The BSC method of Kaplan and Norton is a strategic approach and performance
management system that enables organizations to translate a company's vision
and strategy into implementation, working from 4 perspectives:
1. financial
perspective,
2. customer
perspective,
3. business process
perspective,
4. learning and growth
perspective.
Ad 1: The BSC / Financial
perspective: Kaplan and Norton do not
disregard the traditional need for financial data. Timely and accurate
funding data will always be a priority, and managers will do whatever
necessary to provide it. In fact, often there is more than enough handling
and processing of financial data. With the implementation of a corporate
database, it is hoped that more of the processing can be centralized and
automated. But the point is that the current emphasis on financials leads to
the "unbalanced" situation with regard to other perspectives. There is perhaps a
need to include additional financial-related data, such as
risk assessment
and cost-benefit data, in this category.
Ad 2: The BSC / Customer
perspective: recent management philosophy has
shown an increasing realization of the importance of customer focus and
customer satisfaction in any business. These are leading indicators: if
customers are not satisfied, they will eventually find other suppliers that
will meet their needs. Poor performance from this perspective is thus a
leading indicator of future decline, even though the current financial
picture may look good. In developing metrics
for satisfaction, customers should be analyzed in terms of kinds of
customers and the kinds of processes for which we are providing a product or
service to those customer groups.
Ad 3: The BSC / Business
Process perspective refers to internal
business processes. Metrics based on this perspective allow the managers to
know how well their business is running, and whether its products and
services conform to customer requirements (the mission). These metrics have
to be carefully designed by those who know these processes most intimately. In addition to the
strategic management process, two kinds of business processes may be
identified: a) mission-oriented processes, and b) support processes.
Mission-oriented processes are the special functions of government offices,
and many unique problems are encountered in these processes. The support
processes are more repetitive in nature, and hence easier to measure and
benchmark using generic metrics.
Ad 4: The BSC / Learning
and Growth perspective includes employee
training and corporate cultural attitudes related to both individual and
corporate self-improvement. In a knowledge-worker organization, people are the main resource. In the current
climate of rapid technological change, it is becoming necessary for
knowledge workers to be in a continuous learning mode. Government agencies
often find themselves unable to hire new technical workers and at the same
time is showing a decline in training of existing employees. Kaplan and
Norton emphasize that 'learning' is more than 'training'; it also includes
things like mentors and tutors within the organization, as well as that ease
of communication among workers that allows them to readily get help on a
problem when it is needed. It also includes technological tools such as an
Intranet.
The integration of
these four perspectives into a graphical appealing picture have made the
Balanced Scorecard method a very successful methodology within the Value Based
Management philosophy.
Book: Robert S. Kaplan, David P. Norton - The BSC:
Translating Strategy into Action - 
Book: Paul R. Niven - BSC Step-by-Step: Maximizing
Performance and Maintaining Results -
Book: Paul R. Niven - BSC Step-by-Step for Government and
Nonprofit Agencies -
Compare with the Balanced Scorecard:
Strategy Maps |
The Strategy- Focused
Organization |
Performance Prism |
Intangible Assets Monitor |
People CMM |
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