THE BALANCE

SCORECARD
P. GURU PRASAD
FACULTY
INC GUNTUR
 THE BALANCE SCORECARD

• In the rapidly changing world of business,

considering only the financial measures of
performance gives an incomplete picture
of the overall organizational performance.
It has become increasingly necessary for
organizations to simultaneously look at
non financial measures for this purpose.
 THE BALANCE SCORECARD
• Concepts like JIT, TQM, and SIX SIGMA have
brought out the growing importance of non
financial measures for evaluating the
organizations overall performance.
• A combination of financial and non financial
measures gives a better picture of organizational
performance. One concept which has received
universal acclaim is the “Balance Scorecard”
(BSC), proposed by Robert Kaplan and David
Norton in 1992.
 THE BALANCE SCORECARD

• The BSC framework considers the customer

perspective, internal business perspective, and
the innovation/learning and growth perspective,
in addition to the financial perspective.

• The customer’s perception of the value delivered

by an organization’s product or service is
primarily influenced by four factors – quality,
time, performance and service, and cost
 THE BALANCE SCORECARD

perspective Underlying question

Customer perspective To achieve our vision, how
should we appear to our
customer
Financial perspective To succeed financially, how
should we appear to our
shareholders
Internal business To satisfy our customer and
shareholders, at what business
perspective processes must we excel?
Innovation/learning To achieve our vision, how
growth perspective will we sustain our ability to
change and improve?
 Trent and the BSC
• In 2005, Trent, the parent company of Westside retail
store chain, was included in the Balance scorecard hall
of fame for successful implementation of the Balance
scorecard for enhanced customer satisfaction.
• Under the customer perspective, the strategy devised
was “surprisingly affordable style, quality, and a great
shopping experience for the entire family”. This gave an
overall view of the other objectives of the organization.
• Apart from this, the store layout and display were
changed to reflect the customer’s choice. New products
were launched after studying the market for recent
trends. This helped achieve the financial objective
 Implementing the BSC
• If an organization emphasizes only short-
term or financial goals, it will not be able to
successfully execute its strategies and
excel in the business. The balance
scorecard serves as a tool for strategic
performance control by clarifying the
vision and strategy of the organization and
articulating the top management's
expectations
 Implementing BSC for strategic Performance Control and Strategic Learning

Vision and Mission

Strategy strategy
formulation
Clarity in vision
translate into strategy
Strategic
Feedback
Communicate and link And learning
strategic objectives
and measures

Corrective actions Plan, set targets, and

For strategic Align strategic initiatives
Performance control

Measure / monitor / report

 Thank you
• The only time success comes before
work is in the dictionary.
• "The desire of appearing clever often
prevents our becoming so."
• "Copy from one, it's plagiarism; copy
from many, it's research."
• -Wilson Mizner (1876-1933)