Why is the Balanced Scorecard considered the best business improvement framework?
March 25, 2024
Back in the 1990s, when many businesses solely relied on revenue growth, Robert Kaplan and David Norton emerged as visionary thinkers who recognised the critical need for strategic alignment across multiple perspectives for achieving operational excellence.
Their realisation paved the way for a groundbreaking ideology transcending the narrow focus on financial metrics. Kaplan and Norton's pioneering insight led to the development of what we now know as the Balanced Scorecard. Soon, the scorecards became a transformative tool that revolutionised how organisations measured and managed their performance.
So, why do many businesses invest in Balanced Scorecards? Is it for strategic alignment? Let's check it out!
The Balanced Scorecard- Translate your Strategies into Actions!
The Balanced Scorecard (BSC) isn't just a static framework. It can offer a dynamic dashboard for your performance improvement plans. The Balanced Scorecard is a strategic management framework that helps organisations translate their vision and strategy into actionable objectives using performance metrics. It encompasses a comprehensive set of performance metrics that span Financial, Customer, Internal processes, and Learning & Growth perspectives (FCIL). By incorporating these diverse performance metrics, the Balanced Scorecard software provides a balanced view of organisational performance, enabling strategic leaders to make informed decisions that drive sustainable growth and continuous improvement.
4 Balanced Scorecard Perspectives
- Financial Perspective: Maximising Returns The financial perspective of a balanced scorecard focuses on the economic health and sustainability of the organisation. It assesses the company's ability to generate revenue, manage costs, and maximise profitability while ensuring long-term financial stability. Metrics in this perspective provide insights into the effectiveness of financial strategies and the organisation's overall financial performance.