different processes for each unit, Management Office, tasked with implementing the BSC, took
Jeff envisioned a consistent approach that would drive transparency and care to assure business units that their role was not to quash
accountability. Jeff and his team saw the magnitude of the challenge facing that autonomy by imposing brand new business plans, but
them from the beginning and approached the change with intentionality and instead to provide the unit with the tools to better express
patience, rolling out the new, consistent strategic planning approach in a slow and achieve their strategy.
but mandated fashion.
Creating a standard understanding of strategy across
The team knew that they would be successful when the corporate strategy was multiple units was a highly visible expression of the Strategy
well understood throughout the organisation, employees were using consistent Management Office’s influence. Business units’ strategies
language to talk about the strategy and everyone used the same methods rarely needed to fundamentally change to align with the
to measure success. CHRISTUS introduced new reporting tools, creative corporate strategy, but the way they expressed them did. For
communication platforms (such as a giant Strategy Map at the entrance of the example, where one business unit would express a strategic
employee elevator) and messaging tailored to multiple employee types to drive priority as ‘high patient satisfaction’, another would express
change at a steady pace. They were so successful that it became commonplace the same as ‘patient excellence’. Identifying divergent terms
to hear people discuss the progress they were making on strategic projects in for shared items of significance and creating a consistent
the hallways. vocabulary became a priority for the Strategy Management
Office. Communicating the strategic plans consistently took
CHRISTUS one step closer to becoming one company
instead of many operating companies.

8 | 2015 BSC Hall of Fame

Adapting to a Regional, Strategy Execution Gap Analysis
Multi-Tiered Board Structure In June 2012, with the BSC implementation well underway, the Strategy
Because of CHRISTUS’ regionally decentralised organisational structure Management Office decided the organisation was ready to take on
and the desire to reflect responsiveness to local needs, they have a more robust approach to strategic planning. In collaboration with
regional boards as well as a corporate board. Like the corporate board, Palladium consultants, CHRISTUS created a system to manage and
these regional boards naturally wanted to have input into the strategy prioritise strategic initiatives that they named Strategy Execution Gap
and remain abreast of progress, so CHRISTUS adapted their reporting Analysis, or SEGA. With SEGA, CHRISTUS quantified the gap between
and governance process to accommodate their multi-tiered board their current state and desired goals and evaluated initiatives based on
structure. their ability to close the gap, avoiding wasting precious resources on
initiatives that would not yield significant long-term impact. Each region
One regional board oversaw at least two hospitals and upwards of 20 would assess the intended financial outcomes and strategic impact
out-patient and clinical facilities. Rather than implement unique BSCs of each of their proposed initiatives, and that analysis in turn would
for each facility, they instead created one scorecard for the region be reviewed in aggregate at the corporate level to determine which
as a whole and two “daughter” scorecards, one each for the clinics initiatives were worth pursuing.
and the hospitals. The approach segmented and aligned their various
operating units towards a common goal for the region, which then fed The CHRISTUS team found that this approach ensured that the
into the overarching corporate strategy, gaining maximum benefits while financial impact of strategic initiatives was integrated with the budgeting
keeping down the costs associated with managing the process. process, whereas previously they had struggled to integrate the
operating budget and the capital planning process. SEGA also helped
better manage one-off initiatives, which previously lacked coordinated
planning processes between corporate and regional leadership.
Undertaking the SEGA process aligned various teams around each
initiative and ensured the resources each initiative required to be
successful. Further, quantifying the financial value derived from potential
strategic initiatives enabled CHRISTUS to tie the strategic measures on
each region’s BSC directly to leadership incentives.

2015 BSC Hall of Fame | 9

 Positive Momentum Execution Premium
Five years since launching a BSC-based strategy management system, Jeff Results from 2012-2015
Puckett’s slow-and-steady approach has paid off: CHRISTUS is increasingly one • Community benefit increased 14.7% from USD 16.3
united organisation with a shared approach to strategy. Today, their culture of million to USD 18.7 million
accountability and relentless focus on closing the gap between where they are • Philanthropy programme grew by 47% from USD 30.4
and where they want to be propel the strategy forward. million to USD 44.6 million
• Total operating revenue increased 38.2% from USD 186
Says Puckett, ‘It was critical for the success of our organisation to find a solution million to USD 257 million
to integrate and align fully… Over the past several years since adoption we have • Patient safety increased 9%
made great strides. Our organisation is thriving today and I can thankfully say our
strategies are aligned across the organisation.’
Future Focus
• Improve ability to assess, track and manage risk
• Continue cascading BSCs and Strategy Maps to gain
greater alignment throughout the organisation

10 | 2015 BSC Hall of Fame

Club América
(Club de Fútbol América SA de CV)
Club América is a professional football club based
in Mexico City, Mexico, and it is a subsidiary of
Televisa Corporation. Known by its millions of
fans as the Eagles (las Aguilas), Club América is
the most well-known and successful club in all of Club America
Mexico. In 2011, Club América faced significant Founded in 1916, Club América is a professional football club,
consisting of 200 employees, 75% of whom are players, coaches
financial and operational challenges, threatening and staff. Based out of the largest stadium in Latin America, the
the stability of its winning legacy. Implementing organisation consists of three teams, all of which play in Mexico’s
the Balanced Scorecard (BSC) has enabled Club professional leagues. Club América holds twelve league titles
América to challenge the traditional means by which domestically and nine FIFA-recognised club trophies. It is a
football teams are managed in Mexico. The Club’s subsidiary of the Televisa Corporation, the largest international
entertainment business in Latin America and the first of its kind in
leadership and employees can now employ the tools the Spanish-speaking world.
and frameworks to ensure its long-term profitability,
increasing the strength of the brand into the future.

2015 BSC Hall of Fame | 11

 Challenges On and Off the Field The Case for the Balanced Scorecard
After almost 100 years of winning history, Club América faced a turning point in Club América hired Yon de Luisa as Club Operations
the late 2000s when the team hit a drastic losing streak. In the 2008 Clausura President in July 2011. Aware of the challenges the Club was
Tournament, one of the biggest tournaments in Mexico, Club América’s premier facing, de Luisa recognized the need for Club América to
team placed next-to-last in the general standings, the first time since the 1950s. implement a new management model. Based on his own
That year the same team suffered twelve straight defeats, disqualifying Club prior experiences, he believed the Balanced Scorecard
América from the playoffs. (BSC) would meet that need. He recognised three primary
challenges preventing Club América from achieving its full
By 2011, it became clear that the Club was experiencing significant challenges off potential both on and off the field.
the field as well. EBITDA numbers had been consistently negative, and revenues
from key sources like television and sponsorships plummeted. Between 2008 and First, Club América’s internal back-of-house operations
2011, the Club cycled through three different team managers, and on November 8, and processes were weak. Like many other Mexican clubs
2011, the Club president stepped down. backed by large corporations, Club América’s reporting was
limited to tracking scores and reporting the monthly and
annual financial statements to Televisa’s financial department.
The parent company did the rest.

While not uncommon within the industry, this centralised

model of management negatively impacted the Club’s ability
to scout players, implement appropriate training programs
for players and coaches and effectively manage resources to
buy and transfer players on the ground. Neither coaches nor
staff had been trained or positioned to manage effectively.
De Luisa realised that in order to make the Club successful
again, he would need Televisa to give Club América
employees the training, authority and autonomy to drive
accountability.

