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The Balanced Scorecard: Translating Strategy into Action Hardcover – September 1, 1996
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From Publishers Weekly
Copyright 1996 Reed Business Information, Inc.
From Library Journal
Copyright 1996 Reed Business Information, Inc.
- Item Weight : 1.45 pounds
- Hardcover : 336 pages
- ISBN-10 : 9780875846514
- ISBN-13 : 978-0875846514
- Product Dimensions : 6.75 x 1.25 x 9.75 inches
- Publisher : Harvard Business Review Press; 1st Edition (September 1, 1996)
- Language: : English
- ASIN : 0875846513
- Best Sellers Rank: #70,994 in Books (See Top 100 in Books)
- Customer Reviews:
Top reviews from the United States
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This is a decent book and considered by many as a landmark in business strategy measurement and implementation.
The main problem I've found so far is that the book seems to be too conceptual for my taste, and the examples provided do not make it clear how to apply the theory to a real case scenario. Other times the author doesnt care about explaining some topics well or thoroughly enough. For example in chapter 6 (Learning and Growth perspective), there is barelly any explanation regarding the topic of "strategic Job Coverage Ratio" . The author only mentions the concept and then puts this picture (figure 6-4, page 135) hoping that the reader would grasp the concept, but I completelly failed at comprehending 1) how to understand it and 2) how to apply it to a real case, creating this measurement from scratch. Another example of the same symptom is also on the concept of creating a measurement for "Personal Goals Alignment" (figure 6-6, page 140). There is no methodology covered on how to go from A to B, how to apply it to a real case, only a description of what a company did, and the author (again) seems to make the assumption that the reader is able to infer correctly how to apply it to a real case. Frustrating...
I wish it was more clear and laid out, maybe including a few cases where a step-by-step process of building and using a scorecard. (I know, I know, there are chapters who supposedly are dedicated to that, so as I said, if the delivers on what it promises I'll change my review)
When all is said and done, for what I've gained from the book so far Im afraid I wont be able to go from A to B after finishing this book. In other words, I probably will have to read other books if I want to be able to build a BSC from scratch.
Nevertheless the book contains a multitude of information that a beginner like me has found useful.
It certainly made me able to grasp several concepts and understand what a BSC entails and how useful it can be.
Still on the plus side, the book also has a nice bibliography at the end of each chapter.
Overall, it is definately useful as a first read, although for the value it conveys it could be a little shorter for my taste.
Perhaps Im expecting too much. Maybe such concepts need a good amount of hands on work that a book cannot conceive, maybe it is just a matter of trying to get your hands dirty by working on real cases trying to apply the concepts, but still I wish there were step-by-step examples and exercises to test how much information you have actually absorbed and how able you are at applying the concepts.
After finishing this book I intend to read 3 other books on BSC by Paul Niven:
The authors then go on to presenting each of the four perspectives in details and discuss how the Balanced Scorecard measures link to the strategy. In the subsequent section, the authors focus on how the Scorecard is used to manage business strategy. The framework presented revives the traditional thinking around strategy and how it is implemented in a very pragmatic manner - balancing both strategy and its associated execution. What I particularly enjoyed are the numerous case studies and examples presented that help anchor the concepts.
A classic must read in the area of Corporate Strategy!
Below are key excerpts from the book that I found particularly insightful:
1- "The Balanced Scorecard emphasizes that financial and nonfinancial measures must be part of the information system for employees at all levels of the organization."
2- "As more and more companies work with the Balance Scorecard, they see how it can be used to:
-clarify and gain consensus about strategy,
-communicate strategy throughout the organization,
-align departmental and personal goalts to the strategy,
-link strategic objectives to long-term targets and annual budgets,
-identify and align strategic initiatives,
-perform periodic and systematic strategic review, and obtain feedback to learn about and improve strategy."
3- "A strategy is a set of hypotheses about cause and effect. The measurement system should make the relationships (hypotheses) among objectives (and measures) in the various perspectives explicit that they can be managed and validated."
4- "The financial objectives serve as the focus for the objectives and measures in all the other scorecard perspectives. Every measure selected should be part of a link of cause-and-effect relationships that culminate in improving financial performance."
5- "The scorecard should tell the story of the strategy, starting with the long-run financial objectives, linking these to the sequence of actions that must be taken with financial processes, customers, internal processes, and finally employees and systems to deliver long-term economic performance."
6- "In the internal-business process perspective, managers identify the critical processes at which they must excel if they are to meet the objectives of shareholders and of targeted customer segments...One recent development has been to incorporate the innovation process as a vital component of the internal-business-process perspective."
7- "While not the same as measurement, and not a long-term substitute for measurement, the text is a marker that serves many of the same objectives as a formal measurement system."
8- "Balanced Scorecard of no more than two dozen measures can be sufficient for measuring their operations. They are, of course, correct in a narrow sense, but they fail to distinguish between diagnostic measures - those measures that monitor whether the business remains in control and can signal when unusual events are occurring that require immediate attention - and strategic measures - those that define a strategy designed for competitive excellence."
9- "The Balanced Scorecard is not a replacement for an organization's day-to-day measurement system. The scorecard measures are chosen to drive the attention of managers and employees to those factors expected to lead to competitive breakthroughs for an organization."
10- "The disconnect between strategy formulation and strategy implementation is caused by barriers erected by traditional management systems - the systems organizations use to:
-establish and communicate strategy and directions;
-define departmental, team, and individual goals and directions; and
11- "The scorecard provides a common framework for organizing the planning process of corporate support departments. It enables these departments to understand the strategies of the entire corporation and the individual SBUs so that the support departments can develop and deliver better services that help the operating units and corporation achieve their strategic objectives."
12- "Strategic planning and operational budgeting processes are too important to be treated as independent processes. Strategic planning must be linked to operational budgeting if action is to be tied to vision."
13- "Mintzberg and Simons identify key aspects of this newer or emergent view of strategy:
-Strategies are incremental and emerge over time
-Intended strategies can be superseded
-Strategy formulation and implementation are intertwined
-Strategic ideas can arise throughout the organization
-A strategy is a process"
14- "...the measurement framework in the Balanced Scorecard should be deployed to develop a new management system. The distinction between a measurement and a management system is subtle but crucial. The measurement system should be only a means to achieve an even more important goal - a strategic management system that helps executives implement and gain feedback about their strategy."
15- "Most companies introduce the scorecard to drive single pieces of the management process: Obtain clarity and consensus about strategy, achieve focus, leadership development, strategic intervention, educate the organization, set strategic targets, align programs and investments, build a feedback system."
Top reviews from other countries
“The Balanced Scorecard” addresses an ever-increasing accounting problem, measuring current companies using old accounting techniques.The book explains that we are now in the information age and the old accounting from the industrial age doesn’t properly reflect or measure a company. The theory is that there are many other intangible assets that a company possesses that are not reflected on the balance sheet but do contribute greatly to the performance of the company. The accounting from the industrial age focuses solely on financial performance neglecting a growing contributor to financial health, the intangible assets.“The Balanced Scorecard” describes a method in which a company can measure and even manage using these intangible assets. A Balanced Scorecard involves developing one strategy or mission for the company. The idea is to incorporate every aspect of the company that will contribute to achieving this mission. In the process, a company gains a new understanding of their business and a new management system.