The balanced scorecard has been used by a lot of organizations nowadays to evaluate their efforts for future improvement in terms of strategies, processes, learning and growth metrics and customer value. However, have you ever wondered why Dr. Robert Kaplan and Dr. David Norton came up with such a term as balanced scorecard?

The term scorecard is a method to measure performance, which is just the same as a teacher presenting a scorecard to his or her students on how they faired during the semester, or a coach giving a scorecard to one of his players, indicating his or her areas of opportunities. On the other hand, the term balanced signifies that the system is on stable status if there is a balance between leading and lagging indicators, internal and external performance perspectives and short-term and long-term goals among others.

With the balanced scorecard, how can one determine if a certain strategy is efficient or not? This is through the use of metrics that will measure each and every aspect of the strategic plan in place. Measures determines how the progress of a certain process will be scored. Say for example in terms of profitability, the specific measure would be return on equity. If manufacturing excellence is being measured, this means that the units to be scored will be yield and cycle time. These are just some of the many metrics that organizations can measure. However, different organizations have different metrics to score. This depends on the objective, the process and the strategic plan to be measured. In addition, balanced scorecard measures should accurate and precise so as to develop a clearer plan of action once the results were presented.

 

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