The cause-and-effect chain defines the cause-and-effect relationships between individual objectives of a strategy, that is, across the defined perspectives of the KPIs. In other words, it describes how the objectives of the perspectives can be achieved. The perspectives themselves form the general conditions for the cause-and-effect chain ('force field of the company'). It can be assumed that improvements in the learning and growth perspective environment have a direct and positive effect on the objectives and KPIs of the internal process perspectives. Furthermore, developments in the process perspective also have a positive impact on the objectives and KPIs of the customer perspective, which in turn leads to an improvement in the financial objectives.

Within the scope of developing a Balanced Scorecard system that is to be valid throughout the company, objectives and KPIs are defined for each strategy, and the relationships between them are represented within and across the perspectives. Based on the objectives and KPIs specified in the financial perspective, corresponding 'positive agents' (performance drivers) are determined in the customer perspective. In a next step, these are broken down to the learning and growth perspective via the internal process perspective. This procedure allows strategies of a company or division to be split into subobjectives and KPIs, and corresponding operational initiatives to be derived from them.

By establishing a cause-and-effect chain and defining the KPIs, a balance is implicitly created between leading and lagging indicators.