Вы находитесь на странице: 1из 33

The strategic perspective of

The Balanced Scorecard

Naam:

J.W. Regter

Nummer:

9746196

Begeleiders: drs. M. Schulp / drs. B.J.M. van Dam

Content
Content

Introduction

1.

The creation of the balanced scorecard

1.1

Tangible versus intangible assets

1.2

Managers incentives and the balanced scorecard

2.

3.

4.

The Structure of the balanced scorecard

2.1

The link between strategy and the structure of the balanced scorecard

2.2

Problems that may occur setting performance measures and goals

The balanced scorecard and its four perspectives

11

3.1

The financial perspective

11

3.2

The customer perspective

13

3.3

The internal business process perspective

16

3.3.1 The innovation process

17

3.3.2 The operations process

18

3.3.3

20

The post-sale service process

3.4 The learning and growth perspective

21

The balanced scorecard as control mechanism of strategy

22

4.1

Beliefs systems

22

4.2

Business conduct boundary system

23

4.2.1 Strategic boundaries system

24

4.3

Diagnostic control systems

24

4.4

Interactive control systems

26

Conclusion

29

References

31

Introduction
Over the past decades a change took place in how to gain competitive advantage from a
strategic point of view. Philosophies about how strategy is set and how strategy evolves
became more and more important in the overall management of an organization. Several
different types of organizations with different kind of strategies were recognized in
relationship to management control systems. Miles and Snow (1978) and Porter (1980) for
example closely looked at the type of organization the y called a cost leader or a defender.
They found out that these types of organizations required sophisticated cost controls in order
to serve their chosen strategy(Simons 1990). At the opposite they found organizations they
called prospectors of differentiators. These organizations followed a strategy where control
was more positively correlated with innovation(Simons 1990). This in order to stimulate
differentiation to gain competitive advantages.
The strategic situation of every organization will fall within this strategic spectrum.
Where it is situated depends totally on the business strategy a company follows. The
strategic position a company takes refers to how the firm competes in its markets and is
usually derived from the organizations vision and written down in a mission statement. It
contains the product, service and market characteristics chosen by the firm to differentiate
itself from its competitors and gain competitive advantage(Simons 1990). From the mission
statement, strategy will be expanded and translated quite detailed throughout the whole
company. This does not main that all intended strategic objectives are also realized. The
whole process of creating a strategy doesnt stop when a strategy has been found. The
strategy must change constantly because of a dynamic and ever changing environment the
company operates in.
When top managers know what kind of strategy they want to follow they must
communicate this strategy, or at least parts of it, to all employees in the company. We have
seen that this purpose can be reached with the help of management control systems. The
balanced scorecard as management control system stands central in this paper. This model,
created by Kaplan and Norton, tries to find a balance between the traditionally used financial
performance measures and newly created operational non financial performance measures.
They state that there are four perspectives from which a company can derive these critical
performance measures. These perspectives are the financial perspective, the customer
perspective, the internal processes perspective and the learning and growth perspective. As
a set of both financially and non -financially performance measures, strategy maps are
created with strategic objectives and goals from the most critical performance measures for
each strategic business unit in the company. This leads to the central question in this paper:

