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MindMap Gallery Balanced Scorecard The Most Influential Strategic Performance Management Tool
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Balanced Scorecard The Most Influential Strategic Performance Management Tool
This is a mind map about the Balanced Scorecard: the most influential strategic performance management tool, with the main contents: 6. Related tools, 5. Case analysis, 4. Functions and deficiencies, 3. Implementation and application, 2 . Content analysis, 1. Conceptual meaning.
Edited at 2025-02-03 18:43:18
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Balanced Scorecard The Most Influential Strategic Performance Management Tool
- DeepSeek User Guide Collection
In order to help everyone use DeepSeek more efficiently, a collection of DeepSeek guide mind map was specially compiled! This mind map summarizes the main contents: Yitu related links, DS profile analysis, comparison of DeepSeek and ChatGPT technology routes, DeepSeek and Qwen model deployment guide, how to make more money with DeepSeek, how to play DeepSeek, DeepSeek scientific research Application, how to import text from DeepSeek into MindMaster, the official recommendation of DeepSeek Wait, allowing you to quickly grasp the essence of AI interaction. Whether it is content creation, plan planning, code generation, or learning improvement, DeepSeek can help you achieve twice the result with half the effort!
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- Voice recognition commercial solution
This is a mind map about a commercial solution for task speech recognition. The main content includes: text file content format:, providing text files according to the same file name as the voice file.
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Balanced Scorecard: The Most Influential Strategic Performance Management Tool
1. Conceptual meaning
1.1. Origin
Balanced Scordcard (BSC): Developed by Professor Robert Kaplan of Harvard Business School and David Norton, executive president of Norland. In 1990, Norton College in the United States launched a research project, and Kaplan and Norton led a team to study 12 companies including Advanced Micro Devices and Apple Computers. Because people question the effectiveness of financial performance indicators for modern enterprises, a balanced scorecard was proposed after discussing various alternative methods. According to a survey by the Gartner Group in the United States, nearly half of Fortune 1,000 companies adopt it, and Harvard Business Review lists it as one of the 75 most influential ideas of the 20th century.
1.2. Meaning
The Balanced Scorecard is a systematic strategic performance management and evaluation system (a tool used to measure and manage the implementation of the enterprise's strategy). Its strategic goals and performance evaluation come from the organization's vision and strategy, covering financial performance indicators and non-financial performance indicators, and achieving the organization's strategic goals and performance evaluation from four aspects: finance, customers, internal processes, learning and growth. in:
Financial dimension: reflects growth, profit, and risk strategy from the perspective of shareholders.
Customer dimension: Value creation and differentiation strategy that reflects the customer's perspective.
Internal business process dimension: reflects business process strategies that create customer and shareholder satisfaction.
Learning and growth dimensions: reflect the formation of a trend that is conducive to organizational improvement, innovation and growth.
1.3. Development history
The balanced scorecard was originally proposed as a performance evaluation model:
In 1992, the paper on related research achievements was published in the Harvard Business Review.
In 1997, Harvard Business Review called the Balanced Scorecard one of the most influential strategic management tools in 75 years.
In 2001, Kaplan and Norton's monograph "Strategic Organisation" reflects the further development of this model.
The balanced scorecard has evolved from a basic performance evaluation method to a comprehensive strategic management tool, a process that is reflected in four papers in the Harvard Business Review. In 1996, the book "Balanced Scorecard: Turning Strategy into Action" summarized early development and exemplified the initial motivation. With the emergence of the strategic map, the balanced scorecard has been further developed and improved.
2. Content analysis
2.1. Structural dimension
The balanced scorecard provides strategic methods to examine value creation from four different perspectives, ensuring the stability and balance of the company's performance management system.
2.1.1. Financial perspective
The goal is to solve the problem of "how to satisfy shareholders" and demonstrate the role of corporate efforts in economic benefits. In the balanced scorecard, the improvements in the other three aspects will ultimately be reflected in financial indicators, such as sales, profits, asset utilization, etc. Finance is the starting point and destination of the other three aspects, because financial data can remind managers that improvements in quality, customer satisfaction, etc. need to be converted into financial results, otherwise it is meaningless, so financial goals are often the priority goals for managers.
