The Balance Scorecard 150
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The Balance Scorecard
A Strategic Management ---- a new
approach developed in the early 1990’s by
Robert Kaplan and David Norton.
This approach provides a clear prescription
as to what companies should measure in
order to “balance” the financial perspective.
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Introduction:------
The Balanced Scorecard is a management
system that enables organizations to clarify
their vision and strategy and translate them
into action.
It provides feedback around both the
internal business process and external
outcomes in order to continuously improvestrategic performance and results.
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Methodology:----------
The Balanced Scorecard methodology buildson some key concepts of previousmanagement ideas such as TQM (Total
Quality Management) including customerdefined quality, continuous improvement,
employee empowerment and primarily
measurement-based management and
feedback.
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Four Perspectives
The Balanced Scorecard suggests that weview the organization from fourperspectives and to develop metrics, collect
data and analyze it relative to each of these perspectives.
The Learning and Growth Perspective
The Business Process PerspectiveThe Customer Perspective
The Financial Perspective.
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Learning and Growth Perspective
To Achieve the vision, how will we sustainthe ability to change and improve.
People need to constantly learn and grow to
accept the desired changes happening in theorganization This is an important perspectiveas it takes into consideration Learning andGrowth of employees so that they don't resist
change and therefore improve continuously.
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Internal Business Process
To satisfy the shareholders and customerswhat business process must one be excellent.
All the business process should be efficient
and effective so as to satisfy the customer'sdemands and shareholder's needs.
Internal business Process are importantaspect for productivity and overall attainmentof organizational goals and objectives.
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Customer Perspective
To achieve the vision, how should oneappear to the customers
Customers are one of the most important
asset of the organization. Their satisfaction isof utmost important for the business. Henceto take the customer aspect or perspectiveinto consideration is necessary.
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Financial Perspective
To succeed financially how should oneappear to the shareholders. The objectives,targets measures and initiatives should be
taken into consideration.Financial perspective is the most important
perspective. It helps the organization to knowthe cost effectiveness and profitability of the
organization
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Double — Loop Feedback
In order to shield the customer fromreceiving poor quality products,aggressiveefforts were focused on inspection and
testing at the end of the production line.True causes of defects can never be
identified and there is always inefficienciesdue to rejection of defects. Hence the causes
of variation needs to be identified and fixed
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Double — Loop Feedback
The Balanced Scorecard incorporatesfeedback around internal business processoutputs, as in TQM, but also adds a feedback
loop around the outcomes of businessstrategies. This creates a “double-loopfeedback” processes in the balancedscorecard.
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Thank You