12 | 2015 BSC Hall of Fame

Second, Club management structure was Initial Resistance Alignment with the Parent Company
proving ineffective. With one president, a In 2009 the Club’s senior management had De Luisa needed to ensure that the new
team manager and no board, the Club lacked tried to implement a BSC with the support strategy was optimal for Club América
sufficient governance. Poor internal capital of a third-party consultant who didn’t but also aligned with Televisa. A well-oiled
management had contributed to financial understand the unique nature of the business, operational machine, Televisa had had
challenges for several years. De Luisa so convincing Club América’s leadership team its own BSC for decades, complete with
recognised that this organisational structure to adopt the Balanced Scorecard proved no cascades down to support units. These units
would have to change to better support an easy task. included IT, Purchase and Warehouse, Tax,
effective governance approach. Investment Projects, Personnel, Financial
The 2009 attempt failed terribly. Without Planning and Budget Control, Administration,
Third, the Club itself had no strategic strong leadership in place, the Balanced Properties and Maintenance. In many ways,
direction. Leadership had yet to delineate Scorecard did not generate buy-in. Because Televisa Corporate had given autonomy to its
a tactical plan to turn the Club around. of the nature of Club América’s relationship support units to manage strategy how they
Strategy had largely consisted of broad with Televisa, employees had minimal saw fit. Similarly, Club América would have
financial projections in response to operational accountability and therefore little the autonomy to manage its strategy, using
Televisa’s expectations. There was incentive to drive strategic or cultural change. Televisa’s examples as templates, where
little to no operational alignment with Senior management walked away from the applicable, and aligning certain objectives, as
strategic objectives. Employee roles and experience convinced that such activities needed.
responsibilities for executing strategy were were a waste of time.
also not clearly articulated. Perhaps most
importantly, mechanisms were not in place to De Luisa worked tirelessly to assure the
manage the evolution of a strategy. De Luisa leadership team that although change
knew that this had to change. would be hard and uncomfortable, it was
the only way to turn Club América around.
The organisation needed to do more than
just business as usual; it needed to drive
incremental change through strategy
management. It took several months, but de
Luisa managed to convince the leadership
team to roll out the BSC.

2015 BSC Hall of Fame | 13

 Redesigning Corporate Governance The Imperative Nature of Education
De Luisa recognised that the Club would need to redesign its organisational Using Televisa Corporation’s strategy guidelines, de Luisa
structure and governance in order to support continued strategy management. began with educating each and every employee of the Club,
First, a Football Board was created as the corporate governance entity of the including scouts, managers and players. Employees who had
Club, which would be responsible for the oversight of the strategic plan. Second, previously relied on the parent company’s shared services
Club leadership was revamped. Roles were created for two presidencies (one for were all incentivised to take on more responsibility.
operations and one for sports), instead of one single authority. Further distribution For all 200 employees, fundamentals and concepts
of accountability and a clear delineation of responsibilities enabled the organisation workshops, tools and methodology training sessions, strategy
to further accelerate the BSC deployment. and project management workshops and culture workshops
were held to make sure that when the Club strategy finally
Identifying the Vision launched, everyone would be capable of communicating
The strategic vision identified during the subsequent creation of the Strategy Map using the same terms.
and BSC was for the Club to ‘achieve year by year on-field success and growing
profitability’. In order to sign and develop great football players who propelled Communications Up and Down
financial and on-field results, the Club delineated other objectives, such as short- De Luisa also implemented a highly effective and
and long-term effective scouting and improved resource allocation for buying and comprehensive communication plan, which included strategy
transferring players. Club América also reworked its mission statement to more town hall meetings, extensive communication campaigns and
closely align with Televisa’s corporate objectives: ‘providing attractive live content focus groups on strategy communication effectiveness. All
to our parent media company for broadcasting’. organisational functions – sport, financial, risk, commercial,
social and traditional media, operations, marketing, talent and
culture – were included. At each phase of implementation
and cascading, employees were enabled to honestly feel: ‘I
understand the strategy; I know what I need to do to execute
the strategy; I am the strategy.’

14 | 2015 BSC Hall of Fame

Accuring Wins Execution Premium
By 2015, Club América had created and implemented a highly effective Balanced • Won Clausura in 2013 and 2014
Scorecard. The hard benefits the Club garnered were numerous. For the first time • Won CONCACAF Champion’s Cup in 2014-15
in its 100-year history, Club América saw positive EBITDA numbers, increasing
revenues from key sources: TV rights, sponsorship and match day, among others. All remaining results from 2011­-2014
The generation of data for decision making was far more streamlined than in • EBITDA increased from MXN -27.8 million to 56.4 million
the past. Progress was monitored closely by the Football Board through annual • Profitability of players increased 9.7%
strategy review meetings and the establishment and operation of the Strategy • Fan participation increased between 12% and 27%
Management Office. • Television ratings increased 13.8%

The soft benefits were also clear. A key challenge to achieving the Club’s strategic
goals was to improve the work environment to create a more collaborative culture. Future Focus
Following implementation of the BSC, annual surveys showed an increase in work • Ensure greater alignment of Club América’s strategy with
environment satisfaction, leading the Club to apply for and receive recognition as a that of Azteca Stadium
‘Great Place.’ • Improve the initiatives execution methodology by hiring
certified project management professionals and working
more closely with Televisa’s Corporate PMO
• Expand the role of the Strategy Management Office in
supporting the management team

2015 BSC Hall of Fame | 15

 DeFacto
DeFacto is one of Turkey’s leading and fastest growing
apparel retailers. Established in 2003, DeFacto now
has 282 domestic and 51 international stores.
DeFacto implemented a successful growth strategy
with a greater emphasis on customer focus and
innovation, ultimately delivering USD 598 million Successful Rapid Growth
in revenue as of the end of 2015. Supporting this Succeeding in an industry as fast-moving and competitive as
strategic shift required reworking the Balanced retail requires agility, clear direction and knowing when it is time
Scorecard system and enhancing the focus on to switch focus, amongst many other capabilities. When its first
engaging more than 8,900 employees in the head store opened in Istanbul in 2004, DeFacto’s initial focus was
on rapid growth and building brand awareness. With a vision
office and stores. to reach 215 stores in Turkey by 2015, they achieved market
differentiation by offering basic and comfortable products at
affordable prices.

In 2010, with the brand firmly established domestically, the

strategic focus became more international. To be ‘a global brand
expanding in ten important countries within ten years’ became
the new corporate vision.

