Business Efficiency: What is Balanced Scorecard?
Balanced Scorecard was developed as a more effective strategy of implementing business efficiency — instead of focusing on financial measurements, Balanced Scorecard is a more holistic system of metrics across four equally weighted quadrants. While methodologies like Six Sigma and Agile may have mutually exclusive viewpoints on the right way to manage a project, Balanced Scorecard plays nicely with most other systems.
Balanced Scorecard in a nutshell
The key differentiations of Balanced Scorecard strategy include:
Focus on knowledge growth: Few organizations measure, let alone give balanced weight to, internal knowledge and growth — but Balanced Scorecard brings these metrics front and center.
Multi-level viewpoints: Scorecards look at the same data on three levels: long-term, short-term (3–5 years), and immediate (today) to keep your eye simultaneously on the big picture and the here and now.
Compatibility with other methodologies: You can use scorecards to measure progress towards goals when using any (or no) formal efficiency-enhancing methodology.
The four scorecard quadrants
A balanced scorecard includes measurements across four key areas:
Financial: Revenue, net profits, expenses, payroll, and other routine monetary metrics.
Knowledge and Growth: How are your employees growing in their skills and knowledge? This question is carefully considered and answered by a knowledge scorecard.
Productivity: In effect, how efficient is your internal organization? This scorecard measures productivity in hard numbers.
Customers: Not just how many customers you have, but retention rates, satisfaction numbers, and other customer-focused figures.
Balanced Scorecard is best for every organization that measures itself and companies primarily composed of knowledge workers.