The document discusses the history and key aspects of the Balanced Scorecard framework developed by Kaplan and Norton. It describes the Balanced Scorecard as translating strategy into implementation across four perspectives: financial, customer, internal business processes, and learning and growth. Each perspective aims to address important questions for an organization. The financial perspective focuses on traditional financial measures, while the other three perspectives capture additional leading indicators important for future performance.

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2.  History of the Balanced Scorecard
In 1992, an article by Robert Kaplan and David Norton entitled "The
Balanced Scorecard - Measures that Drive Performance" in the
Harvard Business Review caused a lot of attention for their method,
and led to their business bestseller, "The Balanced Scorecard:
Translating Strategy into Action", published in 1996.
The financial performance of an organization is essential for its
success. Even non-profit organizations must deal in a sensible way
with funds they receive. However, a pure financial approach for
managing organizations suffers from two drawbacks:
 It is historical. Whilst it tells us what has happened to the
organization, it may not tell us what is currently happening. Nor it is
a good indicator of future performance.
 It is too low. It is common for the current market value of an
organization to exceed the market value of its assets. Tobin's-q
measures the ratio of the value of a company's assets to its market
value. The excess value is resulting from intangible assets. This kind
of value is not measured by normal financial reporting.

3.  4 perspectives of the Balanced ScorecardThe
Balanced Scorecard method of Kaplan and Norton is
a strategic approach, and performance management
system, that enables organizations to translate a
company's vision and strategy into implementation,
working from 4 perspectives:
 Financial perspective.
 Customer perspective.
 Business process perspective.
 Learning and growth perspective.

4.  The balanced scorecard forces managers to look at the
business from four important perspectives. It links
performance measures by requiring firms to address four
basic questions:
 How do customers see us? - Customer perspective
 What must we excel at? - Internal perspective
 Can we continue to improve and create value? -
Innovation & learning perspective
 How do we look to shareholders? - Financial perspective
 This allows the monitoring of present performance, but
the method also tries to capture information about how
well the organization is positioned to perform in the
future.

5.  1. The Financial Perspective
Kaplan and Norton do not disregard the traditional need for financial data.
Timely and accurate funding data will always be a priority, and managers will
make sure to provide it. In fact, there is often more than sufficient handling
and processing of financial data. With the implementation of a corporate
database, it is hoped that more of the processing can be centralized and
automated. But the point is that the current emphasis on financial issues
leads to an unbalanced situation with regard to other perspectives. There is
perhaps a need to include additional financial related data, such as risk
assessment and cost-benefit data, in this category.

2. The customer perspective
Recent management philosophy has shown an increasing realization of the
importance of customer focus and customer satisfaction in any company.
These are called leading indicators: if customers are not satisfied, they will
eventually find other suppliers that will meet their needs. Poor performance
from this perspective is thus a leading indicator of future decline. Even
though the current financial picture may seem (still) good. In developing
metrics for satisfaction, customers should be analyzed. In terms of kinds of
customers, and of the kinds of processes for which we are providing a product
or service to those customer groups.

6.  3. The Business Process perspective
This perspective refers to internal business processes. Measurements based on this
perspective will show the managers how well their business is running, and whether
its products and services conform to customer requirements. These metrics have to
be carefully designed by those that know these processes most intimately. In addition
to the strategic management processes, two kinds of business processes may be
identified:
Mission-oriented processes. Many unique problems are encountered in these
processes.
 Support processes. The support processes are more repetitive in nature, and
hence easier to measure and to benchmark. Generic measurement methods can be
used.

4. Learning and Growth perspective
This perspective includes employee training and corporate cultural attitudes related
to both individual and corporate self-improvement. In a knowledge worker
organization, people are the main resource. In the current climate of rapid
technological, economic changes and new legislation and regulations, it is becoming
necessary for knowledge workers to learn continuously. Government agencies often
find themselves unable to hire new technical workers and at the same time is showing
a decline in training of existing employees. Kaplan and Norton emphasize that
'learning' is something more than 'training'; it also includes things like mentors and
tutors within the organization, as well as that ease of communication among workers
that allows them to readily get help on a problem when it is needed. It also includes
technological tools such as an Intranet.
The integration of these four perspectives into a one graphical appealing picture, has
made the Balanced Scorecard method very successful as a management methodology.