Information Flow Parameters for Managing ^ Organizational Processes Developing a framework for enhancing the design of systems and improving management control of complex relationships. I N T H E contemporary digital economy, intangible assets, of which information is a critical com- ponent, fuel a dominant share of growth and prosperity. This is in contrast to the value added by physical assets in the erstwhile traditional business model [3]. hiformation has typically been ana- lyzed as a product, with the focus primarily derived from a snapshot view taken at a particular rime. However, emphasis on the product view falls short of a precise measurement due to the nonquan- tifiable nature of the characteristics (such as relevance and reliability) of By Ravindra Krovi, Akhilesh C h a n d r a , information. A systematic and con- ^^ld Balaji RajagOpalan scious effort to influence and control the flow of information will lead to efficiencies in organizational processes. Therefore, it is impera- tive to manage information flow (and not just information) to improve business process efficien- cies, especially in organizational environments. Numerous studies done in the business process understanding ot the dynamics of such flows. We redesign realm have articulated the need for ratio- propose a parameter-based guiding framework oi nalizing organizational processes [4]. If process effi- information flow to manage organizational ciencies are to be realized, it is critical to take another processes. Ir establishes a foundation to assist organi- look at the infrastructure based on the parameters zations in measuring and reporting information by affecting the flow of information. Few studies, how- better managing their flow, ever, have speciBcally addressed how flow irregulari- ties can affect the process. The framework proposed Information Flow Dynamics here adopts a process view of information, which In order to comprehend the process view, we draw requires an understanding of information character- from an analogy of information flow with fluid How. istics during its flow through communication chan- During its flow, a fluid is known to change its prop- nels, and its processing by organizational agents, erties (such as velocity and viscosity) with respect to Understanding the process view should help man- space and time llO]. Fine-tuning its measurable agers in measuring the impact of flow parameter dimensions can meaningfully alter the nature of variations on information quality. fluid flow. Knowledge of the relationship between Companies, however, are often poorly organized properties of fluid and its flow is used in engineering and underprepared to manage such complex infor- to design efficient fluid conduits (such as pipes) and mation flows [1]. The existing state of underpre- altering fluid flow mechanisms (such as dams), paredness may partly be attributed to a lack of Could there be a conceptual equivalent of infor- COMMUNICATIONSOFTHE ACM F ...

1. Information Flow Parameters
for Managing ^
Organizational Processes
Developing a framework for enhancing the design of systems
and
improving management control of complex relationships.
I N T H E contemporary digital economy, intangible assets, of
which information is a critical com-
ponent, fuel a dominant share of growth and prosperity. This is
in contrast to the value added by
physical assets in the erstwhile traditional business model [3].
hiformation has typically been ana-
lyzed as a product, with the focus primarily derived from a
snapshot view taken at a particular rime.
However, emphasis on the product view falls short of a precise
measurement due to the nonquan-
tifiable nature of the characteristics
(such as relevance and reliability) of By Ravindra Krovi,
Akhilesh C h a n d r a ,
information. A systematic and con- ^^ld Balaji RajagOpalan
scious effort to influence and control
the flow of information will lead to efficiencies in
organizational processes. Therefore, it is impera-
tive to manage information flow (and not just information) to
improve business process efficien-
cies, especially in organizational environments.
Numerous studies done in the business process understanding ot

2. the dynamics of such flows. We
redesign realm have articulated the need for ratio- propose a
parameter-based guiding framework oi
nalizing organizational processes [4]. If process effi-
information flow to manage organizational
ciencies are to be realized, it is critical to take another
processes. Ir establishes a foundation to assist organi-
look at the infrastructure based on the parameters zations in
measuring and reporting information by
affecting the flow of information. Few studies, how- better
managing their flow,
ever, have speciBcally addressed how flow irregulari-
ties can affect the process. The framework proposed
Information Flow Dynamics
here adopts a process view of information, which In order to
comprehend the process view, we draw
requires an understanding of information character- from an
analogy of information flow with fluid How.
istics during its flow through communication chan- During its
flow, a fluid is known to change its prop-
nels, and its processing by organizational agents, erties (such as
velocity and viscosity) with respect to
Understanding the process view should help man- space and
time llO]. Fine-tuning its measurable
agers in measuring the impact of flow parameter dimensions can
meaningfully alter the nature of
variations on information quality. fluid flow. Knowledge of the
relationship between
Companies, however, are often poorly organized properties of
fluid and its flow is used in engineering
and underprepared to manage such complex infor- to design
efficient fluid conduits (such as pipes) and
mation flows [1]. The existing state of underpre- altering fluid
flow mechanisms (such as dams),
paredness may partly be attributed to a lack of Could there be a

3. conceptual equivalent of infor-
COMMUNICATIONSOFTHE ACM February 2003/Vol 46, No 2
77
d e s i g n provides the necessary infrastructure for
information processing functions that influence the quality of
the
resulting output. The architecture of the design should,
therefore,
incorporate the flow parameters and their changes in real time.
marion flow that pafallcis fluid flow dynatnics? For
exatiipie, the speed with which iiiFofniation flows in
at! organizatiotial process depetids oti the tiutiiher oF
intermediaries chat belotig to that process. Further-
more, subtle changes cati result from flow irregular-
ities due to localized delays and biases. In the current
busiticss environment, an understanding of flow
parameters is essential For enhancing the value of
complex busitiess processes and designitig systetiis
Suppliers ^ Manufacturer *
Trad iti on a.
Suppliers *
^Distributors*
Model in PC
^ Uell *

4. Dell Model
Industry
. Customers
Figure 1. Reduced node ^ 1 ^ . ^ ^an more effectively
density and the resuttmg , ^ ^
information flow. tnanage these flows.
Alteration in the values
ot any one or combitianon of these parameters
should help achieve a desirable influence on the
tisability of information.
Node Density
A node is used to describe an entity or a group of
entities capable of altering the properties of informa-
tion flow. The node density is then defined by the
nutnber ot intermediate nodes in the infortnation
processitig chatinel. The complexity of information
flow is directly related to node density. Studies have
suggested the itnportance of managing coordination
gaps that arise due to the lack of useful information
or the presetice of incorrect or unusable information
[9]. Specifically, the strategic role of IT design in
reducing coordination gaps in the form of time,
space, and information distances between nodes in
information flow ha.s been emphasized.
The number of intermediate nodes appears to be
an impottant (Victor For two reasons. First, iFdecision
making at each node depends on information from
other nodes, then the presence of a large number of
nodes along the processing channel should result in

5. an increase in uncertainty. Second, a large number
of riodes may impede the speed of infortiiation Fiow.
If the extreme case of tnanual processing (human
node) is assumed, then an increase in the number of
intermediate nodes would also negatively afFect the
processing efficiency oFthe entire system. Organiza-
tions can manage internal and external flows by
altering the number of intermediate nodes. Two
broad strategies for managing such informatioti
flows include supply chain integration and efficient
procurement processes.
Virtual integration across supply chains. Sup-
ply chain integration generates efficient information
flows For participating entities by focusing on value-
added components. For example, Dell Computer
Corp. adopted an aggressive strategy of revamping
its supply chain by pruning the non-value-added
nodes and information flows (see Figure 1). By shar-
ing inFormation about its detiiand forecasts across
the supply chain, Dell does not need to carry inven-
tory until it is needed during production. Also, sup-
pliers maintain convenient shipping points to satisfy
demand on a real-time basis. InFortiiation sharing
and supplier accessibility help Dell manage to carry
inventory on a just-in-time basis. Dell has been suc-
cessHil becattse it could effectively elitiiinate the dis-
tribution rtodes from its supply chain resulting in
leaner order-to-delivery times [7].
However, replication of the Dell tiiodel requires a
careful accomtnodation of situation-speciflc variables.
For example, in cases where product development
requires several components and complex configura-
tions, there is tnore material flow and consequently

6. more inFormation flow. Implementing the Dell
model can be difficult for some companies (such as
Ford) because their supply chains are inherently tnore
complex with many layers {tier-1, tier-2, tier-3...)
and intermediary companies. While tier-1 suppliers
may have a well-developed IT infrastructure, suppli-
ers toward the end of the chain have neither the tech-
nological sophistication nor a justiflable business case
to a.ssist in the sharitig of information.
Procurement process efficiencies. Reducing the
nutnber of nodes can also simplify internal workflow
7 8 February ?OOJ/Vol 46, No 2
COMMUNICATIONSOFTHEACM
processes {such as procurement) and consequently
decrease the typically high cost associated with pur-
chases of MRO {maintenance, repair, or operating) or
indirect supplies (see Figure 2). In such situations, all
employees within the purchasing organization have
access to a proprietary master catalog (created from
various supplier catalogs), ln order to control access,
the system contains procurement rules that enforce
purchasing privileges. When an employee selects a
product, the purchase request is routed to the super-
visor (or other intermediaries) for further approval.
1 his order is eventually sent to an exchange (hosted
by either the purchasing organization or by the pro-
curement software vendor). The order is decomposed
into suborders and then routed to individual suppli-
ers. The immediate value proposition of procurement
process efficiencies for most suppliers is that being
connected to an exchange reduces their costs of find-

7. ing potential buyers. Additional value may depend on
the complexity of items being purchased. Most MRO
purchases do not present a problem because they are
standardized functions. Companies arc, therefore,
able to streamline their
procurement activities.
The value of a node
depends on the extent of
reduction in information
content or decision-
making quality if that
node is removed. Nei-
ther of these conse-
quences occurred in
Dell's situation by the
removal of the distribu-
tor node. While fewer
nodes may result in a
smoother transfer of
information, it is important to realize that the qual-
ity of information at each node affects the efficacy of
decision making at subsequent nodes.
Velocity
Velocity refers to the speed of incoming information
at a node. In recent times, such terms as flow and
velocity are used more extensively to indicate the
speed of change in the economy. Bill Gates has
argued that the primary driver of organizational
change will be the flow of information. The Federal
Reserve Board routinely tracks the velocity of money
to guide its Hscal and monetary policy. Michael Dell
uses the phrase "inventory velocity" to refer to rapid
inventory flow in business transactions [5].

