Global business consultacy. Balanced Scorecard

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Currently, the old business management style base only on the financial measurement it’s not enough.

Through the Balanced Scorecard (BSC) the key areas of the business management are integrated and work complementary,  following the statement “if you can’t measure it, you can’t manage it”. 

This areas include the following perspectives: 

  • Financial perspective.
  • Customer perspective.
  • Internal perspective.
  • Learning & Growth perspective. 

A Balanced Scorecard project implementation consists on different phases that might vary depending on the organization, its internal business processes, the market its operates, etc .  However, due to the nature of the project, some of these phase might be considered as common as far as they have to adress the same issues of the BSC.

The type of project and phases described below are just an example and in any case prentend to be a template for a BSC project implementation. They might fit a company but not another one, so they are not necessarily better than any other procedure.  

The Balanced Scorecard (BSC) is a powerful management and strategy execution tool designed by Robert Kaplan and David Norton. 
 
The BSC translates the company’s mission and strategy into objectives and indicators through a balanced group of perspectives, including key performance indicators (KPI) that measure the desired results (kpi-outputs) together with key operational indicators that will further these results at middle and long-term basis, also known as operational drivers (kpi-drivers). 

The Financial Pespective defines the financial objectives which represent the long-term objectives of the whole organization: to achieve higher profitability based on the capital employed. The financial objectives are commonly linked with profitability, like for example “Operating Income / Sales”, the “Return on Capital Employed(ROCE), the “Return on Investment” (ROI), the “Return On Equity” (ROE), the “Economic Value Added” (EVA) or the Cash Flow generation among others.

Based on the long-term financial objectives, the Customer Perspective translates the vision, corporate objectives and general strategy into specific customer objectives and market segments.
 
1.- Market segmentation:
1.1 - Identify the market segments where the company wants to compete: The market research must reveal the different market segments and their preferences in attributes such as price, quality, functionality, image, prestige, relations and services.  

Once the financial and customer objectives have been established, through the BSC Internal Perspective the company must identify and control the core business processes, the critical internal processes in where the company must excel.

These processes allow the company to

  • Accomplish the shareholder’s objectives: Satisfy them at medium-term (success) and at long-term (prosper)
  • Achieve the customer excellence: Generate competitive advantages that bring added value to the customer and engage them in long-term collaboration agreements. 

The BSC manages the called Learning and Growth perspective, providing the suitable learning programs for the employees and the necessary infrastructure related to systems and procedures.

The traditional investments in machinery, equipment or in R&D are important but on their own it might be difficult to achieve the corporate objectives. In an everyday more globalized world, companies must improve their infrastructure and have the proactive collaboration and engagement of their employees, these last ones the most important resource of them all. 

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