How can you translate and implement strategy into the organization and how can this
strategy be controlled, both with the help of the balanced scorecard.
The paper starts with the emergency of the balanced scorecard in chapter one. Central in
this chapter are the environmental changes that lead to the necessity of the creation of a
different type of management control system like the balanced scorecard. It further shows
why the traditional financial management control systems are not sufficient anymore to
optimize competitive advantages. With the balanced scorecard the managers incentives will
change from a short term financially focus to a more long term strategically focus.
When it is clear why the balanced scorecard emerged, chapter two will explain the
structure of the balanced scorecard. Important here is the link between strategy and this
structure of the balanced scorecard. Knowing however that critical performance measures
must be created, this chapter also explain what kind of problems may occur with the creation
and use of critical performance measures. In line with that, problems may also occur in
setting the strategic objectives and goals.
In chapter three the four perspectives of the balanced scorecard are described. Here
the focus lies on how to derive the best strategic critical performance from these four
different perspectives. This is important because with the se critical performance measures,
strategy can be translated and implemented in the entire organization. This chapter also
deepens out the interrelationship among these four perspectives.
In the fourth chapter the control aspect of strategy will be highlighted. To understand
how strategy can be controlled, the levers of control model from Simons will be used. This
model explains how strategy can be protected and improved in order to function in a dynamic
environment. According to Simons this purpose can b e reached by setting up beliefs
systems, boundary systems, diagnostic control systems and interactive control systems.
Within these four systems it will be explained if the balanced scorecard can play a crucial
role. When this is the case this role will be fully described.
Finally an answer to the central question will be given in the conclusion of this paper.

1.

The creation of the balanced scorecard

In the past the organizational measurement system exclusively relied on financial measure s.
These traditional financial performance measures worked reasonably well in the industrial
age ( Kaplan, Norton 1992). It was known however that managing solely with financial
measures had its limitations. In the past non financial measures were incorporated ad hoc to
see whether non financial action were efficient( Kaplan, Norton 2001a). Nowadays the
competitive environment demands more and more improvement and innovation. This
movement increases the limitations of financial performance measures and urges the
development of operational non-financial measures. This trend led to the development of the
balanced scorecard by Kaplan and Norton. First of all , this balanced scorecard is a set of
measures which, as information gatherer, gives top managers a fast but comprehensive view
of their business ( Kaplan, Norton 1992). Second the balanced scorecard can give the
linkage of performance measurement to strategy ( Kaplan, Norton 1996b). Finally, although
the Balanced scorecard is not developed for this purpose, it influences the behavior of
employees and managers throughout the company whose performance can be measured by
the balanced scorecard. This chapter will explain why relying solely on financial performance
measures is not sufficient anymore. First the changing competitive environment and the
increasing importance of the intangible goods compared to the tangible goods strategic issue
will be described. Why this led to the development of the balanced scorecard model stands
central in this part. Second the influence the balanced scorecard has on management
incentives will be explained.
1.1

Tangible versus intangible assets

The last decades showed an enormous decrease in the relative book to market value of
tangible assets. By 2000 the average ratio had dropped to 20% (Webber 2000) an enormous
degrease compared to the 62% in 1982 (Blair 1995). This means that more competitive
advantages can be gained out of intangible assets. The most important intangible assets are:

customer relationships

innovating product and services

high quality and responsive operating processes

skills and knowledge of the workforce

the information technology that supports the workforce and links the firm to its customers
and suppliers

the organizational climate that encourages innovation, problem solving, and


improvements ( Kaplan, Norton 2001a).
5

Financial performance measures are mostly derived out of accounting measures


which are based on tangible assets. Because the accounting performance measures ignore
the changing nature of intangible goods these measures are surrogate indicators of the
economical changes in the firm( Merchant, van der Stede 2003). Because intangible assets
become more and more important for companies, financial measures alone captures less of
the actual economic changes. The reason why accounting profits ignore the economic value
of intangible assets is that accounting rules states that its value cannot be measured
accurately and objectively. Therefore these intangible assets do not appear on the balance
sheets of organizations. Investments made in intangible assets mostly are often expensed
immediately ( Merchant, van der Stede 2003). It is known however that intangible assets
create economic value. Therefore an improvement of these intangible assets can improve
competitive advantages. Where strategy focus on competitive advantages it now must also
focus on the improvement of the intangible goods.
With key operational performance measures, like the balanced scorecard gives,
information can be gathered about the working and the changes of intangible assets. With
this information combined with information from financial performance measures, the
balanced scorecard describes value creating strategies that link intangible and tangible
assets ( Kaplan, Norton 2001a). Meanwhile a better understanding of the overall
performance, financially and non-financially, of the company can be created.
1.2

