Turning organizational knowledge into business assets
Balanced Scorecard Overview
June 17, 2002
Without metrics, management can be a nebulous if not impossible exercise.
How can we tell if we have met our goals if we don't know what our goals are?
How do we know if our business strategies are effective if they have not been
well defined? The balanced scorecard as documented by Robert S. Kaplan and
David P. Norton in the Harvard Business Review article The Balanced Scorecard
- Measures that Drive Performance1 describes a methodology used for
measuring success and setting goals from financial and operational viewpoints.
With those measures, leaders can manage their strategic vision and adjust it for
change. This paper will provide a brief overview of the balanced scorecard.
Balanced Scorecard Mechanics
The balanced scorecard (which saw its initial development during the years of
1987 - 19922) links performance measures by looking at a business's strategic
vision from four different perspectives: financial, customer, innovation and
learning, and internal business processes. These four perspectives do not
eliminate, but instead support the goals of various management techniques (such
as Strategic Planning, Total Quality Management, and Core Competence)
employed during the several decades surroundings the balanced scorecard's
Each of the four perspectives is considered by four parameters. Those
• Goals: What do we need to achieve to become successful
• Measures: What parameters will we use to know if we are successful
• Targets: What quantitative value will we use to determine success of the
Initiatives: What will we do to meet our goals
In the original paper of 1992, Goals and Measures are the only two parameters
shown on the scorecard. Since then, it is often seen with the additional two
parameters, Targets and Initiatives.