The Balanced Scorecard

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Introduction

The Balanced Scorecard (BSC) began as a concept for measuring whether the smaller-scale operational activities of a company are aligned with its larger-scale objectives in terms of vision and strategy. It was developed and first used at Analog Devices in 1987. By focusing not only on financial outcomes but also on the human issues, the Balanced Scorecard helps provide a more comprehensive view of a business, which in turn helps organizations act in their best long-term interests. The strategic management system helps managers focus on performance metrics while balancing financial objectives with customer, process and employee perspectives. Measures are often indicators of future performance. In 1993, Robert S. Kaplan and David P. Norton began publicizing the Balanced Scorecard through a series of journal articles. In 1996, they published the book The Balanced Scorecard. Since the original concept was introduced, Balanced Scorecards have become a fertile field of theory and research, and many practitioners have diverted from the original Kaplan & Norton articles. Kaplan & Norton themselves revisited Balanced Scorecards with the benefit of a decade's experience since the original article.

The Balanced Scorecard is a performance planning and measurement framework, with similar principles as Management by Objectives, which was publicized by Robert S. Kaplan and David P. Norton in the early 1990s. Having realized the shortcomings of traditional management control systems, Kaplan and Norton designed the Balanced Scorecard as a result of a one-year research project involving 12 companies. Since its introduction, the Balanced Scorecard has been awarded a prize by the American Accounting Association as the “best theoretical contribution in 1997”, and its industry and academic attention has placed it alongside approaches such as Activity Based Costing and Total Quality Management. Balanced scorecard is a tool to execute and monitor the organizational strategy by using a combination of financial and non financial measures. It is designed to translate vision and strategy into objectives and measures across four balanced perspectives: financial, customers, internal business process and learning and growth. It gives a framework ensuring that the strategy is translated into a coherent set of performance measures additional management control systems, Kaplan and Norton designed the Balanced.

History

In 1993, Robert S. Kaplan and David P. Norton began publicizing the Balanced Scorecard through a series of journal articles. In 1996, they published the book the Balanced Scorecard. Since the original concept was introduced, Balanced Scorecards have become a fertile field of theory and research, and many practitioners have diverted from the original Kaplan & Norton articles. Kaplan & Norton themselves revisited Balanced Scorecards with the benefit of a decade's experience since the original article. The Balanced Scorecard is a performance planning and measurement framework, with similar principles as Management by Objectives, which was publicized by Robert S. Kaplan and David P. Norton in the early 1990s. Having realized the shortcomings of traditional management control systems, Kaplan and Norton designed the Balanced Scorecard as a result of a one-year research project involving 12 companies. Since its introduction, the Balanced Scorecard has been awarded a prize by the American Accounting Association as the “best theoretical contribution in 1997”, and its industry and academic attention has placed it alongside approaches such as Activity Based Costing and Total Quality Management. Balanced scorecard is a tool to execute and monitor the organizational strategy by using a combination of financial and non financial measures. It is designed to translate vision and strategy into objectives and measures across four balanced...
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