Balanced
Scorecard for Chemical Companies
Now, let’s see
Balanced Scorecard For Chemical Companies and their applicabilities.
A number of consultants to chemical companies have identified
customer segmentation as an ongoing challenge for the industry. Lack
of meaningful progress on the issue, they have suggested, is
contributing to the fact that chemical industry margins as a whole
remain in the basement
Kaplan and
Norton suggest the reason manufacturers, including Balanced
Scorecard For Chemical Companies, have trouble with customer
segmentation is that they grew up in the Industrial Era, when
product innovation and operations management were the keys to
success. Because it is human nature to stay in one's comfort zone,
manufacturers have had difficulty moving beyond their focus on
developing new products and cutting costs to focus on what the
authors believe is the real source of competitive advantage today:
Customer Management.
The main
difference is that the Balanced Scorecard For Chemical Companies
focuses on the "drivers" or lead indicators of future performance.
Most traditional measures such as return on capital, operating
profitability or economic value added are financial measures.
Financial measures describe yesterday's strategy. If you want to
know how yesterday's strategy worked, look at today's financials,
and that means today's economic value added or today's return on
capital. Today's financials reflect the investments an organization
made a year ago. They also reflect the training an organization made
a year ago and the advertising it did a year
ago.
The Balanced
Scorecard For Chemical Companies, as the name implies, achieves a
balance between these lag indicators and the lead indicators that
need to be focused on to make things happen. That's an important
distinction. The balanced scorecard does not replace financial
measurement. It doesn't replace economic value added. Rather, it
complements it. Measures such as economic value added, which have
received a lot of press lately, suffer from the same shortcomings as
other financial measures. To make them work, organizations still
need to get beneath the surface and say what it is that they do
today to improve economic value added.
One chemicals
company created a fifth perspective solely to reflect environmental
considerations. They argued: “Our franchise is under severe pressure
in many of the communities where we operate. Our strategy is to go
well beyond what current laws and regulations require so that we can
be seen in every community as not only a law-abiding corporate
citizen but as the outstanding corporate citizen, measured both
environmentally and by creating well-paying, safe, and productive
jobs. If regulations get tightened, some of our competitors may lose
their franchise, but we expect to have earned the right to continue
operations”.
For them, the
environmental perspective highlighted how outstanding environmental
and community performance was a central part of its strategy and had
to be an integral part of their scorecard. It communicated the
priority to be the outstanding employer in every community in which
it operated.
Thus, even
though suppliers and the community are not explicitly one of the
four perspectives of the Balanced Scorecard, their interests, when
they are vital for the success of the business unit's strategy, are
incorporated on strategy maps and Balanced Scorecards. These
stakeholder objectives, however, should not be appended to the
Scorecard via an isolated set of measures that managers must keep
"in control." Their measures appear only when partnerships with
suppliers and the community are critical to the success of the
strategy and fully integrated into the chain of causal event
linkages on a strategy map that define and tell the story of the
business unit's strategy.
