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Balanced Scorecards (BSCs) are highly important tools that are actively used in management and strategic planning, as they cover business strategy and mission from dissimilar angles including the financial viewpoint, customer, internal processes, and learning initiatives (McKay, 2004). Nowadays, BSCs are utilized in diverse contexts to cater to the needs of various stakeholder groups while making the existent business model highly customer-oriented.
In the context of this paper, apart from heavily relying on public contractors, British Airports Authority (BAA) actively employed the principles of BSC when designing the Terminal 5 (T5) project (Basu, Little, & Millard, 2009). This case displayed the flexibility and dynamics of BSC, as BAA not only used its basics but also paid substantial attention to the quality, productivity, efficiency of the business processes, and building trusting relationships with partners and contractors. It helped the company design a unique value proposition with the help of BSC and address the constantly rising demands from the customers’ viewpoint.
In the first place, it is evident that the T5 project as any other company using BSC focused on ensuring the compliance of corporate mission and strategy with its actions, measurements, and objectives (Murby & Gould, 2005). Apart from that, one of the critical elements of BSC is finance, and discovering a business strategy from this angle will help maximize profits, generate higher revenues, and become attractive to potential investors and shareholders (“EPM review: Financial perspective”, 2014).
It could be said that BAA reflected the main aspects of this strategy in detail. In turn, BSC underlines the vehement importance of Key Performance Indicators (KPIs) used to measure productivity and financial stability of the enterprise, and BAA also reflected this matter by evaluating its performance with the help of various scales.
At the same time, it is vital to note that the traditional BSC approach underlines the significance of working in collaboration, as it is often viewed as a key to success and integrity (Kaplan & Norton, 2015). It helps reach the desired outcomes and industrial benchmarks, and its effective implementation is displayed in the T5 project.
Lastly, leveraging learning and growth is one of the most critical forces of the BSC framework. The primary reason for it is the fact that know-how is a valuable asset that ensures the sufficient functioning of the organization as a complicated mechanism (McKay, 2004). In this case, BAA also relied on this approach by making the company’s decision-making knowledge-driven, future-orientated, customer-focused, and innovative. Overall, it could be said that BAA prioritized the balanced scorecard model, and this finding explains its superior financial performance.
Apart from some similarities, several characteristics were adjusted to comply with the main goals of T5. In the first place, BAA underlined the paramount importance of partnerships while making them the core of all business processes. Empowering suppliers and giving them a possibility to use productivity and financial control metrics to monitor changes in performance were the critical steps of the process.
They assisted working in collaboration while improving the current value proposition, discovering the situation from the viewpoints of different stakeholders, and continuously catering to the newly arising needs of the customers. These initiatives supported the integrity of decision making, as the management created an effective action plan to cultivate and support idea-sharing by using a four-tiered strategy and different agreements (Basu et al., 2009).
As a consequence of creating a multidisciplinary team, additional emphasis was devoted to quality. BAA unveiled that relying on ISO 9000 was not entirely effective (Basu et al., 2009). Along with that, commonly used quality guidelines such as PRICE 2 also tended to have some issues since the organizations referring to these standards “ticked many boxes” but not necessarily complied with the quality benchmarks in reality (Basu et al., 2009, p. 32).
In this case, it was reasonable for BAA to review these guidelines, as prioritizing the quality of the provided services and meeting consumer perceived expectations were the main missions of the company and the T5 project. Along with that, BAA discovered the quadrants related to internal processes from a different perspective. For example, when referring to productivity and efficiency, it was discovered that existent BSC’s quadrants did not fulfill the BAA’s mission and quality standards. Thus, BAA employed Non-Conformance Resolution (NCR) to understand the core issues, propose relevant strategies for improvement, and assure the alignment of all processes with best practices (Basu et al., 2009).
Reasons for Making Changes in General BSC’s Quadrants
The analysis conducted above showed that BAA’s implementation of the BSC framework was slightly different from the traditional model. Nonetheless, it could be viewed as entirely normal since, in the modern world, companies tend to operate in various industrial sectors while having dissimilar focuses and goals. For example, the need to make amendments to the traditional BSC framework is linked to value proposition (“EPM review: The new imperative”, 2014).
Nonetheless, business perspectives continue to revolutionize while highlighting the duality of value proposition and the need to satisfy customers from different socio-economic groups (“EPM review: The new imperative”, 2014). A combination of these factors along with globalization makes the market highly competitive and requires filling the gaps in strategies and utilizing an integrative approach to organizational improvement. Consequently, it becomes evident that consumer imperative and orientation are the definers of corporate success.
In the context of the case study, BAA was able to identify the roots of the problems and propose well-developed solutions to cater to the needs of different consumer segments and comply with organizational goals and expected outcomes. It could be said that the nature and specifics of the T5 project were the major processes that defined the need to make modifications to the BSC framework. Nevertheless, its main principles remained the same while making insignificant adjustments helped increase productivity. This example displays that the BSC model is flexible and can be implemented in the context of any industry.
In the end, it could be said that an analysis of BAA’s T5 project unveiled mysteries of the application of BSC. BAA could be viewed as one of the bright examples showing the dynamic nature of BSC. Initially, BAA relied on the main concepts of the business instrument such as a focus on integrity, KPIs, collaboration, learning, and knowledge.
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Nevertheless, it did not fill all the existent gaps, and to address some of the issues, the company used partnerships, quality and production standards, idea-sharing atmosphere, and NRC. A combination of these factors defines organizational success while highly referring that the roots for making these amendments pertain to a plethora of opportunities in the business field and duality of the value proposition. It could be said that other businesses have to review this case precisely, take advantage of some strategic initiatives, and implement its strengths in practice.
Basu, R., Little, C., & Millard, C. (2009). Case study: A fresh approach of the balanced scorecard in the Heathrow Terminal 5 project. Measuring Business Excellence, 13(4), 22-33.
EPM review: Financial perspective. (2014).
Kaplan, R., & Norton, D. (2015). Balanced scorecard success: The Kaplan-Norton collection. Brighton, MA: Harvard Business Publishing.
McKay, A. (2004). A practitioner’s guide to the balanced scorecard: A practitioners’ report based on ‘shareholder and stakeholder approaches to strategic performance management using the balanced scorecard’.
Murby, L., & Gould, S. (2005). Effective performance management with the balanced scorecard: Technical report.