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BALANCED SCORECARD – AN OVERVIEW
The Balanced scorecard (BSC) is a strategic performance management framework supported
by proven design methods and automation tools that can be used by managers to keep track of
the execution of activities by staff within their control and monitor the consequences arising
from these actions. The core characteristic of the BSC and its derivatives is the presentation of
a blend of financial and non-financial measures
each compared to a 'target' value within a concise
report. The report is not meant to be a replacement
for traditional financial or operational reports, but
used as a summary that captures the information
most relevant to the organization stakeholders.
Balanced Scorecard - History
The earliest balanced scorecard was created in 1987
at Analog Devices, a mid-sized semiconductor
company, followed by applications of the concept in
various companies by Harvard professor Dr. Robert S.
Kaplan and David P. Norton. In 1996, they published a
seminal book The Balanced Scorecard, later followed by their second book The Strategy
Focused Organization on the value of visually documenting the links between measures by
proposing the "Strategic Linkage Model" or strategy map.
Balanced Scorecard - The four perspectives
The four "perspectives" proposed in BSC framework was:
Innovation and Learning
The "financial perspective" encourages the identification of a few relevant
high-level financial measures that help answer the question "How do we look
The "customer perspective" encourages the identification of measures that answer
the question "How do customers see us?"
The "internal business perspective" encourages the identification of
measures that answer the question "What must we excel at?"
The "innovation and learning perspective" encourages th