Managers incentives and the balanced scorecard

Although the balanced scorecard is not made to be a management control system, it reduces
the problems created when management performance are evaluated solely on financial
performance measures. To evaluate the performance of senior managers for example, stockbased performance measures are normally used. This because it is said that stock
performances quite accurately reflect the overall performance of a company for which senior
managers can be hold accountable for. This accountability may induce managers to reduce
or postpone investments that promise payoffs in future periods, even whe n those
investments clearly have a positive net present value. This is called the investment myopia
problem (Merchant van der Stede, 2003 p414).
Another form of myopically behavior by managers occurs when costs are reduced
through a quality decrease through cost reductions. This may increases short term profits but
it can hurt future sales and therefore long term profits. This is called operational myopia and
can also occur when prices are lowered so distributors will give a boost on the sales today.
This so called channel stuffing again may have effect on future sales when distributors are
load up for a long time(Merchant van der Stede, 2003 p415). It must be said however that
these kind of actions are also possible because strategy requires some short term actions.

A third negative management incentive, which may occur when only financial
performance measures are used, is sub-optimization. When the rewarding of a division
manager for example depends on the Return On Investment (ROI) a division generates,
problems according investment decisions may occur. A division manager may decide not to
make an investment because it contains a lower expected ROI than the average ROI of this
division. For the company as a whole however, this investment may be highly profitable if this
expected ROI of the investment is higher than the average ROI of the company. At the same
time a manager of a division with a lower average ROI than the average ROI of the company
may decide to make an investment with a higher expected ROI than its own average ROI
while this investment contains a lower expected ROI than the average ROI of the company
as a whole (Merchant van der Stede, 2003 p418).
Early adopters of the balanced scorecard experienced that the balanced scorecard
guarded against these kind of problems. By forcing senior managers to consider all the
important operational measures together, the model lets them see whether improvement in
one area or division may have been achieved at the expense of another. The focus of
individual managers became more at the long run and therefore a focus on the continuity of
the company was created. They also found out that seemingly disparate elements of a
companys competitive agenda were brought meaningful together in one single management
report ( Kaplan, Norton 1992 ). This was not possible, working solely with financial
performance measures.

2.

The Structure of the balanced scorecard

The balanced scorecard was introduced to provide a new framework for describing value creating strategies that link intangible and tangible assets ( Kaplan, Norton 2001a ). However
the purpose of the balance scorecard is not to financially value the intangible assets. To
understand the working of intangible assets and its performance, these intangible assets will
be measured in units other than in currency units. Only through the creation of measurable
units, comparisons of performances of the intangible assets in order to gain competitive
advantage are possible. As discussed before this is important because the last decades
intangible assets reflected most of the market value of organizations. How non -financial
elements are made measurable will be explained in chapter 3 when the four different
perspectives of the balanced scorecard are described. This chapter sta rts with an
explanation of the relationship between the structure of the balanced scorecard and the
strategy of an organization. Then the problems that may occur critical performance measures
and goals are set.
2.1

The link between strategy and the stru cture of the balanced scorecard

Before discussing the four perspectives of the balanced scorecard, it is important to realize
that the balanced scorecard in general is very much related to the overall strategy of the
organization. When developing and implementing the balanced scorecard, corporate
executives must begin with reviewing the corporate vision and mission statements. This is
important because corporate executives must understand why their company exists, what
the company beliefs and what its core values are(Kaplan, Norton 2001a ). From this
information a strategy must be developed in order to set strategic objectives and goals. The
balanced scorecard provides a framework for organizing these strategic objectives by
making them measurable. After se tting strategic goals and objectives the company must
assign metrics that can be measured in order to determine whether the business is meeting
its goals. This will be done both in financial terms for tangible assets and non-financial terms
for intangible assets. The latter particularly is very hard to accomplish and much attention of
the balanced scorecard goes to the development of these units of measurement. Together
the goals and measures form a framework of called strategic maps. These strategic maps
specify the critical elements and their linkages for the organizations strategy (Kaplan, Norton
2001a ).
Every strategic business units then will have different strategic maps. This is logical
because different strategic business units have different critical performances in order to
serve the overall company. To be more specific the balanced scorecard forces managers to

