Balanced Scorecard financial Perspective

Balanced Scorecard financial Perspective



The Financial Perspective

Introduction

The real test was how Saatchi & Saatchi progressed from its 1997 crisis towards its stated goals. "We achieved our Wall Street goals by June 2000, which was six months prior to our December 2000 deadline. The balanced scorecard was a massive contributor to that success. With it we were able to clearly explain to every employee throughout the world what the strategy was. "For the first time we were able to say 'here's our vision, here's our corporate strategy, here's how we're going to get there and here's the part you play'." (Cobbold, I. and Lawrie, G. 2002)

Analysis

Q. What was the situation for Saatchi & Saatchi in the mid 1990s? The management team adopted an approach that was primarily two-pronged: the financial perspective and the customer perspective. In terms of the financial perspective, what goals did the new leadership set for the company?

Ans. In September 2000, Saatchi & Saatchi was purchased by Paris, France-headquartered Publicis Groupe SA, for close on $2.5 bn. This represented a multiple of about five times the company's market worth and is further evidence of the agency's strategy implementation success Faced with a set of brutally tough choices in the Nineties, Saatchi & Saatchi's leadership team defined a new vision and global strategy and set stretching three-year financial goals. In this case study, Paul Melter, Worldwide Director, CompaSS, explains how the balanced scorecard was used to turn ambitious strategic aspirations into operational reality. Roberts at Procter & Gamble, Seelert at General Foods. Therefore each had first-hand experience of relating to the agency from a client's perspective. As Melter recalls: (Cobbold, I. and Lawrie, G. 2002)

At the time of the de-merger - We announced publicly the detailed blueprint for the company's comeback, which would be met by the end of the three-year period. Those goals included:

Growing our revenue base better than the market

Converting 30 percent of that incremental revenue to operating profit

Doubling our earnings per share." They were goals that became a pledge to shareholders and Wall Street.

Q. How did the company categorize its different business units (agencies)? What strategies were chosen for each unit? Saatch & Saatchi also adopted several strategies that related best to a customer perspective. What were they?

Ans. Recognizing that time was of the essence, the first thing Roberts did was spend almost his entire first three months visiting all of the agency's 45 globally dispersed business units. Melter says: (Cobbold, I. and Lawrie, G. 2002)

"Kevin found that we didn't have a common vision; that, although great work was being done, each location was working to its own agenda. Consequently they were often not creating value for Saatchi & Saatchi corporately." Roberts soon realized that Saatchi & Saatchi needed a management tool that would help communicate and make operational the new vision. Structurally, he also perceived that this would necessitate achieving one of their main objectives, which was to position Saatchi & Saatchi in the top rank of the advertising ...