Benefits from using the Balanced Scorecard
Recognizing some of the weaknesses and vagueness of previous management approaches, the balanced scorecard approach provides a clear prescription as to what companies should measure in order to 'balance' the financial perspective.
Traditional performance measurement, focusing on external accounting data, is obsolete - and something more is needed to provide the information age enterprises with efficient planning tools.
Among the long row of benefits of applying Balanced Scorecard, theese are the most significant:
Many organizations have difficulty establishing mechanisms that translate strategic vision into concrete goals and actions. Then, every single business, public service, project, or simply any kind of prolonged group effort, will benefit from the power of the Balaced Scorecard.To best capture the strategic and competitive value of their information storehouses, top-level managers must abandon the belief that traditional business intelligence offers adequate enterprise analysis. Rather, it is vital for managers to expand their analysis perspective to include business performance management capabilities.
Enterprise Business Performance Management is the process of measuring and analyzing key performance indicators in order to manage internal business processes. Such strategic management yields efficiency improvements so that organizations are empowered to achieve both their strategic and tactical objectives. Today's enterprise can scarcely afford not to meet this challenge.
Strategic learning and linking of measures are key points. It delivers information to managers for guiding their decisions, but these are self-assessments, not customer requirements or compliance data.
This methodology offers senior managers, operational managers, consultants and business academics a comprehensive view of business strategy.
Reflections on the relations between the Balanced Scorecard and other areas such as TQM, information systems and intellectual capital and knowledge management will give a more complete understanding of new forms of control. Related areas of interest include performance measures, management control, business strategy, strategy development, strategic planning and implementation, and quality management.
the Balanced Scorecard provides an effective way of communicating priorities to all levels of organization, then all employees can see and understand how their work is related to the business and its success as a whole.
Using the Balanced Scorecard to handle strategies can lead to fundamentally different project management in several respects. The methodology builds on some key concepts of previous management ideas such as Double-Loop Learning and Deming's Total Quality Management (TQM), including customer-defined quality, continuous improvement, employee empowerment, and measurement-based management and feedback.
the Balanced Scorecard management system is not just another project - it is a continuous cyclical management process.
It has neither beginning nor end. Its task is not directly concerned about the mission of the organization, but rather with internal processes (diagnostic measures) and external outcomes (strategic measures). The system's control is based on performance metrics that are tracked continously over time to look for trends, best and worst practices, and areas for improvement.
The concept of the Balanced Scorecard supports strategic planning and implementation by federating the actions of all parts of an organization around a common understanding of its goals, and by facilitating the assessment and upgrade of strategy. When fully deployed, the Balanced Scorecard transforms strategic planning from an academic exercise into the nerve center of an enterprise.
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the Balanced Scorecard