Hyde Park Electronics, a manufacturer of ultrasonic proximity sensors focused on customer satisfaction and measured it by looking at the increase in sales and net income as a result of increased product acceptance and the incidence of returning/repeating customers. With 42 people employed in 2001, the company enjoyed its most profitable year having this perspective in mind. To enable the company to perform better, it used the Balanced Score Card specifically to identify the strategies it would take to address the customer’s perspective. The effective approaches they implemented included up-to-date product delivery using tracking data on the company’s website.
Similarly, Futura of Utah, an international company that is in the business of fabricating aluminium served its clients better through the use of the Balanced Score Card. In terms of the customer’s perspective, Futura designed their operations such that their customers benefit from superior service they provide. Futura started with an intimate understanding of their client’s business and then tailoring their operations to provide speed and quality. This was accomplished through on-time deliveries, management of inventories, and mindful collection and analysis of customer insights including complaints.
2. In your opinion, are these measures truly "customer-centric" as described in the background reading by Niven? Why or why not? Defend your position. Use your readings to help you decide whether the improved performance was due to viewing the company from the perspective of their potential, prospective, and/or present customers.
According to the article written by Paul Niven (2012), a company’s measures are customer centric if they answer the following questions:
Does the company know who their customers are?
What is the company’s value proposition towards serving their customers?
The first question points out how a company should look at their clients. Companies that want to improve their performance should understand their client’s requirements intimately. Understanding their needs, their business, their goals and aspirations enable the company to determine the best way it should position itself, what products and services to offer, and how to offer these best. The second question takes a look into what best value a company can offer to its customers. The best value could be in providing product leadership, customer intimacy through unrivalled services or operational excellence through efficient operations that create cost advantages.
Both actions by Futura and Hyde Park electronics indicate that their actions are customer-centric. Both companies tried to understand their clients and then propose a combination of the three values that make working with their companies vital to the success of their customers.
3. From the companies' point of view, do you think their effort to evaluate the business from the customer's perspective was the KEY contributor to improved performance? If so, defend your position. Or was another perspective more important? If so, which one was the KEY contributor? Defend your position.
I think that for both companies, it was the customer’s perspective that was main key in improving performance, but it was not the only factor that led to their individual successful results. Customer’s perspective is one aspect of the Balanced Score Card, a technique that both companies used for evaluating their performance, crafting a renewed strategy and then implementing effective programs for the purpose of reaching their objectives. Although this helped tremendously, the other aspects of the Balanced Score Card, which these companies worked on as well, contributed as importantly as the contributions coming from a greater understanding of the customer’s perspective.
For instance, Futura improved their operations and their internal processes as they were improving their capabilities to address the customer’s needs. This included becoming more efficient, making employees happier and more satisfied with their work, managing their costs and suppliers, and ensuring that their financial metrics are sound and sustainable. Hyde did the same type of improvements throughout their organization. So while the customer perspective is an important aspect of improving the business when the Balanced Score Card approach is used, it is not the only key, but an important component to a bigger, encompassing approach.
4. Identify at least one measure you would have included that they omitted. In other words, how could you have improved on their approach?
I think that the two organizations mentioned in the paper both covered a lot of ground in terms of improving their performance using the Balanced Score Card. However, one aspect that I did not read into having too much depth is in terms of organizational change management. The Balanced Score Card helps identify deficiencies and suggests where a company should improve on. However, if the organization is not mobile enough to address the needs of the strategies to be implemented, then there is very little chance of succeeding.
The integration of organizational capital (human resources from management to actual operations and support personnel) are the most critical elements of change and performance improvement. Not much about how Futura and Hyde’s actions towards managing change was discussed but it is impossible for both companies to have succeeded without integrating this into the overall plan. An overall plan is therefore described as a plan of action that takes into account the entire organization and the markets it serves, with thoughtful consideration of how the organization is structured, how it should be modified and how it should be able to respond to opportunities that come its way.
Gumbus, A. and Lussier, RN. (2006) Entrepreneurs use a balanced scorecard to translate strategy into performance measures. Journal of Small Business Management. 44(3):407-426. Retrieved May 17, 2010, from from the library: https://coursenet.trident.edu
Kaplan, RS (2005) A Balanced Scorecard Approach To Measure Customer Profitability. Working Knowledge. Harvard Business School. Retrieved May 17, 2010, from http://hbswk.hbs.edu/item/4938.html
Kaplan, RS and Norton DP (2004). Organizational Capital: Supporting the Change Agenda that Supports the Strategy Execution. Harvard Business School. Volume 6, Number 1, January to February 2004. Retrieved November 3, 2012, from http://hbr.org/hb/bsr/B04010f2.pdf
Niven, P. (N.D.) Customer perspective. EPM Review. Retrieved May 17, 2010, from http://www.epmreview.com/Resources/Articles/Customer-Perspective.html