A balance score card is a strategic planning and management system used extensively in business and by organizations worldwide. Benefits of the system include increasing focus on results, aligning business activities with organization strategy and improving performance and communications. It Was first published in 1992 by Kaplan and Norton, a book followed in 1996. The Traditional performance measurements that only focus on external accounting data were obsolete so this approach is to provide 'balance' to the financial perspective.
The balanced score card proposes that the organization should be viewed from four perspectives, with metrics developed, data collected and analyzed for each of them. These four perspectives are: Financial, Customer, Internal Business Processes and Learning and Growth. The first generation of Balanced Scorecard designs used a "4 perspective" approach to identify what measures to use to track the implementation of strategy. `The original four "perspectives" proposed were: •
Financial: encourages the identification of a few relevant high-level financial measures. In particular, designers were encouraged to choose measures that helped inform the answer to the question "How do we look to shareholders?" Examples: cash flow, sales growth, operating income, return on equity. •
Customer: encourages the identification of measures that answer the question "How do customers see us?" Examples: percent of sales from new products, on time delivery, share of important customers’ purchases, ranking by important customers. •
Internal business processes: encourages the identification of measures that answer the question "What must we excel at?" Examples: cycle time, unit cost, yield, new product introductions. •
Learning and growth: encourages the identification of measures that answer the question "How can we continue to improve, create value and innovate?". Examples: time to develop new generation of products, life cycle to product maturity, time...
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