Transforming the balanced scorecard
Kaplan. and D. P. Norton. 2001.
Kaplan and Norton introduced the Balanced Scorecard to have a comprehensive outlook for business. they believed that financial indicators alone were insufficient to measure performance. Managers that rely exclusively on financial measurements are encouraged to sacrifice long-term improvement for short-term performance. The Balanced Scorecard approach supplements financial measurements with non-financial measures that indicate the actions that increase future financial performance.
The Balanced Scorecard approach not only provides a measure of non-financial performance; it links the measurement to strategy. An important element of the Balanced Scorecard is identifying the goals of the company and the steps to achieve these goals. The Balanced Scorecard also reflects the change in technology and competitive advantage that came about in the 20th century. An increase in the importance of intangible assets, such as customer relationships and skills and knowledge of employees, has created the need for non-financial measurements.
It is very difficult to measure the value of intangible assets. The value of intangibles is indirect and cannot be identified as separate from the context of the organization. The value arises from the collection of intangible assets and their implementation strategy. The Balanced Scorecard approach does not try to “value” an organization’s intangibles, but it does measure these assets in units other than currency.
The Balanced Scorecard provides a framework for developing a strategy map for an organization. First, the strategic objectives are organized into four categories: 1. Financial – strategy for growth, profitability, and risk from the shareholder’s point of view. 2. Customer – strategy for creating value and differentiation from the customer’s