Purpose of a Balanced Scorecard
The balanced scorecard is a strategic planning methodology used by corporate executives to balance financial concerns (stockholders), customer concerns, process concerns and innovation concerns during day-to-day operations. Since each of these four concerns feed the top level strategic vision of a corporation, this balance is required to ensure that daily operations are aligned with the long-term strategic vision of the corporation.
What Is a Balanced Scorecard?
The balanced scorecard is a strategic business planning and tracking tool designed to help companies align their corporate mission and visions with day-to-day activities. The scorecard effectively “keeps score” as to how daily business activities are tracking to strategic vision or goals. This tool is especially needed today with the multitude of information-centered distractions (cell phones, e-mails, PDAs, Twitter, Facebook and the like), which may or may not align with corporate long-term objectives. Applications
The balanced scorecard transforms corporate strategic plans, goals and objectives into actionable and measurable steps. In fact, goals become Specific, Measurable, Actionable, Realistic and Timebound (SMART). The key terms in this group are Measurable and Actionable.
With a balanced scorecard system, corporate executives can now plan more effectively. It’s hard to plan what you can’t measure. To this end, the balanced scorecard provides the necessary measurement and tracking methodology so that executives can identify what should be done and measured early in the strategic planning process. Process
The day-to-day business world is a balancing act between the interests of corporate stockholders, customers, operating processes/employees and innovation requirements. Each of these are strategic objectives/goals of the corporation where, if a company is “unbalanced,” one objective/goal may be handled at the expense of the others. The purpose of the balanced scorecard process is to keep all four in balance so that daily processes will address
all four objectives/goals equally. For this reason, the balanced scorecard process tracks and “scores” daily processes from four core perspectives: financial perspective, customer perspective, process perspective and innovation, or learning, perspective. Implementation
Implementing a balanced scorecard methodology requires details knowledge of “best practices” principles, processes and tools. To this end, corporate managers and executives should visit the Balance Scorecard Institute to learn the details and how to apply the details to their organizations.