According to Kaplan and Norton, what characteristics/features make the balanced scorecard so special for its worldwide adoption? b) Outline the five-pronged strategy crafted by Rockwater in developing the scorecard. c) Using the balanced scorecard (tabular format), translate Rockwater’s strategy into tangible goals and actions.
According to Kaplan and Norton, what characteristics/features make the balanced scorecard so special for its worldwide adoption? b) Outline the five-pronged strategy crafted by Rockwater in developing the scorecard. c) Using the balanced scorecard (tabular format), translate Rockwater’s strategy into tangible goals and actions.
According to Kaplan and Norton, what characteristics/features make the balanced scorecard so special for its worldwide adoption? b) Outline the five-pronged strategy crafted by Rockwater in developing the scorecard. c) Using the balanced scorecard (tabular format), translate Rockwater’s strategy into tangible goals and actions.
At Rockwater, improvements came from product and service innovation that would create new sources of revenue and market expansion, as well as from continuous improvement in internal work processes. The first objective was measured by percent revenue from new services and the second objective by a continuous improvement index that represented the rate of improvement of several key operational measures, such as safety and rework. But in order to drive both product/service innovation and operational improvements, a supportive climate of empowered, motivated employees was believed necessary. A staff attitude survey and a metric for the number of employee suggestions measured whether or not such a climate was being created. Finally, revenue per employee measured the outcomes of employee commitment and training programs. The balanced scorecard has helped Rockwater’s management emphasize a process view of operations, motivate its employees, and incorporate client feedback into its operations. It developed a consensus on the necessity of creating partnerships with key customers, the importance of order-of-magnitude reductions in safety related incidents, and the need for improved management at every phase of multiyear projects. Chambers sees the scorecard as an invaluable tool to help his company ultimately achieve its mission: to be number one in the industry. Required: a) According to Kaplan and Norton, what characteristics/features make the balanced scorecard so special for its worldwide adoption? b) Outline the five-pronged strategy crafted by Rockwater in developing the scorecard.
c) Using the balanced scorecard (tabular format), translate Rockwater’s strategy into tangible goals and actions. d) Outline the importance of the balance score card to Rockwater’s. e) What factors aided Rockwater in its smooth switch to the balanced Score card? f) How beneficial can the scorecard be to Accra Business School?
Transcribed Image Text:QUESTION 1
Rockwater, a wholly owned subsidiary of Brown & Bread, a global engineering and construction
company, is a worldwide leader in underwater engineering and construction. Norman Chambers,
hired as CEO in late 2019, knew that the industry's competitive world had changed dramatically.
"In the 1990s, we were a bunch of guys in wet suits diving off barges into the North Sea with
burning torches," Chambers said. But competition in the subsea contracting business had become
keener in the 2000s, and many smaller companies left the industry. In addition, the focus of
competition had shifted. Several leading oil companies wanted to develop long-term partnerships
with their suppliers rather than choose suppliers based on low-price competition.
With his senior management team, Chambers developed a vision: “As our customers' preferred
provider, we shall be the industry leader in providing the highest standards of safety and quality to
our clients." He also developed a strategy to implement the vision. The five elements of that
strategy were: services that surpass customers' expectations and needs; high levels of customer
satisfaction; continuous improvement of safety, equipment reliability, responsiveness, and cost
effectiveness; high-quality employees; and realization of shareholder expectations. Those
elements were in turn developed into strategic objectives. If, however, the strategic objectives were
to create value for the company, they had to be translated into tangible goals and actions.
Rockwater's senior management team transformed its vision and strategy into the balanced
scorecard's four sets of performance measures. One perspective included three measures of
importance to the shareholder. Return-on-capital-employed and cash flow reflected preferences
for short-term results, while forecast reliability signaled the corporate parent’s desire to reduce the
historical uncertainty caused by unexpected variations in performance. Rockwater management
added two financial measures. Project profitability provided focus on the project as the basic unit
for planning and control, and sales backlog helped reduce uncertainty of performance. Rockwater
wanted to recognize the distinction between its two types of cus
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Transcribed Image Text:companies that wanted a high value-added relationship, and Tier II customers, those that chose
suppliers solely on the basis of price. A price index, incorporating the best available intelligence
on competitive position, was included to ensure that Rockwater could still retain Tier II customers'
business when required by competitive conditions. The company's strategy, however, was to
emphasize value-based business. An independent organization conducted an annual survey to rank
customers' perceptions of Rockwater's services compared to those of its competitors. In addition,
Tier I customers were asked to supply monthly satisfaction and performance ratings. Rockwater
executives felt that implementing these ratings gave them a direct tie to their customers and a level
of market feedback unsurpassed in most industries. Finally, market share by key accounts provided
objective evidence that improvements in customer satisfaction were being translated into tangible
benefits.
From another perspective, Rockwater executives defined the life cycle of a project from launch
(when a customer need was recognized) to completion (when the customer need had been
satisfied). Measures were formulated for each of the five business-process phases in this project
cycle: Identify: number of hours spent with prospects discussing new work; Win: tender success
rate; Prepare and Deliver: project performance effectiveness index, safety/loss control, rework;
and Closeout: length of project closeout cycle. Formerly, the company stressed performance for
each functional department. The new focus emphasized measures that integrated key business
processes. The development of a comprehensive and timely index of project performance
effectiveness was viewed as a key core competency for the company. Rockwater felt that safety
was also a major competitive factor. Internal studies had revealed that the indirect costs from an
accident could be 5 to 50 times the direct costs. The scorecard included a safety index, derived
from a comprehensive safety measurement system that could identify and classify all undesired
events with the potential for harm to people, property, or process. The Rockwater team deliberated
about the choice of metric for the identification stage. It recognized that hours spent with key
prospects discussing new work was an input or process measure rather than an output measure.
The management team wanted a metric that would clearly communicate to all members of the
organization the importance of building relationships with and satisfying customers. The team
believed that spending quality time with key customers was a prerequisite for influencing results.
This input measure was deliberately chosen to educate employees about the importance of working
closely to identify and satisfy customer needs.
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