If the Balanced Scorecard is the answer,
  what is the question, then?


Building a great company is difficult. Great companies attract the best employees. They get the highest valuation. Suppliers want to do business with them. They are more fun to work at. Most companies are torn between financial performance and running a great business.

Management using the Balanced Scorecard allows to achieve both.
It forces you to:

  • Articulate what you care about.
  • Communicate what you care about.
  • Reward people for what you care about.

But there is another key aspect to performance management: seeking improvement. If you measure too much, experiments that fail will be punished. If you don't measure, you don't reap the learning. An important aspect of performance management is designing your rewards and approval systems to encourage experimentation without penalizing the creative projects that lead to continual improvement.

Maybe you have experienced the challenges a complex global marketplace can, and will, present.

In the ongoing struggle to succeed in today's competitive and dynamic global marketplace, the ability to access and analyze information has become more important than ever before. Critical to survival in such a volatile environment is extensive enterprise analysis. In order to understand the health of the enterprise, improve business processes, measure success and make well-informed decisions, organizations must be armed with the right information.

Business is always about resource allocation, and to get the right people to first do to do things right, then do the right things.

One way of thinking about the use of the Balanced Scorecard is to think of it as a way of framing a strategy so that it can be tested. In effect, a financial outcome is the result of setting customer objectives, process objectives and employee/skills objectives. The goal is to figure out where the highest return comes from based upon a combination of such objectives - provided that the mission and values of the company are supported.

The Balanced Scorecard is all about creating a forceful, united and directed team effort. In real world business you need a winning game plan and a team with a clear understanding of your business goals, your plan, and how they fit in and contribute to the team effort. This is what The Balanced Scorecard is about, too. It's about creating a business strategy where all your moves fit together in a simple to understand, cause-and-effect chain of events.

It's also about setting goals and measuring performance, and it's about how you communicate to keep everyone on your team up-to-date and give them a clear line of sight from their own actions to the company's end result.
But most important; it's about taking your foilware strategy and turn it into do-able action that everybody understands and can be made accountable for.

The Balanced Scorecard introduces four generic perspectives that apply to any business:

These perspectives are not always in a certain row and can be determined individually. Though, for a profit seeking organization the sequence normally is:

  1. Financial (make a profit)
  2. Customer (by satisfying your customers needs)
  3. Processes (through being able to deliver value)
  4. Innovation (by having the necessary knowledge and tools available)

For a non-profit or public service organization it might be:

  1. Customer (fulfill your value obligation to the public)
  2. Processes (through being able to deliver)
  3. Innovation (by having the necessary knowledge and tools available)
  4. Financial (by securing funding and prioritizing the use of financial resources)

Each Perspective is associated with a question that signifies the importance.

The Financial Perspective raises the question: "How should we present ourselves to our owners and investors in order to be considered a financial success and an attractive investment?"

In the Customer Perspective we ask: "What is the Customer Response we need in order to reach our Financial Objectives listed above, and what is the customer value proposition that will give us such a response?"

In the Internal Processes Perspective we are looking for answers to: "In what activities must we excel in order to deliver our value proposition as described in the Customer Perspective and, finally, in our Financial Objectives?"

The final question is regarding the Innovative Perspective, and is: "What do we need to change in our Infrastructure or Intellectual Capital to achieve our internal processes objectives?"

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the Balanced Scorecard
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