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Balanced Scorecard

Balanced Score Card is the Excellent Tool for Strategy Deployment through Alignment of Processes and People. Harvard Business School Professor, Robert Kaplan and Management Consultant, David Norton conceived the concept of Balanced Score Card (BSC) in 1991. Harvard Business Review quoted that “The Balanced Score Card is one of the most important management practices of the past 75 years”.
It was revealed through different surveys that the companies having Excellent Strategy failed to get benefits of their strategies, due to failure in deployment. For effective deployment of Strategy, it has to be Translated into Operational Language and clearly understood by the everyone in the organisation.
BSC Concept also helps in validating your strategies by putting them into frame work of Strategy Maps. It asks you to balance your strategies in the BSC perspectives and establish the Cause and Effect relation. This becomes a powerful tool to put the Strategy in one page, pictorially.

BSC Concept:

The Balanced Score Card is a multidimensional framework that gives top managers a fast but comprehensive view of the business. The BSC allows CEO’s to look at the business from four important perspectives:

  • Financial Perspective- To satisfy shareholders, what financial objectives must we accomplish.?
  • Customer Perspective-To achieve Financial objectives, what customer needs must we serve? General mission statement on customer service to be translated into specific measures that reflect the factors that really matter to customers, like lead time measures, quality measures, performance and service measures etc.
  • Internal Process Perspective- To satisfy shareholders and customers in which internal processes must we excel? The internal measures for BSC should stem from business processes that have the greatest impact on customer satisfaction like process capability, cycle time, quality, productivity, cost, etc.
  • Learning and Growth Perspective- To achieve our goals, how must our organisation learn and innovate? Intense global competition  requires that companies make continual improvements to their existing products, processes and have the ability to introduce entirely new products with expanded capabilities.

Though the concept initially was talking about 4 perspectives stated above, the organisations started having 5th / 6th perspective depending on their focus/strategy. Some companies have taken Safety, Corporate Social Responsibilty etc. as fifth perspective.