INTRODUCTION:

The balanced scorecard is a strategic planning and management system that is used extensively
in Firms and industry, that also include government, and nonprofit making organizations
worldwide to arrange business activities to the vision, mission and strategy of the organization,
in other to improve internal and external communications, and monitor organization performance
against strategic goals. The Balanced Scorecard enables an organizations to bridge the gap
between strategy and actions, engage a wider range of users in organizational planning, that
reflects the most important aspects of the firms, and respond immediately to progress, feedback
and changing business conditions. The Balanced Scorecard In fact, it's a management system that
enables an organization to set, track, and achieve its key business strategies and objectives. After
the business strategies are developed, they are deployed and tracked through the Four Legs of the
Balanced Scorecard these four legs comprise four distinct business perspectives, the Balanced
Scorecard its also means the strategic planning and management system that is used to arrange
business activities to the vision, mission statement of an organization. As a model of
performance, the balanced scorecard Its explain the links between leading inputs i.e. human and
physical, processes, and lagging outcomes and focuses on the importance of managing these
components to achieve the organization's strategic priorities. The Balanced Scorecard, is also a
performance measurement system that considers not only financial measures, but also customer,
business process, and learning measures. Meanwhile the Balanced Scorecard defines an
organizations performance and measures whether management is achieving desired results, and
as well the Balanced Scorecard translates Mission and Vision Statements into a comprehensive
set of objectives and performance measures that can be quantified and appraised. It was founded
by Drs. Robert Kaplan (Harvard Business School) and David Norton as a performance
measurement framework that added strategic non-financial performance measures to traditional
financial metrics to give managers and executives a more 'balanced' view of organizational
performance.
BODY:
Performance Measurement
This explain or pictured the really or the original system of the Balance Scorecard That kept the
Financial system as the form of ultimate result measures for business firms success, and also
supplements or improve these with metrics from three perspectives. Shows the original structure
for the Balanced Scorecard (BSC). The BSC retains financial metrics as the ultimate outcome
measures for company success, but supplements these with metrics from three additional
perspectives customer, internal process, and learning and growth that we proposed as the
drivers for creating long-term shareholder value. A performance measurement system that
considers not only financial measures, but also customer, business process, and learning
measures. The balanced scorecard has evolved from its early use as a simple performance
measurement framework to a full strategic planning and management system. The new
balanced scorecard transforms an organizations strategic plan from an attractive but passive
document into the "marching orders" for the organization on a daily basis. It provides a
framework that not only provides performance measurements, but helps planners identify what
should be done and measured. It enables executives to truly execute their strategies. The
Balanced Scorecard is based on performance measurement and derives its objectives from vision
and strategy. It enables shared understanding of the links between strategy, critical success
factors and actions while establishing accountability Besides the Balanced Scorecard,
performance measurement systems have mainly focused on lagging financial indicators.
Although non-financial measures have existed for long, their link to strategy and financial results
has been vague at best. Finally, the Balanced Scorecard does include performance in
communities as process perspective objectives when such performance does contribute to the
differentiation in the strategy (Kaplan and Norton, 2003). This view matches that articulated by
Michael Porter when he advocates that environmental and social performance be aligned to and
support the company strategy (Porter and Kramer, 1999, 2006). Occasionally companies do not
want shareholder value to be the unifying paradigm for its strategy.