8. Velocity's effect was particularly evident during
holiday seasons when several e-commcrce retailers
Figure 2. Information flow in the
procurement process.
were unable to handle the deluge of seasonal orders.
Therefore, systems that handle millions of e-com-
merce transactions (such as Web servers, database
servers, and payment servers) require a design that is
robust enough to sustain wide variations in the
velocity of information flow without an adverse
effect on their performance. Further, the existing
business infrastructure (such as warehouses and
delivery trucks) supporting order fulfillment
processes should also be sufficiently robust to
accommodate different speeds.
Typically, inventory and fulfliimeiu systems can-
not manage high velocity better in a situation where
the subsystems are partially automated and poorly
integrated. The CIO of a major tier-one supplier to
the three largest automotive manufacturers com-
mented, "Ir takes two or more weeks for information
from the automaker regarding the increase in the
sales of a specific type of model, that translates into
materials requirements for our company, to get to us.
This leaves us with about a week to manage our sup-
ply chain, leaving our inventory management ad hoc
at best." Covisint
(www.covisint.com), an
exchange system based
on standards agreed upon
by the three major

9. automakers, will facilitate
exchange of the type of
information that compa-
nies need. This exchange
could lead ro an increase
in the velocity of infor-
mation flow.
Clearly, systems designed to facilitate the automa-
tion of information exchange help to streamline the
organizational processes. However, it is not always
true that automated processes are less prone to influ-
ence velocity. Some processes could potentially suf-
fer from automation when information flows too
quickly. This might occur in ERP environments
where users are unaware of the consequences of their
actions. For example, in the pre-ERP days, if a sales
clerk entered an incorrect order (wrong specifica-
tion, price, or shipping address), there usually was
time to correct the error. In an ERP environment,
sales order information is directly routed to the man-
ufacturing module where it is scheduled into pro-
duction eventually waiting to be shipped. Since the
sales order module is also integrated with the
accounting module, it is likely an undelivered prod-
uct will result in unpaid invoices because of which
the customer's credit status could possibly be down-
graded. It is also possible to imagine the conse-
COMMUNICATIONSOFTHE ACM 200J/Vol. 46, No 2 79
quences of manufacturing a
product without the correct
specifications. In the past,

10. when most processes were
manual and paper-based, busi-
nesses managed to cope with
these problems because there
was more time available to
them to react and correct some
of the inaccuracies.
Viscosity
Viscosity reflects the degree of
conflict at the node. The con-
flict arises due to the presence
of contradictory information
components known as infor-
mation particles-—the smallest
component of" information
rhat can exist independently Figure 3. Impact of flow
and still retain the characteris- parameters in business
,- - (• • I I transactions,
tics or lnrormation. In such
cases, viscosity appears in the form of multiple val-
ues of information (multiple information flows feed
similar information content to a node) that must be
resolved before the node can begin processing. If
there is lesser conflict between the multiple values,
then a quicker resolution can occur—a situation
characterized by low viscosity. However, a high
degree of conflict will likely delay the resolution
time—a situation characterized by high viscosity.
Consider the following example of Toys-R-Us,
which illustrates the effect of viscosity on business
processes. During a past holiday season, Toys-R-Us
was one of the poorer performers in order fulfill-

11. ment. The company handled both offline and
online sales orders during that period. The number
of online orders outweighed many times the avail-
ahle processing capacity and the inventory the com-
pany had in its warehouses. The company's less than
satisfactory performance stemmed from the perplex-
ing nature of inventory management. Prudent man-
agement practice dictates maintaining inventory at
lower levels to avoid storage-related costs. Contrar-
ily, there are longer-term costs associated with stock-
outs that include lost sates, impaired goodwill, poor
customer resource management, damage-control
expenditures, and changes in customer loyalty.
These alternatives represent information particles of
inventory cost management.
Inventory management presents an interesting
administrative dilemma: maintaming excess inven-
tory versus stock-out possibilities. Planning deci-
sions in such cases involve seeking an optimal
inventory level-—a tradeoff between demand projec-
tions by the marketing department, and inventory
cost control by the production department. The
constraints imposed by the two opposing elements
render the decision making relatively inflexible. An
understanding of the interaction and effect of such
viscous information flows would have helped the
company better manage the costly and lasting effect
Toys-R-Us had to cope with.
The Toys-R-Us experience demonstrates the
potential for adverse consequences when organiza-
tions are unable to manage viscosity. The cause of
such consequences is usually a lack of accurate and
streamlined information across the supply chain.

12. Viscosit)'-related uncertainty eventually results in
what is known as a buUwhip effect 16]. In a bullwhip
effect, entities along the supply chain resort to stock-
piling (for just-in-case scenarios), thereby eventually
leading to excess inventories.
Volatility
Information volatility denotes the as.sociated uncer-
tainty in its content, format, and/or timing. The
degree of volatility may depend on the impact of exter-
nal forces based on either industr'wide or economy-
wide factors. Thus, changes in economic policies or
interest rate by the Federal Reserve Board (perturba-
tion) are likely to affect the operating performance of
an organization. Depending on the effect such
changes have on the organization, they would gener-
ate either laminar or turbulent information flows.
For example, an average daily volume of a few
thousand transactions over a month with a variance
of more than 5.000 or 6,000 could be characterized
as a turbulent flow (high volatility), whereas an aver-
8 0 Fcbfu.iry 20D3/Vol 46. No 2 COMMUNICATIONS Of THE
ACM
age daily volume of a thousand transacrions over a
month with a variance of 500 or 600 could be con-
sidered as a laminar flow (low volatility). More
specifically, when the distribution of transactions is
comprised of several peaks, there is a higher likeli-
hood that the flow is turbulent. Similarly, spikes in
transaction volume for an online trading system
when there are widespread sell-offs are representative

13. of a turbulent information flow.
It is difficult for an organization to control the
timing, content and, extent of turbulence. However,
knowledge of relationships between external forces
and internal processes can help manage the effect on
the system. Consider the example of online retailers
who frequently face the problem of preparing for the
surge in demand during the holiday season. Prepara-
tion could entail making necessary investments In
both the technical infrastructure (such as increasing
the number of servers) as well as the business infra-
structure (such as more efficient arrangements with
delivery companies). Planning for such capacity
alternatives requires an assessment of anticipated
demand and subsequent translation of demand into
resource requirements. Thus, an online toy retailer
could project an increase in page views (resource
requirements) based on fourth-quarter estimates and
historical data on the average number of page views
required per order.
Organizational Implications
Organizations invest in e-business drivers to improve
operational and financial performance [2]. Examples
of such drivers include system integration, internal
orientation of information technology, and cus-
tomer/supplier-related processes. For successful
implementation of these drivers, careful attention
should be given to the parameters influencing the
flow. Figure 3 outlines the role of flow parameters in
influencing the nature of interaction between an orga-
nization and its various stakeholders. For example, a
customer order triggers various interdependent busi-
ness processes and the associated information flows.
Performing a credit and inventory check through

14. related subsystems will validate the order. A satisfac-
tory evaluation should initiate information flows
related to the generation of production schedules,
contacts with suppliers, arrangements with logistics
providers, and realization of cash from customers.
Hence, the relationship between the organization and
the external stakeholders (such as customers, suppli-
ers, and service providers) can be affected by varia-
tions in flow parameters. Some illustrative
implications of flow parameter variations in the con-
text oi Figure 3 are described in more detail here.
Customer relationships. The number of orders
per unit time would constitute the velocity of flow
and may be affected by the number of nodes through
which the order reaches the implementation stage at
the back end ot data processing operations. Further-
more, variations in the number of orders processed
per day can increase the volatility of incoming traffic
at electronic trading sites. Hence, back-end applica-
tions must actively control the infltience of velocity
and volatility of the incoming traffic.
Supplier relationships. As a general rule, the Rir-
ther a decision point is along the value chain, the
higher the likelihood it will be affected by node den-
sity. Nevertheless, the nature of controls and interac-
tions may cause node density to become critical at any
decision point. For example, controls for the purchase
function in Figure 3 occur at a relatively early stage in
the value chain, and may affect the node density.
Node density can be a factor along two dimensions:
internal and external. Internal sources stem from the
organization of the purchase department. A large pur-
chase department witb a centralized authority struc-
ture has the potential to congest the decision-making

15. nodes. External source is a function of suppliers' pop-
ulation in this example: selection amongst a large
number of suppliers injects increased node density
(and externally induced volatility) into the system
every time a purchasing decision is involved. Further,
the ability to respond to fluctuations is limited wben
information systems of the company and its suppliers
are not effectively integrated.
Outsourcer relationships. If credit assessment is
outsourced, it might affect the nature of information
flow in the value chain. The level of integration of the
outsourcer s information system with the company's
system will determine the velocity of information. If
the credit-check function is built into the company's
system, then the degree of integration within the
ERP system would influence the velocity of flow. In
specific instances, the velocity will also be affected by
whether required information to perform the credit
check is available internally or help is needed trom a
credit bureau system. Also, when the organization
has some information for performing credit-check
activities internally but requests assistance from credit
bureau systems for additional corroborating informa-
tion it could end up receiving contradictory informa-
tion leading to higher viscosity.
Environmental factors. Besides intrabusiness
transactions, the nature of flows between corporate
intranets and external entities would also be moder-
ated by various environmental factors. For example,
a 500-point drop in the Dow Jones Index can
increase the velocity and volatility of incoming traf-
COMMUNICAT1ONS OF THE ACM February 3003/Vol 46. No
2 8r

16. Pic at electronic trading sites. The uncertainty in the
oil market or a global financial crisis can result in
high viscous flow of information hetween business
entities. Additionally, legal factors sometimes force
an increase in the number oi nodes along the infor-
mation flow—for instance, certain states do not
allow cardirect.com to sell cars directly to consumers
over the Internet; such restrictions would introduce
more intermediary nodes before the final decision
maker processes the information.
Finally, the overall utility oi the information flow
parameters has specific significance b r enhancing
system design and improving management control.
System design provides the necessary infrastructure
for information processing functions that influence
the quality of the resulting output. The architecture
of the design should, therefore, incorporate the flow
parameters and their changes in real time. Knowl-
edge of factors affecting process efficiencies via flow
parameters assumes significance in providing effec-
tive management. In the future, organizations will
evolve into intricate networks of dynamic relation-
ships with external entities. The complexity of the
resulting processes can best be managed by analyz-
ing the parameters of information flow. Q
REFERENCES
1. Baron, J., Shaw, M.J.. and Bailey, A.D, Web-based e-catalog
systetiis
iti B2R procuremL-nc. Commun. ACM 43, 5 (May 2000). 9.1-
100.

