Balanced Scorecard(BSC)

What is the Balanced Scorecard (BSC)

The Balanced Scorecard (BSC) is a strategic management framework developed by Robert S. Kaplan and David P. Norton in 1992.

It helps organizations translate their vision and strategy into measurable objectives across four perspectives: Financial, Customer, Internal Processes, and Learning & Growth.

In simple terms, the BSC is a strategic dashboard that ensures balance between short-term results and long-term capability building.

Origin and Key Figures

• Background: In the 1990s, most companies focused narrowly on financial outcomes. Kaplan and Norton proposed a more balanced view by incorporating intangible assets such as knowledge, processes, and innovation.
• Key Figures: Robert S. Kaplan, David P. Norton
• Representative Users: IBM, HSBC, Huawei, Haier
• Example:
  • Huawei used BSC to align all departments around customer-centric goals and translate strategy into measurable outcomes.
  • HSBC standardized its global performance indicators using BSC, ensuring consistent strategy execution worldwide.

How to Use the Balanced Scorecard

1. Define Strategic Objectives
   • Clarify long-term vision and goals.
   • Tip: Ensure objectives are measurable and actionable.
2. Break Down Goals into Four Perspectives
   • Financial: Profit, revenue growth, cost management.
   • Customer: Satisfaction, retention, market share.
   • Internal Processes: Efficiency, innovation, quality control.
   • Learning & Growth: Employee development, technology, culture.
3. Develop KPIs and Assign Weights
   • Establish key performance indicators for each dimension.
   • Example: Customer satisfaction (30%), Financial return (40%).
4. Monitor and Adjust Continuously
   • Use dashboards or quarterly reviews to track results.
   • Integrate with the PDCA (Plan-Do-Check-Act) cycle.

Case Studies

• Huawei: Applied BSC to cascade strategic goals across departments, ensuring consistent focus on customer value.

  Insight: Strategy only works when connected to execution.

• Public Hospital Reform: Shifted from income-based metrics to quality of care, patient experience, and staff training.

  Insight: BSC encourages holistic organizational improvement.

Advantages and Limitations

Advantages

• Aligns strategy and execution.
• Balances short-term performance with long-term growth.
• Encourages cross-departmental collaboration.

Limitations

• Complex to implement; requires strong leadership.
• Overly detailed indicators may cause confusion.
• High cost of data collection and maintenance.

Common Questions

1. What’s the difference between BSC and KPI?
   • KPIs measure performance; BSC provides the overall strategic framework that includes KPIs.
2. Is BSC suitable for small businesses?
   • Mostly for medium to large enterprises; small firms can adapt a simplified version.

Application Scenarios

• Work: Strategy execution, performance appraisal, organizational alignment
• Learning: Strategic thinking, business management courses
• Personal Life: Balancing financial, learning, and personal growth goals

Recommended Resources

Books

• The Balanced Scorecard: Translating Strategy into Action — Kaplan & Norton
• Strategy Maps — Kaplan & Norton

Other Resources

• Harvard Business Review: How to Use the Balanced Scorecard
• Huawei’s internal course: From Strategy to Execution

Related Methodologies

• OKR (Objectives and Key Results)
• KPI (Key Performance Indicators)
• Strategy Map

Core Essence

“Balanced Scorecard: Making strategy visible and actionable.”