Balanced Scorecard Overview

Study Notes

Origin of Balanced Scorecards

Financial measures alone are insufficient to answer crucial strategic questions: "Where are we?", "Where are we going?", and "How will we get there?"

Balanced Scorecard History

Balanced Scorecard concepts, measures & reporting emerged in 1992.
Alignment & communication evolved in 1996.
Enterprise-wide strategic management was emphasized by 2000.
Harvard Business Review published articles in the 1990s on the Balanced Scorecard.

Widespread Use

Approximately 70% of Fortune 1,000 companies use the Balanced Scorecard for performance management.
The tool is also used for strategy development and testing.
It's widely adopted in the public sector.

Bridging Strategy and Action

A Balanced Scorecard is a tool to create cause-and-effect linkages within an organization.
It establishes a line of sight between strategic goals and operational activities to ensure focus on the right things.
Strategy can be envisioned as a series of cause-and-effect relationships.

Core Principles

The Balanced Scorecard summarizes strategy on a Strategy Map with four performance perspectives.
Cause-and-effect links between strategic objectives across the four perspectives are key to the scorecard design.
Critical elements include measurements, targets, and initiatives.
A robust structure requires tight connections: goals to objectives, objectives to measurements, and measurements to targets.

Description

Explore the essential concepts and history of the Balanced Scorecard, a strategic management tool that bridges organizational strategy with action. Learn how this approach has been widely adopted by Fortune 1,000 companies and its significance in both private and public sectors.