focus on the handful of measures that are most critical for them( Kaplan, Norton 1992). A
sales division for example should not focus on the critical performances a production division
should focus on and vice versa. All different strategy maps come together at the top level of
a company. There the evaluations are made to see whether the implemented strategy works
well(Kaplan, Norton 2001b).
2.2

Problems that may occur setting performance measures and goals

Companies rarely suffer from having too few performance measures(Kaplan, Norton 1992). If
all these measures would be placed in the balanced scorecard the problem concerning
cognitive co mplexity could occur. Managers are rational only with cognitive boundaries and
this must be viewed as a constraint on the information processing capabilities of managers.
They also have many concurrent activities an d therefore the time managers have to absorb
all information is scarce(Simons 1990). To avoid these problems a ranking of activities top
managers want to monitor must be made to derive the most critical performance
measures(Simons 1990).
These critical performance measures should fulfill some important
requirements(Kueng 2000). According to Kitchenham (1996, p. 102) and Winchel (1996, p.
108), these requirements are:

Quantifiability: If performance measures are not quantitative by nature, they have


to be transformed. This is the case for most o f the non-financial performance
measures.

Sensitivity: Sensitivity expresses how much the performance must change before
the change can be detected.

Linearity: Linearity indicates the extent to which performance changes are


congruent with the value of the performance measure.

Reliability: A reliable performance measure must be free of measurement errors.

Efficiency: Since the measurement requires human, financial and physical


resources it must be worth the effort from a cost and benefit point of view.

Improvement-oriented: Performance measures should emphasize improvement


rather than conformity with instructions.

If the chosen critical performance measures fulfill these requirement they could be used in a
proper way. There are however two loopholes who ma y occur. First of all the possibility
arises that the person whos performance will be measured does not understand the
meaning of the critical performance measure. If this is the case the critical performance
measure is useless. The second loophole arise when the critical performance measure will
not be accepted by the person whos performance will be measured. This problem can be

minimized by making the critical performance measure as fair and accurate as


possible(Kueng 2000).
Other risks occur when setting goals and targets. This mostly is done through
negotiations with the employees. Negotiations stimulates gamesmanship which is the actions
employees take that are intended to improve their performance indicators without producing
any positive economic affect ( Merchant, Van der Steede, 2003). This can first of all be done
through creating slack of resources. Employees use more resources than necessary in order
to lower the pre-set goals and targets.
A second form of gamesmanship is data manipulating. This is done by employees to
look better than they really are. Because mostly bonuses and reward systems are tight with
performance targets, gaming the system occurs. In order to achieve the pre-set targets and
so being rewarded, employees may focus primarily on these measures. Being achieved and
having a focus on them, these measures may be enhanced. Even though increased, this
may not lead to advancement of the underlying goal or strategy.

10

3.

The balanced scorecard and its four perspectives

In order to develop strategy the balanced scorecard introduces four strategic perspectives
namely a financial perspective, a customers perspective, an internal business processes
perspective and a learning and growth perspective (Kaplan, Norton 2001a ). Although
strategy can be different among industries and can even be different between corporations
within the same industry, these four perspectives can be used for all profit maximizing
organizations.
Figure 1 The four perspectives of the balanced scorecard

