Balanced Scorecard

What it is

A tool for connecting strategy and execution by creating a dashboard of metrics that go beyond simplistic “rear-view mirror” financial results to include leading indicators of organizational and business health, from four perspectives: Financial or Stewardship; Customer and Stakeholder; Internal Process; and Organizational Capacity or Learning and Growth.

When to use

Pretty much any organization—or part of an organization—can benefit from taking a balanced scorecard approach.

When not to use

While this tool can be used anywhere, it’s important to make sure that scorecards in different parts of the organization are “synced up” and not working at cross-purposes.

Tradecraft tips

Although the four perspective categories are universal, any good balanced scorecard must be customized highly to context, not just taken “off the shelf” from the book. The important thing is that your balanced scorecard must help align people around addressing the root causes of success or failure in real time. To do this well, it’s critical to develop a full systems view and to get scorecard item at the right level of resolution—not too high level or too down in the weeds. 

Source

Robert Kaplan and David Norton, The Balanced Scorecard: Translating Strategy Into Action (1996). See also The Balanced Scorecard Institute for a wealth of supporting materials.

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