Steen Nielsen

System dynamics modelling for a balanced scorecard

Purpose – This paper seeks to construct a dynamic model/framework inspired by a case study based on an international company. As described by the theory, one of the main difficulties of balanced scorecard (BSC) is to foresee the time lag dimension of different types of indicators and their combined dynamic effects. Design/methodology/approach – A case study model is used to develop time or dynamic dimensions by using a system dynamics modelling approach. The model includes five perspectives and a number of financial and non‐financial measures. All indicators are defined and related to a coherent number of different cause‐and‐effect relationships based on knowledge and experience. Through three different scenarios we demonstrate the effects of different drivers on the profit and on Return on Capital Employed are demonstrated. Findings – The results show that a minimal change in one of the base variables (skills, customer base or work in process) may have a major influence on other indicators and profit and may be impossible to predict without using a dynamic model. Practical implications – The model may be used as the first step in quantifying the cause‐and‐effect relationships of an integrated BSC model. Using the system dynamics model provides added insight in the BSC and may also serve as a teaching exercise of BSC. Originality/value – Work on dynamic aspects of BSCs is just in an early state, so the aim of any work is to contribute to both scholars and practitioners basic understanding of how such delayed dynamics propagate through systems and time.

Photodissociation of protonated tryptophan and alteration of dissociation pathways by complexation with crown ether

The behavior of protonated tryptophan (TrpH(+)) and its complex with 18-crown-6-ether (CE) after photoexcitation has been explored based on measurements of dissociation lifetimes, fragmentation channels, and absorption spectra using an electrostatic ion storage ring. A recent implementation of pulsed power supplies for the ring elements with microsecond response times allows us to identify the daughter ion fragment masses and to disentangle fragmentation that occurs from excited states immediately after photoexcitation from that occurring on a longer time scale of several microseconds to milliseconds. We find that attachment of crown ether significantly alters the dissociation channels since it renders the pisigma(*)(NH(3)) state inaccessible and hence prevents the N-H bond breakage which is an important fragmentation channel of TrpH(+). As a result, on a long time scale (>10 micros), photoexcited TrpH(+)(CE) decays exponentially whereas TrpH(+) displays a power-law decay. The only ions remaining in the latter case are Trp(+) radical cations with a broad internal energy distribution caused by the departing hydrogen. Large changes in the fragment branching ratios as functions of excitation wavelength between 210 and 290 nm were found for both TrpH(+) and TrpH(+)(CE).

Discussing feedback system thinking in relation to scenario evaluation in a balanced scorecard setup

Since the emergence of the Balanced Scorecard (BSC) at the beginning of the 1990s, literature has intensively discussed the problems of the cause-and-effect relationships, the time-delay elements between measures and perspectives and the concepts of feedback loops. This article focuses on the use of the System Dynamics Modelling approach to deal with these three problems, an approach first suggested by Forrester back in 1958. The wide scope of application of BSC as a decision-supporting instrument continues to spur the interest in BSC. We have used an actual case as inspiration on which our model construction and our simulation scenarios are based. Our findings suggest that the idea of linking BSC and System Dynamics together based on properties of the systems dynamic nature seem to be both a natural and a relevant development. Furthermore, our simulations demonstrate the ability to: (1) provide a scheme for the translation of the strategy into operational terms and at the same time (2) offer possibilities for the decision maker to be able to evaluate the plan–do–review results based on the feedbacks, specifically in a risk evaluating context.

System Dynamic Modelling for a Balanced Scorecard: With a Special Emphasis on Skills, Customer Base, and WIP

