Balanced scorecard, “definition” Essay Example for Free

Balanced scorecard, â€Å"definition† Essay What is scorecard, how can we define scorecard, is it possible to provide a total comprehensive meaning? Scorecard is not a one word definition system, so in order to do justice to the question, what is scorecard, it is necessary to take a comprehensive approach to that question. â€Å"If you can measure it you can manage† that is the guiding concept behind the BSC management philosophy. The balanced scorecard system was designed by Kaplan and Norton in the 1990s with the objective of giving managers the tool to look into the long term prospect of their organizations with some measure of  reliability. So the BSC is both a management and a measurement tool that when fully and accurately implemented will enable businesses to develop their own vision, and their own strategy, and then translate those business elements into business actions. It is a system that can give businesses an authentic feedback about their internal and external results. And that in turn would enable them to develop a genuine strategy. Since a company with superior strategy and a way of measuring the results of its performance functions do better than companies that do not posses similar tool. (Kaplan Norton 1996). With BSC managers are able to a maintain a clear insight into the operations and management of all business units. It gives the manager the picture that he needs to see how the business is performing when it is compared against the plans, and stated objectives of the business. If a discrepancy is observed between the goals and the actual results, BSC enables practitioners to delve in and correct the noticed discrepancy. And when corrections are made effectively, the business would then redirect the necessary efforts and resources back to the expected reports. It has been  abundantly documented that companies that use BSC have a highly accurate and generally dependable view of their entire operations and its performance. BSC does not simply employ financial metrics in its measurements, but it uses customer satisfaction, technical and intellectual innovations, market share and market competition to garner better more reflective and more comprehensive results of company operations and performance. And there are very little doubts that this system is effective for those companies that have designed and executed the system. (Nevin 2003). A comprehensive  survey/questionnaire conducted by CIO. Com, Balancedscorecard. org, and Microsoft. com revealed that companies that employ BSC â€Å"have improved their financial and future position in the market place†. (Studentweb. tulane. edu). A study by Nevin 2003 indicates that about 50% of fortune 1000 corporations now have employed some form of BSC management performance metrics. (Nevin 2003). That alone means that all of these companies have used the BSC system to position themselves on a better financial and management future. With BSC organizations are able to articulate a comprehensive  strategy towards desired performance, and implementation success. On the whole the BSC system employs tree main systems in order to accomplish its objectives. It uses the measurement system, the strategic management system, and the communication tool. (Nevin 2003). These three factors present only as translation tool to the entire strategy of the BSC business system. The measurement system of BSC uses the â€Å"lead indicators† to forecast future business environment. It reveals the strategy via long term management that focuses on customer satisfaction, innovation and recognition of potential market competitors. It seeks out innovation for the benefit of superior products. It deploys essential resources in order to capture customers that it would retain for the long run. It looks for realistic ways to retain its customers. And it combines all of those factors for both effectiveness and efficiency. It is the measurement aspect of BSC that fully engages the four perspectives, so these perspectives will be discussed here in a little more detail. The four perspective as have been mentioned on this discourse include the customer perspective, the internal process perspective, and the learning and growth perspectives.