Rockwater, a wholly owned subsidiary of Brown & Bread, a global engineering and construction company, is a worldwide leader in underwater engineering and construction. Norman Chambers, hired as CEO in late 2019, knew that the industry’s competitive world had changed dramatically. “In the 1990s, we were a bunch of guys in wet suits diving off barges into the North Sea with burning torches,” Chambers said. But competition in the subsea contracting business had become keener in the 2000s, and many smaller companies left the industry. In addition, the focus of competition had shifted. Several leading oil companies wanted to develop long-term partnerships with their suppliers rather than choose suppliers based on low-price competition. With his senior management team, Chambers developed a vision: “As our customers’ preferred provider, we shall be the industry leader in providing the highest standards of safety and quality to our clients.” He also developed a strategy to implement the vision. The five elements of that strategy were: services that surpass customers’ expectations and needs; high levels of customer satisfaction; continuous improvement of safety, equipment reliability, responsiveness, and cost effectiveness; high-quality employees; and realization of shareholder expectations. Those elements were in turn developed into strategic objectives. If, however, the strategic objectives were to create value for the company, they had to be translated into tangible goals and actions. Rockwater’s senior management team transformed its vision and strategy into the balanced scorecard’s four sets of performance measures. One perspective included three measures of importance to the shareholder. Return-on-capital-employed and cash flow reflected preferences for short-term results, while forecast reliability signaled the corporate parent’s desire to reduce the historical uncertainty caused by unexpected variations in performance. Rockwater management added two financial measures. Project profitability provided focus on the project as the basic unit for planning and control, and sales backlog helped reduce uncertainty of performance. Rockwater Required: a) According to Kaplan and Norton, what characteristics/features make the balanced scorecard so special for its worldwide adoption? b) Outline the five-pronged strategy crafted by Rockwater in developing the scorecard. c) Using the balanced scorecard (tabular format), translate Rockwater’s strategy into tangible goals and actions.
Rockwater, a wholly owned subsidiary of Brown & Bread, a global engineering and construction
company, is a worldwide leader in underwater engineering and construction. Norman Chambers,
hired as CEO in late 2019, knew that the industry’s competitive world had changed dramatically.
“In the 1990s, we were a bunch of guys in wet suits diving off barges into the North Sea with
burning torches,” Chambers said. But competition in the subsea contracting business had become
keener in the 2000s, and many smaller companies left the industry. In addition, the focus of
competition had shifted. Several leading oil companies wanted to develop long-term partnerships
with their suppliers rather than choose suppliers based on low-price competition.
With his senior management team, Chambers developed a vision: “As our customers’ preferred
provider, we shall be the industry leader in providing the highest standards of safety and quality to
our clients.” He also developed a strategy to implement the vision. The five elements of that
strategy were: services that surpass customers’ expectations and needs; high levels of customer
satisfaction; continuous improvement of safety, equipment reliability, responsiveness, and cost
effectiveness; high-quality employees; and realization of shareholder expectations. Those
elements were in turn developed into strategic objectives. If, however, the strategic objectives were
to create value for the company, they had to be translated into tangible goals and actions.
Rockwater’s senior management team transformed its vision and strategy into the balanced
scorecard’s four sets of performance measures. One perspective included three measures of
importance to the shareholder. Return-on-capital-employed and cash flow reflected preferences
for short-term results, while forecast reliability signaled the corporate parent’s desire to reduce the
historical uncertainty caused by unexpected variations in performance. Rockwater management
added two financial measures. Project profitability provided focus on the project as the basic unit
for planning and control, and sales backlog helped reduce uncertainty of performance. Rockwater
Required:
a) According to Kaplan and Norton, what characteristics/features make the balanced scorecard so special for its worldwide adoption?
b) Outline the five-pronged strategy crafted by Rockwater in developing the scorecard.
c) Using the balanced scorecard (tabular format), translate Rockwater’s strategy into tangible goals and actions.
d) Outline the importance of the balance score card to Rockwater’s.
e) What factors aided Rockwater in its smooth switch to the balanced Score card?
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