The Balanced Scorecard Basics

I will today give you a bit of detail about the different aspects of The Balanced Scorecard which is a simple way of keeping track of progress towards your strategic vision and/or your kpi's.

What is this balanced scorecard? How can it help my business? Is it hard to understand? Is it difficult to implement? How is it going to help my business?

The answer could be yes to all of them! It varies and is determined by how well the system is planned, why you want to try it and how it is rolled out. When it is developed as strategic planning process it can unite an organisation behind a common vision of success and have people as a team and focussed on their progress to targets. It really should be more than just a scorecard it is a system, which is made up of strategy, processes and people.

The balanced scorecard was originated by Drs. Robert Kaplan (Harvard Business School) and David Norton as a performance measurement framework.  They describe it like this:

"The balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation."

Their theory is that to map a company’s results purely on financial data is limiting and focussed on what has already happened. The balanced scorecard model looks at business centred on the vision and strategy with four commonly overlooked measures to track the progress towards the business goals. These categories are:

1. Internal processes to create total stakeholder satisfaction
2. Learning and Growth, ability to learn, adapt, be innovative
3. Customer focussed
4. Financial, a business must of course make a profit to exist.

In my next post I will expand on these 4 categories and the best way to implement The Balanced Scorecard system to increase your business efficiency and results.