17. 2. Barita, A., Konana. P., Whitistoti. A., atid Yiti. T. Measures
for e-busi-
ness valtie assessment. IEEE !T Professional {}an.-l-cb. 2001).
35-39.
3. Boulton, R,F,.S,. Libert. B.D., and Samek, S,M. Cracking the
Value
Code. Harper Collins. 2000.
4. Davenport, T.H, and Beers, M.C. Managing information
about
processes. Journal of Management Information Systems 12, I
(Summer
1995). :57-80,
5. Dell. M. Where house. Eor/>rs{No: 30, 1998),
(i. Hau. L.I... Padmanabhati, V,. and Whang. S. I he bullwhip
effect in
supply chains. Sloan Mitnagetneni Review (Spring l')")7). 9.^-
102.
7, Magretia.J, The power of vinual ititegration: An intcrvit-w
with Dell com-
puter's Michael Dell, Harvard Business Review (Mar.-Apr,
199H), 74-84,
8, Patton, D. Supply side: New software can strcamhne the
aften-onerotis
task of procurement. Wall Street Jotirnal (Nov. 15, 1''99).
9, Rathniitn, S., Maliajan. V., and Whinston. A.B. Facilitating
coordina-
tion in custotner support teams: A framework and its
implications for

18. the design of information technology. Management .Sciemr 41,
12
(Dec. 1995), 1900-1921,
10. Roberson. J,A. and Crowe, C.T. Engineering Eiuid
Mechanics. WiLy,
NY. 19%.
R A V I N D R A K R O V I (krovifi'uakron.cdu) is a professor
in the
Deparrmenc of Marî if;etnent at the University of Akron, OH.
A K H I L E S H C H A N D R A (aclO^uakron.cdu) is an
associate professor in
the School of Accountancy at the University of Akron. OH.
B A L A J I R A J A G O P A L A N ([email protected]) is an
assistant
professor in [he Department of Decision and Information
Scietices ai
Oakland University in Rochester. ML
ACM 0002-0782/0S/02
Because usability
is no longer
a luxury -
it's a necessity.
For Subscriptions
Call 800-342-6626
Association for Computing Macfiinery
The First Society in Computing

19. www.acm,org
f • r ' ariMfli
8 2 Febru.iry 2003/Vol 46, No J COMMUNICATIONS OF THE
ACM
Strategic Performance
Measurement and
Management in Nonprofit
Organizations
Robert S. Kaplan
The managers and constituents of nonprofits are increasingly
concerned about measuring and managing organizational
performance. Financial measures alone, or even supplemented
with a collection of ad hoc nonfinancial measures, are not
sufficient to motivate and evaluate mission accomplishments.
This article describes the adaptation of a new performance
measurement and management approach, the Balanced
Scorecard, to the nonprofit sector. Several examples of actual
implementation are provided.
T
HE topic of accountability and performance measurement has
become urgent for nonprofit organizations as they encounter
increasing competition from a proliferating number of
agencies, all competing for scarce donor, foundation, and

20. govern-
ment funding. Yet the public performance reports and many
internal
performance measurement systems of these organizations focus
only
on financial measures, such as donations, expenditures, and
operat-
ing expense ratios. Success for nonprofits should be measured
by
how effectively and efficiently they meet the needs of their
constituencies. Financial considerations can play an enabling or
constraining role but will rarely be the primary objective. At the
more
micro, programmatic level, organizations may have myriad
measures
to track and control local initiatives. These measures, however,
do
not relate to overall organizational mission and objectives.
NONPROFIT MANAGEMENT & LEADERSHIP, 11(3), Spring
2001 © Jossey-Bass, A Publishing Unit of John Wiley & Sons,
Inc. 353
Note: I would like to acknowledge the indispensable
collaboration of David P.
Norton of the Balanced Scorecard Collaborative in developing
and improving
the Balanced Scorecard during the past ten years, and I also
wish to thank
Ellen L. Kaplan, who facilitated the scorecard implementation
in most of the
nonprofit organizations described in this article.
nml11308.qxp 1/24/01 1:26 PM Page 353

21. Even for-profit companies have recently recognized that finan-
cial measurements by themselves are inadequate for measuring
and
managing their performance. Financial reports measure past
perfor-
mance but communicate little about long-term value creation.
To remedy this deficiency, Kaplan and Norton (1992, 1996)
intro-
duced a new performance management system—called the
Balanced
Scorecard—for private sector organizations. The new system
retained
financial measurements but complemented these with measures
from
three other perspectives: that of the customer, the internal
process,
and learning and growth (see Figure 1).
The initial focus and application of the Balanced Scorecard was
in the for-profit (private) sector. But the opportunity for the
score-
card to improve the management of nonprofits should be even
greater. For profit-seeking corporations, the financial
perspective
provides a clear long-run objective, but it provides a constraint
rather
than an objective for nonprofits. Although these organizations
must
certainly monitor their spending and comply with financial
budgets,
their success cannot be measured by how closely they keep
spending
to budgeted amounts, or even if they restrain spending so that
actual
expenses are kept well below budgeted amounts.

22. In this article, I describe the results from a multiyear action
research program to apply the Balanced Scorecard to several
nonprofit
organizations. The next three sections contain a brief literature
review, a description of the Balanced Scorecard, and a
discussion of
methodology. In the remainder of this article I present our
observa-
tions and actual case studies on applying the scorecard to the
non-
profit sector. These experiences have enabled me to draw some
preliminary conclusions about the benefits and the pitfalls of
deploy-
ing this new performance measurement and management system.
Literature Review
The subject of performance measurement for nonprofit
organizations
is extensive but generally inconclusive (Forbes, 1998). Forbes
noted
that nonprofit organizations lack the simple elegance of a
financial
measure—such as profitability or shareholder returns—used by
for-
profit organizations to assess their performance. Forbes also
observed
that nonprofits have difficulty “developing surrogate
quantitative
measures of organizational performance . . . because [they]
frequently
have goals that are amorphous and offer services that are
intangible”
(Forbes, 1998, p. 184). Herzlinger (1996) argues that nonprofit
organizations should disclose nonfinancial quantitative
measures of

23. the quantity and quality of services provided, but does not offer
guidance about how organizations should select such measures.
The difficulty of clearly defining the metrics for organizational
effectiveness, however, is not confined to nonprofit organiza-
tions (Goodman and Pennings, 1977; Cameron and Whetten,
1983).
In their final book chapter, Cameron and Whitten (1983) offer
two
conclusions about organizational effectiveness: (1) “There
cannot be
3 5 4 K A P L A N
Nonprofit
organizations
lack the simple
elegance of a
financial
measure—such
as profitability or
shareholder
returns—used by
for-profit
organizations to
assess their
performance
nml11308.qxp 1/24/01 1:26 PM Page 354

24. Ob
jec
tiv
es M
eas
ure
s Ta
rge
ts
Ini
tia
tiv
es
C
u
st
o
m
er
P
er
sp
ec
ti

25. ve
“H
o
w
d
o
w
e
cr
ea
te
v
al
u
e
fo
r
o
u
r
cu
st
o

26. m
er
s?
”
Ob
jec
tiv
es M
eas
ure
s Ta
rge
ts
Ini
tia
tiv
es
In
te
rn
al
P
er
sp

27. ec
ti
ve
“T
o
s
at
is
fy
cu
st
o
m
er
s
an
d
sh
ar
eh
o
ld
er
s,

28. at
w
h
ic
h
p
ro
ce
ss
es
m
u
st
w
e
ex
ce
l?
”
Ob
jec
tiv
es M
eas

29. ure
s Ta
rge
ts
Ini
tia
tiv
es
L
ea
rn
in
g
an
d
G
ro
w
th
“H
o
w
c

30. an
o
u
r
o
rg
an
iz
at
io
n
co
n
ti
n
u
e
to
le
ar
n
a
n
d

31. im
p
ro
ve
?”
Ob
jec
tiv
es M
eas
ure
s Ta
rge
ts
Ini
tia
tiv
es
F
in
an
ci
al
P

