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Balanced Scorecard

The balanced scorecard (BSC) is a strategic planning and management system that organizations use to:
Communicate what they are trying to accomplish
Align the day-to-day work that everyone is doing with strategy
Prioritize projects, products, and services
Measure and monitor progress towards strategic targets

The system connects the dots between big picture strategy elements such as mission (our purpose), vision (what we aspire for), core values (what we believe in), strategic focus areas (themes, results and/or goals) and the more operational elements such as objectives (continuous improvement activities), measures (or key performance indicators, or KPIs, which track strategic performance), targets (our desired level of performance), and initiatives (projects that help you reach your targets).

The BSC suggests that we view the organization from four perspectives, and to develop objectives, measures (KPIs), targets, and initiatives (actions) relative to each of these points of view:

Financial: often renamed Stewardship or other more appropriate name in the public sector, this perspective views organizational financial performance and the use of financial resources
Customer/Stakeholder: this perspective views organizational performance from the point of view the customer or other key stakeholders that the organization is designed to serve
Internal Process: views organizational performance through the lenses of the quality and efficiency related to our product or services or other key business processes
Organizational Capacity (originally called Learning and Growth): views organizational performance through the lenses of human capital, infrastructure, technology, culture and other capacities that are key to breakthrough performance

Balanced Scorecard

BSCs are used extensively in business and industry, government, and nonprofit organizations worldwide. Gartner Group suggests that over 50% of large US firms have adopted the BSC. More than half of major companies in the US, Europe, and Asia are using the BSC, with use growing in those areas as well as in the Middle East and Africa. A recent global study by Bain & Co listed balanced scorecard fifth on its top ten most widely used management tools around the world, a list that includes closely-related strategic planning at number one. BSC has also been selected by the editors of Harvard Business Review as one of the most influential business ideas of the past 75 years.

Implementing A Balanced Scorecard

  • Identify The Need
  • Define The Scope And Audience
  • Identify Activities and Drivers Most Critical to Success
  • Assess the Available Data/Information and Gaps
  • Prioritize the Metrics
  • Develop and Pilot the Format
  • Refinement

BSC Terminology: Measures (Key Performance Indicators)

  • Provide an objective way to see if strategy is working
  • Offer a comparison that gauges the degree of performance change over time
  • Focus employees' attention on what matters most to success
  • Allow measurement of accomplishments, not just of the work that is performed
  • Provide a common language for communication
  • Help reduce intangible uncertainty
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