TL;DR
A balanced scorecard is a group of KPIs that try to provide a holistic view of a businesses, typically from four perspectives: financial, customer, process, learning and growth.
What is a balanced scorecard, when and how to use it?
Typically a balanced scorecard will be a report, issued to the senior management and/or board members of a company. Usually there is a one page summary divided equally between the four perspectives: financial, customer, process, learning and growth. Each perspective will be represented by key performance indicators and often trends are depicted with graphs and simple diagrams. Some balanced scorecard reports may include further explanation and context in accompanying pages. The scorecard may be updated weekly, monthly or quarterly. As these tend to be more strategic in nature, you often find the reporting will align to the frequency of the company’s board meetings.
Benefits of a balanced scorecard?
Structured reporting covering the whole breadth of a company allows decision making to be supported by evidence. Weak areas or risks are more likely to be identified by the organisations leadership who have the authority to implement remedial actions. Similarly, opportunities or strengths can be identified and exploited, enhanced or replicated.
Where did the balanced scorecard come from?
The origin of the balanced scorecard is from the book “the balanced scorecard: you can’t drive a car solely relying on a rear view mirror” by Robert S Kaplan. Essentially the innovation was to move from company performance assessments being dominated by financial accounting which tend to be retrospective. Kaplan and his colleague David Norton argued that success should be defined by a balanced set of quantifiable goals that represent past, current and future performance for all areas of a company.