Business

Andra Gumbus and Robert Lussier, in their study Entrepreneurs Use a Balanced Scorecard to Translate Strategy into Performance Measures (2006), attempt to fill a gap in information reporting about the use of the Balanced Scorecard methodology (BSC) in the small to medium size business area.  In the case study, Gumbus and Lussier offer three assessments of how BSC transformed the companies Hyde Park Electronics, Futura Industries, and Southern Garden Citrus (SGC).  For purposes of this analysis, the focus will be on the customer perspective for the Balanced Scorecard at each of these companies and the lack of effective customer experience measures placed under that perspective.

Hyde Park Electronics
Hyde Park Electronics placed measures such as increased sales, income, and product on-time delivery as indicators of customer satisfaction.  The company implemented marketing measures as well to monitor the use of the web portal and the effects of marketing and advertising efforts.  Their strategic customer goal noted in the study was meeting the changing needs of customers.  When answering the question of whether the measures first align to the goal, and if they are indeed customer-centric, the answer would depend on how Hyde Parks defined their customers needs.  In this authors opinion, the answer is no, the measures do not align.  Sales and income are financial measures, and are not very indicative of measures such as customer retention or customer experience.  The marketing measures defined are also not very customer-centric, as they focus more on the internal marketing processes and marketing campaign performance, rather than understanding and delivering what the customer needs.

For any of these measures, Hyde was focusing on new and prospective customers and less on present customers.  In the case study, Gumbus and Lussier gloss over a study of the customer area, in favor of the Operational Quality and the Learning and Growth perspectives, and in analyzing the scorecard itself it was the Operational Quality for Hyde that seemed to drive most of the company improvements over time.  Further, the word Customer is not even mentioned anywhere in any of the measures, and there is not a clear category for Customer measures.

Futura Industries
Futura Industries, as stated in the study, indicate that their mission is achieved through the defined goal of meeting the changing needs of the customer (p. 414, para. 2) and to be a hassle-free supplier (p. 416, para. 2).  This company went through an extensive assessment of their customers needs to determine what was important and in turn was able to include indicative customer-centric measures such as Customer Satisfaction and Customer Hassle Index.  Unfortunately, the customer survey focused on quantitative questions rather than qualitative.  On time delivery and fair market value are data driven measures, and are not indicative of customer experience or quality of experience.  A customer may receive a product for a good price and on-time, but that does not demonstrate if the customer is happy with the product andor the service received from beginning to end.  Futura believes the Learning and Growth perspective, focused on employee satisfaction, and the associated strategic measures implemented on their BSC, were most important to their success.  Futura draws the line easily from happy employee to happy customer and thus uses the Learning and Growth perspective as the foundation for their scorecard (p. 415, para. 2).

Southern Garden Citrus (SGC)
In the case study, Gumbus and Lussier lists SGCs five strategic goals, yet not one of these goals is customer-centric.  The corporate BSC is not in the case study, but the measures listed on the bonus BSC include shipments with specifications and cycle time (p. 421), and the most customer-centric measure yet demonstrated in the customer perspective, which is the Customer Service measure.  The case study does not provide much detail about the measures themselves, but the presence of a customer service measure shows that the company does care about the quality of how their employees interact with the current customers.  Inclusive in the study is the recognition SGC has earned for being an exceptional supplier.  The company credits the implementation of the BSC as a whole and does not specifically call out one perspective over another as their claim to fame, and in this authors opinion, a true indication that the scorecard is balanced and that by achieving goals in all four perspectives is the key to improving customer relationships and ultimately the bottom line.

Evaluation and Conclusion
In summary, the mere fact that these companies took the initiative to utilize the Balanced Scorecard to turn their companies around and create value for their stakeholders and employees is commendable.  Implementing a BSC program is not an easy feat, particularly as it is an ever- changing entity and dependent on the prioritization of goals between short-term and long-term initiatives.  All companies in the study focused on what this author will call the measurable metrics in the Customer perspective.  In other words, the data for the measures extracts easily from internal data sources and does not require direct communication with the customer.  Futura, for example, conducted an extensive study into their customers needs, yet did not include any sort of customer experience or customer satisfaction metric on the BSC.  Hyde did not include any customer metrics at all and focused their BSC on improving internal operations.  SGC was the sole company to include customer service as a gauge of customer satisfaction.  In this authors opinion, a customer experience index that combines the capability of the company to meet the customers needs and the customers impression of the service provided (from order to cash) would be an excellent measure to add.  Measuring just on-time delivery is not an indication of whether the customers is satisfied with the delivery or if it is even a measure the customer cares about.  Quality of the product is not necessarily an indication of whether or not the customer had a good experience in the interactions with the company.  A customer might receive a quality product, on-time, and at a cost they love, but if the ordering process was frustrating, or communicating with an employee at the company was trying at best, the customer will remember the experience through the process, and forget about the timeliness or quality of the product or services received.

Customers drive the business.  Companies can create and sell products, but if there are no customers to sell to there is no reason to have a business at all.  A BSCs design is for balance across all four perspectives, yet companies lean toward the measure that they know and that they can control, such as financial and operational measures.  A heavily weighted customer perspective on a BSC, particularly for companies struggling to gain and keep market share, is very important and must have some direct measure of customer experience that takes the customers thoughts and opinions into account.