32. er
sp
ec
ti
ve
“I
f
w
e
su
cc
ee
d
,
h
o
w
w
il
l
w
e
lo
o

33. k
t
o
o
u
r
sh
ar
eh
o
ld
er
s?
”
V
is
io
n
an
d
S
tr
at
eg

34. y
F
ig
u
re
1
.
T
h
e
B
al
an
ce
d
S
co
re
ca
rd
:
F
o
u

35. r
P
er
sp
ec
ti
ve
s
nml11308.qxp 1/24/01 1:26 PM Page 355
one universal model of organizational effectiveness” (pp. 262–
267);
and (2) “It is more worthwhile to develop frameworks for
assessing
effectiveness than to try to develop theories of effectiveness”
(pp. 267–269).
Foreshadowing the development of the Balanced Scorecard,
researchers in the 1980s (Cameron, 1981, 1982; Connolly,
Conlon,
and Deutsch, 1980) advocated that multidimensional approaches
be
used for measuring nonprofit effectiveness. In this way users
could
access both the organization’s ability to acquire resources (that
is,
fundraising) and its ability to mobilize its resources to achieve
desir-
able outcomes. The multiple dimensions can also reflect the

36. role of
the multiple constituencies of many nonprofits.
Kanter and Summers (1987) reinforce the importance of
reflecting
the outcomes for multiple constituencies and the need to have
both
long-term measures (outcomes) and short-term measures
(processes
and activities performed). The authors note that conflict often
occurs
between external and internal constituencies, and they conclude
that
“a balanced approach would provide the data to help the
organization
know whether it is ‘doing well’ on any of the dimensions of
perfor-
mance with which an active constituency might be concerned.”
Sheehan (1996) studied philanthropic organizations and
concluded that although most had clear statements of mission,
very
few had developed performance measurement systems that
revealed
whether the organization had an impact on its mission. In effect,
the
organizations had no way to distinguish whether their strategy
was
succeeding or failing.
Sawhill (in this issue) reports a powerful illustration of the
problems when performance measures are not linked to strategy.
The Nature Conservancy has a mission to preserve plants and
ani-
mals by protecting the habitats that rare species need to survive.
For

37. years, the Conservancy operated with a pair of basic
performance
measures known as bucks and acres—indicating how much
money
was raised each year and how many acres of land were acquired
to be kept in their natural condition. These focused performance
measures set the agenda for everyone, and the organization
was apparently successful. During the 1990s, revenues grew at
an 18 percent annual compounded rate and acres protected more
than doubled. Yet the management team reluctantly concluded
that
success in raising money and protecting acres might not be
contributing to the agency’s fundamental mission of conserving
biodiversity. The gap between mission and measures eventually
led
to the adoption of a much more balanced set of measures, better
linked to its organizational mission.
Normally, one would expect that funders closest to an organiza-
tion would be most likely to ask for measures of effectiveness.
But
Letts, Ryan, and Grossman (1999) conclude that “unfortunately,
the big picture at foundations rarely includes concerns about
orga-
nizational capacity and performance. Even worse, the day-to-
day
356 K A P L A N
Since the
introduction of
the Balanced
Scorecard,
companies using
it have been able

38. to implement new
strategies rapidly
and effectively,
leading to
dramatic
performance
improvements
nml11308.qxp 1/24/01 1:26 PM Page 356
grantmaking practices of many foundations actually undermine
the
ability of nonprofits to develop the capacity for sustained high
perfor-
mance” (pp. 169–170, emphasis in original).
Thus, the literature concurs with the need to articulate a multi-
dimensional framework for measuring and managing nonprofit
effectiveness. This scorecard would seem to provide just such a
framework.
The Balanced Scorecard
The Balanced Scorecard (see Figure 1) was developed for the
private
sector to overcome deficiencies in the financial accounting
model,
which fails to signal changes in the company’s economic value
as an
organization makes substantial investments (or depletes past
invest-
ments) in intangible assets, such as the skills, motivation, and
capabilities of its employees, customer acquisition and

39. retention,
innovative products and services, and information technology.
Since
the introduction of the Balanced Scorecard, companies using it
have
been able to implement new strategies rapidly and effectively,
leading
to dramatic performance improvements (Kaplan and Norton,
forthcoming).
The scorecard’s customer perspective measures the entity’s
performance with targeted customer and market segments by
using
such outcome measures as market share, customer retention,
new cus-
tomer acquisition, and customer profitability. This perspective
should
also measure the value proposition—how the organization
creates value
for its targeted customers. The internal process perspective
includes
measures of operating performance (cost, quality, and cycle
times) of
critical processes that deliver value to customers and reduce
operat-
ing expenses. In addition, the internal perspective can include
mea-
sures of innovation processes that create entirely new products
and
services. Organizational learning and growth arise from such
sources
as people and systems. Typical measures for the learning and
growth
perspective include employee motivation, retention,
capabilities, and
alignment, as well as information system capabilities.

40. Research Method
The research agenda on the applicability of the Balanced
Scorecard
to the nonprofit sector was launched in 1996, shortly after the
found-
ing of the Social Enterprise program at Harvard Business
School. The
program conducted a survey and learned that executives and
board
members of nonprofits consistently rated performance
measurement
as one of their top three management concerns. Although
several
nonprofit organizations in 1996 may have had multidimensional
measurement systems, none explicitly derived their measures
from
strategy and mission or organized their measures using the
multiple
Balanced Scorecard perspectives.
S T R AT E G I C P E R F O R M A N C E M E A S U R E M E
N T A N D M A N A G E M E N T 357
Strategy and
performance
measurement
should focus on
what output and
outcomes the
organization
intends to
achieve, not what

41. programs and
initiatives are
being
implemented
nml11308.qxp 1/24/01 1:26 PM Page 357
Rather than wait to study organizations that have adopted the
Balanced Scorecard on their own timetable and agenda, I
pursued an
explicit action research program (Kaplan, 1998). I approached
United
Way of America and United Way of Southeastern New England
and
gained their agreement to coach them to become pilot sites for
applying the Balanced Scorecard. Subsequently, I worked in the
same
way with several other organizations, including an international
relief
organization, a social service organization, and an innovative
venture
philanthropy start-up. Many of the observations and conclusions
in
this article have arisen from my active involvement in the
scorecard
development of these organizations, though other organizations,
such
as Duke Children’s Hospital, implemented the Balanced
Scorecard
without outside assistance.
Role for Strategy in a Nonprofit

42. Balanced Scorecard
In my experience, nonprofits have considerable difficulty in
clearly
defining their strategy. I have seen “strategy” documents that
run
upwards of fifty pages. And most of the documents, once the
mission
and vision are articulated, consist of lists of programs and
initiatives
rather than the outcomes the organization is trying to achieve.
Such
organizations, when implementing a performance measurement
system, typically measure progress in achieving milestones on
their
initiatives. This is backwards. Initiatives should exist to help
the
organization achieve its strategic objectives. They are means,
not ends. Strategy and performance measurement should focus
on
what output and outcomes the organization intends to achieve,
not what programs and initiatives are being implemented.
Another problem is that many strategy documents represent a
combined wish list from all the participants invited to engage in
the
strategy-setting process. Nonprofit organizations, in particular,
value
employee participation. But often they have difficulty
channeling
suggestions into a few coherent themes. Accustomed to reaching
conclusions by consensus, they fail to accept some suggestions
while
rejecting others. Such organizations have to understand Michael
Porter’s admonition (Porter, 1996) that strategy is not only what
the

43. organization intends to do, but also what it decides not to do, a
message that is particularly relevant for nonprofits.
Achieving focus and alignment, however, may be particularly
difficult for nonprofit organizations. Many people who become
employees of these organizations voluntarily accept below-
market
compensation because they believe in the mission of the agency.
Their personal values motivate them to do good and to
contribute to
society through the agency’s programs. This is wonderful and a
great source of strength for the nonprofit sector. But it is also a
dan-
ger. Such motivated individuals come to the agency already
equipped
with a clear, albeit personal, idea about how to accomplish the
358 K A P L A N
Strategy is not
only what the
organization
intends to do, but
also what it
decides not to do,
a message that is
particularly
relevant for
nonprofits
nml11308.qxp 1/24/01 1:26 PM Page 358

44. organization’s goals. And they often encounter a nurturing
environ-
ment in which all opinions are valued and listened to. This is an
engine for diffusing organizational energy.
One example illustrates this pathology. I worked with an inter-
national relief agency, helping it to translate its strategy into a
set of
measurable Balanced Scorecard objectives. I read and
interpreted their
strategy statement and then consulted with their senior planning
managers. Two full days of work ensued to develop a prototype,
straw-model Balanced Scorecard for the agency. But as the
managers
prepared to depart, one of them remarked, “This has been a
good
exercise but the scorecard is not complete. It doesn’t have
anything
on our land mine program.” After a stunned silence, I responded
that
a land mine program had not been mentioned in any strategy
docu-
ment or at any time during the sixteen hours of discussion just
con-
cluded. The manager responded that there was a lot of interest
and
funding in the world to eliminate land mines and alleviate the
suf-
fering they caused. Several people in the organization and on
the
board had been encouraging the agency to address this issue.
This agency had wandered into a new initiative without any
sense about whether the initiative fell within its mission and
strat-

45. egy, how the initiative fit with its core capabilities and
competencies,
or whether the agency was particularly well qualified, relative
to
alternative providers, to make a substantial, cost-effective
contribu-
tion to land mine relief. Nonprofits, like their private sector
coun-
terparts, have to focus their limited resources on a limited set of
objectives and constituents. Attempting to be everything for
every-
one virtually guarantees organizational ineffectiveness.
At United Way of Southeastern New England (UWSENE), the
chief professional officer framed the strategic options faced by
his
organization: “Local United Ways have three primary choices.
They
can be donor-focused, agency-focused, or community-focused.
Each
of the three strategies is good, with the potential to yield
positive end
results. But each entails considerable downside risk. Many
United
Ways switch strategies, say, to meet specific community needs,
for
very good reasons, but then are surprised when their agencies
and
donors get upset. UWSENE has definitely become a donor-
focused
organization, believing that if the donors are satisfied, then
agencies
will be provided for” (Kaplan and Kaplan, 1997, p. 4).
With a clear focus on the strategy and the key constituent
group,

46. UWSENE could subsequently develop its Balanced Scorecard in
a
straightforward manner.
At Duke Children’s Hospital, Jon Meliones (Meliones, 2000)
was
attempting to transform an organization that had a $50 million
operating loss in 1995. The length of stay of its patients was 15
per-
cent over target. Meliones believed that a new strategy based on
better communication with patients and physicians, as well as
patient-focused process improvements, would lead to cost
reductions,
revenue enhancements, and better patient care. He used the
Balanced
S T R AT E G I C P E R F O R M A N C E M E A S U R E M E
N T A N D M A N A G E M E N T 359
Attempting to be
everything for
everyone
virtually
guarantees
organizational
ineffectiveness
nml11308.qxp 1/24/01 1:27 PM Page 359
Scorecard to communicate and monitor the interrelationships
from
the new strategy.

