In 1993, Rockwater was a global leader in underwater engineering and construction and a wholly-owned subsidiary of Brown & Root/Halliburton. The company’s service offerings included commercial diving, scour and erosion, underwater coatings and installation of marine structures, and their customer base was the oil companies whose deep-sea oil rigs they serviced on a regular basis.
Facing a new competitive landscape, Rockwater, a deep-sea engineering and construction company, needed to find ways of building closer relationships with their customers and providing better service while maintaining profitability. The Balanced Scorecard helped them establish customer feedback channels, boost service levels and identify ways to reduce the cost of doing business.
The Challenge
Having grown from a small and relatively low-tech deep-sea repair and construction diving company, Rockwater had weathered keen competition in the 1980s and emerged in a strong position. However, they were now facing a changing competitive landscape, in which the offshore oil-drilling companies who made up their customer base were now seeing the benefits of establishing long-term partnerships with their suppliers, instead of choosing them based on competitive pricing alone.
Rockwater had to align themselves with these new expectations with a renewed focus on customer service and building robust customer relationships.
The winning formula for customer loyalty needed to be articulated and translated into tangible goals and actions.
The Solution
Rockwell used the Balanced Scorecard to develop a new vision statement that made customer relationships the focus. The CEO and senior management team developed the following vision:
As our customers’ preferred provider, we shall be the industry leader in providing the highest standards of safety and quality to our clients,
and created five strategy elements in support of that vision:
- Services that surpass customers’ expectations and needs
- High levels of customer satisfaction
- Continuous improvement of safety standards, costs and effectiveness
- High-quality employees
- Realization of share-holder expectations
Rockwater Scorecard.These five strategy elements were then expressed in four different perspectives:
- financial,
- customer,
- internal and
- growth.
Each perspective was translated into a clear set of performance measures that could be supported through co-ordinated organizational activities at all levels.
To support the financial perspective, the senior management team developed three measurements geared towards:
- long- and short-term shareholder value,
- return-on-capital-employed and
- cash flow monitored short-term returns,
which forecast reliability showed the company’s commitment to predicting and managing longer-term performance.
To support the customer perspective, the team established a two-tiered system for customer management and recognition. The two-tier approach addressed the realities of staying cost-competitive, while allowing the company to deliver more value to customers looking for a deeper, more stable relationship.
- Tier 1 represented customers who wanted to build long-term relationships with suppliers, and who placed the value of services rendered above cost. To cater to these customers, they engaged an independent organization to conduct monthly and annual customer satisfaction surveys.
- Tier 2 was made up of customers who chose services solely on the basis of cost.Rockwater made sure they were still able to attract these customers by using an in-depth price index.
Rockwater Scorecard.To ensure internal processes were optimal, the team tracked the life cycle of a project, from launch (recognizing the customer’s need) to completion (meeting that need successfully), and developed measures to evaluate five phases in each cycle:
- identify,
- win,
- prepare,
- perform,
- close out.
Linking internal processes along a life cycle continuum was a significant departure from the way Rockwell perceived their internal processes.
Formerly, they had established performance levels for each department separately, instead of integrating key business processes and establishing overall performance measurements.
This helped them to refine the metrics used for identification stage, and to highlight the importance of this time-intensive stage for project success.
The growth perspective included product and service innovation as well as improvement in financial, customer and internal process performance.
- The effectiveness of product and service innovation was measured by the percentage increase in revenue from new services.
- Financial, customer and internal processes were measured using an index of a range of improvements in safety and repeat business.
The Rockwater team recognized that success in both areas relied on empowered and motivated employees.
- To support this, a staff survey was conducted to measure attitude, along with metrics that tracked the number of employee suggestions submitted.
- And to hook employee motivation back into a clear performance metric, the revenue generated per employee measured the outcomes of these employee commitment and training programs.
The Result
Implementing a Balanced Scorecard showed Rockwater that they needed to move from a department-based to a process-based view of operations and helped them recognize the need for customer feedback metrics. It also helped them to become a high-value, service- and results-driven organization, focused on fostering close relationships with long-term customers, but also able to compete on a pure cost basis.
The customer surveys, in particular, gave Rockwater a deeper more responsive relationship to their customer base. And by creating better feedback on the cost of doing business, Rockwater uncovered the significant, hidden, indirect costs of safety incidents, which they addressed with an integrated Scorecard safety index.
The Balanced Scorecard was acknowledged by the company CEO as an invaluable tool in helping Rockwater become number one in their industry.
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