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Balanced Scorecard
The Balanced Scorecard is a new management concept that helps managers at all levels monitor results in their key areas. An article in the Harvard Business Review (1992) by Robert Kaplan and David Norton entitled "The Balanced Scorecard - Measures that Drive Performance" sparked interest in the method and led to their business bestseller, "The Balanced Scorecard: Translating Strategy into Action" (published in 1996.)
There's nothing new about using key measurements to take the pulse of an organization. What's new is that Kaplan and Norton have recommended broadening the scope of the measures to include four areas:
- Financial Performance
- Customer Knowledge
- Internal Business Processes
- Learning and Growth
This allows the monitoring of present performance while attempting to capture information about how the organization is positioned to perform in the future.
Kaplan and Norton cite the following benefits of using the Balanced Scorecard:
- Focusing the whole organization on the few key things needed to create breakthrough performance.
- Helping to integrate various corporate programs, such as quality, re-engineering and customer service initiatives.
- Breaking down strategic measures to local levels so that unit managers, operators and employees can see what's required at their level to move into overall excellent performance.
The Hogan Center implements the Balanced Scorecard in a format we call The Business Performance Matrix (BPM) ( Download Adobe Reader ) . While the BPM can be implemented as a standalone activity, we consider it an important part of an organization's strategic planning process.
*image source: The Balanced Scorecard Institute