1. Discuss in scholarly detail the balance scorecard methodology. Why is it used?
Solution
Balanced scorecard methodology is an analysis technique designed to translate an organization's
mission statement and overall business strategy into specific, quantifiable goals and to monitor
the organization's performance in terms of achieving these goals.
Balanced Scorecard is an example of a closed-loop controller or cybernetic control applied to the
management of the implementation of a strategy. [3]
Closed-loop or cybernetic control is where
actual performance is measured, the measured value is compared to an expected value and based
on the difference between the two corrective interventions are made as required. Such control
requires three things to be effective - a choice of data to measure, the setting of an expected
value for the data, and the ability to make a corrective intervention. [3]
Within the strategy management context, all three of these characteristic closed-loop control
elements need to be derived from the organisation's strategy and also need to reflect the ability
of the observer to both monitor performance and subsequently intervene - both of which may be
constrained. [4]
Two of the ideas that underpin modern Balanced Scorecard designs concern facilitating the
creation of such a control - through making it easier to select which data to observe, and ensuring
that the choice of data is consistent with the ability of the observer to intervene.