Log in | Register | Contact Us | View Cart

 

No comments

Balanced Scorecard

The Balanced Scorecard is a management tool developed by Robert Kaplan and David Norton and published in their book titled The Balanced Scorecard. The book focuses on four areas:

  • Financial performance
  • Customer knowledge
  • Internal business processes
  • Learning and growth

The term ‘balanced’, as explained in their preface, is many faceted. It compares short and long term, financial and non-financial measures, lagging and leading indicators, and external and internal performance. The authors stress that the balanced scorecard is a management system, not a measurement system.

Read more about this topic below.

If you like this reference guide, please help us spread the word about it!

So, what does the balanced scorecard do? The balanced scorecard is a way of ensuring that people throughout the company are aligned. Setting up a strategy that balances the needs of all the different internal organizations in the company is one of the greatest challenges a CEO, or other senior leader, faces.

They, for example, have to decide how much funding should be allocated to R&D. If too much is allocated, earnings can suffer in the short term, sending stock price down. This leads to a harder time getting financing, meaning capital gets more expensive. If too little is allocated, the future is sacrificed for short term gain.

The balanced scorecard helps senior leaders develop a strategy that takes these kinds of issues into account, and create a framework that turns vision into reality.

The balanced scorecard also seeks to address the human side of running a business, and ties that into the corporate strategy. It has a learning and growth measure that links the culture and infrastructure of an organization to its strategy.

For the typical, frontline employee in a Lean organization, a high level balanced scorecard will cascade down through strategy deployment to create a set of KPIs (key performance indicators) which drive a daily management system.

Add a Comment

Share Your Thoughts    |No comments|

Leave a Reply

You must be logged in to post a comment.

Copyright © 2009-2016, Velaction Continuous Improvement, LLC | Legal Information