3.1

The financial perspective

One typical goal for profit seeking organizations is a significant increase in shareholder value
(Kaplan, Norton 2001a ). With incorporating financial performance measures, the balanced
scorecard recognizes this strategic economic objective. To be more specific, it is important to
understand how the company treats its shareholders interests( Kaplan, Norton 1992 ).
As strategy translators, the financial performance measures play a dual role. First of
all, they define financial performances expected from the corporate strategy. Second they
serve as the ultimate targets for the objectives and measures of all the other scorecard
perspectives. Meanwhile the financial performance measures, being accounting / profit
measures, can provide a good insight of the economic consequences of actions taken in the
past. Therefore they show whether the companys strategy implementation and execution
still contribute to bottom-up improvements. Important in this case is to understand that
different business units can have different strategic objectives. Therefore different measures
can be used in different divisions.
There is a wide range of financial performance measures. The most commonly used
financial performance measures are:

extracts of operating p rofits measures

extracts of the return on capital employed measures

11

economic value added measures

return on equity measures (Merchant van der Stede, 2003).

The choice of appropriate financial performance measures however depends of the stage the
businesss life cycle is in and the appropriate strategy. According to Kaplan and Norton there
are three stages possible namely a growth, a maturity and a decline stage. They also
distinguish three possible financial strategic themes namely a revenue / growth and mix
strategy, a cost reduction / productivity improvement strategy and an asset utilization
strategy.
Together a matrix can be formed like figure 2 with appropriate financial measures for
every possible stage combined with the possible strategic themes. Again the performance
measures in the financial perspective must be customized to the industry and the competitive
environment a company operates in. Even then different business units can have different
strategies and therefore can have different financial drivers.
The choice of strategy is a subjective one and is made by the executives of the
company. The choice of strategy also depends of the risk a strategy bears. Therefore
organizations can incorporate explicit risk management objectives into their fin ancial
perspective. Overall it is important to understand that, as stated earlier in this chapter, all
Figure 2 Matrix of financial performance measures

strategic objectives from the three other perspectives are linked to one or more financial
strategic objectives.

12

3.2

The customer perspective

A profit maximizing organization wants to increase its economic value. This purpose can
basically be reached through a revenue growth strategy and an improvement of productivity
strategy(Kaplan, Norton 2001a ). The latter can be realized financially by reducing costs or
by using assets more efficiently see figure 2. A revenue growth strategy is also a financial
objective and generally has two components. The first component consists of building a
franchise with revenue from new markets, new products or new customers. The second
component consists of increasing sales by deepening the relationships with customers. This
includes the cross-selling of multiple products and services and the offering of complete
solu tions of existing or expected customers problems (Kaplan, Norton 2001a ).
To serve these financial objectives, it is important to understand the perspective of
the companies customers. This makes sense since studies have shown that businesses with
satisfie d and loyal customers become more profitable over time ( Simons, 2000 p188).
Research by Reichheld and Sasser in 1990 shows that a 5% increase in customer loyalty
can produce profit to increase from 25% to even 85%. Off course this increase depends on
the industry a company operates in. Basically it can be said that loyal customers increase
their purchases, cost less to serve, refer other customers to the business and are willing to
pay a price premium for products or services they trust ( Simons, 2000 p188 ).
The customer perspective of the balanced scorecard first identifies its customers and
the market segments the company wants to compete in. These so called target segments
could include both existing customers as potential customers ( Simons, 2000 p188). Again
this depends first on the strategy a company follows. Mostly the strategy among target
customers or market segments can be read in the companies mission statement. A typical
mission statement for example can be to be number one in delivering value to customers
(Kaplan, Norton 1992 ). This automatically eliminates the so called no frills strategy, a
strategy which combines a low price with a low perceived added value, which aims on a price
sensitive market segment ( Johnson, Scholes, 2002 p319 ).
When the target customers are identified it is important to understand what the
company can offer to these target customer. Kaplan and Norton developed a customer value
proposition which describes the unique mix of product, price, service, relationship and image
that a company offers see figure 3 (Kaplan, Norton 2001a )

