The Balanced Scorecard

Research on the balance scorecard and write a 1 page document on its importance in translating a strategy into operational terms.

The Balanced Scorecard enables organizations to bridge the gap between strategy and actions, engage a broader range of users in organizational planning, reflect the most important aspects of the business, and respond immediately to progress, feedback and changing business conditions.

Having a balanced scorecard is very important for a business to measure their success and to improve upon their failures. If a business wants to find ways they can succeed, they can look at their scorecards. They will tell a business where they need to improve. This way the business can implement training strategies to help both employees and management staff improves. The scorecards will show where the improvements need to be made and it will also show the successes of the business. Scorecards can be kept on each employee and then their performance can be measured against others. This will show the employee the areas that they have made improvement on and the areas that they still need to improve on.

A new world has risen. In this era of knowledge workers, strategy must be executed at all levels of an Organization. Nowadays, sustainable value is created from developing intangible assets, such as the skills and the knowledge of the workforce, the IT and the links with the customers and suppliers, and the organizational climate that encourages innovation, problem-solving and improvement. Each can contribute to value creation. But several factors prevent the financial measurements from measuring these assets and linking them for value creation:

1. Value is indirect

• Improvements in intangible assets affect financial outcomes through chains of

cause-and-effect relationships involving more stages.

• Investments in employee training lead to improvements in service quality

• Better service quality leads to higher customer satisfaction

• Higher customer satisfaction leads to increased customer loyalty

• Increased customer loyalty generates increased revenues and margins

2.Value is contextual: the value of intangible assets depends on organizational strategy

and context.

3. Value is potential: companies can measure the costs of trainings, the spending on

databases, the advertising to create brand awareness. But such costs are poor

approximations of any realizable value created by investing in these intangible assets.

4. Assets are bundled: intangible assets don’t have value by themselves. They have to

be bundled to other assets, tangible or intangible for creating value.

The Balanced Scorecard provides a new framework to describe a strategy by linking

intangible and tangible assets in value-creating

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