2.1.2. Customer perspective
The goal is to solve the problem of "how customers view us". Modern corporate activities start with customer value, focusing on market share and customer needs and satisfaction from several aspects: time (delivery cycle), quality, service and cost. Because the level of customer satisfaction is the key to the success or failure of a company. Only by satisfying customers can the value of products be realized and the company can obtain an economic source of continuous growth. Customer indicators include delivery on time rate, customer satisfaction, product return rate, new customers' acquisition, product quality, etc.
2.1.3. Internal business process perspective
The goal is to solve the problem of "what we have to be good at". Internal processes are the focus of the company's improvement of operating performance, and customer satisfaction and shareholder value realization rely on the support of internal processes. The main indicators include:
Indicators for evaluating the innovation ability of an enterprise, such as the time spent on new product development, the proportion of new product sales in total sales, the proportion of development expenses consumed and operating profits, etc.
Indicators for evaluating the performance of enterprises' production and operation, such as product production time and operation turnover time, the quality of products and services, the cost of products and services, etc.
Indicators for evaluating the performance of the company's after-sales service, such as the company's response time and processing time to product failures, the success rate of after-sales service, the time of customer payment, etc.
2.1.4. Learning and Growth Angle
The goal is to solve the question of “whether we can continue to improve and create value”. It focuses on the basis of the company's future success, involves issues such as personnel, information systems and market innovation, and evaluates the company's ability to achieve sustainable development. Mainly including:
Indicators for evaluating employee capabilities, such as employee satisfaction, employee retention rate, employee work efficiency, employee training times, etc.
Indicators for evaluating the information capabilities of an enterprise, such as information coverage rate, time reflected by the information system, the ratio of currently possible information to expected information, etc.
Evaluate incentives, authorizations and collaboration indicators, such as the number of suggestions made by employees, the number of suggestions adopted, and the degree of collaboration between individuals and departments.
Each indicator forms a complementary chain based on the "cause and effect relationship", taking into account the "balance" in four aspects to pursue the overall benefits and healthy development of the organization.
2.2. What to balance
The balanced scorecard integrates financial indicators and non-financial strategic indicators through a causal relationship chain, including result indicators and driving indicators, and becomes a management control system for forward feedback, achieving multi-faceted balance, which is conducive to the long-term development of the organization.
2.2.1. Balance between financial and non-financial indicators
At present, corporate assessments focus more on financial indicators, and have fewer assessments of non-financial indicators (customers, internal processes, learning and growth), and lack quantitative and systematicity. The balanced scorecard comprehensively examines enterprises from four dimensions: finance, customers, internal business processes and learning innovation, reflecting the balance between financial indicators and non-financial indicators.
2.2.2. The balance between long-term goals and short-term goals of the enterprise
The balanced scorecard is a strategic management tool that starts from the corporate strategy (long-term goals) and is gradually decomposed to short-term goals. While paying attention to long-term development, we also attach importance to the completion of near-term goals, effectively combining strategic planning and annual plans, and solving the problem of poor operability of strategic planning.
2.2.3. Balance between outcome indicators and process indicators
The balanced scorecard uses effective strategy completion as the driving force, and uses measurable indicators as the results of target performance management, seeking a balance between outcome measures and process indicators.
2.2.4. Balance between internal and external groups of an enterprise organization
In the balanced scorecard, shareholders and customers are external groups, and employees and internal business processes are internal groups. In the process of effectively implementing the strategy, it is important to balance the occasional contradictions between these groups.
2.2.5. Balance between leading indicators and lagging indicators
The four aspects of finance, customers, internal processes, learning and growth include leading indicators and lagging indicators. Financial indicators are lagging indicators that can only reflect past situations and cannot guide companies to improve their performance. The balanced scorecard focuses on leading indicators such as customers, internal processes, learning and growth, making the company pay more attention to the process rather than just the results after the fact, thus achieving a balance between leading indicators and lagging indicators.