13

Figure 3 The customer value proposition

Kaplan, Norton 1996


The customer value proposition can be seen as a major part of the overall strategy. It defines
how the organization differentiates itself from competitors to attract, retain and deepen
relations with the target customers (Kaplan, Norton 2001a ). This mix is developed because
customers concerns tend to fall in these categories ( Kaplan, Norton 1992 ). Knowing what
the companys core competencies are, the company must choose which features of the
companys offers it wants to emphasize. These must be reflected in value describing
measures. From these value measures, information can be gathered, strategy can be
developed and translated and the performance of the core value features can be controlled.
The identification of the target customers and markets must correspond with the customer
value proposition. Again this must have a link with one or more financial objectives.
Improvements according to the customer proposition value has influence on both building the
franchise and increasing customer value. As stated earlier these two has a positive influence
on revenue growth.
When the company is aware off what it offers the target customers, it now is important
to find out whether the offerings are valued properly by these target customers. To make that
possible the managers should first determine the best measures of the business units
performance for these target customer se gments. When these measures are found, the
company, from this point of view, is able to set or revise its strategic goals. Off course this
strategy must be linked with one or more financial objective. This is harder to realize because
these measures are non-financial. As stated earlier they must be determined in units other
than in currency units. Therefore managers must first determine core measures that will
describe the successful outcomes of a well-formulated and implemented strategy.
Kaplan and Norton distinguish five common-based measures on which possible core
measures can be developed to understand what competitive position the company takes in
the market, seen from a customer perspective.

The first common-based measure is customer satisfaction. To make it possible to


measure customer satisfaction a company could, as key measure, use market
research tools like response cards or questionnaires. Other ways of looking at
customer satisfaction are through measuring the amount of complaints, feedback

14

from field sales and service representatives or through for example so called
mystery shopper programs ( Simons, 2000 p189).

The second common -based measure is customer retention. In this core measure
it is important to understand whether customers repurchase products or services.
By monitoring the average duration of a customer relationship, problems
according to the customer value proposition of the company can be detected
( Simons, 2000 p189). Problems arise when long term loyal customers leave the
companies offerings. As stated earlier these loyal customers are the most
profitable. This raises the question whether the valuation of these loyal customers
changed according to the companies value proposition or whether the customer
value proposition changed. Another problem arise when new customers only ones
buy the product or service. Again one might wonder whether these new
customers are the wrong customers for the company or whether there is
something wrong with the value proposition of the company. Another important
issue is to find out where defectors go to. All information from customer retention
measures can lead to changes in strategy ( Simons, 2000 p189).

The third common -based measure is customer loyalty. Through measuring the
number of new customers referred by existing customers it is possible to quantify
the degree of customer loyalty to a company. The idea behind this is that only
highly satisfied customers will recommend a firm to others. An other way is to
measure the debt of the relationship between the company and its target
customers. This is possible, for example, by measuring the frequency of goods
purchased by the stores of the company versus goods purchased in the stores of
competitors( Simons, 2000 p189).

The Fourth and fifth common-based measures are the measures of new customer
acquisition and the market share in every specific segment. These measures can
reflect the competitive position the company has in the market direct.

When a company understands its customers perspective through a combination of


the value proposition and its common based measures, it can set the most critical customer
based strategic objectives. This in order to deliver the most superior offers to the target
customers and so increase the customer value. Optimizing the customer value proposition
can also lead to a better understanding of potential new markets with potential new products.
This may build further its franchise. As seen before these two possible strategies of building
franchise and increasing customer value results in a revenue growth for the company and so
it would improve the competitiveness of the company (Kaplan, Norton 2001a ). The value
proposition also helps an organization to connect its internal processes to improve its

15

outcomes with its customers (Kaplan, Norton 2001a ). The Internal process perspective is
the third perspective of the balanced scorecard.
3.3