16 | 2015 BSC Hall of Fame

First-Generation Balanced Scorecard Amidst all this change, the organisation also introduced a new C-level
Around the same time, DeFacto introduced its first-generation Balanced management structure, with some members recruited from outside
Scorecard system, primarily as a tool to align employee deliverables Turkey. The purpose was to shape the organisational structures and
with the strategic fast-growth expectations of the leadership team. processes necessary for a multinational company, while maintaining the
agility and speed needed to thrive in the fashion industry.
The first version did not include a conventional Strategy Map. Rather,
each perspective contained a single objective, such as ‘Be a global Second-Generation Balanced Scorecard
brand growing fast in all channels’ for the Growth perspective (Financial As a result of all these shifts in strategic focus, the leadership team
perspective) and ‘Up-to-date, comfortable, casual designs at affordable revamped its Balanced Scorecard system. A central change was the
prices’ for its Product (Process) perspective. This simple approach and introduction of Strategy Maps in order to manage the strategic planning
adapted terminology helped create awareness and alignment. process more quickly and with greater focus, to provide an effective
tool to communicate strategy from senior managers through to store
Creating the ‘Wow’ personnel and to create even greater alignment across the organisation.
Effect Through Innovation
Faced with fast-changing customer demands and greater competition Through a series of workshops, they defined six strategic focus areas,
both locally and from international brands, in 2015 the leadership which they distilled into the corporate Strategy Map.
team adopted a more customer-oriented approach to its strategy Each objective is supported by a set of strategic measures called
with a sharper differentiation – without sacrificing their commitment to deFactors. The name creates a clear distinction between strategic and
their ten-year growth goals. They launched a new vision: ‘Be a global operational measures in both usage and discussions.
fashion brand creating a “wow” effect.’ The ‘wow’ effect would be a
differentiator in both products and the customer experience (with a A further distinction is made at the initiative level through tracking
greater emphasis on women shoppers, rather than its historic primarily the top ten strategic initiatives, selected by the senior team based
male focus). on greatest impact on business results and strategic priorities. Each
initiative is owned by a C-level manager who tracks progress as well as
Unusual for an apparel business, DeFacto also introduced innovation revenue, OPEX and CAPEX impact.
as a method of differentiation. Its first innovative product was a t-shirt
that changes colour with sunlight. The launch was a huge commercial
success with over one million t-shirts sold, sending a clear message of
the importance of innovation to all its stakeholders.

2016 Hall of Fame | 17

 Spreading Happiness In the plan, DeFacto uses different types of communication
Recognising that the successful delivery of strategic initiatives and other platforms to engage employees with strategic priorities. One
improvement activities requires engaged employees, DeFacto took the unusual of them is ‘Listening to You Meetings’ with all employees, in
step of creating a Happiness Department, headed by a Happiness Manager. which they share strategic priorities, critical projects’ progress
The department launched a Happiness Project to increase company loyalty reports and financial details. In addition, online platforms like
(staff turnover is a major issue in the apparel industry) and focuses on improving e-learning platforms, Departube video platforms and other
processes such as communication, motivation, environment, working hours, offline internal communication tools are used effectively.
compensation and training and development. There are also happiness rooms for
breaks and an online e-learning platform, Departube, which includes ‘Happiness Supplier Engagement
Conversations’ between staff and members of the leadership team about DeFacto places an emphasis on supplier engagement:
company successes or the personal experiences of leaders. ‘Being a Preferred Partner’ is a theme on the Strategy Map.
Measures to track supplier satisfaction rates are supported
Making Change Happen Through Strategy Management by interventions to improve suppliers’ processes and increase
The organisation set out to instil an appetite for change. Ironically, their success up their efficiency. For example, a Supplier Funding System
to 2015 became a barrier to change. Employees felt that if the company had been accommodates suppliers that require funds earlier than the
so successful – why change? payment due date. This project has succeeded in creating
value for suppliers and significantly improving business
To strengthen the case for change, the shareholders entered a strategic relationships.
partnership with the global investment firm Franklin Templeton (who purchased
a minority holding). This partnership reinforced the message that DeFacto is
passionate about being a global brand, and new C-level managers took on the
role of change delegates.

Moreover, a dedicated strategy communication plan focused on helping

employees understand and feel the change. A key tool here was a Vision for
Change, which captured the priorities of the organisation’s first period (2005-14)
– start-up approach, expansion focus and fast, results-oriented behaviour – and
those of the second period (2015- ) – innovative thinking, customer focus and
international focus.

18 | 2015 BSC Hall of Fame

Lessons Learned Along the Way Execution Premium
Now in the seventh year of their scorecard journey, DeFacto can point to several Results from 2009-2015
key learnings. In their first period, their main challenge was measurement, as • Revenues increased from USD 54 million to
the systems required to collect and analyse data were either inadequate or did USD 598 million
not exist. They remedied this challenge by creating an in-house IT department • Market share rose from 0.4% to 4.2% to become the
to develop these capabilities. In their second period, their main challenges have second-largest brand
been managing the change process in the company and creating awareness. • Number of stores increased from 60 to 333
Using Strategy Maps for internal communication is proving to be a powerful tool • Employee satisfaction rate improved from 55.2%
in addressing these issues. Indeed, the strategic management process within the to 66.9% (2014)
organisation is now positioned as a change management tool. • Employee loyalty rate went up from 61.2% to 74.9% (2014)

Future Focus
• Build a systematic strategic initiative management process
by using a system integrated with the Balanced Scorecard
reporting systems
• Launch a Balanced Scorecard reporting system and
mobile application for the executive team
• Broaden the use of scenario planning and war gaming
tools throughout the strategic planning process
• Further develop the risk management processes to
support rapid growth and foreign investments

2015 BSC Hall of Fame | 19

 Janalakshmi Financial Services
In developing countries like India, access to basic
financial services like bank accounts is an important
enabler of economic development. Without a simple
bank account, small business owners have trouble
paying suppliers and hiring help; individuals have
nowhere safe to save their money for life events and
their elderly years. In 2006, three-quarters of adults Write Your Own Story
At Janalakshmi, a recent tagline has been the invitation to ‘write
in India had a cell phone, but only four in ten had a your own story’. Certainly this phrase encourages customers
bank account. to dream about the possibilities for their life that are enabled by
Janalakshmi Financial Services was founded just basic financial services like microloans and insurance products.
Writing one’s own story is also a powerful notion for Janalakshmi
outside Bangalore with its sights on improving employees.
the financial inclusion of India’s urban poor. After
several years of operation and impressive growth, A typical Janalakshmi employee has a profile similar to that of a
the organisation decided that Strategy Maps and target customer. He or she is more than likely from a family that
Balanced Scorecards would help manage ambitions identifies as urban poor. They will typically be just out of high
school, and Janalakshmi will be their first or second job. They
for future growth while keeping the organisation are literate, but will join the company with very limited knowledge
aligned. Less than a year later, in 2011, the of business concepts. A job at Janalakshmi represents real
microfinance industry in India found itself in crisis, and opportunity not only in terms of reliable income but in terms of
Janalakshmi was losing money. exposure to fundamentals of finance and business. Employees
that choose to leave the organisation do so with foundational
knowledge and skills that will serve them well in their professional
journey. The opportunities that Janalakshmi affords its employees
makes it an employer of choice.

20 | 2015 BSC Hall of Fame

Engaging Talent One of the many communication channels is Janalakshmi’s
One of the key principles of executing strategy is ensuring that all comprehensive on-boarding program. All employees must take this
employees understand the basics of what the strategy is and know how 21-day course developed in partnership with one of India’s leading
they individually contribute. Janalakshmi’s youth as an organisation was universities. Among other topics, the training includes presentation
an advantage; there had not yet been sufficient time for the company of the company’s strategy in a video message from Chairman
to build norms that would have to be broken to instil a strategy- Ramanathan, discussion of how the Balanced Scorecard framework
focused culture. However, Janalakshmi would have other challenges works and training on the benefits of performance measurements and
to overcome, including a constant influx of new staff and the relatively use of dashboards
low business literacy of new hires. These headwinds required a robust
approach to engaging every employee. Competition and Recognition
Like many organisations using Balanced Scorecard, Janalakshmi
Employee engagement started with communication – and lots of it. has an incentive compensation programme that links an individual’s
The company needed to get key messages about the strategy across metrics to the strategy. To keep employees aligned and focused, most
to more than 7,000 employees on a regular basis in a way that was individuals have four or five metrics on which their performance is
inspiring, relevant and easy to understand. As Janalakshmi’s Chairman, gauged. Each banking centre (‘Jana Centre’) has a slightly larger set of
Ramesh Ramanathan, put it, ‘We have managed to socialise [our metrics on which each centre’s manager is evaluated. Incentives are
Balanced Scorecard] throughout the organisation and everyone knows granted based on an individual’s performance.
that there is no Plan B!’ That socialisation required a variety of channels,
repetition and adherence to two communication principles: (1) simplify
and (2) use graphics.

