Balanced Scorecard

Ted over at Blue Lizard has a nice post about the balanced scorecard. We studies this back in my business school days, and while it isn't perfect, it is a much better way to measure company performance than simply using financials.

The Balanced Scorecard at its foundation is based upon the principle that if all you do is measure financial results, you are too late. By measuring and managing those key measures that drive the financial results you will be better positioned to affect the financial results.

The Balanced Scorecard approach contains four major categories of measures.

1. Financial
2. Customer / Consumer
3. Internal / Process
4. Learning & Growth

Think of this measurement framework as a pyramid with the financial results at the top. The layer below contains the Customer / Consumer measures. Below that are the Internal / Process Measures. At the very base are the Learning & Growth measures. The concept works like this: the more you develop your people the more effective they will be at performing the internal processes which impact your customers. As the internal performance increases, things like customer and consumer satisfaction are likely to rise. If your customer and consumer measures remain positive, you are likely to experience positive financial results.

The piece is a great intro for those of you who aren't familiar with the topic. Be sure to check it out.

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