The Balanced Scorecard was introduced by Robert Kaplan, a Harvard Business School professor, and David Norton, the founder and president of Balanced Scorecard Collaborative, Inc., in the early 1990s as a new strategic planning tool. Today, over half of the Fortune 1,000 companies in North America are using the Balanced Scorecard, which has become the hallmark of a well-run organization. Many organizations say the scorecard is the foundation of their measurement and management systems.
To have a balanced and holistic strategy, organizations must have goals that feed off each other. These perspectives are described below:
- Financial or mission: When you provide value to your customers, you achieve your financial or mission goals.
- Customer: If you want to generate additional revenue, you need to provide value to your customers.
- Internal and operational process: In order to provide value to your customers, you must have internal business process to create that value.
- Employee (centering on learning and innovation): And in order for your business processes to function, you need people who are skilled and knowledgeable.
Example
Tammy’s Tantalizing Tacos top line financial goal is to increase the revenue by 10 percent annually. How will she achieve her financial goal? Sell more tacos. In order to sell more tacos, she must provide great customer service. And what does she need to do to deliver great customer service? Have efficient processes that deliver food quickly. To excel at quick food delivery, she has to have well-trained employees.
