Balanced Scorecard Overview

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.