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The balanced scorecard is a strategic planning and management system that is used extensively in business and industry, government, and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals. It was originated by Drs. Robert Kaplan (Harvard Business School) and David Norton as a performance measurement framework that added strategic non-financial performance measures to traditional financial metrics to give managers and executives a more 'balanced' view of organizational performance. While the phrase balanced scorecard was coined in the early 1990s, the roots of the this type of approach are deep, and include the pioneering work of General Electric on performance measurement reporting in the 1950¶s and the work of French process engineers (who created the Tableau de Bord ± literally, a "dashboard" of performance measures) in the early part of the 20th century. The balanced scorecard has evolved from its early use as a simple performance measurement framework to a full strategic planning and management system. The ³new´ balanced scorecard transforms an organization¶s strategic plan from an attractive but passive document into the "marching orders" for the organization on a daily basis. It provides a framework that not only provides performance measurements, but helps planners identify what should be done and measured. It enables executives to truly execute their strategies. This new approach to strategic management was first detailed in a series of articles and books by Drs. Kaplan and Norton. Recognizing some of the weaknesses and vagueness of previous management approaches, the balanced scorecard approach provides a clear prescription as to what companies should measure in order to 'balance' the financial perspective. The balanced scorecard is a management system (not only a measurement system) that enables organizations to clarify their vision and strategy and translate them into action. It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results. When fully deployed, the balanced scorecard transforms strategic planning from an academic exercise into the nerve center of an enterprise. Kaplan and Norton describe the innovation of the balanced scorecard as follows: "The balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation."
. In the current climate of rapid technological change. Kaplan and Norton emphasize that 'learning' is more than 'training'. These metrics have to be carefully designed by those who know these processes most intimately. with our unique missions these are not something that can be developed by outside consultants. it is becoming necessary for knowledge workers to be in a continuous learning mode." The Business Process Perspective This perspective refers to internal business processes. ³Using the Balanced Scorecard as a Strategic Management System. and whether its products and services conform to customer requirements (the mission). Norton. Metrics based on this perspective allow the managers to know how well their business is running. collect data and analyze it relative to each of these perspectives: The Learning & Growth Perspective This perspective includes employee training and corporate cultural attitudes related to both individual and corporate self-improvement. It also includes technological tools. Perspectives The balanced scorecard suggests that we view the organization from four perspectives. what the Baldrige criteria call "high performance work systems.´ Harvard Business Review (January-February 1996): 76. Kaplan and David P. it also includes things like mentors and tutors within the organization. people -the only repository of knowledge -.are the main resource. In a knowledge-worker organization. In any case.Adapted from Robert S. and to develop metrics. as well as that ease of communication among workers that allows them to readily get help on a problem when it is needed. Metrics can be put into place to guide managers in focusing training funds where they can help the most. learning and growth constitute the essential foundation for success of any knowledge-worker organization.
they will eventually find other suppliers that will meet their needs. They show a logical. Once a scorecard has been developed and implemented. Automation adds structure and discipline to implementing the Balanced Scorecard system. Balanced Scorecard Software The balanced scorecard is not a piece of software. Why Implement a Balanced Scorecard? y y y y y y Increase focus on strategy and results Improve organizational performance by measuring what matters Align organization strategy with the work people do on a day-to-day basis Focus on the drivers of future performance Improve communication of the organization¶s Vision and Strategy Prioritize Projects / Initiatives .The Customer Perspective Recent management philosophy has shown an increasing realization of the importance of customer focus and customer satisfaction in any business. often there is more than enough handling and processing of financial data. But the point is that the current emphasis on financials leads to the "unbalanced" situation with regard to other perspectives. With the implementation of a corporate database. Timely and accurate funding data will always be a priority. and managers will do whatever necessary to provide it. step-by-step connection between strategic objectives (shown as ovals on the map) in the form of a cause-and-effect chain. in this category. helps transform disparate corporate data into information and knowledge. The Balanced Scorecard Institute formally recommends the QuickScore Performance Information SystemTM developed by Spider Strategies and co-marketed by the Institute. improving performance in the objectives found in the Learning & Growth perspective (the bottom row) enables the organization to improve its Internal Process perspective Objectives (the next row up). many people believe that implementing software amounts to implementing a balanced scorecard. customers should be analyzed in terms of kinds of customers and the kinds of processes for which we are providing a product or service to those customer groups. Generally speaking. performance management software can be used to get the right performance information to the right people at the right time. however. Unfortunately. The Financial Perspective Kaplan and Norton do not disregard the traditional need for financial data. In fact. and helps communicate performance information. Strategy Mapping Strategy maps are communication tools used to tell a story of how value is created for the organization. such as risk assessment and cost-benefit data. it is hoped that more of the processing can be centralized and automated. even though the current financial picture may look good. which in turn enables the organization to create desirable results in the Customer and Financial perspectives (the top two rows). In developing metrics for satisfaction. There is perhaps a need to include additional financial-related data. These are leading indicators: if customers are not satisfied. Poor performance from this perspective is thus a leading indicator of future decline.
