by CIO Staff

Balanced Scorecard

Mar 26, 20072 mins
IT Leadership

As a value indicator, the Balanced Scorecard method links business strategy with financial performance.

As a value indicator, the Balanced Scorecard method links business strategy with financial performance. In this case, the traditional metric of financial performance is balanced by three more fluid activities: customer relationships, operational excellence and the organization’s ability to learn and improve.

Because the Balanced Scorecard requires every action to answer to established corporate goals, using the Scorecard within IT can help promote alignment and eliminate projects that contribute little or no strategic value. Here’s more on what you need to know about the Balanced Scorecard.

Case Study: Why You Keep Score

BNSF Railway uses the Balanced Scorecard to prove IT’s value and to create synergy with business strategy

Book Excerpt: Alignment

Alignment is not a one-time event. In this excerpt from their book Alignment: Using the Balanced Scorecard to Create Corporate Synergies, Harvard Business School Professor Robert S. Kaplan and Balanced Scorecard Collaborative/Palladium President David P. Norton describe the process of managing and sustaining organizational alignment.

How to Use the Balanced Scorecard

Developed in the early 1990s, this valuation methodology converts an organization’s value drivers-such as customer service, innovation, operational efficiency and financial performance-to a series of defined metrics. Companies record and analyze these metrics to help determine if they’re achieving strategic goals. Nevertheless, installing the Balanced Scorecard within IT is a challenge.

Three Questions with Robert Kaplan

CIO catches up with Robert S. Kaplan, Marvin Bower professor of leadership development at Harvard Business School and the co-creator of the Balanced Scorecard, to hear his thoughts on the state of the Scorecard.

Book Excerpt

Read this excerpt from The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment, Kaplan and Norton’s 2001 book.

Balancing Scorecards With Reality

The Balanced Scorecard is useful because it is grounded in reality. We can’t have it all; trade-offs are inevitable among financial contribution, customer focus, operational excellence and organization maturity-the four dimensions of the Balanced Scorecard. However, it’s important to distinguish between the Balanced Scorecard and the role of operational measurements.