2.3. Main features
The main feature of the balanced scorecard is to combine the company's vision, mission and medium- and long-term development strategy with the company's daily performance evaluation, daily management and operation, so that the company's strategy becomes a daily specific and measurable evaluation indicator and becomes a Daily actions of all employees. Specifically manifested as:
It is not only an evaluation system, but also an important method of strategic management. It attaches importance to the current and long-term development of the enterprise and improves the overall management level.
It can transform corporate strategy into performance indicators and actions at all levels, make corporate actions consistent, promote employees' communication and understanding of strategic goals, and is conducive to employees' learning and growth and core capabilities cultivation.
Achieve the organic combination of financial indicators and non-financial indicators, overcome the short-term behavior of financial indicator evaluation, and evaluate the business performance, competitiveness and sustainable development capabilities of enterprises.
Pay attention to the improvement of the company's external environment and its relationship with external interests, such as meeting customer requirements and relationships with suppliers and governments.
Be able to analyze the business performance of the company from internal and external factors, find out the causes of the problem, and clarify the direction of improvement or development.
3. Implement application
3.1. Implementation Principles
Five principles are required to establish a rigorous balanced scorecard:
Transform strategy into executable language: The balanced scorecard is a strategic management tool, and abstract strategies need to be transformed into clear and easy-to-understand execution language. The strategy is expressed through four dimensions of performance indicators and strategic charts, which facilitates employees to understand and implement.
Enterprise operation and strategic coordination: The strategies of various units and departments of the enterprise need to be coordinated to achieve the overall strategy. Introduce a balanced scorecard, and pass it on to various units and departments with strategy as the core, eliminate inter-organizational barriers, and ensure that comprehensive performance is greater than the sum of individual performances.
Make strategy the daily work of every employee: Employees are the key to the successful implementation of the strategy. It is necessary to deeply understand the strategy in the hearts of employees and become a guide to daily work. Through "top-down" strategic communication, the balanced scorecard goals are set to individuals or teams, and combined with incentive mechanisms to motivate employees to implement strategies.
Make strategy a continuous process: the strategy needs to adapt to changes in the internal and external environment of the enterprise, and the balanced scorecard continues to feedback and correct according to the implementation of performance indicators, so that the formulation and implementation of the strategy become a continuous process.
Promote enterprise change through senior leadership: The implementation of the balanced scorecard is a major change, which requires attention and support from senior leaders, strengthen the concept of strategy and balanced scorecard, guide the enterprise to transform into a strategy-centered organization, and promote sustainable development.
3.2. Implementation steps
The design of the balanced scorecard begins with clarifying and transforming the organization's vision and strategy. The specific steps are as follows:
Establishment and advocacy of the company's vision and strategy: When establishing a vision and strategy in the company, consider establishing a department-level strategy. Establish a balanced scorecard group or committee to explain the company's vision and strategy, and establish specific goals in four aspects: finance, customers, internal processes, learning and growth.
Design and establishment of performance indicator system: Based on the company's strategic goals and long-term and short-term development needs, find the most meaningful performance measurement indicators for the four types of indicators. Through top-down, from the inside to the outside, we solicit opinions from all parties, so that the indicator system can be balanced and fully reflect the company's strategic goals.
Strengthen internal communication and education of enterprises: Use multiple communication channels, such as publications, letters, bulletin boards, etc. to let managers at all levels understand the company's vision, strategy, goals and performance measurement indicators.
Determine the specific numbers of performance measurement indicators for each year, quarterly and monthly, and combine them with the company's plan and budget: pay attention to the causal relationship, driving relationship and connection relationship between various indicators.
Improvement and improvement of performance indicator system: examine the scientific nature of the indicator system design and whether it reflects the actual situation of the enterprise. Pay attention to the incompleteness of performance evaluation and supplement new evaluation indicators; improve unreasonable indicators so that the balanced scorecard can better serve the strategic goals of the company.
