Critical Review

Introduction

According to Gumbus and Lussier the main reason for the introduction of the balanced scorecard was that, in the authors' views, organizations only measured financial performance. There was too much emphasis on financial measures and not enough on operational performance. By complementing financial measures of past performance with the objectives and measures of financial, customer, internal business process, and learning and growth, managers are provided with a framework to translate a strategy into operational terms. The great thing about the balanced scorecard is that it minimizes information overload by limiting the number of measures. It forces managers to focus on the handful of measures that are most critical.

Critical Review

Gumbus and Lussier define the BSC as "a comprehensive set of performance measures that provides a framework for a strategic measurement and management system". The BSC consists of financial measures indicating the results of actions already taken as well as operational measures that drive future financial performance. The BSC gives managers information on four different perspectives: customer satisfaction, internal business process, innovation and learning, and financial. Using these operational measures drives future financial performance and allows a firm to simultaneously monitor their progress in building capabilities and acquiring necessary intangible assets needed for future growth. Acquiring the necessary intangible assets enables an organization to:

retain existing loyal customers while efficiently and effectively growing market share;

introduce innovative products and services;

produce high-quality products/services at a lower cost with shorter lead times;

use employee skills and motivation for continuous process improvements; and

deploy new technology, systems, and databases. (Kaplan & Norton 1996)

In 1993, Gumbus & Lussier reported in a Harvard Business Review article that each company's scorecard must contain a set of measures suited to improving business performance as judged by its own stakeholders. Scorecards must be customized to fit a company's mission, strategy, technology, and culture. ...