3 Balanced Scorecard Examples and their Application in Business

Before presenting Balanced Scorecard examples, it is important to understand the context and the concepts behind the management and monitoring tool created by professors Robert S. Kaplan and David Norton in their famous article in the Harvard Business Review 1992 entitled “The Balanced Scorecard: Measures that drive performance. “

At that time there was a perception that the benchmarking methods of organizations were becoming obsolete and inadequate. At the end of the professors’ study, rather than create a more appropriate method of enterprise performance measurement, they eventually developed an efficient support system for decision making, to aid strategic management.

One of the key points of the Balanced Scorecard was to expand the performance evaluation of prospects that have always been very focused purely on financial aspects.

Therefore, an example of Balanced Scorecard description can be defined as follows:

A tool for monitoring the strategic decisions taken by the company based on indicators previously established and that should permeate through at least four aspects – financial, customer, internal processes and learning & growth.

So the company has its measurement capabilities and expanded monitoring, allowing all relevant points of the supply chain to be measured. Also, It brings about significant improvements in the whole company’s understanding of their strategy defined by top management, which is assessed so that each employee is involved in the process. It’s done through the development of strategic maps.

Furthermore, in our balanced scorecard examples, there are some strategic maps, which become clearer as we summarize every organization’s method of performance measurement and the effect they have on the achievement of business objectives.

In the words of the professors themselves Robert Kaplan and David Norton:

“Balanced Scorecard communication happens through a logical structure, based on the management of established goals; enabling managers to reallocate physical, financial and human resources in order to achieve strategic objectives. More than a performance measurement tool, the Balanced Scorecard is a translator of strategy and a performance communicator. “

A good BPM system will always be a reliable ally in the monitoring, management, and assistance in decision making in your company.

See also: Process Performance Metrics: Learn about 10 of them here.

 

 Balanced Scorecard Examples: Defining the 4 Perspectives

The best way to define the objectives and their metrics for each of the perspectives are by answering a few questions.
Note that there is an interconnected hierarchy ranging from financial goals (usually what the company wants to attain), through to internal customers, processes and then learning and growth which is the way to perpetuate long-term achievements.

Here’s an example of how to answer these questions.

Financial Outlook:

To succeed financially, how should shareholders view us?

An example answer could be: increase revenue and increase profitability.
How to measure it? Through the financial statements.

Customer Perspective:

To achieve our vision, how should our customers see us?

Sample answer: we need to show the market that our products have superior quality compared to the competition.
How to measure it? Through customer satisfaction surveys.

Internal Process Perspective:

To satisfy our customers, what business processes do we need to achieve excellence in?

Sample answer: we must achieve excellence in quality control and innovation.
How to measure it? By the statistical analysis of consumer care service reports, social networks and review sites like “Yelp“.

Learning and Growth perspective:

To achieve our vision, how will we sustain our ability to change and improve?

Sample answer: we must sustain our ability to change and improve through the intensification of training and qualification of employees.
How to measure it? By verifying the number of hours spent in training and the number of certificates achieved by employees in outsourced courses.

See also:

• Kaizen Continuous Improvement Process: See how to use it in your business.
• The PDCA cycle: explaining the concept of process improvement.

 

3 Balanced Scorecard Examples

The development process of the Balanced Scorecard in a company involves several steps, which we have summarized here:

1. Establish a clear vision of the future
2. Define the strategic objectives
3. Determine the critical success factors
4. Choose indicators to measure and monitor performance
5. Set goals, action plans, and initiatives

All 5 steps for each of the 4 perspectives.

These points, are only some aspects of how to set goals and choose indicators. What we would like to present now are 3 examples of strategic maps that are generated during the development of Balanced Scorecard projects, which summarize all of the work for the organization, including objectives, targets, indicators, and also the actions and initiatives that should be implemented.

1. Balanced Scorecard example: Strategic map for a Craft Brewery

2. Balanced Scorecard example: Strategic map for a Jewelry store

 

3. Balanced Scorecard example: Strategic map for an E-Commerce Business

 

The examples of Balanced Scorecards presented are entirely hypothetical and rather schematic. Usually, they may contain more initiatives for each objective, as well as more goals. The important thing is to understand the concept and how to use it correctly in your particular business.

Get to know other strategic management tools and advice:

• Understand the concept of BPM and its usefulness for your company.
• Implement corporate performance management in 7 steps.
• How to reduce operating costs in your business.
• How to perform step by step SWOT analysis.