Putting The Balanced Scorecard To Work
What do companies like Rockwater, Apple Computer, and
Advanced Micro Devices have in commonl They're using the scorecard to measure performance and set strategy.
Putting the Balanced
Scorecard to Work by Robert S. Kaplan and David P. Norton
Today's managers recognize the impact that measures have on performance. But they rarely think of measurement as an essential part of their strategy.
For example, executives may introduce new strategies and innovative operating processes intended to achieve hreakthrough performance, then continue to use the same short-term financial indicators they have used for decades, measures like returnon-investment, sales growth, and operating income.
These managers fail not only to introduce new measures to monitor new goals and processes hut also to question whether or not their old measures are relevant to the new initiatives.
Effective measurement, however, must be an integral part of the management process. The halanced scorecard, first proposed in the JanuaryFebruary 1992 issue of HBR {"The Balanced Scorecard - Measures that Drive Performance"), provides executives with a comprehensive framework that translates a company's strategic ohjectives into a coherent set of performance measures. Much more than a measurement exercise, the balanced scorecard is a management system that can motiRobert S. Kaplan is the Arthur Lowes Dickinson Professor of Aceounting at the Harvard Business School.
David P. Norton is founder and president of Renaissance
Strategy Group, a consulting firm located in Lincoln,
Massachusetts.
134
vate breakthrough improvements in such critical areas as product, process, customer, and market development. The scorecard presents managers with four different perspectives from which to ehoose measures. It complements traditional financial indicators with measures of performance for customers, internal processes, and innovation and improvement activities. These measures differ from those traditionally used by companies in
Advanced Micro Devices have in commonl They're using the scorecard to measure performance and set strategy.
Putting the Balanced
Scorecard to Work by Robert S. Kaplan and David P. Norton
Today's managers recognize the impact that measures have on performance. But they rarely think of measurement as an essential part of their strategy.
For example, executives may introduce new strategies and innovative operating processes intended to achieve hreakthrough performance, then continue to use the same short-term financial indicators they have used for decades, measures like returnon-investment, sales growth, and operating income.
These managers fail not only to introduce new measures to monitor new goals and processes hut also to question whether or not their old measures are relevant to the new initiatives.
Effective measurement, however, must be an integral part of the management process. The halanced scorecard, first proposed in the JanuaryFebruary 1992 issue of HBR {"The Balanced Scorecard - Measures that Drive Performance"), provides executives with a comprehensive framework that translates a company's strategic ohjectives into a coherent set of performance measures. Much more than a measurement exercise, the balanced scorecard is a management system that can motiRobert S. Kaplan is the Arthur Lowes Dickinson Professor of Aceounting at the Harvard Business School.
David P. Norton is founder and president of Renaissance
Strategy Group, a consulting firm located in Lincoln,
Massachusetts.
134
vate breakthrough improvements in such critical areas as product, process, customer, and market development. The scorecard presents managers with four different perspectives from which to ehoose measures. It complements traditional financial indicators with measures of performance for customers, internal processes, and innovation and improvement activities. These measures differ from those traditionally used by companies in