How can you use a balanced scorecard to measure your business success?

1 What is a balanced scorecard?

A balanced scorecard is a management system that translates your strategy into a set of measurable indicators. It was developed by Robert Kaplan and David Norton in the 1990s as a way to overcome the limitations of traditional financial measures. A balanced scorecard helps you to monitor and evaluate your performance from four perspectives: financial, customer, internal, and learning and growth. Each perspective has its own objectives, measures, targets, and initiatives that are linked to your overall vision and mission.

2 Why use a balanced scorecard?

A balanced scorecard can help you to achieve several benefits for your business. First, it can help you to communicate your strategy clearly and consistently to your stakeholders, including your employees, customers, investors, and partners. Second, it can help you to align your actions and resources with your strategic priorities and goals. Third, it can help you to track your progress and results using both qualitative and quantitative data. Fourth, it can help you to identify and address gaps and opportunities for improvement in your performance.

3 How to create a balanced scorecard?

To create a balanced scorecard, you need to follow four steps. First, you need to define your vision and mission, which are the statements that describe your purpose and direction. Second, you need to identify your strategic objectives, which are the specific outcomes that you want to achieve in each perspective. Third, you need to select your measures, which are the indicators that show how well you are performing in each objective. Fourth, you need to set your targets, which are the desired levels of performance for each measure, and your initiatives, which are the actions that you will take to reach your targets.

4 How to use a balanced scorecard?

To use a balanced scorecard, you need to implement it in your daily operations and decision making. You need to communicate your balanced scorecard to your employees and stakeholders, and ensure that they understand their roles and responsibilities. You need to align your incentives and rewards with your balanced scorecard measures and targets, and motivate your employees to achieve them. You need to collect and analyze your data regularly, and report your results and feedback. You need to review and update your balanced scorecard periodically, and make adjustments as needed.

5 What are some best practices for a balanced scorecard?

To make your balanced scorecard successful, you should follow some best practices. Keep it simple and focused, avoid having too many objectives and measures. Involve your employees and stakeholders in the creation and implementation of your balanced scorecard, and seek their input and feedback. Balance your perspectives and measures with a mix of leading and lagging indicators, financial and non-financial data, and short-term and long-term goals. Link your balanced scorecard to your budget and resource allocation to ensure that you have enough resources to execute initiatives. Lastly, use your balanced scorecard as a learning tool to identify strengths and weaknesses, learn from successes and failures, and foster a culture of continuous improvement.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?