The Balanced Scorecard (BSC) began as a concept for measuring whether the smaller-scale operational activities of a company are aligned with its larger-scale objectives in terms of vision and strategy.
Notes:
Robert Kaplan and David Norton developed the balanced scorecard in 1992 became a Fortune 500’s management best practices in 2000s.
Traditional financial measures is not enough to formulate and control strategy. Financial measures should be supplemented with 3 new measures concerning customer satisfaction, internal processes, the ability to innovate (solve problems and produce new products and services).
Balanced Scorecard is a carefully selected set of measures derived from an organisation’s strategy that gives top managers a fast but comprehensive view of the business.
These additional metrics would drive the organization towards its strategic goals while keeping all four perspectives in balance:
1. Balance between financial and non-financial indicators of success (KPIs).
2. Balance between internal and external constituents of the organisation.
3. Balance between lag and lead indicators of performance.
4. Balances the CSFs with KPIs (Short and long term objectives).
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