The article provides case studies of three SMEs: Hyde Park Electronics, Futura Industries, and Southern Garden Citrus and their use of Balanced Score Card to improve consumer relationship. The authors claim that though more than 50% of Fortune 1000 companies use the BSC, their use in SMEs is limited at best, and present the case studies to show how the same can be adapted to be used in smaller companies.
The claim is that companies are good at developing mission statements and strategies but they are poor at implementing those strategies, and poor at measuring the impact of those strategies. BSC offers a way out by linking the mission to the strategies, and then translating those strategies into operational objectives and measures. It manages this by focusing on four perspectives, namely financial, customer, internal processes, and learning and growth. The critical success factors created in each perspective are then aligned with internal and external factors, and both short-term and long-term goals.
HYDE PARK ELECTRONICS
The company is a family-owned business that produces ultrasonic proximity based sensors and is based out of Dayton, OH. The CEO Vincent Lewis believes in keeping all aspects of the business in balance since it is easy to lose track of the bigger picture and in the process lose business. Since the adoption of BSC they have moved from a low volume producer with a very narrow set of consumers to a company that sells various high volume sensor lines through a big distribution network. A breakthrough technology changed the focus of the company and became the savior product of the company. With the introduction of a new product the company's strategy shifted to a penetration sales model and the company started investing more on product development and started a new production facility.
Before the adoption of BSC the company had a lot of data but not much useful information. When Lewis implemented BSC he started with defining the metrics used to measure performance. For each parameter used, they used another to counter it so that the metric was always in balance. The company was always good in financial measures but the issue with financial measures are that they are more short-term measures and focus on events after they have occurred. The company needed something that was pro-active and something that could lead the way forward, and not tell them of something after it had occurred.
The four perspectives mentioned in their BSC were financial, operational quality, customer satisfaction, and learning and growth. Based on the information provided the company measured customer satisfaction not by some direct measure but by using an indirect metric: sales. They felt if a customer bought a product it implied that the customer was happy!
The initial response to the BSC was not too good in the company with employees seeing red in the fact that their performance measures are there for every one to see. But gradually...