D11.3: Economic aspects of mobility and identity

Title: THE BALANCED SCORECARD CONCEPT

The Balanced Scorecard Concept

During the early 1990s, Kaplan and Norton introduced the balanced scorecard (BSC) concept as a balanced performance measurement system for corporations, addressing shortcomings of traditional performance measurement systems. In the following years, the BSC was discussed and applied in various fields. Arguing that financial accounting measures, such as return on investment (ROI) or the payback period, are too narrow in their scope, the BSC does not only rely on financial outcomes. To this regard it is supplemented with additional organisational measures that complement past and future performance indicators in a holistic way.

Figure : Examples for the balanced scorecard and strategic maps

The result of Kaplan and Norton’s research is a scorecard that translates additional measures into four different areas, also referred to as perspectives. Namely these are: financial, customer, internal business processes, and learning and growth. The resulting BSC is visualised in . The perspectives themselves are derived from the visions and strategies of an organisation. They also represent the three major stakeholder groups of an organisation: shareholder, customers, and employees.

The term “balanced” reflects the intent to maintain a balance between the perspectives and their contained performance indicators. Namely the balance is kept between short- and long-term objectives, lagging and leading indicators, and financial and non-financial measures. Furthermore, the specific performance indicators contained in the four perspectives show interdependencies which can be further analysed by causal-chains and causal networks, also referred to as strategic maps.

In summary, by integrating the different perspectives, the BSC allows for a more comprehensive view of the organisation itself. To this regard, the BSC strives to give a view on the historic successes and the future trends. Moreover, the BSC itself can be used to actively manage an organisation down to the project level, which helps to act in best long-term interests for an organisation.