kaplan and norton

• kaplan and norton's balanced scorecard

  model that assesses overall performance of a business (not just profit). also used in developing, implementing and monitoring strategy
• balanced scorecard more info

  * uses both financial & non-financial data, linking both to the overall strategy and vision of the business

  * looks at 4 perspectives, and for each managers must consider the objectives, measures, targets and initiatives that are key to the success of their strategy

  * process involves asking questions, choosing measures of performance based on company's key success factors, setting targets, then coming up with ideas on how to achieve them

  * managers need to be able to balance these different perspectives - improvements in one area cannot be done at the expense of improvements in another (but often improvements in one area will often have positive impact on another area)

  * balance between needs of different stakeholders (internal and external)
• areas in balanced scorecard

  finance, internal business process, customer, learning & growth
• finance perspective


  question: how do we create value for shareholders?
• internal business process perspective


  question: how can we improve our processes?
• customer perspective


  question: what is important to our customers?
• learning & growth perspective


  question: how can we continue to grow and improve?
• advantages of balanced scorecard

  * managers find current position (so find where to improve)

  * useful in creating targets

  * helps departments consider how their actions may impact other departments (interdepartmental impact)
• disadvantages of balanced scorecard

  * focused on strategy implementation

  * limited guidance about which metrics to use

  * only as useful as the managers apply it

  * strategy must be translated into measurable objectives

  * possibility of information overload

  * potential conflict if targets contradict