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Kaplan and Nortons balanced

scorecard
Once you have a strategy in place, you will want to know how well
it is doing. You dont want to just measure financial performance.
The financial implications of a strategy are usually not immediate.
There are lots of areas that contribute to the success of a strategy.

Initiatives

Targets

Measures

To succeed
financially
how should
we appear
to our
shareholders?

Objectives

Financial?

Initiatives

Vision and
strategy

Targets

To achieve
our vision,
what
processes
must we
excel at?

Measures

Initiatives

Targets

Measures

Objectives

To achieve
our vision,
how should
we appear
to customers?

Objectives

Processes?

Customer?

Initiatives

Targets

Measures

To achieve
our vision,
how do we
keep learning
and improving?

Objectives

Learning?

Kaplan and Nortons balanced scorecard

Source: Adapted from Kaplan, R. S. and Norton, D. P., The balanced scorecard: measures that divide performance,
Harvard Business Review, Harvard Business School Publishing, 2005

How to use
You will never create the perfect balanced scorecard for your
organisation. But you can move strategic focus to a range of
measures that better reflect performance and progress towards
your strategy.

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202

The Strategy Book toolkit

First, include your vision and strategy. It doesnt have to be final

but it helps to have a sense of what will be measured. Next, consider the business from four perspectives: financial, customer,
processes and learning. What has to happen in all areas if your
organisation is to be successful? How can you measure how well
you are doing?
Dont get obsessed with the measures or the scorecard. Dont waste
excessive amounts of time measuring. It may be enough to have
a rough, opinion-based measure in many areas. The value here is
in making the strategy come to life and giving people a more balanced view of what is important in what they do and achieve.
The CEO of Britvic, UK-based drinks producer and PepsiCo distributor, adopted the balanced scorecard, because of inconsistent
financial performance.
He made the decision after a coaching workshop with 450 senior
managers reviewed survey and performance data. The employee
survey suggested that leadership was poorly regarded, while
missed targets indicated a lack of accountability.
Leadership ratings did increase slightly but growth did not. More
processes didnt help company creativity, stop a choking hazard
product recall or save the job of the CEO or chairman when a competitor, AG Barr, attempted a takeover.
It was only when the chairman was fired that he had the time and
space to gain a more strategic view. He was able to see the attractiveness of investing in dormant brands and global marketing for
global growth. And when rehired, this time as a CEO, he immediately adopted a growth strategy that has so far worked well particularly with the launch of Fruit Shoot in India and the USA.
The smart strategist remembers that a balanced view is no substitute for a strategic view of strengths and weaknesses. The secret is
to look for connections between the various measures that provide insights into threats and seek attractive opportunities.

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Also by
MAX MCKEOWN

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