Balanced Scorecard and Its Implementation

“Balanced Scorecard and Its Implementation”

Traditional financial reporting systems provide an indication of how a firm has performed in the past, but offer little information about how it might perform in the future. To deal with this, in 1992, Harvard Business School professor Robert S. Kaplan and management consultant David P. Norton developed the Balanced Scorecard, a strategic planning and performance measurement system that considers not only financial measures, but also customer, business process, and learning measures. The first balanced scorecard was created in 1987 at Analog Devices, a mid-sized semiconductor company.  This e-book chronicles its development over the period of 1986-1992. Since its inception, balanced scorecard has been adopted, modified and applied extensively in business and industry, government, and non-profit organizations worldwide.

The balanced scorecard has evolved from its early use as a simple performance measurement framework to a full strategic planning and management system which helps planners identify what should be done and measured. It enables executives to truly execute their strategies. It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results. If understood thoroughly and implemented appropriately, its potential contribution to organisational success – however measured – is fundamental. The “new” balanced scorecard transforms an organization’s strategic plan from an attractive but passive document into the "marching orders" for the organization on a daily basis.

An example of success application of balanced scorecard is world leader in water and wastewater services, Veolia Water, the water division of Veolia Environment. Working closely with Balance Scorecard Institute, Veolia Water was able to implement a system designed to help translate organizational strategy into something employees could understand and use. Its...