If there be anything that organizations are streamlining today, then that is their strategy. The strategy however may not be as easy to come up with as most executives will intimate. Those corporate that have a strategy are increasingly finding a need to establish measurable constituents of these strategies. The balanced scorecard a concept by Robert Kaplan and David Norton has proved the most effective strategic concept of our time. The concept is about modeling a template that can be used as a measure of the objectives resultant from the perspectives supported by the balanced scorecard concept. The nature of the balanced scorecard attempts to identify four typical perspectives in today’ s business world.
The perspectives are identified as financial, customer, internal process, and learning and growth process. The financial perspective relates to the financial objectives and obligations of the organization. Managers in this case will be assessing the company’ s financial success. They are also concerned with shareholder value. A typical question asked under this perspective would be how do the shareholders view us? Operational goals that are internal to an organization are an important consideration. The internal processes perspective covers these goals and outlines the main processes adopted to meet customer objectives.
A typical question asked under this perspective would be what should we excel in? The customer perspective is all about meeting the customer objectives which include their satisfaction, product attributes, market share goals, and service attributes. How do customers see us? (Kaplan & Norton 1992, p. 174). Future determinants of the company’ s success such as human, information and organizational capital, organizational culture, skills, training, and leadership are among those aspects considered in the learning and growth perspective. Under this perspective suggest the question “ can we continue to improve and create value? ” (Kaplan & Norton 1992, p. 174). While employing the balanced scorecard approach managers are avoiding information overload that would otherwise be detrimental to the company’ s performance. A balanced scorecard will guard against sub-optimization (Kaplan & Norton 1992, p. 174). The bottom line may not just be to achieve an objective.
“ Even the best objective can be achieved badly” (Kaplan & Norton 1992, p. 174). While trying to reduce time to market, for example, companies may adopt a number of ways. They can improve the management of their new products.
They may also release products that are different from existing products. Processing costs can be cut by reducing setup times and increasing the batch sizes needed during processing. Many companies today have a focus that is customer-oriented and they aim at making this their number one in their mission statement. Therefore the customer’ s perspective of the organization is very important. In trying to understand this, the company needs to ask itself a number of questions relating to the customer perspective. Among the main customer, concerns are things such as time, service, cost, quality and performance (Kaplan & Norton 1992, p. 175) Considering the customer perspective, therefore, companies need to engage the balanced scorecard framework in this perspective.
By doing this they can articulate goals related to time, quality, service, and performance translating them into specific measures. When the customer’ s evaluation of the company is derived, the company must redefine itself based on this evaluation.
Abernathy, W 1997, Balanced scorecards make teamwork a reality. The Journal for Quality and Participation, pp.58-59.
Kaplan, R S and D P Norton 2006, How to implement new strategy without disrupting your organization, Harvard Business Review, pp.100-109.
Sanjoy Bose, Keith Thomas 2007, Applying the balanced scorecard for better performance of intellectual capital, Journal of Intellectual Capital, Vol. 8, no. 4, Pp. 653 – 665.