Evolution of the Balanced Scorecard For Business
The balanced scorecard approach to business has evolved from simple metrics and performance reporting into a strategic planning and management system. This is a framework that provides performance measurements and helps analysts to identify gaps where service improvements can be made.
Dr. R. Kaplan and David Norton did extensive work on this framework in the early 1990s, and they identified four key steps that are required to design a useful balanced scorecard. First is to translate the vision into operational goals, then communicate the vision and link it to individual performance. Business planning and index setting come next, followed b y feedback and learning, and adjusting the strategy accordingly. An updated version on the traditional balanced scorecard was developed in the late 1990s which was known as the Third Generation Balanced Scorecard.
Balanced Scorecard Tips For Business
Today there is an entire industry built around the balanced score card approach to business. It is one of the most simple and effective tools in business, but it can also be a big waste of time if not implemented properly. Some tips can help managers to effectively use concepts form the balanced scorecard approach.
One tip is to have metrics from at least four different perspectives. If you’ve only got one number, you run a serious risk of damaging your business. You can use the four standard balanced scorecard perspectives as a starting point: financial, customer, internal process, and learning/innovation. Another tip is to not ignore your leading indicators. Most companies do better with lagging indicators such as those found in the financial perspective. You have to make a clear effort to measure leading indicators, like how well your organization learns and innovates.
Get monthly Social Entrepreneur interviews in your inbox. Listen on your music player.Want to Learn More About Social Entrepreneurship?
Learn from successful social entrepreneurs.
Click here to be a member of Matthew's Social Entrepreneurship Series now!