Balanced scorecard

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Using the Balanced
Scorecard as a Strategic
Management System by Robert S. Kaplan and David P Norton
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Included with this full-text Harvard Business Review article:
1 Article Summary
The Idea in Brief—the core idea
The Idea in Practice—putting the idea to work
2 Using the Balanced Scorecard as a Strategic Management System
14 Further Reading
A list of related materials, with annotations to guide further exploration of the article’s ideas and applications

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BEST OF HBR

Using the Balanced Scorecard as a Strategic
Management System
The Idea in Brief

The Idea in Practice

Why do budgets often bear little direct relation to a company’s long-term strategic objectives? Because they don’t take enough into consideration. A balanced scorecard augments traditional financial measures with benchmarks for performance in three key nonfinancial areas:

The balanced scorecard relies on four processes to bind short-term activities to long-term objectives: • a company’s relationship with its customers • its key internal processes
• its learning and growth.

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When performance measures for these areas are added to the financial metrics, the result is not only a broader perspective on the company’s health and activities, it’s also a powerful organizing framework. A sophisticated instrument panel for coordinating and fine-tuning a company’s operations and businesses so that all activities are aligned with its strategy.

identify the most influential “drivers” of the desired outcomes and then set milestones for gauging the progress they make with these drivers.

1. TRANSLATING THE VISION.
By relying on measurement, the scorecard forces managers to come to agreement on the metrics they will use to operationalize their lofty visions.
Example:
A bank had articulated its strategy as