The balanced scorecard is a method developed by Kaplan and Norton to help businesses turn their strategy into action
- It provides a way to take the organisations vision and turn that into measurable objectives
- It has four layers
o Financial – the outcomes for shareholders defined in financial terms
o Customer – the outcomes for customers defined in terms of the benefits they receive and sales
o Internal – the processes that deliver the customer benefits
o Learning – the capabilities of the organisation, its people and its systems which deliver the internal processes
- Each layer is defined in terms of performance measures, performance targets and initiatives
- Initiatives are the projects or changes that are required to reach the targets
How can this be applied in a small business?
- This can be applied in a small business to both develop a strategy and to develop the business plan which will deliver this strategy
- The Vision is used to define financial targets. The financial targets are used to define customer targets. The customer targets are used to define internal targets. The internal targets are used to define learning targets
- The changes necessary to achieve the targets are identified and these become projects or initiatives in the business plan
- The performance measures become the key performance indicators (KPIs) for the business. They are regularly reviewed by management to ensure that the strategy is achieved
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