What is Balanced Scorecard?
Strategy Management
1.1 What is Balanced Scorecard?
The Balanced Scorecard is the method proposed by Robert S. Kaplan and David P.
Norton (2007). The Balanced Scorecard continues to report on traditional financial key
figures that focus on historical periods, In addition, however, the Balanced Scorecard
enables you to record the driving factors of future performance. These cannot be
portrayed in the form of financial key figures but, in certain circumstances, are more
critical to profit than the traditional indicators. The Balanced Scorecard defines an
overall view of the enterprise. This comprises, generally four perspectives with
specific central questions:
- Financial Perspective: “How should we act with partners in order to ensure financial success?”
- Customer Perspective: “How should we act with customers in order to realize our vision?”
- Internal Processes Perspective: “In which business processes must we be the best in order to satisfy our partners and customers?”
- Learning & Growth Perspective: “How can we promote our change and growth the potential in order to realize our vision?”
1.2 Features of Balanced Scorecard
The Balanced Scorecard provides the following functions:
- Definition of scorecards, strategies, perspectives, objectives, measures, and initiatives;
- Formation of scorecard hierarchies and groups;
- Numerous views on the elements of a scorecard;
- Overview;
- Analysis;
- Cause-Effect Chain
- Drilldown of a scorecard;
- Comparison of several scorecards;
- Assignment of scorecards to organizations of your organizational structure.