Balanced Scorecard Methodology: From a Dry Document to a Powerful Management System

The balanced scorecard system was first used as a simple tool to measure performance. It was designed to serve as a checklist for work done and what needs to be done to achieve a set goal. The simple document generated through balanced scorecard system was revolutionized by Drs. Kaplan and Norton. These business intellectuals of the Harvard Business School transformed the simple balanced scorecard into a comprehensive management methodology. The innovation turned this clerical tool into a powerful performance-driven and strategy oriented business management system.

It has replaced the old system of measuring company growth. In the past, company financials is the sole measurement of success. Performances are pitted against possible financial gains or losses. Although this framework can give a partial picture of growth, it cannot address other equally important non-financial aspects that could impact on the success of companies. Specifically, finance-oriented measurement of goals could not determine how companies realize their missions and strategies. The balanced scorecard methodology corrected this. The new balanced scorecard management methodology incorporated customer satisfaction, employee motivation, and business process improvement as additional criteria in measuring growth and success. The ability of companies to concretely determine their current status based on non-financial aspects gave impetus to the development of achievable strategies. Performance planning now can be created based on overall direction of companies. Short term goals are aligned and made to serve the general company strategy.

The balanced scorecard methodology provided companies with an excellent tool to measure company performance. This measurement tool however can also be used to map the strategy of companies in achieving their missions and visions.