The Hindu Business Line : The balanced scorecard

The balanced scorecard helps organisations to accurately measure the results of their actions. The constant monitoring of efforts galvanises the whole organisation into action.

AN IMPORTANT policy announcement of the Government of India, having a very significant bearing on the competitiveness of the Indian manufacturing industry is the appointment of Mr V. Krishnamurthy as the chairman of the National Manufacturing Competitiveness Council (NMCC). According to reports, the council, to play an advisory role, is mandated to a give new impetus to the competitiveness of Indian manufacturing in the global market.

It is crucial that the NMCC does not become yet another bureaucratic organisation. It would do well to take an integrated perspective of the whole gamut of manufacturing competitiveness, recommend policy initiatives and ensure their implementationto galvanise the economy as a whole.

The Council could look at the `balanced scorecard' model introduced by Robert S. Kaplan and David P. Norton. Balanced scorecards tell you the knowledge, skills, and systems that your employees will need (their learning and growth) to innovate and build the right strategic capabilities and efficiencies (the internal processes) that deliver specific value to the market (the customers), which will eventually lead to higher shareholder value (the financials), according to the management gurus.

The balanced scorecard is a tool that easily helps organisations to accurately measure the results of their actions in each of the four perspectives described above. The constant monitoring of efforts and initiatives facilitates mid-course correction wherever applicable, and galvanises the whole organisation into action, as all employees are engaged in the exercise.

Though an American concept, the balanced scorecard can be easily adapted to any context. Speaking of which, the Manufacturing Council has applied the break to the "it-is-not-applicable-here" policy that, for long, has been the bane of Indian industry.

For example, if we were to look at learning and growth, most manufacturing companies in India would score miserably on innovation. And yet, some real cost saving has accrued through the concept of Total Productive Maintenance (TPM), which in the main, is a pro-active strategy aimed at optimising machine availability, zero accidents and machine breakdown, minimisation of waste, reduction in rejection of final product, and so on.

The IITs should consider introducing a full-time post-graduate degree or diploma in TPM or Manufacturing Manangement. A similar course can also be initiated at the National Institutes of Technology.

Since the demand for TPM-trained engineers outstrips supply, jobs would be there for the asking. More important however is the challenge of ensuring the continued education of Indian managers, who, in most manufacturing organisations, are "tunnel-visioned".

Most are found inadequate when faced with strategic challenges. Concepts such as business process re-engineering need to be implemented in the place of age-old processes that do not hold value in the changed business milieu. The Manufacturing Council's agenda for change, should also clearly define who its `customers' are. The Council will be delivering value to the Government, which is its major customer, in-as-much as it will help industry become more globally competitive.

From the financial perspective, the Manufacturing Council could draw up balanced scorecards for each type of industry to measure the kind of changes in financial results that accrue to specific organisations.

The reach of the Manufacturing Council should be such that it should quickly learn from the competitiveness achieved by certain Indian organisations and extrapolate that learning to draw up balanced scorecards for each industry segment. The Government also needs to empower the Council, so that it is not hampered for lack of authority.

(The author is Deputy Manager, Brakes India Limited, Sholinghur.)