3.3. Applicable conditions
From practical experience, the balanced scorecard is mainly suitable for enterprises with the following characteristics:
Companies facing greater competitive pressure: Competitive pressure is the driving force for corporate development, but companies need to perceive competition. If the competitive pressure is high but not perceived, the introduction of a balanced scorecard may not play an active role.
Enterprises oriented towards goals and strategies: goals are the future results of the company, and strategies are the path to achieve goals. The balanced scorecard places strategy in the management center, and enterprise applications need to be strategic-oriented, and they can also be re-understood and formulate strategies.
Suitable for enterprises with a consultative or democratic leadership system or enterprises that are preparing to transform a centralized leadership system into a consultative and democratic system: adopting a balanced scorecard requires enterprises to adopt a "four-wheel drive" model to give full play to employees in the enterprise management role in. It can operate better in companies with democratic management styles and can also promote companies to transform into democratic management styles.
Enterprises with high cost management levels: The customer side of the balanced scorecard is based on specific management ideas and requires measuring the profits brought by customers. Traditional cost management methods are difficult to implement, so the operation cost method needs to be introduced. At the same time, companies also need to pay attention to factors that affect customers such as product quality.
3.4. Misunderstandings
Using a balanced scorecard may lead to the following misunderstandings:
BSC strictly evaluates indicators in four dimensions: Enterprises should not stick to the four dimensions of the balanced scorecard, but should design specific dimensions, implementation plans and indicators based on their own characteristics.
BSC is only suitable for organizational performance evaluation, not individual performance evaluation: The balanced scorecard can connect employee actions with corporate strategy, and connect all employees through a graded balanced scorecard, which is also applicable to individual performance evaluation.
BSC is used only as a tool to measure corporate performance: the balanced scorecard is not only an evaluation system, but also a strategic management system, which can transform strategic goals into specific goals and promote strategic communication and implementation.
The more indicators of BSC, the better: too many indicators will lead to information overload, which does not conform to the cost-effectiveness principle, and may also make the indicators indistinguishable from primary and secondary, and the "causal relationship" unclear. Enterprises should choose key strategic indicators.
There is no correct understanding of the relationship between cost and benefit in the implementation of BSC: the initial implementation of the balanced scorecard is cost investment, and benefits lag. Enterprises need to consider their own ability to bear and development to avoid giving up halfway through quick success and instant benefits.
4. Function and Inadequacy
4.1. Meaning
The balanced scorecard is of great significance to strategic performance management and corporate strategic management:
Provide strong support: By establishing key success factors and key performance indicators, a strategic guarantee system and performance evaluation system will be formed, job work efficiency will be promoted, and overall corporate management efficiency and performance will be improved.
The shortcomings of improving traditional performance evaluation: There are limitations in traditional performance evaluation methods, and the balanced scorecard is systematically decomposed and evaluated through four indicators, which is more systematic and fair.
Promote corporate cohesion and enthusiasm for employee participation in management: Establish employee participation indicators, understand corporate strategies, and recognize their own work value, which is conducive to teamwork and strategic execution.
4.2. Disadvantages
There are some disadvantages to the balanced scorecard:
Implementation is difficult: the company is required to have a clear organizational strategy, senior managers have the ability and willing to decompose and communicate strategies, and middle and senior managers have the ability and willing to innovate indicators. Enterprises with poor management foundation need to improve their management level first.
It is difficult to establish an indicator system: Although the introduction of non-financial indicators overcomes the limitations of single financial indicator evaluation, it is difficult to establish a non-financial indicator system, determine standards and evaluation methods. It requires long-term exploration by enterprises, and different enterprises have different strategies and environments. The settings are also different.
There are too many indicators, and it is difficult to be true and clear about the causal relationship between indicators: the balanced scorecard involves four sets of performance evaluation indicators, and the number of suitable indicators is 20-25. The causal relationship between indicators is difficult to ensure true and reliable. When the competitive environment changes, the original strategy and indicators may fail and need to be revised.