2015 BSC Hall of Fame | 21

 Jana Centre results are published in the monthly newsletter in an effort to be Information is Power
transparent and provide additional motivation to drive performance. Jana Centre One of Janalakshmi’s strategic themes is ‘Cutting-Edge
heads can see the Balanced Scorecard results of all other centres to understand Operations and Technology’. With so many customers and
the relative performance of their team. In some contexts, this sort of transparent transactions and with the need for biometrics to help
competition can have unintended consequences for collaboration and knowledge ensure account security, a robust technology platform is
sharing. The high-growth nature of the microfinance industry in India mitigates this absolutely critical.
risk; Janalakshmi believes that the demand for financial services is nearly infinite in
the short and medium term. Performance transparency has helped to raise the bar The platform allows for a compelling tie between data and
because Jana Centre heads have the data needed to set their sights higher than the company’s performance management approach. Each
the average. In one anecdote, when the Dunlop Jana Centre head pointed out his measure in the performance management system needs to
centre’s above a ­ verage performance to his zone head, the zone head replied by meet certain criteria to ensure it will be reliable and repeatable
raising the bar, encouraging the centre head to compare his team’s performance over time. These criteria include a prohibition on self-reporting
against the best centres across all zones instead of the average. of data (e.g., individual representatives counting the number
of conversations they have had about a loan product). Strong
Beyond performance incentives and friendly centre-level and regional competition, measure definitions in combination with data storage systems
Janalakshmi rounds out its approach for engaging employees through a genuine enable weekly updates of personal metrics, dashboards and
commitment to recognising excellence. The Chairman periodically gives out Balanced Scorecards. This frequency of information allows
awards to recognise above-and-beyond contributions. One year, one of the award for constant feedback on an individual’s performance and
recipients was a woman who had never been more than a few kilometres from faster issue identification and decision making.
home. When she was selected to fly to Bangalore to receive an award from
Mr. Ramanathan, she was very apprehensive about the trip. Management could
have viewed the employee’s trepidation as an excuse to eliminate hassle and
save on travel cost by sending the award via courier. Instead, senior managers
expended a notable amount of effort in personal conversations and logistics
planning to ease her anxiety and ensure she would be able to receive the
award in person.

22 | 2015 BSC Hall of Fame

Evolution of Focus Execution Premium
With dozens of new Jana Centres being opened each year, the company needs • Global Impact Investing Rating System (GIIRS) Platinum
a way to ensure the efficient and successful ramp-up of each centre. Instead for three years running
of each centre developing its own strategy during start-up, they use a standard
model, including a consistent Jana Centre Balanced Scorecard that captures Results from 2011-­2015
the common elements of the approach. Once a location becomes well • Return on assets went from negative (during
established, it is encouraged to use the local market insights it has gained Janalakshmi’s unprofitable period) to 2.28%
through customer service to start tweaking its approach and focus more • 20-fold increase in the size of the loan portfolio
strategically on select priorities. • 1,114.38% increase in the number of customers
• 3.5 times as many Jana Centres (banking centres)
Return to Profitability • Turn-around time for loans decreased from 9 to 6 days
Janalakshmi emerged strong from the microfinance industry downturn; a good • Staff productivity increased 78%
strategy, combined with persistence and discipline, paid off. ‘We are completely • Staff attrition rate decreased 3% while the number of
committed to the Balanced Scorecard framework,’ Chairman Ramanathan said. employees grew at a rate of 61.5% annually
‘Balanced Scorecard is like yoga – you get out of it what you put into it.’

Future Focus
• Develop on-demand dashboards updating in real time
• Create new Balanced Scorecards to support new support
units (e.g., Credit Risk and Collections)

2015 BSC Hall of Fame | 23

 PlayCity Casino
A decade of explosive growth positioned PlayCity Casino
as an attractive gaming destination and casino in Mexico.
PlayCity, a subsidiary of Mexican multimedia conglomerate
Grupo Televisa, began operations in 2006 with its first
casino in Puebla, Mexico. With fewer than a thousand
slot machines, PlayCity had MXN 57 million (about USD
5.3 million) in revenue that year. The next several years Initial Strategic Planning
In 2010, the PlayCity leadership team resolved that new strategic
included plenty of challenges to cope with, including changes must be made in order to successfully compete in the
continued unprofitability and competitive threats. After industry and to gain significant market share. The team started
three years of aggressive expansion and with a total of 26 by designing the first formal strategy for the company to address
establishments in operation, PlayCity finally reached its an extremely competitive time in the gaming industry in Mexico.
financial break-even point in 2009, seeing MXN 1.0 billion Later that same year, PlayCity realised that a more integrated
approach was necessary to facilitate refinements to the strategy
in revenue and EBITDA of MXN 54 million. At this inflection as the industry changed and to ensure that strategic changes
point, PlayCity leaders wondered how the organisation were executed effectively. As a result, PlayCity developed and
would sustain positive momentum. In the meantime, the launched its first Balanced Scorecard (BSC) with particular
casino industry was doing itself few favours; nearly 60% of focus on strengthening the company’s operations, delivering
casinos in Mexico were not fully complying with regulations outstanding service and aligning the organisation.
nor completing tax payments as required by authorities.
PlayCity leaders had growing concerns that the upcoming
2012 election cycle would mean greater industry scrutiny
and regulation that could stymie growth.

24 | 2015 BSC Hall of Fame

Engaging Talent PlayCity leveraged its corporate communications department
The young company faced numerous executive management changes and its Strategy Management Office to communicate the strategy
over a five-year period – two chief executive officers came and left; throughout the organisation. Together they developed a multi-platform
three chief marketing officers oversaw and implemented marketing communication plan to communicate important messages in multiple
plans; and two human resource officers worked on managing a high- ways through a variety of different channels. This multi-pronged
turnover workforce. During this time, they instituted an executive board approach – including monitoring reviews, corporate intranet sites,
to work in conjunction with the executive leadership to oversee and electronic bulletins, banners, posters, trainings, wallpaper and mailings
ensure the success of PlayCity. – was essential for a geographically dispersed workforce with a variety
of working hours, roles, learning styles and education levels. The
During this period of transition and change, the use of the BSC to communications department measured each channel’s performance to
manage strategy remained constant. Although the executive board did better design and implement communication channels in the future.
not always agree on exactly what the strategy should be, they all agreed
that the BSC was an extremely effective structure to manage strategic PlayCity’s strategy would not be fully successful if front-line employees
decisions. Because the BSC was successfully embedded within the could not understand it in a way that was personally relevant, so the
organisation, new leaders found it easier and faster to use the existing company ensured that employees had opportunities to interact with the
strategy management process rather than creating new strategy strategy in their daily activities. There were large posters in employee
frameworks. These new leaders would simply refine the objectives, break areas, Q&A contests promoting curiosity and critical thinking
measures, targets and initiatives that were already in place in order to fit and town halls inviting discussion among other methods. Interactive
their new vision. and informal conversations about strategy allowed employees to get
comfortable with it and to voice how their role mattered to achieve
Tackling the Turnover Challenge initiatives and objectives.
Gaming is historically a very high-turnover industry, with nearly 100%
turnover annually within the industry in Mexico. PlayCity’s leadership PlayCity’s leadership team designed a training program called ‘Escuela
team recognised that there was great value in decreasing the turnover Play’ to develop skills and increase employees´ knowledge of the
rate, which would indicate improved employee engagement, lead to business. By ensuring that their employees were knowledgeable about
improved customer service, result in decreased on-boarding costs the strategy, bought-in to contributing and enabled through training,
and increase retention of operational knowledge within the company. PlayCity increased their employees’ sense of personal purpose in the
A few key levers would prove critical: communication, relevance and company, resulting in a significant reduction in employee turnover.
development.

