Balanced Scorecard Impact on Business Success

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Introduction

Saatchi & Saatchi is an international creative organization with its headquarter in New York City. It was started in 1970 by two brothers, Charles Saatchi and Maurice Saatchi. It deals with offering a range of communication services to its customers. Some of the services offered by Saatchi & Saatchi include marketing strategy and consumer research among others. It has about 138 offices that are located in 82 countries. The agency has about 7000 employees and by the year 2001, the total billings of the agency amounted to over US$ 7 billion. This figure was expected to increase by a bigger percentage by the year 2009 because the performance of the agency was rated high since 2001.

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It is also being recalled that Saatchi & Saatchi experienced very difficult financial problems in the 1990s. The problems were brought about by the global recession that also affected other organizations in the early 1990s. Saatchi & Saatchi was almost being declared bankrupt in 1995 but it narrowly escaped. This led to a reformulation of strategy and changes in the structural organization of the agency. Charles Saatchi and Maurice Saatchi left the agency in the early 1990s then Bob Seelert was appointed the chairman in1995. In 1997, Kevin Roberts was hired as the chief executive officer of the agency by the chairman who was Bob Seelert. Seelert came up with the idea of demerging the company from Cordiant Communications Company. He was also very instrumental in the formulation of the new strategy and corporate vision for Saatchi & Saatchi Company.

As the chief executive officer, Roberts worked very hard to ensure that the execution of the new strategy was successful. Both Kevin Roberts and Bob Seelert had earlier worked in top positions for top spending clients of Saatchi & Saatchi agency and therefore they were familiar with some operations of the company. The goals that the new leadership set for the company were:

  • Doubling the company’s earnings per share.
  • Growing the revenue base of the company better than the available market.
  • Converting about 30 percent of the company’s revenue into operating profit.

It was also believed that customers developed a strong confidence in the new leadership of the Saatchi & Saatchi Agency because they had earlier dealt with the new leaders and they understood their abilities. Pledges were made to the shareholders through the goals that were set by the new leaders. Customers were among the biggest shareholders of the company and thus the pledges were made to them too.

Analysis

When Kevin Roberts came to office, he realized that time was a very important factor to be considered in achieving the goals that had been set for the company. He, therefore, took his first three months in the office to visit 45 business units spread throughout the world. First of all, Kevin discovered that the business units were not working with a common vision. Each unit was working on its agenda and thus they were not adding value to Saatchi & Saatchi as required. This prompted the leadership of Saatchi & Saatchi to categorize the business units so that it was easy to monitor their contributions to the company. The categories were; lead agency, drive agency, and the proper agency. It was reported that the categorization was arrived at after carrying out what the leadership of Saatchi & Saatchi referred to as a check on the financial health of the company to establish which agency was making money for the company and which ones were not making money for the company. It was also to establish the agencies that had the potential to make money for the company and which ones did not have the potential for the same.

Strategies were chosen for each business unit depending on its capacity. For example, a prosperous agency consisted of less than fifty employees and had limited chances of becoming a huge agency. Business units in this category were expected to achieve high margins although their growths were not expected to be drastic. Drive agency had between 50 and 150 workers. Business units in this category were required to maintain or achieve slight growth in their revenue base. They were also required to achieve growth in their margins. Lead agency was expected to grow rapidly because it was the category that received the biggest allocation of the company’s investment. Large economies such as China, the UK, and New York were in this category.

It is true that Saatchi & Saatchi also adopted several strategies that related best to the customers. For example, all the agencies of the company were expected to serve their clients at their best. ‘Permanently Infatuated Clients’ PIC was a phrase that was formed to be observed by all the employees of the company and serve the customers well regardless of the part of the world they were coming from. In addition, employees of the agency were charged with the responsibilities of bringing on board big ideas. This was referred to as ‘Big Fabulous Ideas’ abbreviated as BFIs because this was one of the ways the employee could make customers love them. According to the top leadership of Saatchi &Saatchi, the volume of the ideas did not matter but what mattered were the qualities of the ideas. In addition, inspirational leadership was needed to be in every business unit.

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Conclusion

Let me start by stating that financial strategies that were set by leaders of Saatchi & Saatchi made sense to each given unit. This is because when the units started implementing the strategies, the company started to show signs of achieving its goals. One of the company leaders pointed out that by June 2000, they had achieved their Wall Street goals just six months before December 2000, which was the deadline. This shows that the strategies were making sense to the units. The leaders also pointed out that the success of the company was a result of the balanced scorecard.

The acquisition of Saatchi & Saatchi by Publicis Groupe SA in the year 2000 changed the results of BSC. This is because the figure that was used to purchase the company represented about five times its worth in the market. The buyers had calculated the benefits they were likely to get and with proper management, they might have achieved their targets. After analyzing the two prongs, I can say that they worked in synthesis and helped the company to achieve its goals.

Evaluation

It would be best if the customer perspective strategies meshed with financial strategies. This is because the customer perspective reinforces the financial strategies. The cash comes from the customers and if their perspective is well considered the results are usually good as we have seen in the case of Saatchi &Saatchi. In my view, I think the implementation was done well and that is why the company was able to do very well financially. The goals of the company were met and that was an indication that the implementation was good.

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BusinessEssay. (2022, January 12). Balanced Scorecard Impact on Business Success. Retrieved from https://business-essay.com/balanced-scorecard-impact-on-business-success/

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"Balanced Scorecard Impact on Business Success." BusinessEssay, 12 Jan. 2022, business-essay.com/balanced-scorecard-impact-on-business-success/.

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BusinessEssay. (2022) 'Balanced Scorecard Impact on Business Success'. 12 January.

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BusinessEssay. 2022. "Balanced Scorecard Impact on Business Success." January 12, 2022. https://business-essay.com/balanced-scorecard-impact-on-business-success/.

1. BusinessEssay. "Balanced Scorecard Impact on Business Success." January 12, 2022. https://business-essay.com/balanced-scorecard-impact-on-business-success/.


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BusinessEssay. "Balanced Scorecard Impact on Business Success." January 12, 2022. https://business-essay.com/balanced-scorecard-impact-on-business-success/.