Balanced Scorecard
The Balanced Scorecard, referred to as the BSC, is a framework to implement and manage strategy. It links a vision to strategic objectives, measures, targets, and initiatives. It balances financial measures with performance measures and objectives related to all other parts of the organisation. It is a business performance management tool.
It was originally published by Dr Robert Kaplan and Dr David Norton as a paper in 1992. And then formally as a book in 1996. Both the paper and the book led to its widespread success. It is interesting to note that although Kaplan and Norton published the first paper, they were anomalously referenced in a work by Art Schneiderman who is believed to be the balanced scorecard creator.
The Basics So it’s more than just financial measures? Correct! The major difference that Kaplan and Norton introduced into this methodology is the ‘balance’ across all organisational functions. The problem back then, and still today, is that most companies focus on financial measures. For example, revenue growth and profitability. By looking at an organisation across four ‘Perspectives’ a causal relationship between investment and financial outcome can be defined, measured and managed. The ‘balance’ is brought about by a focus on financial and non-financial objectives that are attributed to four areas of an organisation. These are the Perspectives. They are: Financial, Customer, Internal Processes and Organisational Capacity.
The real value of the Perspective approach is that it provides a framework to describe a business strategy. It focuses on objectives and measures that both inform us about progress and allow us to influence activities to achieve the strategy.
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