47. The start of any performance measurement system has to be a
clear strategy statement. Otherwise, performance measures
focus on
local operational improvements rather than on whether the
strategy
is being achieved. But strategy statements can still lead to
diversity
in how individuals interpret them for their everyday jobs.
Organiza-
tional goals, in general terms, often mask real disagreement
about
what the organization is trying to accomplish. By quantifying
and
measuring the strategy, organizations reduce and even eliminate
ambiguity and confusion about objectives and methods. They
gain
coherence and focus in pursuit of their mission.
Elevating the Role of Customers
Most nonprofits had difficulty with the original architecture of
the
Balanced Scorecard, which placed the financial perspective at
the top
of the hierarchy. This is a proper concern. I have stated earlier
in this
article that achieving financial success is not the primary
objective
for a nonprofit. Many nonprofit organizations have rearranged
the
geography of their Balanced Scorecard to place the customer
per-
spective at the top. For example, United Way of America
initially
followed the private sector tradition by having the financial
perspective at the pinnacle of their scorecard. They finally

48. decided
that their customer perspective belonged at the top, and that the
financial perspective should be at the bottom.
In fact, nonprofit agencies should consider placing an overarch-
ing mission objective at the top of their scorecard. The mission
reflects the agency’s long-term objective, such as a reduction in
poverty, illiteracy, malnutrition, homelessness, disease,
pollution, or
discrimination. Then the objectives within the scorecard can be
oriented toward improving such a high-level objective. For a
private
sector company, financial measures provide the accountability
measure between it and its owners, the shareholders. That is
why the
financial perspective was placed at the top of the Balanced
Scorecard
hierarchy. For a nonprofit, however, the agency’s mission
represents
the accountability between it and society—the rationale for its
existence. The mission should therefore be featured and
measured at
the highest level of its scorecard. Such an objective may only
show
progress with long lags, which is why the measures in the four
main
perspectives of the Balanced Scorecard will provide the short-
to
intermediate-term targets and feedback.
As another modification of the private sector scorecard frame-
work, nonprofits need to expand the definition of who their
customer
is. In a private sector transaction, customers both pay for the
service
and receive the service. The two roles are so complementary

49. that
most people don’t even think about them separately. But in a
nonprofit organization, donors provide the financial resources—
they
360 K A P L A N
By quantifying
and measuring
the strategy,
organizations
reduce and even
eliminate
ambiguity and
confusion about
objectives and
methods
nml11308.qxp 1/24/01 1:27 PM Page 360
pay for the service, whereas another group, the constituents,
receives
the service. Who is the customer, the one paying or the one
receiv-
ing? Rather than making such a decision, organizations have
placed
the donor perspective and the recipient perspective in parallel,
at the
top of their Balanced Scorecards (see Figure 2).

50. I now illustrate the Balanced Scorecards developed at several
nonprofit organizations: United Way of Southeastern New
England,
Duke Children’s Hospital, and New Profit Inc.
United Way of Southeastern New England
As mentioned earlier, UWSENE’s strategy featured its financial
inter-
mediary role of collecting funds from a broad population of
donors
and disbursing the funds to community-based agencies.
Therefore,
the UWSENE project team retained the financial perspective at
the
top of the scorecard.
The UWSENE team discussed whether the four perspectives of
a for-profit Balanced Scorecard were adequate and appropriate
for its
scorecard. Some suggested adding additional perspectives, say,
for
agencies and for volunteers. Agencies, using United Way funds,
sup-
plied needed services to communities. Volunteers, through their
board service and extensive participation in the annual
campaign,
provided substantial personnel resources to UWSENE. The
senior
executive, however, felt that the four basic perspectives had
sufficient
flexibility to include objectives that would address the
organization’s
relationship with agencies and volunteers. This choice did
bother
some in the organization who felt that the agencies were so
critical

51. to the mission of UWSENE that they would have liked them to
be
featured with a separate perspective.
S T R AT E G I C P E R F O R M A N C E M E A S U R E M E
N T A N D M A N A G E M E N T 361
A nonprofit
agency’s mission
represents the
accountability
between it and
society—the
rationale for its
existence. The
mission should
therefore be
featured and
measured at the
highest level of
its scorecard
Figure 2. Adapting the Balanced Scorecard Framework to
Nonprofit Organizations
“To achieve our vision,
how must we look to our
customers /recipients?”
“To achieve our vision, how must
our people learn, communicate,

52. and work together?”
The Mission rather than the financial/shareholder
objectives drives the organization’s strategy.
“To satisfy our customers,
financial donors, and mission,
at which business
processes must we excel?”
The Mission
“If we succeed, how
will we look to our
financial donors?”
nml11308.qxp 1/24/01 1:27 PM Page 361
UWSENE Balanced Scorecard
The team, after several months, produced the scorecard shown
in
Table 1. Reactions to the scorecard were favorable. One middle
man-
ager noted, “You can see how you contribute to the customer or
financial needs of the organization, and to staff advancement.
It’s nice
to feel that what you’re doing is worthwhile, that it relates to
the big
picture.”
A member of the project team expressed the enthusiasm among
the staff for the Balanced Scorecard: “In the past, if you raised
more

53. money than the previous year, you felt that you had done a good
job.
But those departments not involved with fundraising didn’t get
any
recognition for the success of the organization. Now we will
look to
all the Balanced Scorecard measures to assess our success in
reach-
ing our goals. Each employee can be seen as making an
important
contribution.”
The UWSENE experience highlighted the impact of communi-
cating the Balanced Scorecard down to all employees. The chief
362 K A P L A N
Table 1. United Way of Southeastern New England
Outcomes Strategic Objectives
Financial External growth Increase net amount of funds raised
Internal stability Balance internal income and expenses to
maintain our
100 percent guarantee to others
Community building Increase amount of funds that go to
services
Increase amount of funds that go to proprietary products
Customer Customer satisfaction Recognition
Ease of giving

54. Market growth Products that customers care about and that
will improve the community
Customer retention Information on results
Quality, timely service
Internal Key internal business processes Improve key internal
processes in the
based on quality following areas:
• Fundraising
• Fund distribution
• Community building
• Information processing/communications
• Pledge processing
• Product development
• Volunteer/staff development
• Customer service
• Interdepartmental communications
Innovative products Develop a research and development
process
to come up with new, innovative products
Viable product line Develop a consistent process for evaluating
existing products and services
nml11308.qxp 1/24/01 1:27 PM Page 362
financial officer (CFO) went to talk to the building’s custodian.
The
custodian told him that strategy was something that people at
the top

55. floor did, not him. His job included sweeping the floor, painting
walls, and removing trash, and he didn’t feel that these had any-
thing to do with strategy or mission. The CFO used the
scorecard
to explain that the custodian’s efforts were central to
UWSENE’s
strategy: “The tenants in the building generate considerable
rental
income for us. By maintaining the property well, tenants and
United
Way employees will be pleased to work in the facility. That will
help
us generate more rental income that helps us fulfill our 100
percent
guarantee to donors, and also to attract, retain, and motivate our
employees. In addition, donors and volunteers who visit our
build-
ing will value a clean building, attractive landscaping, and
streets
from which the snow has been removed. I could see the light of
recognition cross his face. He said, ‘You’re right. I can see now
how
what I do is important.’”
By communicating the top-level and departmental scorecards
throughout the organization, individuals in every department
could
align their day-to-day actions with helping the organization
achieve
its strategic objectives.
Duke Children’s Hospital
Duke Children’s Hospital (DCH), a 138-bed in-patient facility,
included a neonatal intensive care unit, a pediatric intensive
care unit
(PICU), and beds for bone marrow transplant and intermediate-

56. care
patients. Its cost per case had increased by 35 percent from
1994 to
1995 and its 8.0-day average length of stay was 15 percent over
tar-
get. It was losing money, staff members were dissatisfied, and
recent
process improvement initiatives had been unsuccessful. Yet
DCH
needed $40 million for expansion programs. Jon Meliones, head
of
the PICU, identified several burning platform issues:
• The organization was confused about which services were the
most
important to provide.
• There was no shared purpose between administrators, staff
members, and physicians.
• The quality of communication and coordination with referring
pediatricians was poor.
• There were competitive threats to the organization’s market
position.
• There was great difficulty in balancing quality care, patient
satisfaction, staff satisfaction, education, and research with
financial
objectives (Meliones and others, 1999).
Meliones led a pilot Balanced Scorecard program in the PICU
(Meliones and others, 1999). Based on success there, he helped
to
extend it throughout all of DCH’s pediatric facilities, including
two

57. S T R AT E G I C P E R F O R M A N C E M E A S U R E M E
N T A N D M A N A G E M E N T 363
By
communicating
the top-level and
departmental
scorecards
throughout the
organization,
individuals in
every department
could align their
day-to-day
actions with
helping the
organization
achieve its
strategic
objectives
nml11308.qxp 1/24/01 1:27 PM Page 363
large hospitals in the region that were acquired as the program
was
rolling out. The project started with the leadership team
developing
a mission and vision statement “to provide patients, families,

58. and
primary care physicians with the best, most compassionate care
possible, and excel at communication.” The strategy
hypothesized
that with better communication and care, referrals and revenues
would increase. In addition, DCH’s new strategy would focus
on
reducing costs and length of stay to restore financial viability.
A multidisciplinary team developed the scorecard for the
strategy
(see Table 2). The team renamed the learning and growth
perspec-
tive “Research, Education and Teaching” to reflect its role in an
academic medical center.
Meliones used the scorecard to screen initiatives so that only
high-impact ones were considered (Meliones and others, 1999).
The
staff implemented many new internal processes; for example,
care providers discussed each patient to be discharged, they
informed the family about treatments before a patient was
released,
and they informed the primary care physician about inpatient
treat-
ment and recommended treatment after discharge. DCH supplied
its
physicians with monthly cost and case statistics as well as
patient
and referring physician satisfaction scores, benchmarked against
the
total physician population. Staff physicians could now compare
themselves against their colleagues and peers and search for
ways to
improve.

