Which statement best describes the use or value of a balanced scorecard BSC

The Balanced Scorecard provides a powerful structure for creating and communicating organizational strategy. The organization’s strategy is displayed in a Strategy Map which helps managers to visualize, identify, and understand cause-and-effect relationships between different strategic objectives. The Strategy Map ensures that performance outcomes and key drivers of performance are identified to create a complete picture of the strategy.

2. Improved Strategy Communication & Execution

It is difficult for people to help execute a strategy which they don’t fully understand. Having a one-page picture of your strategy allows you to easily communicate it across the organization. Your visual strategy-on-a-page helps to engage staff and stakeholder buy-in and enables the delivery, execution, review, and course-correction of the strategy.

3. Better Alignment of Projects & Initiatives

The Balanced Scorecard help organizations map their projects and initiatives to different strategic objectives, ensuring that the chosen projects and initiatives are tightly focused on delivering the best strategic results for the organization.

4. More Insightful Management Information

The Balanced Scorecard approach helps organizations design key performance indicators (KPIs) for their various strategic objectives. This ensures that companies are measuring what actually matters. The BSC approach provides high-quality management information and offers data-driven insight to assist in decision-making.

5. Focused Performance Reporting

The Balanced Scorecard lends itself well to the design of performance reports and dashboards. So, management and Board reporting focuses on the most important strategic issues and helps organizations monitor the execution of their plan.

6. Improved Organizational Alignment

The Balanced Scorecard enables companies to better align their organizational structure with strategic objectives. In order to execute any plan well, businesses need to ensure that all business units and support functions are working towards the same goals. Cascading the BSC into those business areas will help to achieve that, as well as link strategy to operations.

7. Improved Process Alignment

The best Balanced Scorecards help align organizational processes—such as budgeting, risk management, and analytics—with strategic priorities to create a truly strategy and data-driven organization.

On board with the Balanced Scorecard methodology? Spider Impact strategy management software brings your balanced scorecard to life. It fully automates your BSC with Strategy Maps, interactive reports, and alerts. Plus, it’s the only software recommended by the Balanced Scorecard Institute. Try it for yourself. Click for a free test drive or demo.

Every single thing you’ve ever wondered about the Balanced Scorecard in one complete article? Check. (You’re welcome!)

Ted Jackson

Ted, Founder and Managing Partner at ClearPoint, has over 25 years of experience working with organizations to improve their performance management and strategy execution processes.

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Table Of Contents

What is a Balanced Scorecard?

There’s a lot that goes into explaining this topic, but let’s begin with the Balanced Scorecard definition:

The Balanced Scorecard (BSC) is a business framework used for tracking and managing an organization’s strategy.

The BSC framework is based on the balance between leading and lagging indicators, which can respectively be thought of as the drivers and outcomes of your company goals. When used in the Balanced Scorecard framework, these key indicators tell you whether or not you’re accomplishing your goals and whether you’re on the right track to accomplish future goals.

With a Balanced Scorecard, you have the capability to:

• Describe your strategy.
• Measure your strategy.
• Track the actions you’re taking to improve upon your results.

The Framework Of A Balanced Scorecard

Throughout the process of creating the BSC, Norton and Kaplan realized an organization must first begin with goals that can broken down into four distinct perspectives that are uniquely connected:

1. Financial goals—“What financial goals do we have that will impact our organization?”
2. Customer goals—“What things are important to our customers, which will in turn impact our financial standing?”
3. Process goals—“What do we need to do well internally, in order to meet our customer goals, that will impact our financial standing?”
4. People (or learning and growth) goals—“What skills, culture, and capabilities do we need to have in our organization in order to execute on the process that would make our customers happy and ultimately impact our financial standing?”

Over time, the concept of a strategy map was created. A Balanced Scorecard strategy map is a one-page visual depiction of an organization’s scorecard. It has the ability to show the connections between all four perspectives in a one-page picture. If you want some examples in your industry, download one of our free ebooks:

• For-Profit Sample Strategy Maps
• Nonprofit Sample Strategy Maps
• Medical & Healthcare Sample Strategy Maps

How is the Balanced Scorecard typically put to use?

A Balanced Scorecard is most often used in three ways:

1. To bring an organization’s strategy to life. Those in the company can then use this strategy to make decisions company-wide.
2. To communicate the strategy across the organization. This is where the strategy map is critical. Organizations print it and include it in interoffice communications, put it on their intranet, communicate it with business partners, publish it on their website, and more.
3. To track strategic performance. That’s typically done through monthly, quarterly, and annual reports.

