What is Balanced Scorecard concept: the four perspectives
The perspectives
Balanced Scorecard concept offers to look at organization’s strategy from the four different points of view (perspectives). Each of them might contain its own sub-perspectives and exact goals that could be measured as well the perspectives. Here is the list of them:
- Financial perspective;
- Customer perspective;
- Innovation and learning perspective;
- Internal process perspective.
Financial perspective
The opportunity of financial data usage is considered important by Kaplan and Norton. Up to date financial information is needed for every company in order to succeed. Managers should pay attention to provide proper financial data in time. The problem here is not to pay too much attention to the financial perspective as it happened to old style industrial companies before. Such actions as directing most of company’s resources into financial growth usually cause imbalanced scorecard and company’s falling into decay even down to failure in the long term.
One more thing to be noticed is that corporate systems (the market in this sphere offers a wide range of software products) might be very helpful to automate financial data collecting and handling. The right choice of corporate system to implement could help reduce cost of data processing and open opportunities to direct company’s resources into other perspectives in order to create balanced scorecard.
Customer perspective
Modern management studies consider client oriented business activities as an important part of company’s strategy. The basis here is customers’ satisfaction – unsatisfied customers will prefer competitor’s product instead. Low performance in this perspective might cause a decay of business even if current financial and other perspectives are well performed. In order to create indicators of customer’s satisfaction special research a needed. For example it could be determination of customers target group for every product company produces or sells, or service it provides. There are lots of ways to execute such research starting with outsourcing marketing services and finishing with own marketing department that could be responsible for customer perspective as a part of company’s scorecard.
Innovation and learning perspective
This company’s activity is referring to staff training and development of corporate culture. The philosophy of such concept is based on every staff member’s high educational level at our modern age of information. Oppositely to old management studies it might be effective to give more freedom to employee concerning the way how to execute their tasks. Also the role of relationships between employees became much more important than in it was considered by old style industrial companies. Psychological researches of business define corporate culture as “the character of an organization” with its unique ethical norms and managerial behaviors. Much work needs to be executed to form and support such culture.
One more thing to be noticed is extremely high speed of information technology’s perfection at our time. Sure in terms of competitive activity it becomes very important for the staff to develop their skills up to date with IT tools (both software and hardware) perfection. Producers of information technology tools are trying to create easier to use products but still it needs employees to be ready to study something absolutely new and realize it in order to rich better performance values and improve money spend on IT novelties’ implementation. All this makes innovation and learning perspective a fundamental activity for business to succeed in long term.
Internal processes perspective
Internal processes activity aims to form the tree of business process in order to monitor and optimize company’s performance. It helps to improve such characteristic as return on resources. There are several techniques of modeling business process but it is recommended to use specialists in this sphere who also clearly understand company’s structure to succeed in optimization.
Internal process perspective seems the most sophisticated activity for lots of companies’ CEOs. That is why IT market referring to business is developing so fast. With nowadays quality of services information technology market could offer to business, it seems not so hard to succeed in such activity as internal process perspective. Certainly it needs investment in such non material thing as well as employee’s skills to operate new tools.
