Journal of Business Research 55 (2002) 531 – 532
Book review
The Strategy-Focused Organization
by Robert S. Kaplan and David P. Norton,
Harvard Business School Press, Boston,
2001, 400 pages, US$29.95
Originally formulated as a more comprehensive measure-
ment system this book introduces the Balanced Scorecard as
an effective tool to implement strategy. In fact, Robert
Kaplan and David Norton propose their performance man-
agement tool as a solution to a number of the most widely
discussed managerial problems. In different chapters of the
book the authors aim to show that the Balanced Scorecard
is, among other things I may have overlooked, an appro-
priate tool
 to manage intangible assets.
 to align functions, SBUs, and geographically dis-
persed units.
 to communicate within and educate the organization.
 to foster change.
 to enhance organizational learning.
 to allow effective budgeting processes.
 to design compensation schemes.
 to align all employees (also the ones at the frontline)
to organizational objectives.
Admirably enough, the authors deliver on these prom-
ises. After some 10 years of experience with the Balanced
Scorecard in dozens of different organizational settings, the
authors are able to substantiate their claims with a vast
number of highly illustrative and diverse examples how
the adoption of a Balanced Scorecard approach helped
companies thrive. By not adopting the normative tone
common in many popular business books and by empha-
sizing the contingent nature of their claims Kaplan and
Norton succeed in making a strong case for the value of
adopting a Balanced Scorecard mindset and in avoiding
exemplary-based targets for criticism (see Peters and
Waterman, 1982).
Nothing the book presents is entirely new nor extremely
challenging to general belief. Rather, its appeal lies in the
presentation of the currently most comprehensive frame-
work to identify and nurture sources of value creation.
Instead of focusing on the measurement of results for
deriving necessary organizational actions the Balanced
Scorecard approach takes the financial outcomes of organ-
izational action as what they are: results. Hence, closely
0148-2963/02/$ – see front matter D 2002 Elsevier Science Inc. All rights reserved.
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following these results — as many measurement systems do
— is pointless: ‘‘Improving organizational performance by
monitoring financial performance is as useless as trying to
improve a sports team’s performance by only reporting the
scores of its games’’ (Atkinson et al., 1997, p. 35). Instead
organizations need to focus on strategy and also measure it.
Such behavior renders an organization strategy-focused,
causing a ‘‘performance based culture (linking) everyone
and every unit to the unique features of the strategy’’ (p. 25).
By aligning performance measures with strategy instead of
financial outcomes the key requirement of effectively imple-
menting strategy is met.
Kaplan and Norton introduce five principles of the
strategy-focused organization: translate the strategy to
operational terms, align the organization to the strategy,
make strategy everyone’s everyday job, make strategy a
continual process, mobilize change through executive
leadership. The ideas behind these principles have been
discussed in literally hundreds of articles and books on
strategy as have been the challenges of effectively carry-
ing them out. This is the major strength of the concept: A
single tool may allow for moving a strategy from con-
ceptualization to implementation. But do not be fooled by
this statement: Adhering to all suggestions and running
through all the steps outlined in the book requires
enormous organizational commitment and resources.
Without strong belief into the benefits possibly to be
reaped a leader may be quite reluctant to walk through all
the details outlined and commit the necessary resources.
In addition, the rather analytical nature of the approach
will be more attractive to the systematic mind than the
intuitive one. I assume that the more intuitive type of
manager might question the appropriateness of the Bal-
anced Scorecard because of its strong emphasis on
detailed analysis of processes. While the authors claim
that the approach is helpful for the effective emergence of
strategies (Mintzberg, 1987) by providing strong align-
ment to organizational objectives one might also argue
that such processes are suppressed because of this very
alignment. I therefore believe that every organization has
to individually determine the ‘‘right’’ degree of detail in
its attempts to reap the benefits from the Balanced
Scorecard and that the detail given in the book may
overburden many organizations. The same may apply to
the reader of The Strategy-Focused Organization and one
may well skip most of the — though highly interesting
— examples given to grasp the book’s essence.
532 Book review/Journal of Business Research 55 (2002) 531 – 532
I like the book because it is one of the few books not
to only re-repeat the necessity to move from functional to
process-oriented organizations, from a focus on budgets to
continual controlling, from a purely shareholder-value-
driven mindset to effective management of intangible
assets, but also shows ways to respond to these demands.
Taking a different perspective, this book may be consid-
ered the first book on how to effectively implement the
stakeholder management idea. In line with the instrumen-
tal version of stakeholder theory — in contrast to the
normative or descriptive one (see Donaldson and Preston,
1995, for this distinction) — the Balanced Scorecard is an
effective approach to study the sources of value creation
in an organization’s environment and thinking about the
possible effects of responsiveness to different constituen-
cies on organizational performance. Kaplan and Norton
are right that their measurement tool is more than a
stakeholder scorecard (p.102) that only focuses on stake-
holders’ objectives, not on ways to reach these objectives.
When carried out properly, the Balanced Scorecard needs
to take into account the expectations of all relevant
stakeholders and forces the organization to craft strategies
to meet these expectations — at least to an extent where
the concerned groups will not withdraw their support.
Advocates of the stakeholder idea will question the
appropriateness of maximizing shareholder value as the
only organizational goal (which the authors do throughout
the entire book), but one may either alter the strategy map
and choose a different organizational goal (which is
equally questionable) or establish certain minimum (and
even maximum) levels on all measures corresponding to
the expectations of the different stakeholder groups. By
treating shareholder value as the primary measure and
putting it on top of the strategy map Kaplan and Norton
do not fully adhere to the stakeholder concept but the
process of (more or less explicitly) taking into account
stakeholders in identifying and nurturing all sources of
value creation turns the Balanced Scorecard into a wide-
spread and convincing tool to apply this concept —
something the stakeholder idea strongly needs to establish
itself as a useful business orientation.
In the classroom, this book may be used in a number of
different fields. The core ideas brought forward are worth-
while discussion topics for strategy, marketing, controlling,
or human resources courses. The examples given can
illustrate concepts ranging from strategy formation, imple-
mentation, positioning, branding, budgeting, organizational
learning, or organizational change. However, none of these
ideas is presented in enough depth to make the book suitable
as the core book for a course specializing in any of the
above fields. But in order to contrast established wisdom
and to focus discussion on implementation issues certain
parts of the book may be very useful for either area. Another
application may be as a reading complement or source of
class discussion (some examples really go in-depth) in
boundary-spanning MBA capstone or case-oriented courses.
The book lacks the academic rigor necessary for doctoral
courses but the core thoughts presented are relevant to
almost any business academic and practitioner who believes
that identification and pursuit of growth opportunities is a
more effective road to high performance than eliminating
the last bit of organizational slack left.
References
Atkinson AA, Waterhouse JH, Wells RP. A stakeholder approach to strategic
performance measurement. Sloan Manage Rev. 1997;38(3):25 – 37.
Donaldson T, Preston LE. The stakeholder theory of the corporation: con-
cepts, evidence and implications. Acade Manage Rev 1995;20(1):
65 – 91.
Mintzberg H. Crafting strategy. Harv Bus Rev. 1987;65(4):66 – 75 (July/
August).
Peters TJ, Waterman RH. In search of excellence: lessons form America’s
best run companies. New York: Harper & Row, 1982.
Oliver Koll
Marketing Group, Faculty of Social Sciences
University of Innsbruck, Universitätsstr. 15
6020 Innsbruck, Austria
Email address: oliver.koll@uibk.ac.at