Who should use the BSC?

The Balanced Scorecard has been proven to be applicable in all industries—for-profit, nonprofit, government, healthcare, and more—and for organizations of all sizes.

Typically it’s used by leadership teams either at the executive level of the organization or at the division or department level. One of the keys to an effective scorecard is having leadership buy-in. That might seem obvious at first glance, but it’s easy to get enthusiastic about the scorecarding concept, see that it is relatively simple to implement, and move forward without the true buy-in and understanding from the leadership team you need.

The reason this can be such a struggle is because in order to make the BSC work in your organization, you have to change the way you’re currently managing. You will have to stop the weekly KPI reports or weekly leadership meetings and integrate any strategic management tactics into your scorecard. Of course, if your leadership team doesn’t buy into this concept, they’re not going to be obliged to change the way they handle their strategy and management.

Note: The Balanced Scorecard has made it very easy to communicate the way you talk about your strategy—but having a strategy and discussing it is only one piece of the puzzle. For your scorecard to be effective, you need to be able to execute your strategy—which includes managing it, making decisions around it, measuring it, and implementing it. If you want to get started quickly, take a look at the Strategy Execution Toolkit. It’s a free 42-page guide that walks you through how to write a purpose statement, build a change agenda, create a strategy map, and more.

2 Balanced Scorecard Success Stories

Below are just two examples of the many ClearPoint customers who have successfully executed their strategies with the help of the Balanced Scorecard.

Louisiana State University (LSU) College Of Engineering

When Richard Koubek became Dean of the College of Engineering, he devised an ambitious five-year strategic plan that would promote growth and provide Louisiana employers with first-rate engineers.

Armed with data from SWOT and gap analyses, he came up with eight areas to focus on:

• Preparing LSU Engineers for a Dynamic World
• Conducting Research to Improve the Quality of Life
• Innovating Through Diversity
• Improving and Diversifying Louisiana’s Economy
• Enhancing Recruitment and Retention
• Improving the College’s Visibility Locally, Nationally, and Globally
• Developing Diverse Streams of Support
• Fostering an Environment of Effective Decision Making

Each area had its own strategy, including specific goals, measures, and projects that were clearly aligned.

Then, with the help of ClearPoint, all of the College’s departments began tracking their performance. They developed simple red/amber/green status indicators that reflected the success level of their metrics, initiatives, and strategies. This simple classification helped people focus their performance discussions on areas of strategic importance. And the transparency of the tracking system overall proved to be motivational, too—when people could easily see the results of their efforts, they worked harder to do their part.

The Balanced Framework kept the College focused on strategy execution for the duration of the five-year period. As a result, they were able to accomplish most of the key elements in their strategic plan. At the end of the five-year period, the College and its staff members had:

• Boosted enrollment by 41%
• Earned double the number of patents in just one year alone
• Raised $52 million for building renovations
• Attracted a record number of companies and industries at its annual career fair
• Partnered with Louisiana Economic Development and IBM to develop a new curriculum

City of Fort Lauderdale

Fort Lauderdale launched its first-ever strategic plan in 2012 and adopted the scorecard framework at the same time. Called Press Play Fort Lauderdale 2018, the plan was created as a vehicle to bring the city’s vision statement, Fast Forward Fort Lauderdale 2035, to life. Citizen satisfaction went up as a result of its successful execution; the city also won the National Civic League’s All-America City Diversity and Inclusiveness Award for its community-based problem solving and civic engagement efforts.

The city’s current plan, Press Play 2024, builds on the momentum that began in the earlier years, and continues to use the scorecard framework as a mechanism for achieving the vision.

The 2024 plan has six focus areas:

• Infrastructure
• Public Places
• Neighborhood Enhancement
• Business Development
• Public Safety
• Internal Support

In accordance with the vision statement, which was developed as the result of a massive community outreach effort, it includes a total of eight goals (one for each focus area and two for both Infrastructure and Internal Support), 35 objectives, and 35 performance measures. The plan emphasizes cross-departmental collaborations, with teams working in concert so their objectives, measures, and initiatives are in sync. Cross-functional teams also meet regularly to address issues, solve problems, and discuss how to implement initiatives.

