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Balanced Scorecard
100 Success Secrets

Balanced Scorecard 100 Success Secrets, 100 most Asked Questions on Approach, Development, Management, Measures, Performance and Strategy

Gerard Blokdijk

Balanced Scorecard 100 Success Secrets

Copyright © 2008 by Gerard Blokdijk

Notice of rights

All rights reserved. No part of this book may be reproduced or transmitted in any form by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher.

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The information in this book is distributed on an “As Is” basis without warranty. While every precaution has been taken in the preparation of he book, neither the author nor the publisher shall have any liability to any person or entity with respect to any loss or damage caused or alleged to be caused directly or indirectly by the instructions contained in this book or by the products described in it.

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Balanced Scorecard 100 Success Secrets
Gerard Blokdijk

There has never been a Balanced Scorecard manual like this.

100 Success Secrets is not about the ins and outs of Balanced Scorecard. Instead, it answers the top 100 questions that we are asked and those we come across in forums, our consultancy and education programs. It tells you exactly how to deal with those questions, with tips that have never before been offered in print.

This book is also not about Balanced Scorecard’s best practice and standards details. Instead, it introduces everything you want to know to be successful with Balanced Scorecard.

Table of Contents

Balanced Scorecard 's Use in Managerial Accounting

On any organization, managerial accounting has always been present. But then again, many have criticized managerial accounting methods over the past years due to the fact that very little has been changed from the traditional practices, despite radical changes in technology and a lot of process improvements have been introduced in the business arena. But then again, it is a good thing that managerial accounting is accepting process innovations, such as the introduction of balanced scorecard to the corporate world.

As a traditional practice, management accountants have been thought to generate performance reports through variance analysis. Variance analysis is a systematic approach to compare data from actual to the budgeted costs and revenues during the production phase of any given project.

Though there may be some firms that still use variance analysis at this day and age, many have changed their pace and resorted to using balanced scorecards to generate performance reports.

Balanced scorecard in managerial accounting has been used primarily for financial measures.

It also sets operational measures on customer value, process improvement activities and other internal processes that lead to business growth and development. Dr. Robert Kaplan and Dr. David Norton also see the balanced scorecard as a potentially good system in applying strategic management to identify the factors that should be measured to properly align business objectives within the organization.

Kaplan and Norton were the pioneers of the balanced scorecard and it is because of their efforts that has paved the way in promoting changes to the traditional managerial accounting system. Balanced scorecard is just the right ingredient to improve managerial accounting practices.

Balancing Measures of Effectiveness in the Army with a Balanced Scorecard

In order to transform itself into a more technically advanced force that is nimble enough to quickly and decisively respond to any type of operation they might encounter, the United States army did extensive research with regards to the implementation matters of using a balanced scorecard initiative in their entire organization.

The amount of work they invested has been quite worth it, for now the collaborative of the balanced scorecard and the United States Army has been able to successfully provide the technology as well as the consulting support that is needed in order to implement the scorecard itself.

In just a little over two years since it was first implemented, the United States Army was able to do a three hundred sixty degree turn around, transforming itself into a strategy focused institute that has also been inducted into the hall of fame of the balanced scorecard world.

This balanced scorecard, which the United States Army was successful in implementing, is simply a newly redesigned concept that was able to measure whether or not the activities of any particular company (in this case, the many different activities of the United States Army) was able to meet and attain its objectives while keeping along the lines of their organization 's vision and strategy.

Its utility in the United States Army is not just limited to the improvements in the said organization 's financial outcomes, but also in addressing their human issues as well.

Thus, the balanced scorecard is able to help provide the United States Army with a more detailed view of their business aspect of their organization as well as creating effects of change in the members of their group by making them act to the best of their long term interests.

The Birth of the Balanced Scorecard

The development of the balanced scorecard can be attributed to the work of Dr. Robert Kaplan and Dr. David Norton from Harvard Business School in the early 1990s.

They began publishing articles and then later, came up with the book entitled The Balanced Scorecard in the year 1996.

Since then, it has become well known that it is now being adopted by a lot of companies and industries worldwide. The balanced scorecard concept was even awarded by the American Accounting Association as The Best Theoretical Contribution in 1997.

Though the term balanced scorecard was coined in the 1990s, there are still other works that has been published in the past with almost the same kind of approach such as the revolutionary project of General Electric on developing a performance management reporting tool in 1950s. Another term came out in the early part of the 20th century by some French process engineers, which sprouted out of creating Tableau de Bord that means dashboard of performance measures.

There were a lot of attempts to further research and study the concept behind the balanced scorecard. Some practitioners have even diverted from the original draft of Kaplan and Norton through the many articles that they have written in the past. Other scorecards were also introduced as alternatives such as Results Based Management, The Performance Prism and Third Generation Balanced Scorecard. These tools promised to solve some design issues of the original balanced scorecard that can be used by organizations in setting up targets for performance measurement. But then again, the balanced scorecard has remained the most common in terms of application and usage by a lot of companies for the past ten years or so.

Balanced Business Scorecard, Why Things Go Wrong

Behind every success of a business initiative or strategy lies on its implementation. There are a lot of different approaches presented in the past, each promises to bring a company on top of the competition. But then again, this will only remain as a mere theory if not given appropriate attention. This is the reason why a certain business approach may work wonders for a particular organization, but fail to deliver on another. Same is true with the balanced business scorecard concept. But what went wrong? Here are some of the reasons:

(a) Leadership. This is one of the many predictable reasons why a certain business approach, such as the balanced scorecard concept, will not work on every organization. Full attention is needed and every tiny detail should be taken into consideration. A good leader may meet certain needs but a great leader will go on extra mile and exceed company and customers expectations. This will motivate employees to do well on their daily tasks and will eventually lead to business success.

(b) Communication. To be successful in implementing an initiative, then make it easier for people to understand the concept behind it. Communicate well why this should be done to inspire them more on what they do. Make each task as simple as possible as complexities only lead to potential failure.

(c) Timing. Appropriate timing is crucial in any business operation. There are certain deliverables that need to be on top priority. Make each step orderly and precise with a little sense of urgency.

(d) Expectations. Expecting too much may only lead to disappointments. If a balanced scorecard has proven that a strategy is not that feasible, make appropriate changes. Don 't settle for anything less as innovation is needed for the business to grow and improve.

Balanced Scorecard Institute, Setting a Different Approach for Balanced Scorecard Implementation