Balanced Scorecard
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- 17 Mar 2010
- Working Paper Summaries
Conceptual Foundations of the Balanced Scorecard
This article documents the precursors of the Balanced Scorecard (BSC) strategic performance management tool and describes the evolution of the BSC since its introduction in 1992 in the Harvard Business Review. During the last 15 years, the BSC has been adopted by thousands of private, public, and nonprofit enterprises around the world. HBS professor Robert S. Kaplan, who created the concept and tool with David Norton, explains the roots and motivation for their original article as well as subsequent innovations that connect it to a larger management literature. Key concepts include: The BSC was not original for advocating that nonfinancial measures be used to motivate, measure, and evaluate company performance. Early pioneers included General Electric, Nobel Economics Laureate, Professor Herb Simon, at the Carnegie Institute of Technology (later Carnegie-Mellon University), and management theorist Peter Drucker in his now-classic book, The Practice of Management in the 1950s. The BSC differs from stakeholder theory by embedding stakeholder interests within a strategy framework. It also extends the economics-based agency theory by offering the instrumentation to guide a multi-period shareholder value creation process. The BSC continues to grow and evolve. Future developments will, for example, formally embed enterprise risk management into the strategy execution framework. Closed for comment; 0 Comment(s) posted.
- 23 Jul 2008
- Sharpening Your Skills
Sharpening Your Skills: Balanced Scorecard in Action
Introduced by Harvard Business School professor Robert Kaplan and colleague David Norton, the Balanced Scorecard has been used by thousands of organizations to align business activities with the strategy. Closed for comment; 0 Comment(s) posted.
- 22 May 2008
- Working Paper Summaries
Testing Strategy with Multiple Performance Measures Evidence from a Balanced Scorecard at Store24
To what extent do balanced scorecards provide useful information for testing and validating an organization's strategy? Numerous case studies of balanced scorecard implementations document their use in translating organizational strategies to objectives and measures, communicating strategic objectives to employees, evaluating the performance of business units, and aligning the incentives of employees across business units and functions. There has been comparatively little research, however, on the potential learning and feedback role of balanced scorecards. Analyzing balanced scorecard data from Store24—a privately held convenience store retailer in New England—during the implementation of an innovative but ultimately unsuccessful strategy, this study investigates whether, when, and how information about problems with the firm's strategy was captured in the multiple performance measures of its balanced scorecard. Key concepts include: Store24's balanced scorecard contained useful and timely information for detecting problems in its strategy. The results also suggest that Store24 executives eventually learned about problems with the strategy despite a lack of reliance on such formal analysis. Analysis of the balanced scorecard could have yielded more timely information as well as more detail on why the strategy was not working as planned. Multiple measures in a balanced scorecard might systematically be used to test how well different drivers of performance are working to achieve strategic objectives and superior financial performance. Closed for comment; 0 Comment(s) posted.
- 05 Jul 2006
- Working Paper Summaries
Improving Corporate Governance with the Balanced Scorecard
The authors review the key roles of corporate boards and recommend a Balanced Scorecard approach to help boards work smarter, not harder. Kaplan and Nagel recommend a three-part Balanced Scorecard program: Part 1: An Enterprise Scorecard that includes enterprise-wide strategic objectives, performance measures, targets, and initiatives; Part 2: A Board Scorecard that defines and clarifies the strategic contributions and requirements of the board, and provides a tool to manage the board's performance; Part 3: Executive Scorecards, which define strategic contributions of top management and are used to select, evaluate, and reward senior executives. Key concepts include: Reforms such as Sarbanes-Oxley have increased the amount of work that boards need to do. A Balanced Scorecard approach can help boards use their limited time effectively. An enterprise strategy map and enterprise Balanced Scorecard should be the primary documents distributed to the board in advance of meetings. Closed for comment; 0 Comment(s) posted.
- 24 Apr 2006
- Research & Ideas
Managing Alignment as a Process
"Most organizations attempt to create synergy, but in a fragmented, uncoordinated way," say HBS professor Robert S. Kaplan and colleague David P. Norton. Their new book excerpted here, Alignment, tells how to see alignment as a management process. Closed for comment; 0 Comment(s) posted.
- 09 Jan 2006
- Research & Ideas
When Benchmarks Don’t Work
Benchmarks have their virtues, but professor Robert S. Kaplan argues they should be saved for surveys of commoditized processes or services. From Balanced Scorecard Report. Closed for comment; 0 Comment(s) posted.
- 08 Aug 2005
- Research & Ideas
A Balanced Scorecard Approach To Measure Customer Profitability
Happy customers are good, but profitable customers are much better. In this article, professor and Balanced Scorecard guru Robert S. Kaplan introduces BSC Customer Profitability Metrics. From Balanced Scorecard Report. Closed for comment; 0 Comment(s) posted.
- 02 Feb 2004
- Research & Ideas
Mapping Your Corporate Strategy
From the originators of the Balanced Scorecard system, Strategy Maps is a new book that explores how companies can best their competition. A Q&A with Robert S. Kaplan. Closed for comment; 0 Comment(s) posted.
- 23 Dec 2002
- Research & Ideas
Partnering and the Balanced Scorecard
Created in 1992, the Balanced Scorecard has become an effective tool for managing strategy. Now authors Robert S. Kaplan and David P. Norton propose using it to communicate values and vision to employees and partners. The payoff? Better strategic relationships with partners. Closed for comment; 0 Comment(s) posted.
- 23 Oct 2000
- Research & Ideas
The Strategy-Focused Organization
In the ten years since it was introduced, Robert Kaplan's and David Norton's Balanced Scorecard has become not just a measurement tool but a means of putting strategy at the center of a company's key management processes and systems. Closed for comment; 0 Comment(s) posted.
Updating the Balanced Scorecard for Triple Bottom Line Strategies
Society increasingly expects businesses to help solve problems of environmental degradation, inequality, and poverty. This paper explains how the Balanced Scorecard and Strategy Map should be modified to reflect businesses’ expanded role for society.