Balanced Scorecard History

The Balanced Scorecard was originally developed by Dr. Robert Kaplan of Harvard University
and Dr. David Norton as a framework for measuring organizational performance using a more
balanced set of performance measures. Traditionally companies used only short-term financial
performance as the measure of success. The “balanced scorecard” added additional non-
financial strategic measures to the mix in order to better focus on long-term success. The system
has evolved over the years and is now considered a fully integrated strategic management
system.
This new approach to strategic management was first detailed in a series of articles and books
by Drs. Kaplan and Norton and built on work by Art Schneiderman at Analog Devices.
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.

What is a Balanced Scorecard?

The balanced scorecard (BSC) is a strategic planning and management system. Organizations
use BSCs to:
• Communicate what they are trying to accomplish
• Align the day-to-day work that everyone is doing with strategy
• Prioritize projects, products, and services
• Measure and monitor progress towards strategic targets
The name “balanced scorecard” comes from the idea of looking at strategic measures in addition
to traditional financial measures to get a more “balanced” view of performance. The concept of
balanced scorecard has evolved beyond the simple use of perspectives and it is now a holistic
system for managing strategy. A key benefit of using a disciplined framework is that it gives
organizations a way to “connect the dots” between the various components of strategic planning
and management, meaning that there will be a visible connection between the projects and
programs that people are working on, the measurements being used to track success (KPIs), the
strategic objectives the organization is trying to accomplish, and the mission, vision, and
strategy of the organization.

https://balancedscorecard.org/bsc-basics-overview/
Who Uses the Balanced Scorecard (BSC)?
BSCs are used extensively in business and industry, government, and nonprofit organizations
worldwide. More than half of major companies in the US, Europe, and Asia are using the BSC,
with use growing in those areas as well as in the Middle East and Africa. A recent global study
by Bain & Co listed balanced scorecard fifth on its top ten most widely used management tools
around the world. BSC has also been selected by the editors of Harvard Business Review as
one of the most influential business ideas of the past 75 years.

What Are Balanced Scorecard Perspectives?

The BSC suggests that we examine an organization from four different perspectives to help
develop objectives, measures (KPIs), targets, and initiatives relative to those views.
• Financial (or Stewardship): views an organization’s financial performance and the use
of financial resources
• Customer/Stakeholder: views organizational performance from the perspective of the
customer or key stakeholders the organization is designed to serve
• Internal Process: views the quality and efficiency of an organization’s performance
related to the product, services, or other key business processes
• Organizational Capacity (or Learning & Growth): views human capital, infrastructure,
technology, culture, and other capacities that are key to breakthrough performance

What Are Strategic Objectives?

Strategic Objectives are the actions we must implement into our daily activities in order to see
improvement in our strategies. They break down abstract concepts like mission and vision
into actionable steps.

What Is a Strategy Map?

One of the most powerful elements in the BSC methodology is the use of strategy mapping to
visualize and communicate how value is created by the organization. A strategy map is a
simple graphic that shows a logical, cause-and-effect connection between strategic objectives
(shown as ovals on the map).

https://balancedscorecard.org/bsc-basics-overview/
https://balancedscorecard.org/bsc-basics-overview/