2015 BSC Hall of Fame | 25

 Loyalty Reality Exposed Execution Premium
A key feature of the Balanced Scorecard process is the use of strategic measures • EBITDA margin increased from 7% in 2010 to 28% in 2014
to monitor the progress of objectives. PlayCity enjoyed this facet of the framework • Revenue grew at a compounded annual growth rate of
when strategic measures brought to light problems with the loyalty programme. 11.90% between 2010 and 2014
• Average revenue per user increased from MXN 400 in
A casino’s loyalty programme is a key tool for gathering customer-specific data. 2012 to MXN 700 in 2014
When a customer opens a loyalty account, the casino immediately gathers certain • Slot machine utilisation surpassed its target achieving
demographic information and is able to track detailed playing history. Before 42.2% in 2015, an 8 percentage point increase over 2013
the BSC, that data was not evaluated as part of a holistic strategic hypothesis. • Customer dissatisfaction decreased 30% between 2012
Transactional loyalty data may have seemed positive in aggregate but was not and 2014
sufficiently analysed with a focus on ultimate customer and financial outcomes. • Annual employee turnover rate decreased from 82% in
The CMO examined the loyalty programme in the context of the new BSC and 2012 to 71% in 2014
realised that the current loyalty programme was not creating value for PlayCity; in
other words, customers were receiving incentives but company financial results
were not improved. Future Focus
• Shift the strategy and the cascade design from focusing
PlayCity overhauled their loyalty programme based on a better understanding of narrowly on operational efficiency to promoting product
the relationship between transactional loyalty programme indicators and measures leadership while maintaining efficiency
of customer and financial outcomes. The new programme enhanced the loyalty • Develop tailored KPIs to address the needs of local
customers’ experiences while increasing their frequency and duration of visits. business unit customisation

Play On
PlayCity has made great progress by using its strategy to address uncertainty
about the future and to spur a systematic approach to managing its strategy.
Better financial and operational results have certainly followed. As José Antonio
García González, Televisa’s VP and Corporate Administrator, put it, ‘PlayCity has
significantly improved its profitability while growing in terms of revenues. The BSC
methodology has been key in achieving this.’ While PlayCity accomplished its most
recent strategy, the work is not over. As the company readily admits, ‘When one
goal is accomplished, it’s always right onto the next one.’

26 | 2015 BSC Hall of Fame

Portuguese Navy
Protecting national interests at sea and contributing
to international security within NATO, the European
Union and the United Nations is the mandate of the
12,000 employee-strong Portuguese Navy and its
44 ships (37 of which are combatant).
The Navy introduced the Balanced Scorecard in A History of Change
As one of the oldest national maritime forces, the Portuguese
2009 to bridge the gap between a strong strategic
Navy is no stranger to change and the challenges it brings. By the
process and decentralised implementation in a very same token, it is adept at adapting to a new course. Portugal’s
diverse organisation. Excellence in strategic initiative integration into the European Union and NATO in the 1980s
management and the deployment of technology brought a fresh slew of challenges for the Navy. The resultant
have been central to their success. concerted efforts to improve strategic planning capabilities
(leveraging some of the best practice methodologies available at
the time) led to major advances in the Navy’s efficiency, but more
importantly effectiveness.

Ultimately these efforts resulted in a set of doctrinal strategic

documents launched in 2004, which incorporated three ‘Navy
Paradigms’ (management models): Operational, Structural and
Genetic. These paradigms would eventually become three of the
perspectives of the Navy’s Strategy Map. A fourth perspective,
‘Mission’, sits at the top of the map and captures the social value
the Navy creates.

2015 BSC Hall of Fame | 27

 Powering Change through Strategic Initiatives A state-of-the-art Enterprise Project Management (EPM)
A set of new Navy Admirals and their closer staff introduced the Balanced system (which plays a key role in initiative selection) is then
Scorecard to close an identified gap between strategic planning and real-world used to plan and monitor initiative roll-out. The EPM is
execution. They considered strategic initiatives the real ‘muscle of strategy’, integrated with the Navy’s custom-built strategic information
where the real work of strategy takes place. The Navy has paid close attention to system (called SMC-GE), which is used to manage the
seamlessly integrating project management capabilities into the overall strategic overall strategy execution; this integration enables the flow
management process. of information and insights from the EPM to inform strategic
decisions. The Navy correlates analysis of the behaviour
Integration starts with the Corporate Strategy Map (which has just 12 objectives of the measures that support strategic objectives with the
to focus squarely on what really matters in driving performance forward). Each behaviour of associated initiatives. This holistic strategic
candidate initiative is subjected to a rigorous assessment against the key strategic performance analysis enables management teams to take
drivers of the target objective. The cause-and-effect relationships between timely action to remedy performance shortcomings by, for
candidate projects and associated strategic measures are then analysed to example, by assigning more resources to initiatives. Powerful
determine the collective impact of the initiative portfolio in closing identified gaps business intelligence capabilities for reporting and making
between current and desired future performance against the objectives housed in data-driven strategic predictions are embedded into the
the Strategy Map. SMC-GE to strengthen the decision-making process, most
notably within the monthly initiative review and quarterly
The final portfolio is further rationalised through the Navy’s STRATEX (Strategic strategic review meetings.
Expenditure) process and available people resources. STRATEX funding protects
strategic investments from business-as-usual calls on financial resources. Indeed, Strategy management/project management integration is
strategic funding is approved by the Ministry of Defence and this protection furthered through their network of ten Project Management
is guaranteed through Portuguese law (called the Programming Military Law): Offices (PMOs) – one corporate and nine departmental,
operational initiatives are funded separately through the Navy’s own budget. which mirrors the Balanced Scorecard alignment structure
within the Portuguese Navy (one corporate and nine
departmental scorecards). Through its governance structure,
the PMO oversees the implementation of the portfolio of
initiatives, each of which has a dedicated project manager
and strategic measure owners who report to the relevant
strategic objective owner.

