Strategic Plan III: Balanced Scorecard

Strategic Plan III: Balanced Scorecard

Introduction

The balanced scorecard is a management technique for strategy formulation, implementation, monitoring, evaluation, and refinement. It is a tool that allows the strategists in an organization to formulate a strategy that is balanced (Pangarkar & Kirkwood, 2009). Then, this strategy is expressed with respect to financials, customers, processes, and culture of the organization. Hence, the balanced scorecard attempts to balance the focus of the strategy of the organization. While previously there was only a focus on the measurement of financial performance, now it also strives to measure other nonfinancial performance (Kaplan & Norton, 2000). This is measured through customer satisfaction and quality and by also including the processes and core competencies of the organization. It also highly emphasizes learning and growth of the organization which has quality implications, as well.

In this way, the balanced scorecard is a strategic management tool. It first allows the strategists to define the strategy in terms of the four dimensions of the balanced scorecard. Then, the organization sets objectives and targets for various measures in each of the given dimension (Ulrich et al., 2001). These targets are then used for quarterly or monthly monitoring and evaluation of the performance. This allows the senior managers to track progress and make any necessary changes in the company strategy to accommodate the achievement of the predetermined targets (Hitt et al., 2012). In fact, this tool helps the senior managers to manage almost all key performance indicators (KPIs) of the business. These four dimensions are financial, customers, internal processes, and learning and growth. Hence, the organization balances its focus of strategy and operations. In this way, the business is not only managed to improve the bottom line, but the improvements are implemented across the board in all aspects of the organization.

Discussion

The Balanced Scorecard

The balanced scorecard is a management system and technique that is used widely to link the operations of the organization with its vision and strategy. Then, it is used to measure the performance of the business with respect to the targets, to improve internal and external communication, and give a boost to the organization. It was developed by Norton and Kaplan to balance the focus of the organizations toward their financial performance with other nonfinancial measures of performance (Ulrich et al., 2001). While it was not used extensively before, it is now used as a comprehensive strategy implementation and monitoring system. Hence, it is used by the organizations to give a force to their strategic plans and bring them to the floor on a daily basis. Hence, it not only measures the performance but also identifies as to what needs to be done. Then, it allows managers to execute their strategies in reality.

Therefore, it suggests what needs to be measured, so that the financial perspective can be balanced with other perspectives. Hence, it is a management system that allows organizations to formulate strategy and also implement it through various actions (Hitt et al., ...