Purpose - The purpose of this paper is to analyse some dynamic consequences of the theoretical foundations of the balanced scorecard (BSC) with the aid of a simulation approach based on part of a real BSC. Design/methodology/approach - The model includes five perspectives and a number of financial and non-financial measures. All indicators are defined and related to a number of assumed cause-and-effect relationships. Time lags are included to stipulate one of the most important characteristic of BSC. We use the model to simulate different strategies or scenarios over time. Through three different scenarios we also demonstrate the effects of different variables on the profit or RoCE (Return on Capital Employed). Findings - The results show that minimal changes in the three variables: skills, customer base and work in process may influence profit in different directions. Research limitations/implications - Our analytical model is based on assumed associations hypothesized from literature as well as from our study of a case. In this type of model, the sensitivity of our results with respect to the assumptions should be analysed in subsequent studies. In addition, our model should be extended to cover a complete BSC of an actual company. Practical implications - The model may be used as the first step in putting numbers on an integrated BSC model. The model is our first attempt to study an analytical version of BSC and to make inferences concerning optimal or rational relationships between different indicators and perspectives. The credibility or benefit of the model is insight into the finality of a model but it can also be used as a teaching exercise of BSC. It is easy to extend our model to more realistic circumstances, by including more measures or change time lags. Using the assumed cause-and-effect relationships between financial and non-financial performance measures, attention should also be paid to the definitions and the number of indicators. Originality/value - A large number of case studies and surveys are now present in BSC literature. However, there is a lack of more theoretical and analytical modelling of the BSC. Our paper just throws a little light on this modelling approach.

The knowledge, attitude, priority of usage and benefits associated with management accounting practices: a survey of Danish companies

There have been several studies of the diffusion of new management accounting practices. Respondents were asked to answer questions in a questionnaire covering four variables: level of knowledge, level of attitude, priority of usage and level of benefit for 15 new accounting practices. The survey includes a sample of 119 large and medium-sized privately owned manufacturing and non-manufacturing companies. For those companies that indicate a high level of priority of usage, our results reveal a high level of benefit from the practices. However, significant differences between low priority of usage and high number of practices associated with the company are very likely to contribute to a more modest level of benefits. Based on the analysis between number of practices and benefits, about 20% of the companies associate themselves with four to six projects on new accounting practices in their organisation. This might lead to poor performance and high failure rates.

The Balanced Scorecard and the Strategic Learning Process: A System Dynamics Modeling Approach

The main purpose of this paper is to improve on the conceptual as well as the methodological aspects of BSC as a quantitative model by combining elements from traditional balanced scorecard (BSC) thinking with the Systems Thinking. This is done by combining short and long term aspects of measurements. The result is then used to build and construct a balanced scorecard model for strategic learning with the specific aim to maintain satisfied customers and motivated employees. Strategic planning, operational execution, feedback, and learning are some of the most important key features of any performance measurement model. This paper aims to address not only the conceptual domain related to BSC, that is, learning and system dynamics causality and feedback, but also the methodological domain concept of precision solved by differential equations. Our results show how a potential move from a static strategic vision map to a linked and dynamic understanding may be not fully realistic but very useful for learning purposes. The new knowledge obtained from the learning feedbacks fertilizes both decision discussion and decision-making and what may be required in order to move to the next level of BSC and system dynamics integration.

Transcribing the balanced scorecard into system dynamics: from idea to design

The purpose of this paper is to show how a system dynamics modelling approach can be integrated into the balanced scorecard (BSC) for a case company with special focus on the handling of causality in a dynamic perspective. The BSC model includes five perspectives and a number of financial and non-financial measures. The overall idea of BSC is to make the strategy operational, as proposed by Kaplan and Norton (2007) and to use the strategy for simulation. Our results indicate that a company may gain great insight from simulation studies. The hypothesised model may be used as the first step in quantifying the cause-and-effect relationships of an integrated BSC model. Including dynamic aspects of BSCs into the discussion is only in its infancy, so the aim of our work is also to contribute to both scholars and practitioners general understanding of how such delayed dynamic effects propagate through system and time.

Business Analytics and Performance Management: A Small Data Example Combining TD-ABC and BSC for Simulation and Optimization

The purpose of this paper is twofold: first, it discuss the potentials of combining performance management with the concept and methodology of business analytics. The inspiration for this stems from the intensified discussions and use of business analytics and performance in organizations by both academics and professionals. Second, the paper demonstrates and evaluates the idea of business analytics on a numerical example combining the balanced scorecard and TD-ABC. Four different scenarios are analysed by means of spreadsheet Monte Carlo simulation and optimization to show how such a combination can be made and assess the consequences. The paper shows that in order to be able to fulfill future jobs descriptions; accountants must not only have specific quantitative skills but also creativity and imagination. In addition, the results of the simulation scenarios show the complicated nature of decision making and the careful considerations needed before actually making a decision. For practical implications, the paper establishes some basic ideas for integrating the business analytics methodology for selecting and evaluating accounting problems and it therefore paves the way for analytics performance management approaches.