Balanced Scorecard (BSC) is a concept helping you translate strategy into action. BSC starts from
the company vision and strategies, from here critical success factors are defined. Measures are
constructed that aid target-setting and performance measurement in areas critical to the
strategies. Hence, Balanced Scorecard is a performance measurement system, derived from vision
and strategy, and reflecting the most important aspects of the business. The Balanced Scorecard
(BSC) concept supports strategic planning and implementation by federating the actions of all parts
of an organization around a common understanding of its goals, and by facilitating the assessment
and upgrade of strategy.
Figure 1:
Create a Balanced Scorecard: You have to identify a vision. Where is the organization going? By
identifying strategies you learn about how you will get there. Define Critical Success Factors
and perspectives, which means you have to ask what do we have to do well in each
perspective. Thereafter ask how do we measure that everything is going the expected way?
Then it is necessary think about evaluating your Scorecard. Consider how do we ensure that we
are measuring the right things? Based on this work you should create action plans and plan
reporting and operation of the Scorecard. How do we manage the Scorecard? Which persons
should have reports and what should the reports look like?
Figure 2:
The picture shows a very general example of a Scorecard. Where are we going? The vision:
"We should dominate the market." How? By focusing on cost efficiency, high quality and by
investing in new technologies. In which perspectives should we excel at what? Responsibilities
and action plans for achieving targets set are defined. You can easily create a Scorecard, but to
create a manageable scorecard is a completely different thing!
Benefits
• Balanced Scorecard helps align key performance measures with strategy at all levels of an
organization.
• Balanced Scorecard provides management with a comprehensive picture of business
operations.
• The methodology facilitates communication and understanding of business goals and
strategies at all levels of an organization.
• The balanced scorecard concept provides strategic feedback and learning.
Balanced Scorecard helps reduce the vast amount of information the company's IT systems
process into essentials.