Strategy Classics: Balanced Scorecard (BSC)
Originally published: 11/12/2020 08:23
Last version published: 11/12/2020 08:26
Publication number: ELQ-70054-2
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Strategy Classics: Balanced Scorecard (BSC)

The Balanced Scorecard (BSC) is a Strategic Performance Management System.

The Balanced Scorecard (BSC), developed by Robert Kaplan and David Norton, is a Strategic Performance Management System. It is a semi-standard structured report, supported by proven design methods and automation tools, that can be used by managers to keep track of the execution of activities by the staff within their control and to monitor the consequences arising from these actions.

Whereas conventional Performance Management focus on financial metrics, the BSC is "balanced," in that it takes into consideration non-financial metrics as well. Specifically, the Balanced Scorecard approach takes into account 4 areas of measurement:

1. Financial Measures
2. Customer Relationships
3. Internal Business Processes
4. Learning and Growth

The Balanced Scorecard also relies on 4 key management processes to connect short-term activities to long-term objectives:

1. Translating the Vision
2. Business Planning
3. Communicating and Linking
4. Feedback and Learning

Companies should use the Balanced Scorecard as a foundation to an integrated and iterative Strategic Performance Management System to perform the following functions:

1. Clarify and update the overall corporate strategy
2. Communicate strategy throughout the company
3. Align departmental and individual goals with the strategy
4. Link strategic objectives to long-term targets and annual budgets
5. Identify and align strategies initiatives
6. Conduct periodic performance reviews to learn about and improve strategy

The BSC approach to Strategic Management is a continuous, iterative process.

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