59. 364 K A P L A N
Customer
Perspective
Learning and
Growth
Perspective
Internal
Perspective
Financial
Perspective
Satisfied consumers,
families, and
funders
Agencywide
adherence to
performance
improvement via
PDCA methods
Effective,
comprehensive
information systems
(external and
internal
communications)
Achieve continued
improvement in net
asset and liquidity
to support new

60. service
development
Recognized as a
leader in conduct-
ing and disseminat-
ing research
Access to career
development and
mentoring for
all staff
Effective,
comprehensive, and
cost-effective care
for consumers
Effectively link
clinical and
financial data
systems and
decisions
Optimizes quality
of life
Strategic job
coverage at all
levels
Safeguard rights,
responsibilities, and
ethics via corporate
compliance office

61. Effectively link staff
compensation,
performance, and
service delivery
Recognized as a
leader in the media
and by legislators
Diverse staff work-
ing productively—
guided by the
agency’s balanced
scorecard
Effective collabora-
tion and partnering
with other
agencies/providers
Sufficient funding
support for all
programs/services
Table 2. Duke Children’s Hospital Balanced Scorecard
Our Mission Excellence in Service, Training, and Research
nml11308.qxp 1/24/01 1:27 PM Page 364
The near-term results from the scorecard, initiatives, and
process
improvements were dramatic. Cost per case dropped by 25
percent

62. in three years, despite an increase in case mix complexity.
Average length of stay also dropped by 25 percent (from eight
to
six days) in two years. Revenues and margins increased,
transform-
ing a loss operation of more than $40 million into a positive
margin
of about $10 million. Most important, the cost and length-of-
stay
reductions were not accomplished at the cost of patient care.
Aware-
ness of the recommended medical plan jumped from 47 to 94
per-
cent, the rate of readmission to the PICU dropped from 11 to 4
percent, and the rate of readmission to the intermediate ward
dropped from 11 to 7 percent.
Family satisfaction scores increased by 9 percent (from 4.3 to
4.7
on a 1–5 scale) and were now the highest among the twenty-
eight
institutions surveyed by the outside research firm. The score on
whether families would recommend DCH to others jumped by 8
per-
cent (from 4.3 to 4.7) and was also the highest among the
twenty-
eight institutions surveyed. Patient discharges by 1:00 P.M.
increased
from 20 to 60 percent, and complaints about the admission and
discharge process decreased by 15 percent within six months.
Pri-
mary care physicians also reported their increased satisfaction
with
the communication they received from DCH.

63. Through the use of the Balanced Scorecard to focus and align
the
clinical, academic, and administrative staff to a new strategy,
DCH
had improved patient and physician satisfaction and achieved
dramatic financial and operational improvements over a period
of
two to three years.
New Profit Inc.
A novel Balanced Scorecard application occurred at New Profit
Inc.
(NPI), a Boston-based venture capital philanthropic fund
(Kaplan
and Elias, 1999). NPI represented a new model for overcoming
the nonprofit sector’s lack of an efficient and active capital
market.
NPI founder Vanessa Kirsch (in Kaplan and Elias, 1999, p. 3)
artic-
ulated three principles to guide the fund’s investment strategy:
• Choose scalable organizations. The fund would seek out social
entrepreneurs who had proven track records and were seeking to
grow their organizations.
• Use a performance-based design. Both NPI and the
organizations it
supported would be made accountable by reference to mutually
agreed-upon benchmarks based on measurable performance
criteria. Fund dispersal would depend on organizations reaching
their goals.
• Employ active life cycle investing and monitoring. The fund
would
commit to multiyear investments. In addition to funding, NPI
would provide management and technical assistance to help the

64. S T R AT E G I C P E R F O R M A N C E M E A S U R E M E
N T A N D M A N A G E M E N T 365
nml11308.qxp 1/24/01 1:27 PM Page 365
organization become more effective and grow. NPI would be
expected to take board seats on its portfolio organizations.
NPI used the Balanced Scorecard to evaluate the performance of
its portfolio organizations. Unlike the previously cited literature
(Cameron, 1982; Kanter and Summers, 1987), which expressed
con-
cern about the inherent conflicts among a nonprofit’s multiple
constituents, NPI’s general partner, Kelly Fitzsimmons (Kaplan
and
Elias, 1999, pp. 8–9) stated that the scorecard provides a
common
reference point for its stakeholders: “The scorecard aligns all
our
stakeholders for creating social innovation and social returns.
That
means the boards, investors, fund managers, foundations, and
social
entrepreneurs can bring all their resources to bear in the right
ways to
strategic applications.”
NPI, being a financial intermediary like UWSENE, retains the
financial perspective for its high-level objective, which is to
raise ade-
quate capital and operating funds and then use them in an
efficient
and sustainable manner. NPI identified fund investors as the

65. primary
customers and highlighted investor satisfaction as an outcome
objec-
tive for its customer perspective.
Like the UWSENE debate about the role of agencies, the NPI
team debated whether its portfolio organizations were customers
or
whether they were part of the internal business processes that
needed
to be managed. The team finally decided that portfolio
organizations
are so critical to the success of NPI that they warrant their own
per-
spective. The success of the portfolio organizations would be an
important driver of the investor satisfaction objective.
Extending this
principle, the team proposed that the scorecards from the
portfolio
organizations should include a perspective to represent their
contri-
bution to NPI’s strategic objectives. The scorecard approved for
initial
use at NPI is shown in Table 3.
NPI also demanded that its portfolio organizations also develop
their own Balanced Scorecards to demonstrate how they
contribute
to NPI’s mission for growth, scalability, and social impact.
Kirsch (in Kaplan and Elias, 1999) also used the scorecard as
the
primary communication tool to the board of directors and
funders.
One board member commented: “The Balanced Scorecard
allows the

66. board to be updated in a brisk way about what is happening
across
the organization, factoring in a breadth of issues ranging from
those
of the balance sheet to the softer aspects involving people and
their
knowledge. Discussions don’t become monolithically focused
on how
much money was raised if no one is paying attention to how the
money will be spent.”
Finally, NPI used the Balanced Scorecard to offer a highly
attrac-
tive product-leadership value proposition to potential investors:
a
unique performance management system for accountability to
donors, a system that would help fund managers search out the
best
opportunities for investing, and a mechanism for active
management
366 K A P L A N
nml11308.qxp 1/24/01 1:27 PM Page 366
T
ab
le
3
.
N

67. ew
P
ro
fi
le
I
n
c.
B
al
an
ce
d
S
co
re
ca
rd
F
oc
u
s
S
tr

68. at
eg
ic
O
bj
ec
ti
ve
s
M
ea
su
re
s
F
u
n
d
ca
pi
ta
li
za
ti
on

69. —
Se
cu
re
$
5
m
i
n
f
u
n
d
c
o
m
m
it
m
en
ts
f
ro
m

70. i
n
ve
st
o
rs
u
si
n
g
p
yr
am
id
s
tr
at
eg
y.
O
pe
ra
ti

71. n
g
re
ve
n
u
es
—
Se
cu
re
5
0
0
k
o
p
er
at
in
g
fu
n
d
s

72. fr
o
m
f
o
u
n
d
at
io
n
s
an
d
f
ri
en
d
s
fo
r
F
Y
9

73. 9
&
F
Y
0
0
.
S
u
st
ai
n
ab
il
it
y—
M
an
ag
e
ca
sh
fl
o
w

74. t
o
m
ai
n
ta
in
a
n
o
p
er
at
in
g
su
rp
lu
s
w
it
h
3
m

75. o
n
th
s’
c
as
h
o
n
h
an
d
.
E
ffi
ci
en
cy
—
M
ai
n
ta
in

76. r
at
io
o
f
1
:4
s
ta
ff
$
/p
ro
b
o
n
o
$
,
o
p
ti
m
iz

77. e
p
ro
b
o
n
o
a
n
d
v
o
lu
n
te
er
r
es
o
u
rc
es
.