28 | 2015 BSC Hall of Fame

Senior Officers Drive the OSM The Critical Role of Leadership Lessons Learned Along the Way
In 2010, the Navy established a strategic core Assigning critical strategic responsibility to As a long-established, large and complex
team, composed of nine MBA graduates, senior officers is in keeping with the Navy’s military organisation (an in-house joke goes
to aid overall strategic governance. Three overall approach to strategy management. ‘and we also have ships!’), assuming a
sub-teams are each responsible for At the outset of the Balanced Scorecard consistent, focused approach to strategy
supporting departmental teams in managing program, the Chief of Staff ensured the management and execution comes replete
the scorecard process. The Executive support and leadership of the nine Admirals with many challenges – both structural and
Coordinator (a Naval Captain) reports to heading the nine departments and created cultural. The cultural challenges were a key
the Navy Staff Director (Rear-Admiral). Four a strong central strategy team that could reason why senior managers were assigned
others are assigned on a part-time basis (and pilot the implementation. Senior leaders to lead the effort: they had the authority to
are of Commander rank) and the rest on an continue to be closely involved in the strategy drive change but were also well versed in the
ad-hoc basis during the strategy cycle. management process – from formulation to workings of the Navy as a whole, as well as
alignment (strategic, operations, budgetary its values, global doctrine and cultural norms.
and HR) and implementation. The Admirals
heading each department report their A further early obstacle was the classic
strategy execution progress and challenges to challenge of identifying the right measures
the Chief of the Navy. This deep involvement and initiatives that support the strategic
signals their commitment and promotes buy- objectives at both corporate and
in from their own reports and personnel. departmental levels. They overcame this
challenge by implementing an automated
process that synchronises measures and
initiatives in terms of their cause-effect
relationships and therefore impact on
objectives.

2015 BSC Hall of Fame | 29

 An additional challenge is continuity: in military organisations personnel typically Execution Premium
switch assignments every three to five years. Continuity requires ongoing Results from 2011-2015
communication, training and change management, as well as clear direction from • Homologous variation rate of the maritime surveillance
the most senior team. Luís Manuel Fourneaux Macieira Fragoso, the Portuguese and patrol effort increased from 4.63% to 8.19%
Navy Chief of Staff and National Maritime Authority Admiral, comments, ‘I have • Homologous variation rate of inspection/survey effort of
established a set of challenging genetic, structural, operational and mission goals vessels increased from -1.94% to 8.7%
to be achieved during my three-year term through corporate strategy anchored • Programming Military Law (military investment) annual
in Naval Strategic Doctrine, our Values and Culture, and using the invaluable implementation rate rose from 87% to 99.88%
Balanced Scorecard as the overall framework to my strategic Directive for the • Employee motivation rate increased from 67.5% to 78%
Navy. Now, our sailors [and] our personnel know the course, the navigation
conditions and restrictions, but also the way-points and selected harbour [to
which] we are sailing together.’
Future Focus
• Further develop the SMC-GE tool for use as the strategic
information system of the overall Portuguese Public
Administration
• Improve communication and understanding of the
Portuguese Navy Strategy Management Doctrine
• Increase the number of people with an academic profile
related to strategic management by motivating and
supporting officers and other personnel to take master
degrees in strategy-related areas
• Improve integration of strategy management and risk
management models

30 | 2015 BSC Hall of Fame

Renault Australia
A subsidiary of the France-headquartered Renault
Group (the world’s third-largest automobile
manufacturer), Renault Australia has been active
in the Australian car market for over 110 years.
However, declining sales and continued losses
placed the company’s future in Australia in jeopardy A Burning Platform
by 2010. Ranked as the 25th automotive company in the Australian market
in 2010, Renault only represented 0.02% of all car sales in that
A new Managing Director and largely new year, with just 1,907 units sold. Renault Australia’s business was
leadership team championed the Strategy Map in a dire situation: sales were falling consistently, the business
and Balanced Scorecard as the strategy execution was losing money, morale was low and many automotive
framework and dramatically improved performance. commentators were speculating that Renault would soon be
exiting the Australian market. With the platform clearly burning,
Unwavering leadership commitment and a focus
Renault Australia appointed a new Managing Director, Justin
on aligning the employee base to the strategy were Hocevar, with the remit to significantly increase sales, market share
critical success factors. and profitability. Upon bringing in a largely new leadership team,
Hocevar saw immediate success, increasing sales by 89% and
doubling the market share in 2011.

2015 BSC Hall of Fame | 31

 As Easy as 1, 2, 3 Leading through Adversity: The ‘10+10 Plan’
Understanding that they needed to build sustainable growth in the business, the new Despite the early gains for the new leadership team, Renault
leadership team crafted an ambitious 2012-2016 strategy, which was built around Australia faced a watershed moment in late 2013 that
three key themes: (1) putting people first; (2) doubling the distribution network; and (3) threatened to undo all of the successes of the previous
tripling sales volume. The simplicity of the strategy made it easy to communicate to two years. Due to negative global economic forces and a
the staff, who knew it as 1, 2, 3. rapidly devaluing Australian dollar, Renault’s global business
recommended drastic budget cuts and price increases that
Part of the commitment to put people first was the need to reengage a largely would have halted Renault’s Australia’s momentum. By using
demotivated workforce. During the creation of the corporate strategy, Renault the Strategy Map as the guide, Renault Australia revised their
Australia established a core team to allow a greater cross-section of employees to business plans and prepared a counter offer to its parent
be involved in the strategy creation process, which in prior years had been done in company that maintained existing investment levels and that
isolation by the senior team. This new inclusive approach helped build trust in the would deliver greater sales volumes and profits. The ‘10+10
new management team and ensured a greater buy-in across the business as the Plan’ provided a roadmap for Renault Australia to achieve
core team joined the management committee to become champions of the strategy 10,000 vehicles sold and 10 million Euro in profit in 2014.
and its formulation and execution process. Using the Balanced Scorecard to manage their progress,
Renault Australia sold 10,014 cars in 2014, a 43% increase on
In early 2012, Renault Australia built a Strategy Map and Balanced Scorecard to 2013, and achieved the forecasted 10 million Euros in profit.
describe and measure their strategy and align the broader organisation to the
strategic goals. The development of the Strategy Map was led by the management
committee, ensuring their ownership of the strategic objectives. The resulting map
contained three key strategic themes: re-establish the brand, be customer-centric
and strengthen the dealer network. The core team then took responsibility for leading
the development of the Balanced Scorecard, thus ensuring that identified measures,
targets, etc. resonated with and would receive buy-in from employees. To maintain
core team influence, team members attended the monthly strategy review meetings.

Once the corporate Balanced Scorecard system was finalised, Renault Australia
began the process of aligning the organisation to the strategy, with all departmental
and individual KPIs aligned to the strategic objectives.

32 | 2015 BSC Hall of Fame

The Critical Role of Communications As a powerful example of communicating the importance of the
Key to Renault Australia’s success was the leadership team understood strategy, all new starters had a one-on-one session with Justin
that they were key to driving change throughout the organisation. Hocevar to personally educate them on Renault Australia’s strategy
The change management programme they implemented had and Strategy Map. This ensured they understood the importance
communication at its heart. Through a series of open company forums, the organisation places on strategy and the role of the map, and it
the leaders shared their vision for the company and encouraged demonstrated that execution is driven by, and championed by, the
employees to ask questions and become involved in building its future. executive leadership team.

They made a concerted effort to align the culture of the business to

the strategy to allow all employees to take ownership of the success
of the business. Key to this effort was aligning employee performance
objectives to the strategy to ensure there was a clear line-of-sight for
each individual demonstrating how they personally contributed to the
strategy, and as such, the company’s success. Monthly emails from the
Managing Director to all staff and quarterly company-wide meetings
outlining progress towards the strategy further reinforced this message.

Furthermore, at the end of each year a strategy execution survey of all

employees was conducted to identify key areas for improvement. The
management committee members were champions for renewing the
strategy with the core team and worked together to update the strategy
through a series of interviews, offsite meetings and workshops. This
process helped deepen cultural buy-in to the strategy and its execution.

