Did you ever wonder where the balanced scorecard came from? It was created as part of a set of workshops by Drs. Kaplan and Norton with a group of companies who were looking for a way to combine financial and non-financial management information. The idea that emerged and that was finetuned over time was to group and connect four areas of performance: financial, customer, process and growth/learning.
I wasn’t in the room during those workshops that led to defining the four perspectives, but I have a hypothesis how it could have happened. In figuring out which non-financial areas to pick, someone may have mentioned the three value disciplines from Treacy and Wiersema: operational excellence, product innovation and customer intimacy. Treacy and Wiersema state that organizations need to score sufficient in all these areas, and need to excel at one.
These three value disciplines map 3 of the balanced scorecard perspectives perfectly: process, growth/learning (innovation) and customer. The fourth perspective had to be the financial outcome of those perspectives.
If it didn’t happen this way, at least it shows the logic of the four perspectives, as they align with other established management theory.
PS. Please take the survey that is part of the research for my new book on www.frankbuytendijk.com.
Comments (1)
Executives are treating the financial element of the four as an outcome, rather than an essential and fairly equal indicator to the other three dimensions, we should agree that financial performance, over the course of developing the remaining tree elements should take a parallel growth, hence finance should become a forth indicator rather than an outcome
Posted by Jad Baz | August 1, 2009 6:26 AM
Posted on August 1, 2009 06:26