Performance measurement scenarios with fuzzy cognitive strategic maps

Quantitative target setting in balanced scorecard method using simultaneous equations system and goal programming

Purpose

The purpose of this paper is to identify the accurate cause and effect relationships among strategic objectives and also to demonstrate how decision makers can be guided in the process of defining quantitative strategic target values in the framework of balanced scorecard (BSC) and performance measurement system.

Design/methodology/approach

Based on the proposed method in this research, after determining strategic objectives and developing an initial strategy map according to decision makers’ opinions, simultaneous equations system (SES) was used to determine the significance of the relationships among strategic objectives in higher perspectives of the BSC and corresponding strategic objectives in lower perspectives. Afterward, desirable values for performance measures were determined based on the equations and relationships obtained through SES and were optimized by goal programming method.

Findings

By applying the proposed method, a clearer picture of the associations among strategic objectives is obtained and the influence of strategic objectives on one another is determined. Afterward, optimal values for strategic objectives are determined to achieve the organization’s goals.

Research limitations/implications

This paper proposes a framework for constructing a strategy map and setting quantitative targets in the framework of BSC. Indeed, this paper presents a case study to demonstrate the applicability and effectiveness of the proposed approach. However, SES technique requires a greater amount of data to generate more accurate results. Although the advent of the Information Age has forced organizations’ decision makers to provide sufficient information and data for business analysis, the data requirements are met.

Practical implications

The presented quantitative approach is a supporting approach for improving decision makers’ opinions and enabling them to reach a more accurate picture of the relationships, valuing strategic objectives and achieving strategic goals. This research also presents a case study to demonstrate the applicability of the proposed approach. The application and implication of the proposed method in banking services show that the contributions of the paper are not only theoretical, but also practical.

Originality/value

The proposed method provides a novel approach for determining the most appropriate targets and applies a comprehensive and scientific model together with decision makers’ opinions and experiences and has two main contributions: first, the associations among strategic objectives are investigated and obtained in an effective way by conducting the SES for the first time in the framework of BSC. Second, quantitative targets have been determined to help in achieving the long-term goals. This task has been accomplished through a combination of SES, the three-stage least squares regression analysis and optimization by using weighted goal programming method.

Modeling cause and effect relationships of strategy map using fuzzy DEMATEL and fourth generation of balanced scorecard

Purpose

– The purpose of this paper is to develop the strategy map (SM) of an Iranian automotive industry and the causal and effects relations of the SM’s variables though fourth generation of balanced scorecard (BSC) and fuzzy DEMATEL (decision-making trial and evaluation laboratory) technique.

Design/methodology/approach

– This research has employed a fuzzy DEMATEL approach in order to find cause and effect relations. At first step, CSFs in Company A’s SM were determined. Then four experts’ views of Company A’s strategic planning department were gathered and calculated by fuzzy set theory.

Findings

– Results showed the important role of customer perspective in supporting and achieving the organization’s vision which ultimately will lead to fulfillment of the financial objective of the company through satisfied customers. In other words, the dominant approach to logic of SM design in Company A and the obtained results from this research indicate, Company A can achieve strategic result with a more prominent role of customer and financial perspective, through employing the enabler perspective, i.e. learning and growth perspective.

Research limitations/implications

– Current study is limited to Iranian automotive industry. So, the strategic planning managers and future researchers shall consider their own company’s strategic structures for developing their SM.

Originality/value

– To the best of knowledge of the authors, it is the first attempt, particularly in the context of Iran, aimed at using fourth generation of BSC and fuzzy DEMATEL technique in an automotive industry which led to the confirmation that these two approaches can jointly be employed for the identifying cause and effect relations in SM and clarification and easy understanding of it. This proposed research structure can be a suitable base for the development of SM in other companies.