2015 BSC Hall of Fame | 33

 Ensuring Strategy is at the Top Execution Premium
of the Leadership Team’s Priorities Results from 2011-2014
Leadership commitment has been a critical success factor • Sales have grown by 176%
throughout Renault Australia’s strategy journey and continues to • Market share has increased from 0.02% to 1%
be the secret to their success. Their 100% focus on the strategy is • Profit has increased 26-fold
measured each month when they come together to monitor their • Increase in dealer numbers in excess of 200%
performance against the strategy. Each member of the leadership • Awarded as a ‘Best Employer in Australia’ in 2015, one
team is accountable for both corporate measures and initiatives. They of only 15 companies to be recognised and the only
form an integral part of each management committee team member’s company from the automotive industry
personal KPIs and drive their remuneration. A living and breathing • Employee satisfaction with learning and development
part of their everyday activity, the Balanced Scorecard system is increased from 33% to 90%
the foundation of Renault Australia’s business, its turnaround and
continued success.
Future Focus
• Automate the strategy management process through data
warehousing in order to allow greater integration of data
from all sources to derive insights
• Revise the existing strategy to provide direction for the
coming five years to further stretch and grow the business

34 | 2015 BSC Hall of Fame

City Government of San Fernando
Located within the main island group of Luzon,
Philippines, the City of San Fernando, La Union is
the administrative capital of Region I, the nation’s
northernmost cluster of provinces.
With about 658 employees serving a population of
around 125,000, the City was a pioneer Balanced A ‘Dream’ Pilot: The Journey Begins
In 2004, the City of San Fernando, La Union (CSFLU) was selected
Scorecard adopter within the Philippine government
to pilot the Performance Governance System (PGS), an adaptation
and is proving a global innovator in cascading of the Balanced Scorecard for public sector organisations in the
strategy execution to the village level. Philippines. Selected by the Institute of Solidarity in Asia (ISA, a
non-partisan, not-for-profit organisation), the city was named a
‘dream city’ pilot to underscore the importance of making this
approach work in a local government setting.

With the city administration already seeking to explore innovative

management systems to enhance its delivery of public services,
this selection was a timely development. As a result, CSFLU
launched its first Strategy Map and Public Governance Scorecard
in 2005, thus meeting the PGS initiation criteria. CSFLU
subsequently attained compliance, proficiency and, in 2015,
the institutionalisation stage – meaning that the scorecard is
deeply rooted and would endure past the political terms of
elected officials.

2015 BSC Hall of Fame | 35

 From a Botanical Garden to a Centre for Health and Wellness Key to achieving this common approach was a series of
The scorecard system for the 2005-2010 strategic cycle focused on developing three ‘boot camps’ to introduce the city’s strategy to multiple
the city as a Botanical Garden City, drawing on the city’s environmental thrust. Key stakeholders, including Barangay Captains (Village Leaders),
objectives focused on enhancing the quality of life of the city’s constituents, achieving and to begin to chart a way forward.
International Organisation for Standardisation (ISO) Certification, developing and
advancing the workforce and improving financial and resource management to This integrated approach to strategy is more than just lofty
increase city revenues. ambition; it is delivering tangible benefits to villagers, in
particular delivering on the reducing poverty aspect of the
In 2012, during the second strategic cycle, the scorecard implementation switched liveable city objective. For example, an income generating
to establishing the city as a Premier Capital City in the region, with objectives on project was launched to engage villages in identifying their
becoming a highly liveable city (especially in terms of addressing poverty) and strategic advantages, focusing them on developing products
developing a dynamic local economy, as two examples. that are unique to their locality. As one city resident noted,
‘I have many children who are going to school and I would
During the 2013 strategy refresh, the Strategy Map and scorecard were recalibrated not be able to send them without this…broomstick making
to support the new vision for the year 2020: to be the ‘Centre for Health and project which provides an alternative source of income.’
Wellness in Northern Luzon’. In addition to improving or developing appropriated
services to the population, this new vision would also position CSFLU as an ideal A village leader also noted that the villagers are benefiting
business location for health- and wellness-related enterprises from coordinated and funded programs that ‘address the
environment as well as the health and safety of our people,’
An Innovative Approach: Cascading the Scorecard to Local Villages such as ISO EMS (Environmental Management System).
In addition to cascading the Balanced Scorecard system to its 36 units (such as the
local health board, local school board and even the city veterinary office), in 2014
CSFLU took the innovative step of cascading the strategy to its 59 villages.
To help drive the cascading process, the city institutionalised a multi-sectoral
governance council. This self-governing body represents various stakeholders,
such as the city government, the local and national agency offices, civil society and
private sector partners. Using the same language and system with the same vision,
the collaboration and cooperation sets out to integrate the strategy city-wide and,
importantly, to facilitate strategic action at all levels.

36 | 2015 BSC Hall of Fame

An ISO Registered Office of The OSM also oversees usage of the Lessons Learned Along the Way
Strategy Management organisation’s STRATEX (strategy expenditure) As with many organisations, CSFLU took
CSFLU’s commitment to using international budget. STRATEX accounts for 21.43% of the time to create buy-in to and proficiency in the
standards extends to its Office of Strategy total annual budget. Monthly utilisation rates Balanced Scorecard methodology and found
Management (OSM), which is unique to are monitored and reported quarterly during that change is not easy in the context of the
the Philippines in that its processes and the strategy review. local public sector, which has traditionally
procedures are regularly calibrated and been guarded when it comes to new ideas
registered to the city’s Quality Management and ways of doing things. Through concerted
System (ISO 9001:2008). Moreover, CSFLU communication efforts, the strategy and the
is the only local government unit in the system have taken root in the hearts and
Philippines that has established full-time and minds of stakeholders from the highest levels
permanent positions for the OSM. They are of leadership to every constituent from the
supported by six integrative managers from farthest reaches of the city.
departments such as the City Budget Office,
Information Dissemination Section (IDS) and With innovation also came challenges in data
Human Resource Management Office. As an and metrics. While the organisational vision
example of collaboration, the OSM works with and strategic objectives were clear, matching
IDS to communicate the strategy externally. these to accurate and readily available
The IDS spearheads the implementation of data proved to be complex, particularly in
communication activities, conducting the the context of a city-wide scorecard that
State of the City Address and People’s Day required data from various sources from
Celebration. They also created a dance and a different sectors. Remedial actions included
jingle to communicate the city’s vision. recalibrating metrics to ensure they were
within the timeframe needed for regular
scorecard monitoring.

2015 BSC Hall of Fame | 37

 Despite these and other challenges, the city’s strategies have been Execution Premium
renewed three times over the last 10 years, proving that strategy Results from 2003-2014 (except where stated)
development, implementation and review have been fully integrated • Incidences of poverty decreased from 14.6% in 2005 to
into how the city manages strategy. As City Mayor Hon. Pablo 3.8% in 2012
C. Ortega comments, ‘The Balanced Scorecard has provided • Total Local Income vs. Internal Revenue Allotment
the essential foundation for achieving our vision and realising our improved from 34.38% vs. 65.62% to 39.66% vs. 60.34%
aspirations for the people of San Fernando. This is my last term as • From a zero start the number of ISO procedures
the City Mayor but I am confident that what we have built and all the registered reached 81
successes and good we have brought to the city will continue. Our • Number of E-HSAS Certified Barangays (villages) rose
vision will endure. Our strategy will succeed. Our Balanced Scorecard from 0 to 36
[journey] will continue.’ • Growth rate of business registration improved from 2.75%
in 2010 to 9.33% in 2014
• Amount of investments generated increased from about
$2 million in 2010 to $6.4 million in 2014

