Skip to Main Content »

 
 

Balanced Scorecard

Balanced Scorecard

Availability: In stock

$6.50

Quick Overview

The Balanced Scorecard (BSC) is a tool for management at a strategic level and for achieving long-term targets. Managers are not judged by the financial aspects only, but rather by several aspects. All aspects are weighed differently, which explains the term ‘Balanced’.


Related models: AIDA Model7S ModelKnowledge TriangleINKSWOT AnalysisBalanced ScorecardFive ForcesBCG Matrix6W's of Corporate GrowthCRM;KondratieffCustomer PyramidProduct Life Cycle

$6.50

Balanced Scorecard Cartoon

More Views

  • Balanced Scorecard Cartoon
  • Balanced Scorecard Page01
  • Balanced Scorecard Page04
  • Balanced Scorecard Page02
  • Balanced Scorecard Page03

Details

Balanced Scorecard

 

Background

The Balanced Scorecard (BSC) became seriously popular thanks to Robert S. Kaplan and David P. Norton. In 1993 they published an article called The balanced scorecard measures that drive performance.

The Balanced Scorecard (BSC) is a tool for management at a strategic level and for achieving long-term targets. Managers are not judged by the financial aspects only, but rather by several aspects. All aspects are weighed differently, which explains the term ‘Balanced’.

Related models: AIDA Model7S ModelKnowledge TriangleINKSWOT AnalysisBalanced ScorecardFive ForcesBCG Matrix6W's of Corporate GrowthCRM;KondratieffCustomer PyramidProduct Life Cycle

 

The model

The balanced scorecard is based on the organisation’s vision and strategy. The organisation’s strategic targets are translated into concrete parameters. These objectives may for instance have been put along the bar of the SMART principles.

 

These parameters are subdivided into four perspectives:

-      Financial perspective (profit)

-      Buyer’s perspective (customers)

-      Internal operational management (activities)

-      Learning and innovation perspective (continuity).

 

Financial perspective

The financial perspective focuses on the organisation’s profit results, shown in money. In this way something can be said about the added value of all the efforts made. The results shown in money focus exclusively on the past. To keep the ship ‘on course’ other perspectives, targeting both the past and the present, also matter. The financial perspective is the most important perspective for profit seeking organisations. One important question is this: “what do shareholders expect from us?”

 

Buyer’s perspective

The buyer’s perspective focuses on the customer and customer satisfaction. The latter must be measured on a regular basis. Questions such as “Who is our customer?” “What does our customer expect from us?” and “To what extent do we meet our customer’s expectations?” must be answered. The buyer’s perspective focuses on the here and now. A diminishing scorecard in this perspective can be a sign of less promising results in the future, despite the positive signals in the financial perspective.

 

Internal operational management

This perspective focuses on the internal processes. Examples include primary, secondary but also administrative processes. Having processes under control means that the organisation will be better capable of tuning these processes to the customers’ needs. Also, the organisation will be able to control properly and divide all the available resources.

 

Leaning and innovation perspective

The learning and innovation perspective focuses on the continuity of the organisation’s medium long and long term. The environment is changing. This dynamics must be followed or even partly determined by the organisation. Innovating products, services and processes in line with the customers’ needs must be integrated in all processes. Adapting to changes on time and making sure sufficient knowledge exists to do so allow the organisation to continue to exist and take the lead.

 

Implementation

A balanced scorecard can be implemented in five steps:

-      Define the organisation’s vision and strategy

-      Translate vision and strategy into concrete targets

-      Communicate concrete targets and the linking with individual performances/KPIs

-      Plan activities for realising objectives

-      Evaluate and improve the balanced scorecard.

 

Vision and strategy

Having a crystal-clear vision and strategy will help the organisation determine course and remain ‘on course’. In its vision the organisation will make clear where it stands, what the future looks like, which role it will play in it and what is required to make this come true. A vision will help the organisation gain insight into the future. What are our ambitions?

The strategy indicates how the organisation plans to reach objectives. In what time will it achieve what and which fields of knowledge add to reaching objectives? A strategy is the step-by-step plan at the highest level.

 

Concrete objectives

In addition to the organisation’s mission and vision, objectives must be defined. Objectives describe quantitatively and/or qualitatively which results are to be delivered. We recommend testing these objectives against the SMART or MAGIE requirements. The good thing about the latter is that it will help decide on one language, unequivocal terminology and make sure everyone is heading in the same direction.

 

Communicating targets

Communicating targets is vital to steering the same course. Putting targets to paper only won’t suffice. At all (management) levels of the organisation some of the targets must be reached. The desired performance for the middle and higher management must be discussed explicitly. This is more than a top-down approach: in a dialogue the translation of the strategic targets into personal performance criteria is discussed. For a bad translation will lead to unwanted results.

 

Planning activities

The outlined planning/plateaus is detailed and worked out at lower levels. These plans are measurable and time-bound. Defining objectives based on SMART criteria makes steering and intervention perfectly possible.

 

Evaluation and improvement

The Balanced Scorecard is evaluated on a regular basis. Mistakes and obscurities are removed. Also, a change of strategy will have to be added to the Scorecard.

 

How to use it

 

The Balanced Scorecard can be used as follows:

-      To execute the company strategy: the signals in the balanced scorecard allow for periodical steering and intervention.

-      You may use it as a communication tool to clarify and put the strategy into operation: all heading in the same direction. Matters must not be communicated top-down but rather both ways.

-      Focus on essential issues that matter to being successful.

-      Identify and analyse strategic opportunities: here you may also use other instruments such as the SWOT analysis, DESTEP or Porter’s five force model.

-      To better tune the company’s activities to the strategy.

-      To screen the company on a regular basis, using other tools as well such as the Deming/PDCA Circle and the knowledge value chain.

-      For seeking synergy with other control models including the INK and ISO and for linking matters to the steering parameters applied at a lower level of the organisation such as the devil’s triangle or the BOQIT+R.

-      For steering initiatives, programmes and projects in coherence.

 

Using the Balanced Scorecard as an integral part of the operational management does not exclude other control instruments. Wherever necessary they will complement each other, increase depth or help communicate unequivocally.

 

We wish you perfectly balanced good luck!

 

Related models: 

-   AIDA Model

-   7S Model

-   Knowledge Triangle

-   INK

-   SWOT Analysis

-   Balanced Scorecard

-   Five Forces

-   BCG Matrix

-   6W's of Corporate Growth

-   CRM;Kondratieff

-   Customer Pyramid

-   Product Life Cycle

 

 

Sources:

-       Wikipedia

-       http://www.12manage.com/methods_balancedscorecard_nl.html

-       Balanced Scorecard & INK Management model, dr. ir. C.T.B. Ahaus, ir. F.J. Diepman, ISBN 9789013079081

 

 

The product:

- Cartoon, full colour, 8000-6000 pixels

- Description, full colour, pdf