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Recommended Readings: Business Strategy

 

The Balanced Scorecard - Measures That Drive Performance by Robert S. Kaplan and David P. Norton

Traditional performance measurement systems are inadequate. A balanced presentation of measures that allow managers to view the company from several perspectives simultaneously is needed.

 

The balanced scorecard includes financial measures that tell the results of actions already taken and three sets of operational measures - customer satisfaction, internal processes, and the organization's ability to learn and improve.

 

Managers can create a balanced scorecard by translating their company's strategy and mission statements into specific goals and measures. To create the part of the scorecard that focuses on the customer perspective, for example, executives can establish general goals for customer performance. These might be to get standard products to market sooner, to improve customers' time-to-market, to become customers' supplier of choice through partnerships, and to develop innovative products tailored to customer needs. Managers can translate these elements of strategy into four specific goals and identify a measure for each.