Summary of Balanced Scorecard
Using the Balanced Scorecard as a Strategic Management System
Kaplan, Robert S., Norton, David P.
Harvard Business Review; Jan/Feb1996, Vol. 74 Issue 1, p75-85, 11p, 3 Diagrams
Robert S. Kaplan and David P. Norton introduced the balanced scorecard, which supplemented traditional financial measures with criteria that measured performance from the perspectives of customers, internal business processes, and learning and growth. The scorecard enabled companies to track financial results while monitoring progress in building the capabilities they would need for growth.
Traditional management systems rely on financial measures, which bear little relation to progress in achieving long-term strategic objectives. The scorecard introduces four new processes that help companies connect long-term objectives with short-term actions. The first--translating the vision--helps managers build a consensus around the company 's strategy and express it in terms that can guide action at the local level. The second--communicating and linking--lets managers communicate their strategy up and down the organization and link it to unit and individual goals. The third--business planning--enables companies to integrate their business and financial plans. The fourth--feedback and learning--gives companies the capacity for strategic learning, which consists of gathering feedback, testing the hypotheses on which strategy was based, and making the necessary adjustments.
Many companies adopted early balanced-scorecard concepts to improve their performance measurement systems. They achieved tangible but narrow results. Adopting those concepts provided clarification, consensus, and focus on the desired improvements in performance. More recently, we have seen companies expand their use of the balanced scorecard, employing it as the foundation of an integrated and iterative strategic management system. Companies are using the scorecard to: clarify and update strategy, communicate strategy
Kaplan, Robert S., Norton, David P.
Harvard Business Review; Jan/Feb1996, Vol. 74 Issue 1, p75-85, 11p, 3 Diagrams
Robert S. Kaplan and David P. Norton introduced the balanced scorecard, which supplemented traditional financial measures with criteria that measured performance from the perspectives of customers, internal business processes, and learning and growth. The scorecard enabled companies to track financial results while monitoring progress in building the capabilities they would need for growth.
Traditional management systems rely on financial measures, which bear little relation to progress in achieving long-term strategic objectives. The scorecard introduces four new processes that help companies connect long-term objectives with short-term actions. The first--translating the vision--helps managers build a consensus around the company 's strategy and express it in terms that can guide action at the local level. The second--communicating and linking--lets managers communicate their strategy up and down the organization and link it to unit and individual goals. The third--business planning--enables companies to integrate their business and financial plans. The fourth--feedback and learning--gives companies the capacity for strategic learning, which consists of gathering feedback, testing the hypotheses on which strategy was based, and making the necessary adjustments.
Many companies adopted early balanced-scorecard concepts to improve their performance measurement systems. They achieved tangible but narrow results. Adopting those concepts provided clarification, consensus, and focus on the desired improvements in performance. More recently, we have seen companies expand their use of the balanced scorecard, employing it as the foundation of an integrated and iterative strategic management system. Companies are using the scorecard to: clarify and update strategy, communicate strategy