Strategy Simulation:
THE BALANCED SCORECARD
by V.G. Narayanan, Harvard Business School
FOR COURSES IN: Strategy Implementing Strategy Managerial Accounting
Strategy Simulation: The Balanced Scorecard
In this multi-player simulation, students experience the benefits and challenges of using a scorecard to implement strategic initiatives and monitor firm performance. Students work together in small teams to choose a strategy for their company, create a strategy map, develop a balanced scorecard, choose initiatives to
implement their strategy, and use feedback from the balanced scorecard to adjust their implementation approach over time. At the conclusion of the simulation, each team’s company will be purchased by a private investor. The goal of the simulation is to maximize firm value.
Students must select initiatives that support their company’s strategy.
PREREQUISITES AND PLAY
Students should be familiar with the balanced scorecard concept before playing the simulation. Although it
1 Data Entry role and 1, 2, or 3 Data Analyst roles. The Data Entry player is responsible for submitting
allowing students to play 1 or more practice rounds before making their final selections. Instructors can do
can be played by individuals, the author recommends dividing students into small teams. Each team will have
the team’s decisions. Due to the breadth and complexity of the simulation, the author recommends
this by enabling the practice mode.
hbsp.harvard.edu
CREATING A SCORECARD
Students prepare by reading the Delta/Signal Corp case to learn the company background. Each team then creates a unique stock ticker symbol, chooses a market segment, and selects 1 of the 4 possible strategies for their company: Customer Integration, Product Innovation, Low Initial Cost, or Low Lifetime Cost. Students select objectives and metrics that will match their chosen strategy and then create a strategy map.
FUNDING INITIATIVES
The simulation consists of 8 rounds, each representing 6 months of elapsed time. In each round, teams decide which initiatives to fund in order to achieve their strategic objectives. Students review the different options and fund as ma ny
The Strategy Map shows the cau se-and-effect relationships between objectives.
initiatives as they would like, up to a $25 million maximum budget. While the initiative choices from the previous round automatically carry over, students can make adjustments based on their analysis of the results. At the conclusion of the simulation, the team’s company will be purchased by a private investor. The buyout price will be based on the company’s financial position and future prospects.
FINANCIAL AND SCORECARD DATA
Financial and scorecard metric data is updated after each simulation round. Students should analyze this data so they can determine which initiatives are creating the desired performance improvements and which are not. Students can review the Metric Dashboard, History, and Graphs screens to perform their analysis.
The Analyze screens allow students to determine the success of their initiatives.
ADMINISTRATION TOOLS ON NEXT PAGE ➜
Administration Tools for Faculty
A comprehensive Teaching Note covers key learning objectives. Students will: ■
Learn how firms use the balanced scorecard to define strategy, implement strategy, and measure strategy execution.
■
Understand that a strategy is more likely to be effective if the initiatives implemented are synergistic with the strategy.
■
Explore how a good balanced scorecard can help companies take midcourse corrective actions.
■
■
■
Recognize that financial metrics are often lagging, volatile, and noncontrollable measures of firm performance.
The Private Equity Valuation debrief screen shows the various buyout prices for the class.
Examine the advantages and
PRACTICE MODE
disadvantages of measuring a small or large number of metrics.
Setting the simulation to practice
Control group players will not select objectives or see a balanced
mode allows students to play through the first 4 rounds repeatedly. Practice
scorecard, but they will see the financial metrics, and all other aspects
rounds allow students to experiment with possible choices prior to making
of simulation play will be the same.
Understand how using the balanced scorecard is like financial variance analysis extended to nonfinancials.
■
permanent decisions for their company.
Learn how a well-designed strategy
CONTROL GROUP
map can help managers think about and communicate strategy.
Instructors can assign certain student teams to be part of a control group.
RESULTS SECTION
The instructor results section provides key statistics and graphs that summarize student performance.
4 1 7 0 6 5 7 8 1 C M
4 0 0 0 0 M # t c u d o r P . r e p a p d e l c y c e r
n o d e t n i r P
Product #114701 | Multi-player | Seat Time: 75 minutes | Developed by Harvard Business School and Forio Online Simulations
PREVIEW AND FREE TRIAL ACCESS Visit hbsp.harvard.edu
ALSO AVAILABLE ■
A Preview of the simulation is available
Premium Educator access is a free
on our web site at hbsp.harvard.edu.
service for faculty at degree-granting
Capital Budgeting #3357 ■
Educator Copies, Teaching Notes,
entire simulation and is available to Premium Educators on our web site.
Free Trials, course planning tools, and special student pricing.
Customer Service and Tech Support are available 6 am to 8 pm ET, Monday through Friday, and 9 am to 5 pm ET, Saturday and Sunday. Customer Service 1-800-545-7685 (1-617-783-7600 outside the U.S. and Canada)
[email protected] Technical Support 1-800-810-8858 (1-617-783-7700 outside the U.S. and Canada)
[email protected]
Strategic Innovation Simulation:
Back Bay Battery V2
institutions and allows access to
A Free Trial allows full access to the
Finance Simulation:
■
#7015
Strategy Simulation:
Competitive Dynamics and Wintel
#710802
