Success Factors, Customization, and Limitations of Implementing the Balanced Scorecard

By: Lotfi Al-Sarori

In our last article of the Key Business Concepts 101 series, we presented the Balanced Scorecard. We explored how it can help companies define and implement strategies effectively through its four main perspectives - Financial, Customer, Internal Process, and Learning & Growth. And how it provides a mechanism to compare actual vs planned outcomes, by identifying objectives, metrics, targets, and relevant initiatives, so that corrective measures can be taken if there are variances. We've also examined the Strategy Map, which links diverse objectives across perspectives.

How can we begin putting the BSC into action?

In this article, we'll delve deeper into the topic and demonstrate how you may adopt the BSC in your own organization, how you can tailor it to your needs, and where its limitations lie.

Key Business Concepts 101: The Balanced Scorecard

By: Lotfi Al-Sarori

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The Balanced Scorecard is a very popular strategic management framework, and it will be the subject of this article of our Key Business Concepts 101 series. The Balanced Scorecard (BSC) is a management tool that has grown in prominence since its introduction by Kaplan and Norton in a 1992 article in the Harvard Business Review.

The BSC can be used to create, carry out, keep tabs on, and modify corporate strategies and plans. As a strategic management tool, the BSC aligns a company's everyday actions with its long-term goals. The ability to monitor and quantify performance is another benefit. Financial, customer, process, and learning and growth are the four main pillars around which the company's strategic initiatives are built. The purpose of this effort is to develop a streamlined and simplified dashboard that provides a comprehensive view of the company's performance from these four perspectives.