DDBA 8006 Week 7 Scorecard Measurement Plan Example

Keep the Counter or Close It Next Spring? A Scorecard Measurement Plan for a Member-Owned Grocery Cooperative's New Prepared-Foods Counter, With a Failure Line Set Before the Results Arrive

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Walden University

DDBA 8006: Contemporary Challenges in Business

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Month Day, Year

Keep the Counter or Close It Next Spring? A Scorecard Measurement Plan for a Member-Owned Grocery Cooperative's New Prepared-Foods Counter, With a Failure Line Set Before the Results Arrive

The Decision Being Judged

Westside Food Co-op, a composite grocery owned by some 5,800 member households in Madison, Wisconsin, opened a prepared-foods counter in April: hot entrées, grain salads and soups made in a kitchen converted from storage space, at a cost of $310,000. The board approved it as a test. By next April it must decide whether to keep the counter, scale it back to cold items only or close it and return the space to storage. This plan explains how the board will judge which choice is right, using measures chosen now and a failure line fixed before any results come in.

The Framework

Kaplan and Norton (1996) proposed that organizations judge strategy through four connected views: financial results, how customers respond, how well internal processes work and whether the organization is learning and improving. Their point was that financial results alone report the past; the other three show whether the strategy is building what will produce future results. Hoque (2014), reviewing two decades of research on the scorecard, found that it works best when measures are few and tied to a specific strategy rather than collected out of habit. This plan uses one or two measures per perspective, each tied to the counter's purpose: bringing members in more often and keeping their food spending at the co-op.

The Measurement Table

Table 1

Measures, Targets and Failure Lines for the Prepared-Foods Counter

Targets set by the general manager and the board's finance committee in September; failure lines agreed at the same meeting.

Why These Measures

The contribution margin answers the simplest question: does the counter pay for its own food and labor? Sales per week show scale. But the counter's real purpose was to give members a reason to visit more often and to keep their food spending at the co-op rather than at a nearby supermarket with a hot bar. The two customer measures test that. Repeat purchase within 14 days shows whether the counter builds a habit. The basket comparison shows whether counter buyers spend more in the rest of the store, which would justify a counter that only breaks even on its own.

Waste is the internal measure because prepared food that is not sold by the end of the day is discarded, and waste is where counters usually lose money. The learning measure counts certified kitchen staff, since a counter that depends on two cooks cannot cover vacations or turnover.

Why the Failure Lines Are Set Now

Kerr (1975) showed how organizations end up rewarding behavior different from what they want because the measures they watch do not match their goals. A related danger here is that measures chosen after results arrive tend to favor whatever happened. Setting failure lines in September, before the board knows the numbers, means the April decision will be made against a standard the board agreed while it was still uncertain. If two or more failure lines are crossed, the general manager will recommend scaling back to cold items; if three or more, closing.

How Data Will Be Gathered

Most measures come from systems the co-op already runs. The basket comparison needs one new step: the finance manager will pull transaction data for members who used the counter at least twice and a matched group who did not, monthly. The waste log is new; counter staff record discarded items at closing on a paper form, entered weekly.

What the Scorecard Cannot Show

It cannot show what members would have done without the counter, since there is no comparison store. A growing basket among counter buyers could reflect members who already spent more choosing to try the counter. The board should read the basket measure with that caution.

References

Hoque, Z. (2014). 20 years of studies on the balanced scorecard: Trends, accomplishments, gaps and opportunities for future research. British Accounting Review, 46(1), 33-59. https://doi.org/10.1016/j.bar.2013.10.003

Kaplan, R. S., & Norton, D. P. (1996). The balanced scorecard: Translating strategy into action. Harvard Business School Press.

Kerr, S. (1975). On the folly of rewarding A, while hoping for B. Academy of Management Journal, 18(4), 769-783. https://doi.org/10.2307/255378