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The use of the Balanced Scorecard in strategic planning
This 1996 Harvard Business Review article, by Harvard Business School professor Robert Kaplan and David Norton, president of Nolan, Norton & Co., is an extension to their articles 'The Balanced Scorecard: Measures that Drive Performance' (1992) and 'Putting the Balanced Scorecard to Work' (1993). The balanced scorecard made it possible for managers to express and measure operational performance.
This article discusses the integration of the four balanced scorecard perspectives (financial, customer, internal-business-process, and learning-and-growth) into strategic planning. In order to do this the authors introduce four (new) processes. The first process is called 'translating the vision' and helps managers to build a consensus around the organization's vision and strategy. The second process - communicating and linking - allows managers to communicate their strategy throughout the organization and link it to departmental and individual objectives. The third process - business planning - enables companies to integrate their business and financial plans. The fourth and final process - feedback and learning - gives companies that capacity for strategic learning (single-loop and Chris Argyris' double-loop learning). Each of these processes are discussed using various companies as examples. The aim of the authors is to enable managers to use the balanced scorecard as a framework for managing the strategy and vision, thereby linking long-term strategic objectives with short-term actions.
I did enjoy the authors' original balanced scorecard-article, I did not enjoy their second and I am disappointed by this third article. This article does not focus that much on the balanced scorecard, therefore readers expecting more information and knowledge on the balanced scorecard will be disappointed (like me). The article is more about the strategic planning/budgeting process, and how companies should use the balanced scorecard within this process. But I am in the opinion that those processes are better discussed by other sources/authors. The article is written in simple US-English.
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