2003 Q3 The Balanced Scorecard
The Balanced Scorecard is a set of measures that are directly linked to the company’s strategy. Developed by Robert Kaplan and David Norton, it allows a company to link its own long-term strategy with tangible goals and actions. The scorecard allows managers to evaluate the company from four perspectives: financial performance, customer knowledge, internal business processes, and learning and growth. As illustrated in the accompanying figure, the Balanced Scorecard contains a concise definition of the company’s vision and strategy. Surrounding the vision and strategy are four additional boxes; each box contains the objectives, measures, targets, and initiatives for one of the four perspectives:
The box at the top represents the financial perspective, and answers the question, “To succeed financially, how should we appear to our shareholders?” The box to the right represents the internal business process perspective while the bottom box centers on how the company will sustain its ability to change and improve. The box at the left reflects the customer perspective and responds to the question, to achieve our vision, how should we appear to our customers?
A properly constructed scorecard is balanced between short-and long-term measures: financial and nonfinancial measures and internal and external performance perspectives.