Question

Professor Robert Kaplan “If you don’t measure something, you can’t manage it.” Explain how the development of the balanced scorecard methodology ties in to a company’s strategic goals. Is the balanced scorecard consistent with what we learned in The Goal - that the goal of an organization should be to make money?

Answer 1

During the 1990s, two Harvard professors and consultants – Kaplan and Norton, devised a tool, the Balanced Scorecard, to rectify the deficiencies in relying primarily on traditional financial measures. A Balanced Scorecard allows better measurement of a firm’s capabilities to create long-term value by identifying the key drivers of this value. The drivers are then translated into four categories of measures- customer, internal/operational, innovation/learning, and financial. The financial measures are typically focused on short-term results; while the other three categories are coupled to future oriented activities needed to successfully sustain the enterprise.

It is a strategic planning and management system that organisation use to communicate what they are trying to acheive, allign the day-to-day work that everyone is doing with strategy. This system connects the dots between bif picture strategy elements such as mission, vision, core values, strategic focus areas, and the more operational elements such as objectives, measures, targets and initiatives, Balanced Scorecard is generally used in industry, government, and nonprofit organisations.

One of the most powerful elements in BSC methodology is the use of strategy mapping to visualize and communicate how value is created by the organisations. With the use of balanced scorecard it is possible to develop a strategic plan and develop management.

Yes balanced scorecard is consistent