Designing and Implementing Business Process Models 10.5 | Designing and Implementing Business Process Models | ARIS Method manual | Balanced Scorecard method | The Balanced Scorecard concept | Key elements of the BSC approach
 
Key elements of the BSC approach
The Balanced Scorecard approach is a strategic management system first proposed by Robert Kaplan and David Norton in 1992 ('The Balanced Scorecard - Measures that drive Performance', Harvard Business Review, January/February 1992). It was developed from the results of research on the subject of Approaches to performance measurement. This research found that performance measurement systems geared exclusively to financial KPIs are likely to impede value-adding activities in many companies. Built on these findings, Kaplan and Norton set out to collaborate with innovative businesses to create a system of KPIs that would make it possible to optimally measure the realization of a company's visions and strategies.
The Balanced Scorecard approach associates KPIs with various views of the company (so-called perspectives). These include internal performance perspectives (for example, learning and growth perspective, process perspective) and external performance perspectives (for example, customer perspective, economic/financial perspective). Due to this arrangement of KPIs, a certain balance between short-term and long-term goals, financial and non-financial KPIs, leading and lagging indicators, and internal and external views can be achieved. The integration of industry-specific KPIs adds a further benchmarking component to the concept.
The pure performance measurement approach has evolved into a comprehensive management system for goal-oriented corporate management, starting from corporate vision and individual competitive strategies to the formulation and control of initiatives using balanced KPIs. Therefore, the Balanced Scorecard approach is more than just a system of performance measurement KPIs. It assists companies in communicating and implementing their corporate strategy and supports the resulting strategic learning process (double-loop learning).

Copyright © 2019 | Software AG, Darmstadt, Germany and/or Software AG USA, Inc., Reston, VA, USA, and/or its subsidiaries and/or its affiliates and/or their licensors.