BALANCED SCORECARD
 
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The main goal of BSC is to break down the corporate strategy into relevant, measurable success factors. Based on a clear corporate vision, strategic goals are derived for focus areas: finance, customer/markets, processes, and potentials. These goals are then placed in causal relationship with one another and function
using performance figures.

The following steps are involved in creating a BSC:

  • Develop a corporate vision and strategy
  • Derive and formulate strategic goals for the relevant business units
  • Enter the goals in a cause-and -effect model
  • Determine the operative goals and measures
  • Develop parameters for measuring the degree to which these goals have been achieved
  • Develop an implementation plan and feedback process

The following strategic improvements are the results from BSC's, which have been implemented in companies from various industries:

  • Break down of vision/strategy into clear, measurable objectives
  • Balance between financial, internal, and market-related figures
  • High transparency and common understanding of strategy/goals
  • High level of acceptance, motivation, and identification among employees
  • Increased customer loyalty
  • Strategic learning effects/continuous feedback

In order to successfully implement the BSC concept, both tools for financial analysis and "soft", qualitative methods have to be employed. These include vision/strategy workshops, interviews with employees, satisfaction analyses, innovation circles, focus groups, and process analyses. These tools help management determine the most important control variables. Absolutely vital for success is the commitment of all participating business units and above all, of management.
Often, this initially requires the participants to tear down mental barriers that hinder them from relying on anything other than the traditional variables.
However, the value of the BSC can be seen only after this essential step has been made and a fundamentally different process for developing and implementing strategy has been implemented.