78. In
ve
st
or
c
om
m
u
n
it
y—
C
lo
se
t
ar
ge
t
in
ve
st
o
rs
a
n

79. d
e
n
ga
ge
t
h
em
i
n
k
ey
a
sp
ec
ts
o
f
N
P
I
n
et
w

80. o
rk
t
h
ro
u
gh
e
ve
n
ts
,
fo
rm
al
r
o
le
s,
a
n
d
s
o

81. o
n
;
d
ev
el
o
p
r
ep
o
rt
s
to
i
n
fo
rm
i
n
ve
st
o
rs

82. o
f
p
er
fo
rm
an
ce
.
In
ve
st
or
s
at
is
fa
ct
io
n
—
U
se
s
at

83. is
fa
ct
io
n
s
u
rv
ey
a
n
d
o
n
e-
o
n
-o
n
e
in
te
rv
ie

84. w
s
to
s
o
li
ci
t
fe
ed
b
ac
k
.
F
oc
u
se
d
in
ve
st
or
s

85. tr
at
eg
y—
D
ev
el
o
p
i
n
ve
st
o
r
se
gm
en
ta
ti
o
n
,
p

86. ro
fi
le
s,
a
n
d
m
ar
k
et
in
g
st
ra
te
gy
t
o
o
p
ti
m
iz

87. e
si
ze
a
n
d
sc
o
p
e
o
f
fu
n
d
in
g
b
as
e.
G
ro
w
th

88. —
Se
t
an
d
r
ea
ch
s
p
ec
ifi
c
gr
o
w
th
t
ar
ge
ts
(
su
ch

89. a
s
in
cr
ea
se
d
r
ev
en
u
e,
e
x
p
an
si
o
n
t
o
n
ew
s

90. it
es
)
w
it
h
p
o
rt
-
fo
li
o
o
rg
an
iz
at
io
n
s
fo
r
th

91. e
li
fe
o
f
fu
n
d
(
5
y
ea
rs
).
S
oc
ia
l
im
pa
ct
—
Se
t

92. an
d
r
ea
ch
s
p
ec
ifi
c
ta
rg
et
s
fo
r
in
cr
ea
si
n
g
th
e

93. sc
o
p
e
o
f
p
o
rt
fo
li
o
o
rg
an
iz
at
io
n
’s
s
o
ci
al

94. i
m
p
ac
t
(s
u
ch
a
s
n
u
m
b
er
o
f
cu
st
o
m
er
s/
cl

95. ie
n
ts
s
er
ve
d
)
fo
r
th
e
li
fe
o
f
fu
n
d
(
5
y
ea
rs

96. ).
B
al
an
ce
d
sc
or
ec
ar
d
pe
rf
or
m
an
ce
—
B
u
il
d
a
n

97. d
i
m
p
le
m
en
t
fi
rs
t
sc
o
re
ca
rd
s
fo
r
ea
ch
p
o
rt

98. fo
li
o
o
rg
an
iz
at
io
n
.
S
at
is
fa
ct
io
n
w
it
h
f
u
n
d

99. se
rv
ic
es
—
So
li
ci
t
sa
ti
sf
ac
ti
o
n
a
n
d
f
ee
d
b
ac

100. k
f
ro
m
p
o
rt
fo
li
o
o
rg
an
iz
at
io
n
s
re
ga
rd
in
g
N

101. P
I
an
d
m
o
n
it
o
r
re
so
u
rc
es
;
u
se
s
u
rv
ey
o
n

102. f
u
n
d
l
au
n
ch
,
im
p
le
m
en
t
fe
ed
b
ac
k
.
B
es
t

103. pr
ac
ti
ce
s—
Sh
ar
e
b
es
t
p
ra
ct
ic
es
a
cr
o
ss
p
o
rt
fo

104. li
o
o
rg
an
iz
at
io
n
s.
P
or
tf
ol
io
m
an
ag
em
en
t—
Q
3
:
Se

105. t
te
rm
s
w
it
h
p
o
rt
fo
li
o
o
rg
an
iz
at
io
n
s,
i
m
p

106. le
m
en
t
p
er
fo
rm
an
ce
m
an
ag
em
en
t
sy
st
em
;
Q
4
:
d

107. ep
lo
y
m
o
n
it
o
r
an
d
N
P
I
re
so
u
rc
es
,
co
n
ti
n
u

108. e
p
ip
el
in
e
d
ev
el
o
p
m
en
t,
a
n
d
d
ev
el
o
p
r
ep

109. o
rt
in
g
in
fr
as
tr
u
ct
u
re
.
D
efi
n
e
le
ad
er
sh
ip
p
os

110. it
io
n
—
Q
3
:
E
st
ab
li
sh
c
o
ll
ab
o
ra
ti
ve
r
el
at
io

111. n
sh
ip
s
w
it
h
i
n
te
ll
ec
tu
al
p
ar
tn
er
s
(s
u
ch
a
s

112. se
cu
re
F
id
el
it
y
re
la
ti
o
n
sh
ip
,
o
ri
en
t
k
ey
p
la
ye

113. rs
a
n
d
l
ar
ge
r
m
o
n
it
o
r
co
m
m
u
n
it
y)
,
es
ta

114. b
li
sh
m
ar
k
et
in
g
an
d
e
x
te
rn
al
co
m
m
u
n
it
y
re

115. la
ti
o
n
s,
l
au
n
ch
p
u
b
li
c
re
la
ti
o
n
s,
p
o
si
ti

116. o
n
in
g
st
ra
te
gy
,
m
ar
k
et
r
es
ea
rc
h
,
an
d
f
o
cu

117. s
gr
o
u
p
s;
Q
4
:
es
ta
b
li
sh
b
es
t
p
ra
ct
ic
es
f
o

118. r
p
er
fo
rm
an
ce
-b
as
ed
f
u
n
d
in
g,
b
ec
o
m
e
p
o
li

119. cy
s
p
o
k
es
p
er
so
n
o
n
p
h
il
an
th
ro
p
ic
i
ss
u
es

120. (s
u
ch
a
s
n
u
m
b
er
o
f
co
n
fe
re
n
ce
s
in
vi
te
d
t

121. o
a
tt
en
d
,
n
u
m
b
er
o
f
p
re
ss
h
it
s,
i
n
vi
ta
ti
o

122. n
s
to
s
p
ea
k
).
B
oa
rd
a
n
d
go
ve
rn
an
ce
—
Q
3
:
D

123. efi
n
e
ro
le
o
f
b
o
ar
d
;
Q
4
:
E
x
p
an
d
a
n
d
d

124. ev
el
o
p
n
at
io
n
al
b
o
ar
d
a
n
d
d
ev
el
o
p
ac
ad
em

125. ic
b
o
ar
d
.
P
la
n
N
P
I
In
st
it
u
te
—
Q
4
:
P
la
n
f

126. o
r
in
st
it
u
te
;
d
et
er
m
in
e
re
so
u
rc
es
(
h
u
m
an

127. a
n
d
c
ap
it
al
)
n
ec
es
sa
ry
f
o
r
in
tr
o
d
u
ct
io
n

128. ;
fo
rm
al
iz
e
le
ad
er
sh
ip
p
o
si
ti
o
n
a
n
d
l
ea
rn
in

129. g
fo
cu
s.
F
il
l
st
ra
te
gi
c
po
si
ti
on
s—
H
ir
e
fu
n
d
ra

130. is
er
,
d
es
ig
n
s
tr
at
eg
y
fo
r
at
tr
ac
ti
n
g
an
d
r
et

131. ai
n
in
g
ta
le
n
te
d
s
ta
ff
.
T
ec
h
n
ol
og
y—
Q
3
:
Id

132. en
ti
fy
t
ec
h
n
o
lo
gy
n
ee
d
s
an
d
p
la
n
f
o
r
p
ro

133. cu
re
m
en
t.
K
n
ow
le
dg
e
m
an
ag
em
en
t—
Q
4
:
D
ev
el
o
p

134. l
im
it
ed
b
u
t
ta
rg
et
ed
s
ys
te
m
f
o
r
im
p
ro
ve
m
en

135. t
an
d
l
ea
rn
in
g
re
la
te
d
t
o
k
ey
p
ro
ce
ss
es
(
d
u

136. e
d
il
ig
en
ce
,
te
rm
s
se
tt
in
g,
B
SC
);
d
ev
el
o
p
t
em

137. p
la
te
f
o
r
p
ro
ce
ss
i
m
p
ro
ve
m
en
t.
A
li
gn
m
en
t—

138. E
n
su
re
t
h
at
o
p
en
l
in
es
o
f
co
m
m
u
n
ic
at
io
n

139. e
x
is
t
b
et
w
ee
n
i
n
ve
st
o
rs
,
N
P
I,
a
n
d
p
o

140. rt
fo
li
o
o
rg
an
iz
at
io
n
s
th
ro
u
gh
c
u
lt
u
re
b
u
il

141. d
in
g,
e
ve
n
ts
,
re
p
o
rt
in
g,
a
n
d
f
o
cu
s
gr
o
u

142. p
s.
F
in
an
ci
al
In
ve
st
or
P
er
fo
rm
an
ce
of
P
or
tf
ol
io

143. O
rg
an
iz
at
io
n
In
te
rn
al
B
u
si
n
es
s
P
ro
ce
ss
es
L
ea

144. rn
in
g
an
d
G
ro
w
th
R
ai
se
$
4
.5
m
il
li
o
n
.
M
ai

145. n
ta
in
o
p
er
at
in
g
ca
sh
fl
o
w
w
it
h
3
-m
o
n
th
s
u

146. rp
lu
s.
C
lo
se
3
f
o
u
n
d
in
g
an
d
3
l
ea
d
i
n
ve
st

147. o
rs
.
A
ch
ie
ve
8
0
%
s
at
is
fa
ct
io
n
.
C
re
at
e
fo
u

148. r
sc
o
re
ca
rd
s
w
it
h
s
p
ec
ifi
c
ta
rg
et
s.
A
ch
ie
ve
a

149. m
in
im
u
m
o
f
8
0
%
p
er
fo
rm
an
ce
fo
r
p
o
rt
fo
li
o

150. o
rg
an
iz
at
io
n
s.
C
o
u
n
t
sh
ar
ed
l
ea
rn
in
g
an
d
c

151. o
ll
ab
o
ra
ti
o
n
ev
en
ts
b
et
w
ee
n
p
o
rt
fo
li
o
o
rg

152. an
iz
at
io
n
s.
F
in
al
iz
e
te
rm
s
p
ro
ce
ss
w
it
h
p
o
rt

153. fo
li
o
o
rg
an
iz
at
io
n
s.
M
ee
t
ta
rg
et
s
fo
r
p
re
ss
h

154. it
s
an
d
i
n
vi
ta
ti
o
n
s
to
s
p
ea
k
.
Se
cu
re
r
el
at

155. io
n
sh
ip
s
w
it
h
1
0
0
%
o
f
p
o
te
n
ti
al
i
n
te
ll

156. ec
tu
al
p
ar
tn
er
s.
F
il
l
1
0
0
%
o
f
n
ec
es
sa
ry
s
tr

157. at
eg
ic
p
o
si
ti
o
n
s.
F
in
al
iz
e
H
R
s
tr
at
eg
ie
s
fo

158. r
at
tr
ac
ti
n
g
an
d
re
ta
in
in
g
st
af
f.
nml11308.qxp 1/24/01 1:27 PM Page 367
of portfolio organizations to improve their performance against
stated objectives.
Some Failures
The Balanced Scorecard management systems at most of the

