A great lesson of how Balanced Scorecard works can be learned from global retailer Tesco. This company is known for its state of art Business Intelligence (BI) system. Balanced Scorecard is published yearly on tescoplc.com as part of Tesco’s BI system and is a must-see business performance tool. It even has its own name, “steering wheel.”
In this article, I’d like to review the Tesco’s BSC for the year 2013 and suggest some insights that any business professional might adopt in his business.
It is not classical BSC
If you ever start discussions about BSC or what BSC is, you’ll end up with some expert saying that BSC is not what you have in your company because you don’t have some important component. As was discussed before, there is no fixed recipe for the BSC.
Companies use this framework and modify it according to their needs. What is more important is that the company sees the improvement in business performance.
Tesco did the same trick. Taking a classical Balanced Scorecard as a framework method and adopting it to the needs of the company.
Let’s have a quick look at what was modified and what is missing:
- In the very beginning, it is stated that there are five perspectives: community, operations, people, finance, customer. Remember that classical Balanced Scorecard suggests four perspectives that are a little bit different.
- Another difference from the classical BSC is that strategy map is not included. If you’re checking the BSC on Tesco’s website, it is not possible to learn what strategic objectives the company has and how it is going to achieve them. Obviously, that strategy map just was not published here, and one can find a so-called “7 part” strategy of Tesco with strategic objectives and target measures. Check out this strategy map guide if you want to learn more about strategy maps.
- Finally, as we know in classical BSC, any business objective should be aligned to KPI and action plan. It is easy to see that the publicly available BSC of Tesco does not contain all the details, such as an action plan, but comments tell us what the general vector of the company is and for sure make more sense for employees.
Let’s continue the review and find best practices that one can adopt in his own business.
From my viewpoint, one of the most important innovations is that the Balanced Scorecard (well, at least some significant part of it) is publicly available. It makes sense for company employees, it makes sense for partners and clients. I believe publishing BSC online in public access is the best way to declare that BSC is important for your company, and you are using it for performance management.
Now, let’s pay attention to the marks used in the BSC. Achieved or unachieved targets are marked with a tick or a cross that gives a quick picture of what is doing well and what needs to be improved.
Also, a minor feature, but I think it is really nice – when the first value is introduced for 2008, it is not marked with tick or cross, it just said that it is “new.”
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More Examples of the Balanced Scorecard
- It is not 100% classical BSC
- Strategy map with objectives is available apart from BSC
- It is published online
- Simple marks are used to display current state and progress