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
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.