159. organi-
zations studied have been sustained and are being extended at
the
time of this writing. Participants considered the innovation to
be a
great success and central to their ability to improve the
performance
and accountability of their organizations. The Balanced
Scorecards
at United Way of Southeastern New England and United Way of
America, however, did not survive changes in leadership. We
knew
that the chief professional officer (CPO) of UWSENE would
retire
from the organization within six months. We went ahead
anyway to
get the experience from an early implementation. During the
project,
the CPO did not actively involve his board in developing the
scorecard, believing that the board should monitor the strategy
but
not participate in its formulation.
The consequences from not involving the board in the develop-
ment of the Balanced Scorecard soon became apparent. In the
search
process for a new CPO, the board did not place high weight on
finding
a new leader who would be committed to the new strategic
perfor-
mance management system. The board selected a retired bank
execu-
tive who felt that his immediate priorities would be to deal with
some
operational issues left by his predecessor and to ensure that
each posi-

160. tion had a complete job description. The Balanced Scorecard
was new
to him, he had no commitment to it, and he discontinued its use
at
UWSENE, much to the disappointment of several managers who
had
invested much time and energy in the project. The board, given
its lack
of involvement with the Balanced Scorecard, did not press the
issue.
At United Way of America (UWA), the CEO resigned unexpect-
edly during the project. The new CEO, hired from outside
UWA,
arrived with her own management style and highly formalized
plan-
ning process. The Balanced Scorecard did not fit within her
planning
process and therefore did not survive the transition.
These implementation experiences match the lessons from
the private sector. For a new performance-oriented management
system to succeed, the executive leadership team must be deeply
committed to—not just supportive of—a new way of managing
their
organization. The new way places strategy, not job descriptions,
at
the center of the management system. It emphasizes the value
of communicating to all units and individuals, aligning them to
the strategy, and encouraging them to find innovative ways to
achieve
strategic outcomes in their daily operations.
Summary
During the past five years, nonprofit organizations have adopted
and

161. adapted the private sector Balanced Scorecard to their
situations. Sev-
eral have elevated the role of mission and customer to the top of
the
368 K A P L A N
The Balanced
Scorecard
management
systems at most
of the
organizations
studied are
considered to be a
great success and
central to
participants’
ability to improve
the performance
and
accountability
of their
organization
nml11308.qxp 1/24/01 1:27 PM Page 368

162. hierarchy of perspectives, recognizing that nonprofits should be
accountable for how well they meet a need in society rather than
how
well they raise funds or control expenses. Also, as the
individuals or
groups that provide financial support to nonprofits are usually
dif-
ferent from those who are the direct beneficiaries of the
services pro-
vided, many nonprofits recognize donors or funders, as well as
recipients, as their customers.
The Balanced Scorecard has enabled the nonprofit organizations
to bridge the gap between vague mission and strategy
statements and
day-to-day operational actions. It has facilitated a process by
which
an organization can achieve strategic focus, avoiding the
pathology
of attempting to be everything to everyone. The measurement
sys-
tem has shifted the organization’s focus from programs and
initiatives
to the outcomes the programs and initiatives are supposed to
accom-
plish. It has helped organizations avoid the illusion that they
have a
strategy because they are managing a diverse and noncumulative
set
of programs and initiatives. It has enabled them to align
initiatives,
departments, and individuals to work in ways that reinforce
each
other so that dramatic performance improvements can be
achieved.
Used in this way, all organizational resources—the senior

163. leadership
team, technology resources, initiatives, change programs,
financial
resources, and human resources—become aligned to
accomplishing
organizational objectives.
ROBERT S. KAPLAN is professor at Harvard Business School
and chair of
the Balanced Scorecard Collaborative. Since arriving at Harvard
in 1983,
he has focused on linking cost and performance measurement
systems to
strategy implementation and operational excellence.
References
Cameron, K. S. “Domains of Organizational Effectiveness in
Institu-
tions of Higher Education.” Academy of Management Journal,
1981,
24, 25–47.
Cameron, K. S. “The Relationship Between Faculty Unionism
and
Organizational Effectiveness.” Academy of Management
Journal,
1982, 25, 6–24.
Cameron, K. S., and Whetten, D. A. (eds.). Organizational
Effective-
ness: A Comparison of Multiple Models. New York: Academic
Press,
1983.
Connolly, T., Conlon, E., and Deutsch, S. “Organizational

164. Effective-
ness: A Multiple-Constituency Approach.” Academy of
Management
Review, 1980, 5, 211–217.
Forbes, D. P. “Measuring the Unmeasurable: Empirical Stud-
ies of Nonprofit Organization Effectiveness from 1977 to
1997.”
Nonprofit and Voluntary Sector Quarterly, 1998, 27 (2), 183–
202.
Goodman, P. S., and Pennings, J. M. New Perspectives on
Organiza-
tional Effectiveness. San Francisco: Jossey-Bass, 1977.
S T R AT E G I C P E R F O R M A N C E M E A S U R E M E
N T A N D M A N A G E M E N T 369
The new way
emphasizes the
value of
communicating to
all units and
individuals,
aligning them to
the strategy, and
encouraging them
to find innovative
ways to achieve
strategic
outcomes in their
daily operations

165. nml11308.qxp 1/24/01 1:27 PM Page 369
Herzlinger, R. E. “Can Public Trust in Nonprofits and Govern-
ments Be Restored?” Harvard Business Review, Mar.–Apr.
1996,
pp. 97–107.
Kanter, R. S., and Summers, D. V. “Doing Well While Doing
Good:
Dilemmas of Performance Measurement in Nonprofit Organiza-
tion and the Need for a Multiple-Constituency Approach.” In
W. W. Powell (ed.), The Nonprofit Sector: A Research
Handbook.
New Haven, Conn.: Yale University Press, 1987.
Kaplan, R. S. “Innovation Action Research: Creating New
Manage-
ment Theory and Practice.” Journal of Management Accounting
Research, 1998, pp. 89–118.
Kaplan, R. S., and Elias, J. “New Profit Inc.” Boston: Harvard
Business
School, 1999. Case 9–100–052.
Kaplan, R. S., and Kaplan, E. L. “United Way of Southeastern
New England.” Boston: Harvard Business School, 1997. Case
9–197–036.
Kaplan, R. S., and Norton, D. P. “The Balanced Scorecard:
Measures
That Drive Performance.” Harvard Business Review, Jan.–Feb.
1992,
71–79.

166. Kaplan, R. S., and Norton, D. P. The Balanced Scorecard:
Translating
Strategy into Action. Boston: Harvard Business School Press,
1996.
Kaplan, R. S., and Norton, D. P. Strategy-Focused
Organizations: How
Balanced Scorecard Companies Thrive in the New Business
Environ-
ment. Boston: Harvard Business School Press, forthcoming.
Letts, C. W., Ryan, W. P., and Grossman, A. High Performance
Nonprofit Organizations: Managing Upstream for Greater
Impact.
New York: Wiley, 1999.
Meliones, J. “Saving Money, Saving Lives.” Harvard Business
Review,
Nov.–Dec. 2000, pp. 57–67.
Meliones, J., and others. “A Three-Year Experience Using a
Balanced
Scorecard to Practice Smarter.” Working Paper. Durham, N.C.:
Duke Children’s Hospital, 1999.
Porter, M. “What Is Strategy?” Harvard Business Review, Nov.–
Dec.
1996, pp. 61–78.
Sheehan, R. “Mission Accomplishment as Philanthropic
Organiza-
tion Effectiveness: Key Findings from the Excellence in Philan-
thropy Project.” Nonprofit and Voluntary Sector Quarterly,
1996, 25,
110–123.

167. 370 K A P L A N
nml11308.qxp 1/24/01 1:27 PM Page 370
Copyright of Nonprofit Management & Leadership is the
property of John Wiley & Sons, Inc. and its content
may not be copied or emailed to multiple sites or posted to a
listserv without the copyright holder's express
written permission. However, users may print, download, or
email articles for individual use.
References
Kaplan, R. S. (2001). Strategic Performance Measurement and
Management in Nonprofit
Organizations. Nonprofit Management & Leadership, 11(3),
354. https://doi-
org.libraryresources.columbiasouthern.edu/10.1002/nml.11308
Krovi, R., Chandra, A., & Rajagopalan, B. (2003). Information
Flow Parameters for Managing
Organizational Processes. Communications of the ACM, 46(2),
77–82. https://doi-
org.libraryresources.columbiasouthern.edu/10.1145/606272.606
277