INFORMATION MANAGEMENT

Strategic Information Management



Strategic Information Management

Kaplan and Norton Balanced Scorecard

The concept of the Balanced Scorecard was presented for the first time in a series of articles published in the Harvard Business Review in 1992: "The Balanced Scorecard Measures that drive performance" by Robert Kaplan and David Norton. Both authors then completed the study of field experiences and published the Best Seller, "The balanced scorecard." Over the writings, the method oriented performance measurement, naturally evolved and now covers the expression of the strategy and, more specifically, establishing cause and effect diagrams (Harvard Business School Press, 2009, pp. 34). The Balanced Scorecard by Kaplan and Norton support the strategic management process in the company and serve as a framework for this process. The company's current resounding success in the corporate practice shows both the great need of a complement monetary performance measures and the perceived urgency to dovetail with strategies to improve business operations. For the former aspect form the proposed four perspectives of the balanced scorecard a viable approach, since they ultimately represent the entire value chain. For the aspect of strategy implementation, the Balanced Scorecard is competing with other concepts (e.g., enforcement of Strategic Intent, focusing on a core capability or Hoshin Planning). The Balanced Scorecard (BSC) is a system of balanced performance measurement:

between financial and non-financial

between short term and long term goals;

between intermediate indicators and outcome measures.

These indicators are divided into four areas (financial, customer, internal processes and organizational learning). Most importantly, they are interconnected by relations of cause and effect that the emerging strategy (Parmenter, 2007, pp. 46). The objective is to articulate the initiatives of employees, departments and enterprise, and dynamic simulations, to identify new processes to meet the expectations of customers and shareholders.

The financial perspective is considered if the implementation of the strategy is to improve results. Key figures of the financial perspective, as the achieved return on equity and economic value are added. The financial figures assume a double role. First, they define the financial performance that is expected of a strategy. Second, they act as the ultimate goals of the different perspectives of the balanced scorecard. Key figures of the customer, internal process and learning and growth perspective should always be connected with the financial objectives (Norreklit, 2003, pp. 591).

The customer perspective reflects the strategic goals of the company in terms of customer and market segments in which it would compete. For the identified customer and market segments indicators, targets and measures are developed.

Role of the internal process perspective is to map those processes that are primarily of importance in order to achieve the objectives of the financial perspective and the customer perspective.

The ratios of the learning and growth perspective, describe the infrastructure that is necessary to achieve the objectives of the first three perspectives. The need to invest in the future is emphasized by Kaplan and Norton. Three main categories are categorized as: training employees, performance of the information system, as well as motivation ...