The Balanced Scorecard is a strategic management framework that takes into account multiple perspectives to measure the performance of an organization or a specific area of focus. Let’s consider a hypothetical health and fitness app called “FeeLLight” and demonstrate the implementation of the Balanced Scorecard with numbers and calculations.
Perspectives:
- Financial Perspective: Increase revenue from premium subscriptions.
- Customer Perspective: Improve customer satisfaction ratings.
- Internal Process Perspective: Increase the number of active users engaged in workout challenges.
- Learning and Growth Perspective: Enhance employee training and development programs.
Let’s delve into each perspective and include some relevant numbers and calculations.
Financial Perspective:
- Objective: Increase revenue from premium subscriptions by 20% in the next quarter.
- Key Metric: Revenue from premium subscriptions.
Baseline Data:
- Revenue from premium subscriptions in the current quarter: ₹100,000
Target Calculation:
- Target revenue from premium subscriptions = Baseline revenue + (Baseline revenue * 20%)
- Target revenue from premium subscriptions = ₹100,000 + (₹100,000 * 20%)
- Target revenue from premium subscriptions = ₹100,000 + $20,000
- Target revenue from premium subscriptions = ₹120,000
Customer Perspective:
- Objective: Improve customer satisfaction ratings by 10% in the next quarter.
- Key Metric: Customer satisfaction rating (on a scale of 1-10).
Baseline Data:
Average customer satisfaction rating in the current quarter: 7
Target Calculation:
- Target customer satisfaction rating = Baseline rating + (Baseline rating * 10%)
- Target customer satisfaction rating = 7 + (7 * 10%)
- Target customer satisfaction rating = 7 + 0.7
- Target customer satisfaction rating = 7.7
Internal Process Perspective:
- Objective: Increase the number of active users engaged in workout challenges by 15% in the next quarter.
- Key Metric: Number of active users participating in workout challenges.
Baseline Data:
- Number of active users participating in workout challenges in the current quarter: 5,000
Target Calculation:
- Target number of active users participating in workout challenges = Baseline users + (Baseline users * 15%)
- Target number of active users participating in workout challenges = 5,000 + (5,000 * 15%)
- The target number of active users participating in workout challenges = 5,000 + 750
- The target number of active users participating in workout challenges = 5,750
Learning and Growth Perspective:
- Objective: Enhance employee training and development programs by increasing the average training hours per employee by 20% in the next quarter.
- Key Metric: Average training hours per employee.
Baseline Data:
- Average training hours per employee in the current quarter: 10 hours
Target Calculation:
- Target average training hours per employee = Baseline hours + (Baseline hours * 20%)
- Target average training hours per employee = 10 + (10 * 20%)
- Target average training hours per employee = 10 + 2
- Target average training hours per employee = 12
By implementing the Balanced Scorecard framework, FeeLLight can track and measure its performance across different perspectives. These calculations provide specific targets to work towards, such as increasing revenue from premium subscriptions, improving customer satisfaction ratings, increasing active user participation in workout challenges, and enhancing employee training and development. FeeLLight can evaluate its progress, identify areas for improvement, and adjust its strategies to achieve the desired outcomes.