Is the Balance Scorecard being revived?


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Balanced Scorecards tell you the knowledge, skills and systems that your employees will need (learning and growth) to innovate and build the right strategic capabilities and efficiencies (internal processes) that deliver specific value to the market (customer) which will eventually lead to higher shareholder value (financial). – “Having Trouble with Your Strategy? Then Map It” by Robert S. Kaplan and David P. Norton – Harvard Business Review. These are timeless principles.

Professor Bob Kaplan discusses the importance of the balanced scorecard:

Thirty years ago, Kaplan and Norton developed the Balanced Scorecard documented in their book, The Balanced Scorecard: Translating Strategy into Action. The Balanced Scorecard translates a company’s vision and strategy into a coherent set of performance measures. The four perspectives of the scorecard:

  1. Financial: How do we look to shareholders?
  2. Customers: How do customers see us?
  3. Internal process: What must we excel at?
  4. Innovation and Learning: Can we continue to improve and create value?

I have found the use of the Balanced Scorecard becoming more and more prevalent in my work. There seems to be a lack of understanding on how the four perspectives intertwine in many organizations. Balanced Scorecard aligns organizations to new strategies: away from the historic, short-term focus on cost reduction and low-price competition, and toward generating growth opportunities by offering customized, value-added products, and services to customers.

In essence, I believe that the Balanced Scorecard is alive and well. However, a basic shift is required in the implementation. In the past the Balanced Scorecard was anything but balanced. There was an exorbitant amount of time spent on internal processes. In most cases forty percent or more was spent on internal processes and improvement. In the future, I think there will be a shift towards more time being spent on the customer perspective. First we will have to re-phrase the scorecard slightly:

  1. Financial: How do we look to stakeholders (0ur entire value stream; Supplier to Customer)?
  2. Customer Relations: How do we enable the use of our product and eventually co-create?
  3. Internal process: What must we continually improve at?
  4. Innovation and Learning: Can we continue to create value through knowledge sharing?

I am not sure where to fit in collaboration and team building but feel that they should be addressed within the four perspectives. What changes would you make? Have you seen the balance scorecard in use?

Republished with author's permission from original post.

Joseph Dager
Business901 is a firm specializing in bringing the continuous improvement process to the sales and marketing arena. He has authored the books the Lean Marketing House, Marketing with A3 and Marketing with PDCA. The Business901 Blog and Podcast includes many leading edge thinkers and has been featured numerous times for its contributions to the Bloomberg's Business Week Exchange.


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