In spite of the the Balanced Scorecard assignment being cancelled in Aplia, I decided to investigate this concept and provide an outline of it in my blog.
Description
The Balanced Scorecard concept is based on four strategic perspectives: financial, customer, internal process, and learning and growth.
The process for developing a strategy based scorecard is outlined in the below graphic. The scorecard development begins at the top of the pyramid with the creation of an overarching mission and vision and works its way down to the tactical level of specific operations creating a clear link between each level.
Sustainable processes become integrated in the scorecard at the strategic themes and results level. Here is where triple bottom line processes are linked to the mission and vision of the business as pillars which support that mission and vision.
Sustainability can then be viewed from each of the four strategic perspectives:
The below graphic illustrates how sustainability measures can be incorporated into the scorecard:
In a strategy based balanced scorecard system, the measurements are a means to an end rather than an end in themselves. Each strategic objective is supported by a measure which can be tracked and therefore managed.
http://www.sustainabilitymanagement.net/public/04%20The%20Sustainability%20Balanced%20Scorecard.pdf
http://www.balancedscorecard.org/Portals/0/PDF/LinkingSustainabilitytoCorporateStrategyUsingtheBalancedScorecard.pdf
Description
The Balanced Scorecard concept is based on four strategic perspectives: financial, customer, internal process, and learning and growth.
- The financial perspective focuses on the return on investment that owners, investors and analysts are looking for.
- The customer perspective focuses on the products or services that satisfy customer's wants and needs at an appropriate price.
- The internal process perspective focuses on the ability to efficiently turn resources into outputs which can then be sold to customers.
- The learning and growth perspective focuses on the infrastructure required to support the financial, customer and internal process activities. This includes both tangible and intangible infrastructure such as buildings, equipment, company culture, knowledge and skills of employees, and technology.
The process for developing a strategy based scorecard is outlined in the below graphic. The scorecard development begins at the top of the pyramid with the creation of an overarching mission and vision and works its way down to the tactical level of specific operations creating a clear link between each level.
Sustainable processes become integrated in the scorecard at the strategic themes and results level. Here is where triple bottom line processes are linked to the mission and vision of the business as pillars which support that mission and vision.
Sustainability can then be viewed from each of the four strategic perspectives:
- Financial: Demonstrate that sustainable practices improve the bottom line.
- Customer: Improve brand image and delivering a product that customers feel good about purchasing.
- Internal Process: Manage materials, energy consumption, and waste in such a way as to achieve the least impact possible.
- Learning and Growth: Create a culture of sustainability that employees feel committed to practicing every day.
The below graphic illustrates how sustainability measures can be incorporated into the scorecard:
In a strategy based balanced scorecard system, the measurements are a means to an end rather than an end in themselves. Each strategic objective is supported by a measure which can be tracked and therefore managed.
http://www.sustainabilitymanagement.net/public/04%20The%20Sustainability%20Balanced%20Scorecard.pdf
http://www.balancedscorecard.org/Portals/0/PDF/LinkingSustainabilitytoCorporateStrategyUsingtheBalancedScorecard.pdf
Daryl! This is great! I'm very glad that this was my first introduction to Balanced Scorecards because it was so clear.
ReplyDeleteThe pyramid graphic was very informative and easy to read. I really like how you showed where sustainability would fit in and the graphic.
Great post!
Molly
Daryl,
ReplyDeleteThanks, I feel like I am a bit ahead of the game for next week and diving into balanced scorecards. Your blog got me thinking a conundrum that I have been dealing with and we discussed at the last intensive. Many companies have been adding on sustainability as a measurement, creating director positions,and weaving it into daily operations, but few are indoctrinating sustainability at the mission/vision level. You pyramid was a good reminder of how integrating sustainability into a company might look like.
Love it! Thanks for looking into this and sharing! With all the focus on the single bottom line that's in the world on the Macro level this week I was a bit discouraged. I knew there has to be other more responsible ways of thinking and managing business - thanks for highlighting one!
ReplyDeleteI feel like I just read the Cliff-Notes. Awesome.
ReplyDeleteUnderstanding that once integrated, everything works like gears and cogs together as a means to an end, and businesses can operate sustainably at a organic level (bad pun, sorry)
I feel like BGI as a grad-program is an example of exactly this, of how it is a standard to which everything else is measured by.
Thanks again for skipping ahead - this is as valuable as Bert's screencasts! :)
Alana