Integration – Causal Chains and StrategyThe case for this module involves putting together all you have learned about setting objectives for each of the four perspectives, establishing measures and targets for them, and identifying action plans that might put them into effect.

Integration – Causal Chains and StrategyThe case for this module involves putting together all you have learned about setting objectives for each of the four perspectives, establishing measures and targets for them, and identifying action plans that might put them into effect.

As we noted in the introduction to this module, the trick in putting things together under the balanced scorecard involves creating “causal chains” linking together the objectives in such a way that achieving one objective makes it possible to achieve another in sequence. Thus, when we have a series of objectives defined for each of the perspectives, we should be able to start with actions to achieve objectives in the learning and growth domain and ultimately achieve objectives in the financial return/effectiveness domain. Our case here gives you an opportunity to put together such causal chains and see how they might work.

But let’s start with some practical advice. Here’s a review of a recent book by Kaplan and Norton, the gurus of the balanced scorecard, that discusses implementation strategies. While the review is interesting in its own right, even more interesting is the wide variety of reactions to it from readers that follow the review; read through them quickly to get a sense of the diversity of opinions surrounding this topic.
Silverthorne, S. (2008). Executing Strategy with the Balanced Scorecard. Retrieved May 17, 2010, from
Armed with your new sensitivity to implementation, you’re now better equipped to look at an example. A few years ago, the journal Strategic Finance published a very interesting case describing the implementation of a balanced scorecard approach in a bank:
Albright, T.; Davis, S.; & Hibbets, A. (2001, October). Tri-Cities Community Bank: A Balanced Scorecard Case. Strategic Finance, 83(4), 54-60.Retrieved May 17, 2010, from the library:
Basically, you are to carry out the case analysis described in the article, with some slight modifications to the questions posed in the article, as follows. Your complete analysis should involve 4-5 pages, responding to the numbered points below.


Assignment Expectations:


What’s referred to as “Case A” in the article tracks the initial implementation of the balanced scorecard through the establishment of the first set of objectives for each of the perspectives. As you’ll see, Table 2 in the article (p. 57) presents a list of performance measures suggested by bank personnel as intermediaries toward the achievement of the three main financial goals: loan balances, deposit balances, and non-interest income.

The first step is to categorize each of the performance measures in Table 2 as belonging to one of the four perspectives (to start you off, we’ve put the three financial goals in the table already). Here?s a table that you can copy and paste into your paper that might be helpful toward this end:
Internal Business Processes
Customer Service
loan balances

deposit balances

non-interest income
Then, following the procedure described in Figure 1 of the article (p. 58), you are to connect these objectives and measures into two or more causal chains, indicating how the achievement of one objective leads to the potential achievement of another such that ultimately one or more of the financial performance objectives are achieved. You can do this by drawing arrows, or if this is too complicated, by simply specifying the chain in order. As noted, Figure 1 shows one chain; it is highly recommended that you find two others rather than including this one as one of your two. There are numerous possibilities. For each chain, please include a brief paragraph describing the logic of the chain, and why you see the objectives as connected in the way you do. You’ll be graded on the effectiveness of your balanced scorecard logic, rather than on whether or not you happen to stumble on any one of the chains that occurred to your instructor. This may seem like a somewhat daunting task, but it’s actually kind of fun once you get the categorization of the measures into the proper perspectives accomplished.
Once you’ve accomplished Case A, then you can move on to the second part of the assignment, Case B, which involves looking at the implementation of the balanced scorecard approach and its apparent consequences. There are two sources of information available to you here: Table 3 (p. 59), which lists the before and after performance of each of the branches of the bank, and the interviews with bank personnel in each of the branches where the system was implemented (pp. 57-59). Here’s what you need to do to accomplish this part of the exercise:


Review Table 3 in a comparative way and try to decide if there is evidence for the effectiveness of the balanced scorecard approach in terms of improving the key financial measures. Remember, the balanced scorecard was implemented in branches A-E , and not in branches F-J. To help you make this comparison, you can click here to access an Excel spreadsheet that presents the Table 3 data for your use in this analysis. If you really get stuck in this process, you can click here to access an augmented version of the spreadsheet that has already made some comparisons to help you out — but you’ll get more out of the case if you try to run the analysis on your own from the raw data. The important part is to present a brief but cogent analysis of the relative performance of the balanced scorecard branches versus the branches that did not use the approach, using appropriate comparative numbers to support your argument.
Then, to finish the analysis, review the relative performance of the five implementing branches in relation to the information you have presented in the interviews about how the balanced scorecard was used in each of the branches — apparently, there were significant differences in implementation, and there are significant differences in the relative performance of the branches (A-E). Briefly describe the relative performance of these branches, and any conclusions you can draw about how the system was implemented in each of them.
Conclude with a brief statement of advice that you might give to the board of the bank about the use of the balanced scorecard overall, and how it ought to be implemented to achieve maximum effectiveness, citing appropriate information and data to support your argument.



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