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Balanced Scorecard

Professor Robert Kaplan of the Harvard Business School and Consultant David Norton developed the Balanced Scorecard approach for measuring performance. The formal approach stresses the importance of a balance in strategic objectives. Balanced Scorecard focuses on and measures both economic and non-economic drivers of organization success.

According to balancedscorecard.org, "The balanced scorecard is a management system (not only a measurement system) that enables organizations to clarify their vision and strategy and translate them into action. It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results."

A Balanced Scorecard is intended to view an organization from four perspectives:

  1. Learning and Growth Perspective -- How will we sustain our ability to learn and grow?

  2. Business Process Perspective - What business processes must we excel at?

  3. Customer Perspective - How should we appear to our customers?

  4. Financial Perspective - How should we appear to our shareholders?

According to David Norton, a Balanced Scorecard is a statement of strategy. Also, the business process, customer, financial and learning and growth perspectives are the foundation for strategy formulation.

Related Terms: Key Performance Indicators, Critical Success Factors, Performance Management

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