Balanced Scorecard
Use this framework to translate your company vision and strategy into actions by setting targets in four important parts of the company – financial, learning and growth, customers, and internal processes.
This model was developed by Robert Kaplan and David Norton and first published in the Harvard Business Review in 1992. The authors believed that improvements in a company's performance needed measurements built into management systems.
The balanced scorecard (BSC) is a strategic planning tool that joins up the vision and strategy of the company with the means by which it can be achieved. It forces managers to think about the initiatives that will be required and it introduces measures and targets to track the performance.
A score card is like a school report – it measures how you are doing in four key aspects of a business - financial, learning and growth, customers and internal processes. (See diagram). In each of the four quadrants there are a list of initiatives with measures. These are not cast in stone; they are appropriate for what is required to achieve the vision and strategy. It is therefore a flexible tool which can be adjusted to meet the strategies of different organisations.
Each of these measures (e.g. increase in revenue, increase in profitability etc) requires an objective and number that will drive change. Objectives, measures, targets and initiatives must be set for financial, learning/growth, customers, and internal processes.
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In one form or another most large organisations use the balanced scorecard. They have objectives that must be met and key performance indicators to keep track of them. The balanced scorecard framework has been selected by the editors of Harvard Business Review as one of the most influential business ideas of the past 75 years.