Establishing Balanced Scorecards
Released April 2001
Organizations tend to juggle a number of improvement initiatives at the same time, ranging from
process mapping to benchmarking to administering customer satisfaction surveys. But they
often lack the alignment to cohesively structure these initiatives in a way that addresses an
The balanced scorecard, a framework that links business strategies with day-to-day activities, is
one solution that has worked wonders for many.
"If profits go down, you don't know what's driving profits," said Cynthia Raybourn, an APQC
custom engagement specialist. "Measurement is a whole lot more than a yard stick. It doesn't
just measure where we are but helps us get to where we want to be. The balanced scorecard is
a means of focusing people's attention on desired behaviors and desired results."
A balanced scorecard aligns measures with strategies in order to track progress, reinforce
accountability, and prioritize improvement opportunities. Unlike a bottom-line analysis, a
balanced scorecard integrates four related perspectives: finance, customers, internal processes,
and innovation and learning. "Essentially, it's a means of understanding—in an accurate and
complete way—the overall performance of an organization," said Raybourn.
Raybourn explained that the balanced scorecard is the most popular and widespread framework
for developing performance measures. Even so, implementation has proven to be a challenge in
most organizations. Part of this difficulty is the scorecard's reliance on fully articulated strategic
objectives. Successful implementation breaks down if an organization lacks direction.
Furthermore, identifying critical success factors is an involved process. And changing
measurements from an emphasis on finance to a more balanced approach with multiple
emphases has significant cultural implications, ranging from changes in compensation and
career advancement to increased dependence on teamwork. So, like any other culture change
initiative, the balanced scorecard process carries a set of challenges to successful
The good news is these challenges can be overcome with a detailed balanced scorecard
implementation process. The following is a basic framework upon which an organization can
formulate links between its business strategy and day-to-day activities.
Step 1: Plan the Project
This step is critical to the success of the implementation process. The following activities should
be considered by the process sponsor and owners.
Confirm the scope of the project and establish a project time line.
"A clear sense of
the mission, values, and strategic objectives is the single, most critical thing to
establish," said Raybourn. Once this has been done, the sponsors and owners
determine the scope of the project, which will likely begin with a small number of teams
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