Tool for Strategic Implementation: Balanced Scorecard (Essay Sample)

Tool for Strategic Implementation
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Tool for Strategic Implementation
The Balanced Scorecard
In the early 1990s, David P. Norton and Robert S. Kaplan recommended a balanced score card as a management system. Essentially, this tool would translate the business strategy and mission of an organization into few specific strategic objectives that would not only be linked but also measured operationally. Importantly, the balanced score card emphasized on business processes, resources, and capabilities as the critical drivers of an organization's future performance. What is more, it focused on profitability and growth of the business as well as outcomes for customers as the results of those drivers. Furthermore, cause and effect relationships were used to link specific objectives derived from the strategy and communicated to members of the organization for implementation (Bourne & Bourne, 2007). Notably, many organizations in different industries use the balanced scorecard in strategic management approaches. Chavan (2009) writes that the balanced scorecard enables a firm to:
Enhance learning and strategic feedback
Set targets, plan, align strategic initiatives, and plan
Link strategic measures and objectives and communicate
Translate and clarify vision and strategy


Figure 1: Perspectives of the balanced score card. This figure illustrates a simple design of a balanced scorecard performance system (Bourne & Bourne, 2007).
Kaplan and Norton (2001) state that the effectiveness of the balanced scorecard is enhanced by its four perspectives of strategy implementation: innovation and learning, internal business, customer, and financial, shown in Figure 1. First, the innovation and learning viewpoint focuses on how a company can sustain continual improvement to achieve its vision. Thereby, the perspective identifies the infrastructure needed to support other objectives. Second, the internal business point of view is focused on the business processes, technologies, and core competencies a company needs to perfect to satisfy customers and shareholders. Third, the customer perspective focuses on how a firm should compete to achieve its vision. Accordingly, the firm endeavors to address customer concerns in cost, quality, time, as well as performance and cost. Lastly, the financial perspective is about how the business appears to its shareholders and if it is improving shareholder value and profitability.
Effects of Strategic Influences on the Balanced Scorecard
The balanced score card is affected by the internal environmental factors. To implement the balanced score card, an organization has to articulate goals for service, performance, quality as well as time and then translate the goals to specific measures (Malina & Selto, 2001). For example, the management at Nike formulated general goals for client performance: develop innovative products, become the supplier of choice to customers by partnership with them, improve the time for customers to market, and get quality products to the market sooner. The managers then translated the general goals into specific goals and created an appropriate measure for each. To monitor the specific goal of offering continually offering attractive solutions, Nike measured sales from proprietary products as well as sales from new products. The data was available internally. However, certain measures forced the organization to get information from its customers. Nike found that customers had different definitions of "responsive and reliable supply". Subsequently, the company established a record of the factors according to the definition of each of its major buyers (Dyer, Godfrey, Jensen, & Bryce, 2016). The incorporation of external metrics of performance with clients caused Nike to redefine "on time" to align with customers' expectations.
The balanced score card is also affected by organizational considerations. Importantly, the internal process and customer-based process measures of the tool identify parameters that the organization considers important for market success. However, the targets for competitive success keep changing. Chavan (2009) states that due to the intense global competition companied must make continual improvements to processes and existing products and develop capacity to create entirely new products that have more capabilities. The ability of a firm to learn, improve, and innovate has a direct link to the value of the company. Thereby, the business can only increase margins and revenues as well as penetrate new markets by continually improving operating efficiencies, creating value for customers, and launching new products. For instance, the innovation measures used by AT&T and Apple focus on the ability to create and introduce quality products and services. The organizations expect this will be the foundation of future success. Their product development improvement measures are focused on new products rather than improving existing products. Thus, the organizations use the sales from new products to measure improvement and innovation (Dyer et al., 2016). Ultimately, if there is a downward trend in sales from new products, managers can determine if there are problems in new product introduction or new product design.
Usefulness of the Balanced Scorecard in My Strategic Business Leadership
Kaplan and Norton (2001) argue that the balanced score card enables a business leader to consider both financial and non-financial measures that are related to strategic objectives. Therefore, by using the tool I will focus on indicators that point towards the company's future direction. With this future-oriented perspective, I will be motivated to consider both operational as well as strategic factors. Having an appropriate strategic guideline is critical as internal organizational structures are fluid and complex while external competitive environments are becoming ...