The City has used ClearPoint since the beginning to monitor performance. It serves the city’s need to facilitate data input, simplify reporting, and improve transparency both internally and externally, with city residents. (You can see its 2024 public-facing dashboard here.)

ClearPoint also supports Fort Lauderdale’s PerformanceSTAT model of performance review meetings (based on the CitiSTAT model developed by Baltimore in 2000), which it has branded FL2STAT (for Fort Lauderdale, FL). Because data can be displayed in numerous ways, departments have been able to streamline reporting outputs, expanding their capacity for more strategic work. Progress with the commission’s action plan initiatives, for example, is monitored and reported from ClearPoint, eliminating the need for any duplicate reporting to elected officials. Thanks to its strong leadership, dedicated staff, and a little help from ClearPoint, Fort Lauderdale is well-positioned to see its vision come to life.

What software should you use to track your scorecard?

We’ve seen everything from pen and paper, Excel, PowerPoint, numerous scorecard-specific applications, and business intelligence tools used to track Balanced Scorecards. Aside from pen and paper (which we do not recommend for obvious reasons), there are pros and cons to each:

A Microsoft Office Application (Excel Or PowerPoint)

Positives:

• It can be easily managed by individuals.
• It can be customized to meet the nuanced needs of your executive team.
• Each element can be done entirely to your specifications.

Considerations:

• It is very difficult to manage from one reporting period to the next.
• It is very hard to keep track of versions, so different executives might be seeing different numbers in their report if they do not have the most up to date version.

See Also: How To Create A Balanced Scorecard In Excel

A Business Intelligence (BI) Solution

Positives:

• It’s typically connected to your data warehouses or your information analytics systems.
• You can store a lot of your data and information in one place.

Considerations:

• It is very hard for your typical business user to use, and you’ll likely need an IT team to be involved with the integration.
• It is very hard to generate your executive-team reports.
• It is hard to include qualitative information with your project information.
• It can be cost-prohibitive.

A Scorecard-Specific Application

You may have noticed that scorecard management is in many ways “hard” for both the Excel/Powerpoint and BI solutions above—that’s the primary reason why organizations using those tools are less likely to execute their strategies. Not only do tracking and reporting become a burden, but it’s also more difficult to see how your daily activities contribute to the big picture.

Many organizations experience these problems eventually and turn to a scorecard-specific application.

Positives of this type of solution:

• It is typically very adept at managing the Balanced Scorecard and can do so out of the box.
• It can handle multiple users.
• It allows many people to contribute to BSC report creation.
• Some tools (like ClearPoint) make it easy to see alignment across the organization.

Considerations:

• It can typically be managed outside of your IT department (which may be okay).
• It may require a learning curve.
• Some can manage other activities, like project reporting.

See Also: The 6-Part Scorecard Software Checklist

The Best Option For Tracking Your Scorecard: ClearPoint

ClearPoint is strategy reporting software built explicitly to save teams time and effort in relation to Balanced Scorecard design, management, and reporting.

As a result, those organizations have significantly improved the way they manage and report on their strategies:

• No more version control nightmares. When users update data in ClearPoint, it updates everywhere, in every report the data appears.
• No bouncing between multiple specialized tools. ClearPoint acts as a central hub for all strategic information, automatically pulling in data from relevant sources, analyzing it, and arranging it in the desired format.
• No piecing together disparate information for analysis. ClearPoint automatically performs the necessary calculations and evaluates performance so it’s easy to digest in a glance. It’s also easy to compare data to previous years.

In short, ClearPoint users are more likely to keep up with scorecard management simply because it’s easy to use and offers exactly the insights they need to stay on track with strategy over the long term.

If you’re looking for a better way to make the most of your organization’s Balanced Scorecard, see what ClearPoint has to offer!

What is the history of the balanced scorecard?

Drs. Norton and Kaplan started a working group to examine the challenges of reporting quarterly financial results in for-profit organizations. They produced an article for Harvard Business Review and then wrote the book, “The Balanced Scorecard.” They went on to write four additional books and 12 papers on the topic of the Balanced Scorecard.

Ted Jackson and Dylan Miyake worked for about 10 years each at the Balanced Scorecard Collaborative with Drs. Norton and Kaplan before founding ClearPoint Strategy.

What is the purpose of a balanced scorecard BSC?

Which of the following best describes the purpose of a balanced scorecard?

What is the value of a balanced scorecard?

What is a balanced scorecard BSC )? Where did it come from?