The Balanced Scorecard is a performance measurement tool created in the early 90's by Kaplan and Norton. It encourages leaders of organizations to select a manageable number of key measures which all of the organization's strategies and activities support. It is a management tool offering four perspectives: financial, customer, internal processes and innovation & learning. These perspectives are linked with strategic objectives and help translate your strategy into actionable and measurable objectives.

Benefits

Balanced Scorecard helps an organization to become strategy-focused and performance-driven, one that is based on an aligned set of scorecards cascaded on an internally consistent basis throughout the organization.  A well developed Balanced Scorecard with an advanced organizational cascade can also yield:

An understanding of how vision, strategy, objectives, measures, targets, initiatives, key performance indicators (KPI’s), and ownership thereof, can be brought together into one comprehensive performance management framework for the whole of the organization

A comprehensive view of how cost-effective “state of the art” reporting systems can pull together all these key elements in a “light touch” and accelerated way

An awareness of the importance of strongly inter-related issues around performance review processes, rewards, people skills, and cultural issues that need to be addressed as part of successful scorecard implementation

The Balanced Scorecard has two distinctive features which set it apart from other similar scorecard measurement tools:

Historically organizations gauged their success solely in terms of a limited range of measures (e.g. financial results.)  This often resulted in behaviors which were short-term focused, self-defeating or counter-productive.  The Balanced Scorecard has four categories of measures (or perspectives) for organizational success.  To use it properly, an organization must set goals and measures for itself in each of these four categories. 

• Financial:  How do shareholders see us?
• Customer:  How do customers see us?
• Internal:  What must we excel at? (i.e. focus on critical success factors and internal processes)
• Learning and growth:  How can we continue to improve and add value?  (i.e. focus on developing and retaining employees)

Kaplan and Norton recommend that no more than a maximum of 4-5 measures be set in each category and that they each be given equal priority.  This means an absolute maximum of 20 measures at the top level of any organization.  

The Balanced Scorecard also encourages an equal focus on past (or ‘lagging’) success measures and future (or ‘leading’) measures.  In general, the financial and customer categories measure what has already been achieved.  They are the ‘lagging’ indicators.  The internal and learning and growth categories measure those key things which are likely to ensure an organization’s future survival and success.  They are the ‘leading’ measures.

What 1-Focus does to assist in post strategy implementation of a Balanced Scorecard:

1. Enable co-development of the Strategy and Goals in all levels of the organization
2. Involve the organization to take ownership
3. Expand communication throughout the organization
4. Get organizational buy-In through participation
5. Co-develop projects in support of Strategy
6. Facilitate cross-functional sharing and growth