Kaplan and Norton’s Balanced Scorecard is a reaction against only measuring the financial performance of firms. They proposed four key performance areas:
- Customer Perspective – goals to delight customers
- Internal Business Perspective – goals for world class operations
- Innovation and Learning – goals to drive improvement
- Financial Perspective – goals to look after shareholders
All goals should be converted to Key Performance Indicators that can be measured, targets set and benchmarked against competitors. The top level balanced scorecard can be cascaded down the organization to more specific goals and KPIs for parts of the organization and even individuals. These more detailed measures remain congruous with the top level scorecard. In this way the organization is geared towards achieving success and advantage.
We are currently working on including a form of balanced scorecard in our business plan generator app, Business Plan Quick Builder. Our aim following Kaplan and Norton will be to include nonfinancial measures as part of the Key Performance Indicators within the business planning process.
Kaplan RS and Norton KP (1992) The balanced scorecard – measures that drive performance, Harvard Business Review.
