Customer Reviews

The balanced scorecard: Measures that drive performance (HBR on point)

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This 1992 Harvard Business Review article, by Harvard Business School professor Robert Kaplan and David Norton, president of Nolan, Norton & Co., was the introduction into the now world-famous Balanced Scorecard - there is now even a Balanced Scorecard website. This article was followed by several other HBR-articles and two books ('The Balanced Scorecard' and 'The Strategy-Focused Organization').

The main reason for the introduction of the balanced scorecard was that, in the authors' views, organizations only measured financial performance. There was too much emphasis on financial measures and not enough on operational performance. By complementing financial measures of past performance with the objectives and measures of financial, customer, internal business process, and learning and growth, managers are provided with a framework to translate a strategy into operational terms. The great thing about the balanced scorecard is that it minimizes information overload by limiting the number of measures. It forces managers to focus on the handful of measures that are most critical.

This article made it finally possible for managers to express and measure operational performance. Great thing about the balanced scorecard is that it a simple visual tool. If you like this article, the logical step is to read their follow-up HBR-articles 'Putting the Scorecard to Work' (1993) and 'Using the Balanced Scorecard as a Strategic Management System' (1996) or their 1996-book 'The Balanced Scorecard: Turning Strategy into Action'. The article uses simple US-English.

This 1992 Harvard Business Review article, by Harvard Business School professor Robert Kaplan and David Norton, president of Nolan, Norton & Co., was the introduction into the now world-famous Balanced Scorecard - there is now even a Balanced Scorecard website. This article was followed by several other HBR-articles and two books ('The Balanced Scorecard' and 'The Strategy-Focused Organization').

The main reason for the introduction of the balanced scorecard was that, in the authors' views, organizations only measured financial performance. There was too much emphasis on financial measures and not enough on operational performance. By complementing financial measures of past performance with the objectives and measures of financial, customer, internal business process, and learning and growth, managers are provided with a framework to translate a strategy into operational terms. The great thing about the balanced scorecard is that it minimizes information overload by limiting the number of measures. It forces managers to focus on the handful of measures that are most critical.

This article made it finally possible for managers to express and measure operational performance. Great thing about the balanced scorecard is that it a simple visual tool. If you like this article, the logical step is to read their follow-up HBR-articles 'Putting the Scorecard to Work' (1993) and 'Using the Balanced Scorecard as a Strategic Management System' (1996) or their 1996-book 'The Balanced Scorecard: Turning Strategy into Action'. The article uses simple US-English.

Since Peter Drucker first popularized the idea of business strategy, there have been vastly more strategies conceived than there have been strategies successfully implemented. Much attention has been paid to devising better strategies, and little to implementing strategies. The big pay-off is in the implementation, and THE BALANCED SCORECARD hits a home run in showing how to explain what needs to be done to successfully execute strategy. You must have more measures, and different measures than the accounting system provides. You also need to link measures to the key tasks that each person must perform. This book is simply the Rosetta Stone of communicating and managing strategy. THE BALANCED SCORECARD is the beginning of the practical period of maturity in the field of business strategy. Read this book today to enjoy much more prosperity!

The article "The Balanced Scorecard-Measures that Drive Performance" was written in the HBR in 1992 but is still very powerful, relevant and useful today in guiding managers not to only rely on financial measures but to also include a balanced set of operational measures in the performance measurement system. This allows managers to look at an organization from several perspectives at the same time.

Complementing financial measures with operational measures of internal business processes, customers and learning and growth, enables an organization to translate strategy into operational terms, thereby facilitating strategy implementation. As the authors point out, "What you measure is what you get", therefore measuring say customer satisfaction enables a company to ensure that it meets customer needs, which is very critical in the current highly competitive operating environment. A company also needs to know what it excels at (internal perspective) so that it can use its strengths top exploit opportunities whilst minimizing the impact of its weaknesses and threats.

The book does not attempt to downplay the importance of financial measures but only to emphasize the need to have a balanced set of measures. The emphasis is on a few critical balanced set of measures and not a proliferation of measures. The balanced scorecard forces managers to look at the essential operational measures together thus avoid the situation where success in one area is at the expense of other areas.

The authors used simple language, charts to illustrate the concepts and mini cases to reinforce the practical application of the concept.

The article is comprehensive enough that it is ideal for the busy executive who may not have the time to read other related articles or the book on the same topic by the authors "The Balanced Scorecard: Turning Strategy into Action". I, however, strongly recommend one to also read this very interesting and ground-breaking book especially those studying management or doing an MBA.

Do not buy an e-book. There is a lot of trouble downloading both the software and the article. When you think you can read the article at your leisure, you find it diffucult to read on-line and it cannot be saved into a 'word' document where you can adjust the font size, etc.