What is the Balanced Scorecard ?

The Balanced Scorecard (BSC) is a strategic planning tool and performance management system that provides organizations to align business activities to the vision and strategy of the organization and monitor organization performance against strategic goals.

BSC answers two key questions for organizations : "Where do we want to be?" and "How well are we doing getting there?"

This tool was originated by Drs. Robert Kaplan and David Norton as a performance measurement framework that added strategic non financial performance measures to traditional financial metrics to give managers and executives of an enterprise a balanced view to steer the organization. This phrase was coined in early 1990s but the roots of this type of approach are found in 1950s with the pioneering work of  General Electric on performance measurement reporting and from the work of French process engineers, (who created the Tableau de Bord – literally, a "dashboard" of performance measures).

Kaplan and Norton describe the innovation of the balanced scorecard as follows:

"The balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation."

Source: Adapted from Kaplan and Norton, "Using the Balanced Scorecard as a Strategic Management System," Harvard Business Review, July 2007

This BSC suggests that we see the organization from four critical success factors, develop metrics, collect data and analyze it relative to these perspectives:

Scorecarding and Strategy Management Solution Providers:

Many vendors provide solutions for strategy management and scorecarding- ranging from BI vendors, stand-alone strategy and performance management suite providers to enterprise application vendors. The vendor landscape has become a hybrid market composed of megavendors such as IBM (Cognos), SAP (Business Objects) - that offer a portfolio of capabilities.

BSC is broadly being used by various businesses, organizations, and government across various industries worldwide.Once a BSC has been developed and implemented, however performance management software can be used to get the right performance information to right people at right time. Both together help transform corporate data into information and knowledge and help senior leadership team to take strategic organizational decisions.

Sources:-

• Opening the BPM Methodology Toolbox: The Balanced Scorecard , Gartner, 15June2012, John Dixon
• Solutions for Scorecards and Strategy Management, Gartner, 02April2010, Neil Chandler
• Balancedscorecard.org

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