The Balanced Scorecard is a measure of
the key elements of a company’s
strategy, ranging from continuous
improvement and partnerships, to team
work and innovation.
Organisations design their unique
balanced scorecard based upon their
unique constraints. A company’s
performance depends on how it
measures its performance.
Managers cannot afford to rely on either
financial or operational measures
No single measure provides a clear
performance target focusing on the
critical areas of a business. Thus there is
a need for balanced representation of
both financial and operational measures.
Kaplan and Norton have devised a balanced
scorecard- a set of measures that give top
managers a quick but comprehensive view of
the business. The balanced scorecard consists
a)financial measures that measure the actions
b)The scorecard also contains operational
measures such as customer satisfaction,
internal processes and the organisation’s
innovation and improvement activities.
The balanced scorecard can be
compared with dials and indicators in an
Pilots need detailed information of
many aspects of flight ( wind speed, level
of turbulence, height above the ground,
temperatures, etc. )for navigating and
flying an airplane.
These information is necessary to get an
idea of the current and predicted
Relying on an single measure can be
Just like a pilot, a manager should be
able to view performance in several
areas at the same time.
Using a balanced scorecard, managers
can look at the business in terms of four
dimensions. The balanced scorecard
answers four basic questions-
1. HOW DO CUSTOMERS SEE US?
New products Percentage of sales from new
On-time delivery ( defined by
Share of key account’s
Number of co-operative
2.WHAT MUST WE EXCEL AT?
Manufacturing geometry vs.
Manufacturing excellence Cycle time/ unit cost/yield
New product introduction
Actual introduction schedule
3.CAN WE IMPROVE AND CREATE
Time to develop next generation
Time to market
Process time to maturity
Percent of products that equals 80%
New product introduction vs.
4.HOW DO WE LOOK TO
growth and operating
income by division
share and ROI
Many firms use balanced scorecard as a
1. It brings many elements of a company’s
strategy in a single report.
2. It helps to minimise sub optimization.
The balanced scorecard is appropriate for
organisations of today to be on track and
move confidently into the future. The
scorecard keeps strategy and vision at the
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