It is difficult to allocate weights of each indicator: four levels of factors must be considered comprehensively to evaluate the performance of an enterprise, which involves weight allocation, and the allocation of weights at different levels and indicators will affect the evaluation results. The balanced scorecard does not provide objective criteria for determining weights, and the weight allocation is subjectively colored.
5. Case Study
5.1. Use of the DHL Balanced Scorecard for China Foreign Exchange
background
China Foreign Trade and Foreign Trade - DHL was established in Beijing on December 1, 1986. Since 1998, joint ventures in Beijing, Shanghai and Guangzhou have implemented the operating cost method to understand the cost structure and differences, and assist in cost management and strategy formulation. 2002 is the "Year of Service", because the task of improving employees' service awareness is arduous and the recognition that the balanced scorecard can assist in management, it was decided to implement the balanced scorecard.
Implementation of Balanced Scorecard
Establish a vision strategy: Determine the vision strategy of the "Market leader" (market leader) aims to provide the highest service in the international express industry.
Indicator design: Redesign financial indicators, such as using accounts receivable for more than 90 days to describe revenue and budget completion, etc., covering customer indicators, such as customer retention rate, new customers, customer satisfaction, etc.
Implementation and training: Establish a "Balanced Scorecard Group" to be responsible for strategy formulation and other work. Invite training consultants to design courses, train internal trainers of the branch, and then internal trainers train employees.
Implementation effect: Promoted performance growth, the company's annual average growth rate of business is 40%, and the turnover jumps by 60 times. It has established the largest joint venture express service network in China, with a market share of 37% [reflecting the performance of the balanced scorecard Improve the effect].
Case review
Successful points:
Take the balanced scorecard as the strategic management system, clarify long-term strategic goals and refine them into specific areas, and set performance evaluation indicators from multiple dimensions.
Adjust indicators according to China's national conditions and regional characteristics, and the indicators spread downward, allowing management to track and correct indicators and improve management efficiency and transparency.
Link the balanced scorecard with floating salary to guide employees to pay attention to company and department performance.
Disadvantages:
The balanced scorecard structure is incomplete, with three dimensions on the surface, and in essence it only involves two levels, lacking the "internal process" and "learning and growth" levels.
The financial-level indicators are missing, and the indicators reflected are incomplete, which may be related to the company's environment and operating conditions at the time.
There are problems with improper attribution relationships in indicator classification, such as some indicators should be classified at a more appropriate level.
References:
A balanced scorecard allows the execution level to agree with the organization's strategic intentions.
The balanced scorecard goals need to be adjusted according to China's national conditions.
The balanced scorecard system can cause essential changes in the company's performance appraisal and employee responsibility, but it may involve cultural changes and needs to be handled properly.
6. Related tools
6.1. Strategic Map
6.1.1. Conceptual meaning
Strategic Map: Proposed by Robert S. Kaplan and David P. Norton. It was developed on the basis of a balanced scorecard, adding a particle layer (each level can be broken down into many elements) and a dynamic layer (which can be drawn in conjunction with the strategic planning process). Taking the four levels of the balanced scorecard as the core, a corporate strategic causal relationship diagram is drawn and the relationship between the corporate strategic goals and drivers is described.
6.1.2. Content and practices
Core content: Enterprises use intangible assets such as human capital, information capital and organizational capital (learning and growth) to achieve innovation and establish strategic advantages and efficiency (internal processes), provide specific value to the market (customers), and thus realize shareholder value (financial ).
Design process: Find the route from the goal, first clarify the company's strategic goal statement and core value positioning, and develop the strategic vision. The standard template of the strategic map corresponds to the four aspects of the balanced scorecard, including finance, customer, internal process, learning and growth, and links expected outputs and drivers through a causal relationship chain.
Specific contents in all aspects:
Financial aspects: Enterprises have two basic requirements for financial growth: revenue growth and productivity improvement. Revenue growth can be achieved through new markets, new customers, etc., and productivity improvement can be achieved through improving cost structure and efficient use of assets.
Customer: The core is customer value plan, which is selected from three typical aspects: business advantages, customer intimacy, and product leadership. Enterprises need to highlight their advantages in a certain field.
Internal process aspects