Balanced Scorecard

IS 111 – Evaluation of Business Performance

What is Balanced Scorecard
❖ The balanced scorecard (BSC) is a strategic planning and
management system.
❖ Organizations use BSC 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

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What is Balanced Scorecard
❖ 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.

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What is Balanced Scorecard
❖ 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.

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Who Uses the 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.

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BSC Perspectives
❖ 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

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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).

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Strategic Initiatives
❖ Strategic Initiatives are projects (new or existing) that are
designed to help the organization achieve Strategic
Objectives and have significant organization-wide impact.
❖ They are managed formally like any other project (owner,
schedule, resources needed, action steps, progress, and
expected results).
❖ Some Strategic Initiatives are short-term (taking only a few
days to implement) while others can take years to fully
implement.

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Cascading a BSC
❖ Cascading strategy focuses
the entire organization on
strategy and creating a line-
of-sight between the work
people do and high-level
desired results.
❖ This alignment step is critical
to becoming a strategy-
focused organization.

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BSC Automation
❖ Once a scorecard has been developed and implemented,
performance management software can be used to get the
right performance information to the right people.
❖ Automation adds structure and discipline to implementing
the Balanced Scorecard system, helps transform disparate
corporate data into information and knowledge, and helps
communicate performance information.

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Spider
Impact

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Spider
Impact

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End