Future Focus
• Integrate roll-out of the United Nations Sustainable
Development Goals into the Balanced Scorecard system,
in particular Goal No. 11: ‘Make cities and human
settlements inclusive, safe, resilient and sustainable’
• Monitor and evaluate the progress of villages to assess
their compliance and contribution to the city’s strategy
• As part of the Performance Governance System’s
requirements, regularly subject the city government to
an external audit, facilitated by ISA, to ensure that the
organisation is able to sustain the institutionalisation of the
Balanced Scorecard
• Conduct a boot camp for neighbouring provincial towns in
the province to showcase scorecard achievements and to
encourage adoption

38 | 2015 BSC Hall of Fame

Wanxin Media
(Anhui Xinhua Media Co., Ltd)
Faced with serious economic challenges in China’s
shifting market economy, in 2011 Anhui Xinhua
Media Co., Ltd (Wanxin Media) turned to the
Balanced Scorecard to lead them into the future.
Led by the Chairman, Mr Jie Cao, Wanxin hit record A Multi-Faceted Media Company
sales, gaining ground against its private sector rivals, Wanxin Media is a multimillion-dollar textbook distributor and
bookstore chain based in Anhui Province in the People’s Republic
and built a prosperous future with an engaged and of China (PRC). Headquartered in Hefei City, the capital city of
motivated workforce. Anhui Province, Wanxin consists of five subsidiary companies with
a workforce of about 3,500. The firm develops, publishes and
distributes magazines, books and textbooks, as well as audio,
visual and digital advertising.

The company has two primary revenue streams: (a) as the

exclusive distributor of primary and secondary class education
materials in Anhui province, serving more than 500 school districts
across all of Anhui Provinces’ 16 cities, and (b) by operating the
well-known Xinhua Bookstore chain, the dominant chain retailer
with more than 600 stores across all of Anhui Province.

2015 BSC Hall of Fame | 39

 Since the late 1950s, Wanxin Media has been a state-owned The Case for the Balanced Scorecard (BSC)
enterprise (SOE), a common legal entity in China since the Despite the aforementioned efforts, these reforms produced only lukewarm
advent of the Chinese Communist Party (CCP), in which performance from 2008 to 2010. The growth rates for both revenue and stock
the state serves as a partial or primary stakeholder of a value barely hit an annual rate of 10%. SOEs across the country also struggled;
commercial entity that provides services within what the between 2008 and 2010, these firms averaged only half the profitability of their
CCP believes to be strategic sectors, such as aviation, power non-state peers.
and telecommunications. (There are numerous advantages to
being a SOE in China; over the years, Wanxin has benefitted Wanxin Media went public in 2010. The firm listed on the Shanghai Stock Exchange
from preferred supplier project bidding and numerous tax as an A-Share IPO, raising RMB 1.3 billion RMB (about 190 million USD). Still,
deductions.) Wanxin struggled to define itself as an autonomous entity, independent of its long
history as an SOE, and to establish itself as a differentiated and innovative firm in an
Wanxin Media was specifically established as a national increasingly digital domestic economy.
brand to carry forward the ideological concepts of the CCP
by disseminating mainstream culture. Tens of thousands of It was not until Mr Cao became Chairman in June 2011 that Wanxin Media saw a
Xinhua Bookstore branches were established in core areas new hope. With the understanding that the Chinese economy would continue to
of various cities throughout the PRC after the country was slow as it matured, Mr Cao knew that Wanxin Media would have to do something
founded in 1949. They also established a revolutionary book drastic to avoid the operational inefficiencies that plagued its peers. He felt the
distribution network, allowing the brand to hold market share company needed to re-think its mission, vision, values, business directions and
in both urban and rural economics. strategy to produce a brighter future.

In the years leading up to the 2008 global financial crisis, Recognising that implementing strategy through the BSC framework requires
Wanxin Media, along with thousands of its SOE counterparts employee accountability and effective governance, Mr Cao began by implementing
across the country, faced increasing competition from an organisational capability management framework based on David Ulrich’s Human
private sector rivals. In 2003, for example, Wanxin lost its Resource Business Partner methodology. Cao knew that employees needed to
monopoly market position in textbook distribution due to be positioned to receive and embrace change if the BSC were to work, and the
the development and expansion of the internet, political organisational capability management framework helped cultivate that foundation.
changes and competitor bookstores going online. As part of Once this framework was rolled out, Mr Cao introduced the BSC to Wanxin Media.
a country-wide reform of the SOE system aimed at increasing
the efficiency and profitability of such firms, Wanxin Media
underwent massive reforms, including management changes.

40 | 2015 BSC Hall of Fame

Three Rounds of Reforms For the bookstore chain business, Wanxin believed that by rebranding
Mr Cao broke down the BSC implementation into three rounds of its bookstores based on market and customer segment analysis, it
reforms. During the first round of reforms, he introduced the BSC could achieve significant growth. Wanxin launched a series of different
concept to the management team to raise awareness of the brands in addition to the Xinhua brand bookstore to target and satisfy
importance of strategy and ensure that that leadership was equipped different consumer groups. In addition to its traditional storefront
with the correct tools for execution. He encouraged each member offerings, Wanxin started offering a bookstore café model for urbanites,
of the management team to cultivate a deep understanding the the Book Garden for children and the Reading Alliance library providing
organisation’s mission: ‘Be an integrator and service provider to books for local government administrators and agencies. Stores that
people’s life-long education.’ kept the Xinhua brand within prime commercial and residential areas
dramatically updated their product lines and interior displays.
The second round of reforms consisted of setting the growth strategy
for the two key business units and designing a Strategy Map and The third round of reforms consisted of cascading the Strategy Maps
Balanced Scorecard for each. and Balanced Scorecards of the two primary business units down to
the individual level. Wanxin implemented workshops for all employees
For the textbook distribution business, the primary objective for growth around the BSC methodology and corresponding KPIs, set personal
was to become a total solution provider of education and culture within objectives for employees and aligned these personal objectives with
Anhui province. They planned to achieve this objective by leveraging employees’ quarterly performance reviews and incentive bonus
Wanxin’s well-established customer network of schools and local programmes, especially within the textbook division.
education agencies to go beyond providing textbooks for Anhui’s
nine-year compulsory education system by providing wider-ranging
supplementary educational materials and services, even down to
the pre-school level. As part of this effort, the textbook distribution
team would drive more intimate connections with direct consumers
– individual students, parents, and teachers – who all held significant
sway when it came to purchasing textbooks.

2015 BSC Hall of Fame | 41

 Return to Industry-Leading Growth Execution Premium
In 2014, the company hit record sales numbers of nearly RMB 6 Results from 2012­-2014
billion (USD 1 billion), a 20% increase in sales from the previous • CAGR of 25.6%
year. The textbook division in particular gained significant growth • 39% increase in net profit
by tapping into non-traditional service areas such as vocational • Increased customer satisfaction from 82% to 95%
education, adult education and non-book learning and teaching aid • Tripled the number of customers for the textbook division
products. Between 2012 and 2014, the textbook division’s revenues purchasing RMB 10 million or more annually
climbed from RMB 700 million to RMB 2.3 billion. • Increased on-time textbook delivery from 95.12%
to over 98.5%
• Expanded performance appraisals to cover 100%
of employees

Future Focus
• Extend use of the BSC into new units of the company
• Improve the process for defining and governing
strategic initiatives
• Further build out the capabilities of Strategy
Management Office

42 | 2015 BSC Hall of Fame

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