Strategic Objectives and Strategy Maps:
As Norton and I began working with the companies, after the initial HBR article appeared, we
faced the question about how to choose the metrics that would go on a Balanced Scorecard. We
could have adopted the generic metrics that many companies were already using, such as
customer satisfaction, customer retention, defect rates, yields, lead and process times, and
employee satisfaction. But the client companies and we were dissatisfied with these metrics.
They were too generic. By 1992, virtually all companies (airlines and dysfunctional companies,
such as WorldCom, being notable exceptions) were attempting to increase customer satisfaction,
improve process quality, and motivate employee performance. As we probed this issue with
executives, we quickly learned that creating a Balanced Scorecard should not start with selecting
metrics. The first versions of balanced scorecard asserted that relevance should derive from
the corporate strategy, and proposed design methods that focused on choosing measures and
targets associated with the main activities required to implement the strategy. As the initial
audience for this were the readers of the Harvard Business Review, the proposal was translated
into a form that made sense to a typical reader of that journal - one relevant to a mid-sized US
business. Accordingly, initial designs were encouraged to measure three categories of non-
financial measure in addition to financial outputs - those of "customer," "internal business
processes" and "learning and growth." These categories were not so relevant to non-profits or
units within complex organizations (which might have high degrees of internal specialization),
and much of the early literature on balanced scorecard focused on suggestions of alternative
'perspectives' that might have more relevance to these groups. The Balanced Scorecard originally
was conceived as an improved performance measurement system. However, it soon became
evident that it could be used as a management system to implement strategy at all levels of the
organization by facilitating the following functions:
1. Clarifying strategy - the translation of strategic objectives into quantifiable measures
clarifies the management team's understanding of the strategy and helps to develop a
coherent consensus.
2. Communicating strategic objectives - the Balanced Scorecard can serve to translate
high level objectives into operational objectives and communicate the strategy effectively
throughout the organization.
3. Planning, setting targets, and aligning strategic initiatives - ambitious but achievable
targets are set for each perspective and initiatives are developed to align efforts to reach
the targets.
4. Strategic feedback and learning - executives receive feedback on whether the strategy
implementation is proceeding according to plan and on whether the strategy itself is
successful ("double-loop learning"). The balanced scorecard has evolved from its early
use as a simple performance measurement framework to a full strategic planning and
management system. The new balanced scorecard transforms an organizations
strategic plan from an attractive but passive document into the "marching orders" for the
organization on a daily basis. It provides a framework that not only provides performance
measurements, but helps planners identify what should be done and measured. It enables
executives to truly execute their strategies. Strategy maps are communication tools used
to tell a story of how value is created for the organization. They show a logical, step-by-
step connection between strategic objectives (shown as ovals on the map) in the form of a
cause-and-effect chain. Generally speaking, improving performance in the objectives
found in the Learning & Growth perspective (the bottom row) enables the organization to
improve its Internal Process perspective Objectives (the next row up), which in turn
enables the organization to create desirable results in the Customer and Financial
perspectives (the top two rows). The Balanced Scorecard is based on performance
measurement and derives its objectives from vision and strategy. It enables shared
understanding of the links between strategy, critical success factors and actions while
establishing accountability

The Balanced Scorecard focuses on creating and communicating a total comprehensive
picture to all members of the organization from the top down, taking a long-term view of
what the company's strategic objectives really are, making good use of knowledge gained
through experience and maintaining the required flexibility of such a system to cope with
the fast-changing business environment. In short, it's a management system that enables
your organization to set, track, and achieve its key business strategies and objectives. After
the business strategies are developed, they are deployed and tracked through the Four
Legs of the Balanced Scorecard You not only have to measure these critical four legs, but
also set strategies, goals, objectives, and tactics to make them happen. And while you're at
it, you have to make sure that your strategies and tactics are congruent. They have to work
together and create a single thread, tying together in ways that make sense. This isn't an
optional exercise; it's essential. The future of your business depends on it. Strategic
Planning is a comprehensive process for determining what a business should become and
how it can best achieve that goal. It appraises the full potential of a business and explicitly
links the businesss objectives to the actions and resources required to achieve them.
Strategic Planning offers a systematic process to ask and answer the most critical
questions confronting a management teamespecially large, irrevocable resource
commitment decision

These functions have made the Balanced Scorecard an effective management system for the
implementation of strategy. The Balanced Scorecard has been applied successfully to private
sector companies, non-profit organizations, and government agencies.
The Strategy Management System:
My HBS colleague, Robert Simons, developed the Levers of Control management control
framework (Simons, 1995a&b) at the same time that Norton and I were developing the Balanced
Scorecard. Simons identified several types of management control systems that managers use to
motivate, monitor, and manage their strategies. The control systems included belief systems
(mission, vision and values), boundary systems, internal control systems, diagnostic systems, and
interactive systems. As described at the beginning of this chapter, Norton and I originally
envisioned the Balanced Scorecard as an enhanced performance measurement system, labeled by
Simons as a diagnostic system. Our vision for the BSC was for managers to define and track
performance among multiple financial and nonfinancial measures that were considered important
for company success. Although it helps focus managers' attention on strategic issues and the
management of the implementation of strategy, it is important to remember that the Balanced
Scorecard itself has no role in the formation of strategy. In fact, balanced scorecards can co-exist
with strategic planning systems and other tools. The Balanced Scorecard originally was
conceived as an improved performance measurement system. However, it soon became evident
that it could be used as a management system to implement strategy at all levels of the
organization .The balanced scorecard is a management system (not only a measurement system) that
enables organizations to clarify their vision and strategy and translate them into action. It provides
feedback around both the internal business processes and external outcomes in order to continuously
improve strategic performance and results. When fully deployed, the balanced scorecard transforms
strategic planning from an academic exercise into the nerve center of an enterprise. Its provides
organizations with the ability to clarify vision and strategy and translate them into action. By focusing on
future potential success it becomes a dynamic management system that is able to reinforce, implement
and drive corporate strategy forward. To provide a management system that was better at dealing with
today's business pace and to provide business managers with the information they need to make better
decisions, Kaplan and Norton developed the Balanced Scorecard. Note that the Balanced Scorecard is
a management system not a measurement system. As a management system its used to align
business activities to the vision statement of an organization'. More cynically, and in some cases
realistically, a Balanced Scorecard attempts to translate the sometimes vague, pious hopes of a
company's vision/mission statement into the practicalities of managing the business better at every
level.