DD is a research company operating in the computer hardware industry. It has been established for three years. The company employs 30 scientists and engineers working in three research teams. One of those teams has invented an innovative processor which is significantly faster than any processor that is currently available commercially. It is likely that the new processor will be usable in computers used for industrial and, possibly, gaming purposes. The other teams are working in similar areas, developing processors.

Although all of the researchers have done new and innovative work, which has led to a number of published academic papers, no patents have been filed since the company started. Therefore, none of DDs innovative products has ever become commercially available.

The company is privately funded by an entrepreneur (Mr X), who made R350 million from the sale of his previous computer business.

Mr X has, to date, allowed his research staff to conduct research which is focused on creativity rather than commercial viability. He does not want to lose any of the current research staff but now want to encourage them to be more commercially aware.

Mr X has decided that the company must now capitalise upon the innovative computer processor that one of the DD teams has invented. He intends that some of the focus should shift to the development of commercially available products rather than purely research activities.

Mr X recognises that this will be a significant change in strategy and culture for the company and that the change will require significant planning and management. Mr X intends to hire marketing staff and five additional engineers to bring the processor, and any other potential products, to market as soon as possible.

Currently, there is no performance measurement system in place within the company. Mr X believes that the balanced scorecard might be the best performance measurement system for DD.

Required:

3.1Explain the components of the balanced scorecard model.

3.2Recommend, with reasons, two measures that DD should use in each of the components of the balance scorecard model.

3.3Discuss how the balanced scorecard should be introduced and used, in order to help DD achieve the proposed change in strategy and culture.