Balance Scorecard Overview

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Balanced Scorecard Overview
Douglas Scherer June 17, 2002 Introduction Without metrics, management can be a nebulous if not impossible exercise. How can we tell if we have met our goals if we don 't know what our goals are? How do we know if our business strategies are effective if they have not been well defined? The balanced scorecard as documented by Robert S. Kaplan and David P. Norton in the Harvard Business Review article The Balanced Scorecard - Measures that Drive Performance1 describes a methodology used for measuring success and setting goals from financial and operational viewpoints. With those measures, leaders can manage their strategic vision and adjust it for change. This paper will provide a brief overview of the balanced scorecard. Balanced Scorecard Mechanics The balanced scorecard (which saw its initial development during the years of 1987 - 19922) links performance measures by looking at a business 's strategic vision from four different perspectives: financial, customer, innovation and learning, and internal business processes. These four perspectives do not eliminate, but instead support the goals of various management techniques (such as Strategic Planning, Total Quality Management, and Core Competence) employed during the several decades surroundings the balanced scorecard 's appearance. Each of the four perspectives is considered by four parameters. Those parameters are: • Goals: What do we need to achieve to become successful • Measures: What parameters will we use to know if we are successful • Targets: What quantitative value will we use to determine success of the measure • Initiatives: What will we do to meet our goals In the original paper of 1992, Goals and Measures are the only two parameters shown on the scorecard. Since then, it is often seen with the additional two parameters, Targets and Initiatives.

Kaplan, Robert S. and David P. Norton, "The Balanced



References: Art Schneiderman 's Home Page. Retrieved June 15, 2002 from http://www.schneiderman.com/ Calabro, Lori (2001) On Balance: Almost 10 years after developing the balanced scorecard, authors Robert Kaplan and David Norton share what they 've learned. CFO Magazine Retrieved June 15, 2002, from http://www.cfo.com/article/1,5309,2044,00.html Kaplan, Robert S. and David P. Norton, "The Balanced Scorecard - Measures that Drive Performance," HBR 71 (1992) Martinsons, Maris G. (2001) Balance Requires Focus First: A balanced perspective on the balanced scorecard. Retrieved June 15, 2002 from http://fabweb.cityu.edu.hk/is5001r/SCMP-BSC.doc Seybold, Patricia B. (2002). How to Evaluate CRM Alternatives by Functionality, Architecture, & Analytics. An Executive 's Guide to CRM U.S. Department of Commerce (1999). Guide to a Balanced Scorecard Methodology: Moving from Performance Measurement to Performance Management Page 5 of 5

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