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Balanced Scorecard Evolution as a Management Tool Case Study

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Updated: Jan 27th, 2021

Summary

This article gives a detailed explanation of how the balanced scorecard (BSC) was introduced, developed, and its use in the modern world. It also presents a case study of how this measurement tool has been used in modern times. According to Coe and Letza, the balanced scorecard was developed by Kaplan and Norton (64). The scorecard aimed to provide managers of different organizations with a clear and precise performance measurement tool. The initial BRC had numerous challenges; thus, there was a need to improve the tool to enhance its effectiveness. Consequently, Kaplan and Norton came up with two improvements; one in 1996 and the other one in the year 2000 (Coe and Letza 66). Later, this tool was modified to suit modern organizational needs by Lawrie and Cobbold in 2004.

Learning Points

The main learning points in this article

  1. The BSC is anchored on four major perspectives; financial perspective, customer satisfaction, innovations, as well as internal processes in an organization.
  2. In 1996, the BSC was developed further to link long-term organizational objectives to short-term goals of organizations.
  3. The introduction of the employees’ scorecard enabled workers to shift their goals to match the organizational objectives.
  4. Further developments in the BSC in 2000 paved the way for the mapping of organizational strategies with their perspectives.
  5. The BSC was later split into 3 generations to give room for a scorecard that could be used in an NGO, where shareholders were not mainly concerned with making profits.
  6. A BSC software has been developed, where organizations can take advantage of the current technological advancements in developing personalized scorecards and mapping the strategies that the organizations intend to use to achieve their objectives.

Critical Analysis

The article has given a clear understanding of the balanced scorecard (BSC). The description of how the BSC was introduced and developed is presented clearly, with the authors making an effort to identify the inventors of the performance measurement tool. The exact year in which BSC was first introduced for organizations to perfect their mapping of strategies has been indicated. However, the authors fail to mention any organization that used this tool in its initial stages of development. Therefore, one can question the authenticity and effectiveness of the BSC. On the other hand, commendable efforts have been made to illustrate this measurement tool through the use of diagrams. Moreover, the diagrams are well-labeled, they relate to the notes given, and they are easy to interpret. An effort has been made to reveal to the reader the exact period when developments were made to the BSC. Those who participated in updating the tool have been identified in the article.

The various linkages that the BSC was made to match with have been shown clearly. However, the authors fail to give examples of the organizations that recommended the development of the tool or the organizations that expressed their dissatisfaction with the tool. Besides, no example is given to show the organizations that used the tool and expressed satisfaction, or recorded improvements in their organizations.
The advantages that an organization can achieve as a result of using the balanced scorecard tool have been listed and their discussions made. The various shortfalls that this tool has have been outlined to present an unbiased explanation. This is an excellent way of introducing the tool to the reader, as one has a guided approach in deciding whether to adopt the measurement tool for use in their organization or not. Coe and Letza have explained how the BSC tool is related to the modern world. The adjustments that were made to the tool to make it more useful in the modern era are given clearly. The only notable shortcoming is the failure to show examples of the organizations that had used the tool and the results that they obtained. The case study presented is demonstrated clearly, with the points being short and easy to follow. Concerted efforts were made to balance the conclusion with the introduction.

Practical Implications

How could you apply the subject matter from the article?
A balanced scorecard is a measurement tool that is useful in every organization, be it profit-making or not-for-profit (Coe and Letza 70). An organization can use the scorecard to gain in many ways. For instance, the scorecard can enable an organization to know its exact position from the customers’ point of view. Therefore, the organization in question can deliberate on whether to make adjustments or remain in the current state, depending on the feedback from the customers.
The BSC can also give organizations a clear picture regarding innovations and the areas that need improvements. The various goals and measures that the organization uses to achieve its objectives should guide it in deciding whether there is a need to improve the quality of its output or to remain in the current state.

The other way in which the BSC is important to an organization is by allowing organizational managers to link the objectives that are regarded as long-term to the short-term goals of the organization. The moment a manager does this, then they can communicate the organizational goals to all the personnel in the organization with effectiveness. As a result, the organization can achieve the goals and objectives set as a single unit. Besides, a manager can reduce the kind of ambiguity that comes with the implementation of organizational goals
Finally, the BSC software can be used by any organization that wishes to embrace technology in its operations. The software makes it easy for managers to map strategies to the organizational goals and objectives. In the process, the organization attains a better position to achieve its goals effectively.

Other Comments

The balanced scorecard is an effective management tool that organizations in all sectors of the economy ought to adopt in mapping organizational strategies and facilitating the achievement of their goals. However, more research needs to be carried out to address the various challenges that are faced by organizations in utilizing this operations management tool. Therefore, the various organizations need to come together and contribute towards the funding of such projects, which will simplify their work and contribute towards the realization of their goals and objectives.

Reference

Coe, N & Letza, S 2014, ‘Two decades of the balanced scorecard: A review of developments’, Poznan University of Economics Review, vol. 14, no. 1, pp. 63-75.

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IvyPanda. "Balanced Scorecard Evolution as a Management Tool." January 27, 2021. https://ivypanda.com/essays/operations-management-balanced-scorecard/.

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IvyPanda. 2021. "Balanced Scorecard Evolution as a Management Tool." January 27, 2021. https://ivypanda.com/essays/operations-management-balanced-scorecard/.

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IvyPanda. (2021) 'Balanced Scorecard Evolution as a Management Tool'. 27 January.

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