Balanced Scorecard – The Scorecard of Success

Mar 13, 2012

In the early 1990s, the Balanced Scorecard (BSC) was introduced by Robert Kaplan, a Harvard Business School professor, and David Norton, the founder and president of Balanced Scorecard Collaborative, Inc., as a new way to work with business strategy.  Today, more than half of the Fortune 1,000 companies in North America use the BSC, which has become the hallmark of a well-run organization.  Many organizations say the scorecard is the foundation of their measurement and management systems.

Often, business owners and executives fall prey to the allure of setting too many financial goals.  Or their goals are exclusively financial.  Thinking too much about the financial side of business detracts from the other reasons they’re in  business, such as employing people, contributing to their communities, or providing a needed product or service.  Enter the Balanced Scorecard.

The BSC is an excellent management tool that ensure you have a holistic and balanced strategy as well as a way to track performance over time to asses whether goals are being met.  To have that balanced and holistic strategy, organizations must have goals that feed off each other. The four perspectives are:

 

  • Financial
  • Customer
  • Internal/Operational Process
  • People/Learning

 

 

Take Yogurt Beach, a company with a top-line financial goal to increase the revenue by 10% annually: How will the owner achieve her financial goal? Sell more yogurt.  In order to sell more yogurt, she must have a great product that’s different from the competitor down the street and provide outstanding customer service.  And what does she need to do to deliver great customer service?  Have efficient processes that deliver yogurt quickly.  To excel at quick delivery, she has to have well-trained, friendly employees.  With this example you can see how every step of the Balanced Scorecard is needed to be successful.

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