There is a long-established tradition of on-the-job training and experience for young people to learn and be mentored by experienced project managers. y y The figure represents a time line or GANTT chart.) are delivered to the customer. In fact. Many guidebooks. strategic results. manuals. vision. The initial stage requires establishment of a precise . decisions. services. It is the way they think about achieving their mission. and strategy mapping first to avoid rushing to judgement on measures or software Viewing the scorecard as a long-term journey rather than a short-term project Planning for and managing change Applying a disciplined implementation framework Getting outside help if needed The Balanced Scorecard: Not Just Another Project By Paul Arveson y y y Managers in many government agencies have been reared on project management. and the federal government has thousands of project managers who are routinely capable of amazingly complex achievements. The goal is to meet customer requirements. etc. many project managers may have never seen or considered any other way to get things done. software programs. managers and employees in scorecard development Agreeing on terminology Choosing the right BSC Program Champion Beginning interactive (two-way) communication first Working through mission. and other means have been devised to aid the project manager. a simple diagram will help to show its general features.What are the Primary Implementation Success Factors? y y y y y y y y y y Obtaining executive sponsorship and commitment Involving a broad base of leaders. Project management has been in the management culture for decades. project or program management has been the framework for development of every system costing from ten thousand dollars to ten billion dollars. documents. All projects (or programs) have a definite start time (green) and a definite stop time (red) when the final deliverables (products. Although it is not necessary here to describe project management in detail. In the Defense Department.
best and worst practices. The situation is similar with the balanced scorecard. We will probably get hurt -. where does one begin? What kind of plan is appropriate for deployment of the balanced scorecard system? If we want to ride a rotating merry-go-round. It is fundamentally different from project management in several respects. we had better not attempt to just hop on. If this is not a project. and probably focused deployment of pilot efforts . y y y y The first thing to notice is the topology: the balanced scorecard management process. One of the key practical difficulties is to figure out how to get the process started in the first place. So project management is the effort to manage work within a finite. we have to accelerate in the same direction for awhile. called an Engineering Schedule Work Breakdown Structure (ESWBS). derived from Deming's Total Quality Management. To get on the merry-go-round. a diagram is shown of the BSC performance measurement process. but rather with internal processes (diagnostic measures) and external outcomes (strategic measures).y budget and a plan of action and milestones (POA&M). since there are usually other projects that are depending on input from the deliverables of this project. as it would run when installed in an organization. there needs to be a ramp-up phase. hierarchically-structured." This includes training or retraining of project managers. The goal is to reach the end point on time and within budget. It has neither beginning nor end. The balanced scorecard management system is not just another project. The work is focused on the actual mission of production undertaken for the customer. The system's control is based on performance metrics or "metadata" that are tracked continously over time to look for trends. is a continuous cyclical process. and areas for improvement. It delivers information to managers for guiding their decisions. then hop on when our speed equals that of the circular floor. To illustrate the radical nature of this difference. where everyone "comes up to speed. People trained only in project management may have difficulty in figuring out how to accomplish the BSC. Usually some kind of final report is written as one of the deliverables. In other words. simply because it is such a different kind of management paradigm. but these are self-assessments. Status and review meetings are scheduled at regular intervals throughout the project. linear development process with a definite beginning and end. It may be broken down into a hierarchy of subtasks.and won't get on. Its task is not directly concerned about the mission of the organization. clearly scoped. not customer requirements or compliance data.
patient leadership will be needed before the payoff is attained. . Sustained.before attempting to cover an entire large agency.
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