Balanced Scorecard - A Strategic Management System by Kaplan & Norton

In 1990's, Robert S. Kaplan (An accounting academic & Harvard professor) and David P. Norton (American theorist & management consultant) came up with a new perspective of looking at organizational success rather than just the financial aspects and named it as the Balanced Scorecard. The study was first published in Harvard Business Review.  

Often, organizations tend to focus on financial goals as the prime indicator of success. Although, for a business to stand the test of time and the competitive nature of the market, other non-financial goals & aspects need to be considered and aligned with the long-term vision and strategy of the business. 

The four perspectives including Financial when tracked using relevant KPI’s would yield the exact growth the business has had to sustain itself for future generations to grow.

·       Financial: Encouraged the identification of a few relevant high-level financial measures.

·       Customer: Encouraged the identification of measures that answer the question "What is important to our customers and stakeholders?"

·       Internal business processes: Encouraged the identification of measures that answer the question "What must we excel at? "Examples: cycle time, unit cost, yield, new product introductions.

·       Learning and growth: Encouraged the identification of measures that answer the question "How can we continue to improve, create value and innovation?". Examples: time to develop a new generation of products, life cycle to product maturity, time to market versus competition.

Keeping the scorecard in my mind, businesses need to clearly define Objectives, Measures, Targets & Initiatives towards each of the perspectives above and review them timely to exactly gauge where they stand and act on areas of improvement. 

Source: HBR

Summary

If we see through the lens here, you may notice the exact answer for so many businesses failing or ceasing to exist is their focus either just on the technology or financial outcomes. Undoubtedly, finances play a big role but with the rise of Industry 4.0, Artificial Intelligence, Cryptocurrencies and other emerging technologies the non-financial elements are the most powerful areas companies need to work on if they really want to succeed. Today’s customer is demanding & knowledgeable than ever before making Customer Experience the prime focus for upcoming years.

The same goes for how much an organization invests in the learning & growth of its existing resources to nurture the in-house talent rather than hiring new ones. Rightly said by Gartner, Research VP, Svetlana Sicular, “Organizations already have people who know their own data better than mystical data scientists — this is a key. Learning Hadoop is easier than learning the company’s business.”

A must-read for Startup KPI's: https://bscdesigner.com/startup-kpis.htm