7
Brown & Root Energy Services (Rockwater Division). Rockwater, located in
Aberdeen, Scotland, is an undersea construction company whose clients are
major offshore oil and gas producers. Rockwater was formed in 1989 by
merging two previously independent construction companies—one British,
one Dutch. In 1992, the company was still struggling to assimilate this
merger. The vision of the combined company was not yet clear or had yet to
be accepted across the organization, and the company was losing money.
The division president introduced the Balanced Scorecard to his
management team in 1993 to help clarify and gain consensus for the
strategy. The scorecard design process accomplished that, helping to identify
different views of the customer value proposition and build agreement on
the approach for moving forward. Once designed, the scorecard was linked
to the programs for managing the business. By 1996, Rockwater was first in
its niche in both growth and profitability.
“The Balanced Scorecard helped us improve our communication
and increase our profitability.
”9
Norman Chambers, Managing Director
Brown & Root Energy Services
Chemical Retail Bank (now Chase Manhattan Bank). In 1992, the Retail
Division of Chemical Bank enjoyed a 30% market share in the New York
metropolitan area. Chemical was still struggling to assimilate a recent
merger, as well as attempting to introduce more integrated financial services
and greater use of electronic banking to its customers. Implementation of
this new strategy was being hindered by the proliferation of new ideas and
investment initiatives. There was no way to prioritize. The Balanced
Scorecard was introduced in 1993 to more clearly define the strategic
priorities and provide a structure to link strategy and budgeting. By 1996,
the results of the new strategy were becoming apparent. In the space of three
years, profitability had increased by a factor of 20.
“The Balanced Scorecard has become an integral part of our
change management process. The Scorecard has allowed us to look
beyond financial measures and concentrate on factors that create
economic value.
”10
Michael Hegarty, Vice Chairman, Chemical Bank
The experience of these four organizations illustrates the power of the
Balanced Scorecard approach. The fact that these executive teams
successfully executed their strategies (when 90% of their colleagues could
not) is impressive enough. But the speed with which the results were
achieved spotlights the potential that exists for every organization. The rapid
strategic benefits realized by these companies show us that the capabilities
to achieve success were already present in these organizations. People had
the skills and knowledge needed to execute these strategies. What they
lacked was focus, alignment, and understanding of where the organization
was trying to go. The Balanced Scorecard eliminated these barriers. It
provided the understanding, focus, and alignment that unlocked these
assets—assets which, although hidden, existed all along. It unlocked and
focused the strategic skills and knowledge of the organization.