SSN 1940-204X Pikesville Lightning (B): Evaluating New Initiatives via Strategy Mapping and the Balanced Scorecard" Roopa Venkatesh Associate Professor Department of Accounting University of Nebraska at Omaha Amy Fredin Associate Professor Department of Accounting St. Cloud State University Jennifer Riley Associate Professor Department of Accounting University of Nebraska at Omaha BACKGROUND The Pikesville Lightning is a minor league baseball team, created in 1976 as a feeder program for the major league Pittsburgh Pirates organization. While the ultimate purpose of a minor league team is to help develop future big leaguers, team owners run these clubs just like a professional operation. The Lightning currently plays in a state-of-the- art facility built in 2006Waterfall Stadium. Greg Storm's management of the team has gone very well thus far, affording the organization the ability to build this beautiful facility where thousands of fans come each year to cheer on the next wave of big leaguers. But Storm believes that his organization's success is not an accident. He has very strategically and intentionally built the Pikesville Lightning to be an innovative organization-being the first to recognize that fans come to the ballpark for a family entertainment experience, not just to watch baseball. To date, he has overseen the implementation of many initiatives (including post-game fireworks and concert, a mascot encounter, and kids happy hour in the fun zone, just to name a few) designed to keep families coming back for more fun at the park. The organization's newest idea to stay fresh and current is to custom produce a specialized oven, which would be sold to Lightning fans who love the ballpark's famous (and difficult to replicate) hot dogs. But without a proper measurement tool, Storm will not know if any of his new ideas, including the ovens, are workingif they are leading the organization toward its mission of creating an exceptional entertainment experience for the fans. He has learned about strategy maps and balanced Scorecards in his discussions with other contacts in the business world, though, and is cautiously optimistic that this type of performance measurement device could work for the Lightning. With the new product launch on the horizon, there is not time to dive into a full-scale organization-wide balanced Scorecard effort. Storm feels, however, that the new oven sale venture could be the perfect candidate to test out this strategy map and balanced Scorecard approach on a smaller scale. Will he be able to pull these pieces together in time for this new product launch, or will this new performance measurement effort actually detract from the Lightning's momentum? EXPANDING PROFITABILITY In addition to creating memorable experiences for fans while they are at the ballpark, Storm also hopes to bring a little reminder of the ballpark to fans in their own homes. A "POG" is a special type of hot dog (a Pikesville hot dog) that has been sold at Waterfall park for years and is wildly popular with the fans. What makes these POGs unique is that they are cooked in special ovens at the park. These 'This Case is an extension of the "Pikesville Lightning: Evaluating Strategic Business Expansion Opportunities Canace and Juras (2012) IMA Educational Case Journal, 5:2. with permission. IMA EDUCATIONAL CASE JOURNAL VOL. 12, NO. 1, ART. 1, MARCH 2019 2019 IMA REQUIREMENTS: ovens promote a unique taste and texture to the POG that is difficult to replicate. In an attempt to bring this baseball park hot dog experience into the homes of many Lightning fans year-round, the Pikesville organization has obtained an exclusive franchise from its manufacturer to purchase smaller, replica POG ovens (branded with the team logo) for distribution. This one-of-a-kind product is rolling out in quarter one of fiscal year 2017. The leadership team can only hope that this initiative will drive future innovations for growth, capitalizing on the facilities' investments and fans' desires for a year-round ballpark experience. 1. Review the strategy map (Exhibit 1) for Pikesville's stated mission. Several objectives have been linked to show how one of its initiativesIncrease Revenuescould be operationalized to allow Pikesville to remain competitive. Create a similar linking of objectives to show how the second initiativeMaintain Solid Profit Marginscould be just as appropriate for the organization's success (two objectives are provided for your consideration). You could revise the existing objectives or add additional objectives under each perspective for each initiative. Consider what key activities or processes would need to be in place for each of these initiatives to be realized. THE STRATEGY MAP AND BALANCED SCORECARD 2. Create a balanced Scorecard for each of Pikesville's initiatives (Exhibits 2 and 3 provide a structure), incorporating the objectives listed in the strategy map, specifying one or two measures that could be used to adequately evaluate the progress of each objective. Provide support for each measure, explaining your underlying assumptions of why or how it will be a useful metric for capturing progress on a given objective. Further, for each measure that is specified, identify where Pikesville's accountants would obtain that information (i.e., from the general ledger account information). Unlike some executives, Storm has not been satisfied with evaluating the organization's success by looking at profitability or sales trends alone. He has wanted a more comprehensive approach to capture the success of the organization's investments and initiatives. Further, now that the organization is starting to venture into new territory, he wants to better understand whether the new initiatives are truly leading the Lightning organization toward its goals of long-term, market-leading, sustainable growth and fan loyalty. A balanced Scorecard approach seems to fit his desires perfectly, as it could potentially provide the comprehensive view of performance that he has been looking for. The trouble is that he has not had time to pull the entire management team together to create this scorecard, which would have been ideal, in order to bring together their collective knowledge and expertise, as well as to promote buy-in for the stated objectives. Instead he started to create a strategy map for two of Pikesville's main initiatives related to its newest venture: (1) increasing revenues and (2) maintaining solid profit margins from the POG ovens (see Exhibit 1). Storm needs some help completing not only the strategy maps for these initiatives but also the related balanced Scorecards to help measure their progress. 3. How do you think the balanced Scorecard that you just created will be effective in evaluating the progress of Pikesville's newest initiatives? What could go wrong? ABOUT IMA (INSTITUTE OF MANAGEMENT ACCOUNTANTS) IMA, the association of accountants and financial professionals in business, is one of the largest and most respected associations focused exclusively on advancing the management accounting profession. Globally, IMA supports the profession through research, the CMA (Certified Management Accountant) program, continuing education, networking and advocacy of the highest ethical business practices. IMA has a global network of more than 100,000 members in 140 countries and 300 professional and student chapters. Headquartered in Montvale, N.J., USA, IMA provides localized services through its four global regions: The Americas, Asia/Pacific, Europe, and Middle East/India. For more information about IMA, please visit www.imanet.org. Exhibit 1: Strategy Map Initiative 1: Increase Revenues (in gray) Initiative 2: Maintain Solid Profit Margins (in blue) Financial Perspective Increase revenues via POG oven sales Control costs from sales of POG ovens 1 Customer Perspective 1 Reach out to season ticket holders about POG oven offer Collect feedback from customers regarding satisfaction with POG oven purchases Internal Business Process Perspective Create and launch advertising campaign for POG oven sales Create warranty/return plan for any defective POGovens Learning and Growth Perspective Educate sales staff about POG oven design features and use Educate purchasing department staff about appropriate cost/quality specifications of POG ovens Exhibit 2: Balanced Scorecard for Initiative 1 Initiative 1: Increase Revenues (in gray) Perspective Objective(s) Financial Increase revenues via POG oven sales Measures Source of Data for Measure Customer Reach out to season ticket holders about POG aven sales Internal Business Process Create and launch advertising campaign for POG oven sales Learning and Growth Educate Lightning sales staffabout POG oven design features and use Exhibit 3: Balanced Scorecard for Initiative 2 Initiative 2: Maintain Solid Profit Margins (in blue) Measures Source of Data for Measure Perspective Financial Objectivels) Increase revenues via POG oven sales Customer Reach out to season ticket holders about POG oven sales Internal Business Process Create and launch advertising campaign for POG oven sales Learning and Growth Educate Lightning sales staffabout POG oven design features and use