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Handbook of Management Accounting Research

Edited by Christopher S. Chapman, Anthony G. Hopwood and Michael D. Shields

© 2009 Elsevier Ltd. All rights reserved

Conceptual Foundations of the Balanced Scorecard

Robert S. Kaplan

Harvard Business School, Harvard University, USA

Abstract: David Norton and I introduced the balanced scorecard in a 1992 Harvard Business Review

article (Kaplan & Norton, 1992). The article was based on a multi-company research project that

studied performance measurement in companies whose intangible assets played a central role in value

creation (Nolan & Norton, 1991). Our interest in measurement for driving performance improvements arose from a belief articulated more than a century earlier by a prominent British scientist,

Lord Kelvin (1883):

I often say that when you can measure what you are speaking about, and express it in numbers, you know

something about it; but when you cannot measure it, when you cannot express it in numbers, your knowledge is of a meagre and unsatisfactory kind.

If you can not measure it, you cannot improve it.

Norton and I believed that measurement was as fundamental to managers as it was for scientists. If

companies were to improve the management of their intangible assets, they had to integrate the measurement of intangible assets into their management systems.

After publication of the 1992 Harvard Business Review article, several companies quickly adopted

the balanced scorecard, giving us deeper and broader insights into its power and potential. During the

next 15 years, as it was adopted by thousands of private, public and non-profit enterprises around the

world, we extended and broadened the concept into a management tool for describing, communicating and implementing strategy. In this chapter, I describe the roots and motivation for the original

balanced scorecard article, as well as the subsequent innovations that connected it to a larger management literature. The chapter uses the...