Recasting Objectives.

Stimulating progress at DuPont Canada

DuPont Canada Inc. is a diversified science company, serving customers across Canada and in more than 40 other countries. The organization sells products manufactured in Canada to customers here and around the world, as well as offering the thousands of products of the global DuPont company to Canadian customers.

In Canada, the Elastomers business unit of DuPont Canada is the "transparent conduit" and exclusive Canadian distributor for products from DuPont-Dow Elastomers, a joint venture between DuPont and Dow Chemical. Elastomers are rubber products sold into a variety of applications in automotive, construction and industrial industries. The Elastomers business unit operates using developmental work practices. A cross-functional team made up of sales and marketing, technical support, customer service, logistics, finance and human resources has accountability for strategy development and delivering business results. A number of shared services are leveraged from DuPont Canada.

Recently, the Elastomers business team has used the balanced scorecard to create focus and drive significant improvements in business results.

Building familiarity with the framework

Before 1999, the business team used a general brainstorming session for creating objectives, where goals were developed from corporate direction and general personal pursuits. Lacking a well-designed process, this resulted in a "laundry list" of objectives, each on their own worthy of pursuing, but lacking an overall context. The first step in developing familiarity with the balanced scorecard was to "retrofit" the existing objectives into the categories of financial, customer, internal and growth and development. One immediate leaning was that the team's brainstorming process had created few conscious objectives around customers, but had many internal objectives. This caused the team to re-frame some objectives for the year. The diagram on the following page is an example of some of the team's objectives.

A set of metrics was developed against each of the objectives. The balanced scorecard framework was used for regular team reviews of progress using a Microsoft PowerPoint presentation that provided the metrics and commentary. During an interactive meeting, the business team upgraded the presentation online. This provided a tool for communicating progress and status to senior management and partners, and developed familiarity with the balanced scorecard framework.

Building the next year's objectives

To build year 2000 objectives, the team used a methodology outlined by Kaplan and Norton in their article "Putting the Balanced Scorecard to Work" (Harvard Business Review, September-October, 1993). In this methodology, scorecards are developed by answering the following questions:

1. What is my vision of the future?

2. If my vision succeeds, how will I differ?

* To shareholders?

* To customers?

* In our internal processes?

* In our ability to innovate and grow?

3. What are the critical success factors in attaining this difference?

4. What are the critical measures?

Using this framework, a process was developed that held the essence of the methodology but adapted it to the unique needs of the Elastomers business unit.

Understanding the strategic context

A key direction for the business unit is to grow beyond the existing business model and move to higher order functions beyond distribution. This increase in functioning was mapped out in earlier strategic planning sessions a few months before the beginning of developing year 2000 objectives. An important growth in team capability is to continue with the strong growth of existing business while simultaneously developing new business models. Collins/Porras' book Built to Last provides a description of how successful companies use the "power of the and" -- the ability to work at two levels simultaneously. The "yin-yang" concept was used to illustrate the idea of working in harmony at two levels -- "Preserving the Core" and "Stimulating Progress" -- growing existing business and developing new business models..

The team also recognized that to succeed, an essential stakeholder for this business unit was the supply partner (DuPont-Dow Elastomers). A "partner" perspective was added to the framework to acknowledge the important role the partner plays in the success of the business.

First meeting

The first meeting on building the balanced scorecard involved the full cross-functional business team. First on the agenda was an introduction to the process. Second on the agenda was a review of the "Preserve the Core/Stimulate Progress" concepts. The business unit leader then reviewed the strategic direction. In the case of this business unit, the team had jointly developed the strategy and was familiar with its' content

Each team member then filled out a form with the question, "If our vision succeeds, how will we differ?" We asked this question with four different perspectives in mind: to our customers, to our shareholders, in our ability to innovate and grow, and to our "partners." The latter perspective was chosen because of the important role interdependence with our supply partners plays in our business model. One person on the team recorded people's responses on flip charts, as the team discussed the changes in function, being and will we needed to generate.

After the meeting, a sub-group coalesced the varied responses into key strategies. These fit into the "Preserve the Core/Stimulate Progress" framework.

Second meeting

The process leader began with a review of the process. The strategies that had been developed off-line were reviewed and upgraded by the team to ensure that everyone understood and felt a personal ownership in their development. For each strategy within each perspective, the questions asked were "What are the critical success factors in achieving the strategy?" and "What are the critical measures?" Responses were recorded online in the meeting using a Microsoft Excel spreadsheet.

After the meeting, a column for "personal objective" was added to the Excel template. These were forwarded to team members so they could develop a personal plan of action in support of the team's strategies. As well, a comparison was done between the strategic partners' objectives and overall corporate objectives to ensure they were aligned with one another.

Third meeting

At the third meeting, team members reviewed their own personal objective in support of the team objective. This developed a sense of commitment towards team objectives and ensured that we had adequate leadership from within the team for each strategic pursuit.

Continuous improvement

Regular team review of the balanced scorecard is conducted quarterly using metrics and reports developed in an Excel template. This information is used for top management reviews and communicating within the organization. The intent is to revisit annually the set of metrics and objectives to ensure they continually support the company's strategic direction.

Key learnings for management accountants

One of the key learnings for Certified Management Accountants is the opportunity presented by the framework to apply an "integrating perspective" to decision-making. The balanced scorecard framework has an intuitive feel for many that do not have a financial background. CMAs can demonstrate their ability to integrate a number of functional perspectives in developing and implementing the balanced scorecard.

The concept can be applied at a business or functional unit level, so you do not have to wait for overall corporate or organization initiatives. Indeed, the next organizations pursuing development of balanced scorecards at DuPont Canada are within shared service organizations. By not having to wait for corporate initiatives, CMAs can quickly affect their organizational units' performance and lead by example.

With the balanced scorecard framework, there is an opportunity to apply knowledge of a particular business context to create a customized solution tailored to organizational needs. By presenting a balanced approach to performance measurement, CMAs can help organizations avoid the "tyranny of the shareholder perspective" and focus the organization on levers that drive performance.

A number of software companies have developed programs which assist in developing and delivering balanced scorecard, even integrating with activity-based costing. The balanced scorecard can be developed using traditional ready-at-hand software tools, such as spreadsheets, to develop familiarity with the process before investing in other software tools. This will allow quicker and smoother implementation of software solutions in the future.

The balanced scorecard has been demonstrated to deliver improved and more focused results for organizations that have implemented it. An opportunity exists for CMAs to apply best practice in implementation and an integrating perspective in bringing this useful framework to their own organizations

John R. Ford, CMA, is a senior business analyst with DuPont Canada Inc. He can be reached at [e-mail]. For more information on DuPont Canada, please visit www.dupont.ca.

Process for Building a Balanced Scorecard (based on Kaplan/Norton)

1.0 UNDERSTAND STRATEGIC CONTEXT

* What is key for this business to prosper and grow?

* How clear and understood is our strategic direction?

* What are the key perspectives that are needed in this business?

2.0 FIRST MEETING: VISION & CHANGES

* Overview of process

* Confirm vision

* If our vision succeeds, how will we differ?

3.0 SECOND MEETING: CRITICAL SUCCESS FACTORS AND MEASURES

* Confirm strategies

* What are the critical success factors in achieving strategies?

* What are the key measurements to drive performance?

4.0 THIRD MEETING: PERSONAL OBJECTIVES & COMMITMENT

* What is each person doing to support our strategies?

* Is there appropriate leadership for key pursuits?

5.0 CONTINUOUS IMPROVEMENT

* What is the review and renewal process?