The internal business process perspective

Once a company has a clear picture of its customer perspective and its financial perspective,
it can determine the means by which it will achieve these objectives( Kaplan, Norton 1992 ).
This means that all internal processes must be adjusted to serve the revenue growth strategy
in the customer spectrum and to serve the improvement of productivity strategy in the
financial spectrum. As stated before these are the two strategies which results will increase
the economic value of the organization. The internal business process perspective must
represent all critical processes within a strategic bu siness unit who serve one or more parts
of these strategies( Simons, 2000 p192).
Taking the customer value proposition as given, the task is to adjust the internal
processes against the lowest costs possible. To understand what kind of processes must be
improved to reach optimal performance a distinction of processes must be made. The
internal value chain model, created by Porter in 1980, provides a handy template that
companies can use to customize their own objectives and measures in their internal
business process perspective of the balance scorecard( Simons, 2000 p192).
A balanced scorecard analysis of the internal processes however differs from a
traditional approach. Traditional models focus on monitoring and improving existing
processes. This goes beyond just financial measures of performances by incorporating
quality and time based metrics. These measures will be outlined later this chapter. Although
the focus of the internal business perspective is to monitor and improve existing processes, it
is able to identify entirely new processes to meet customer and financial objectives. This is
also a difference and happens when the balanced scorecard reveals customer values for
which new processes must be developed( Simons, 2000 p197).
The last mean difference between the traditional approach and the balanced
scorecard approach is the incorporation of innovation processes. Through innovation
processes responses of future customer needs can be fulfilled. In an ever changing
environment customer values change and so the customer value proposition must change.
This purpose can be made possible through innovation( Simons, 2000 p197). Figure 4 shows
a simple version of an internal value chain model with innovation processes.

16

Figure 4 The internal business process value chain

Kaplan and Norton, The balanced scorecard( Boston: Harvard Business School Press,
1996), p.96
The figure shows that three different stages of process cycles can be distinguished namely
an innovation cycle, an operation cycle and a post sale service cycle. Depending of the
overall strategy of the company, the critical processes must be revealed. To make sure the
critical success factors are working optimal, measures must be developed. The purpose will
be whether managers, operating in the different processes, act according to the intended
strategy. A sufficient translation of strategy is necessary to optimize these critical
organizational activities.
3.3.1 The innovation process
The mantra innovate or die is broadly accepted(Ambler, 2003). This makes the innovation
process a point of focus in the overall strategy. In the innovation process, companies identify
new markets, new customers and the latent needs of existing customers (Simons, 2000
p192). These goals can be reach through market research like identifying the size of the
market and the nature of customers preferences. Other market research could be price
sensitivity for possible target products or services(Simons, 2000 p192). After mapping this
information a product or service must be designed and developed in order to meet the needs
of the customers.
The purpose of the balanced scorecard is to create measurable objectives. It is
however tough to find and implement the right key internal process measures (Ambler,
2003). Critical success measures of innovation which could be used are:

The number of key items in which it was first or second to the market.

The percentage of sales from items newly introduced into stores can also be used
as innovation measure.

17

The number of new product launched.

It is important to understand that each company differs in leadership style and culture.
Therefore copying success measures from competitors does not guaranty success for its
own innovation process(Ambler, 2003). Measures must be developed out of the companys
own strategy. Another important issue is the high failure rate of 95% of new products
developed(Brown and Eisenhardt, 1995). Studies according to these failures conclude that
the primary cause comes from the miss-understanding of the customer needs(Pandya and
Dholakia, 2002). Therefore the focus of innovation managers must be on the solutions that
address customer needs rather than on the launch of new products(Berggren, Thomas
2001). The quality and not the quantity of innovation is the crux that must be solved(Ambler,
2003).
3.3.2 The operations process
The operations process is the second major part in the internal value chain. It represents the
processes that produce and deliver existing products and services to customers. Histo rically
this part of the business has been the focus of internal measurement systems. In the
operations process the efficiency measures and the cost measures traditionally play a crucial
role. Because of the repetitive character of existing processes the management techniques
concerning these processes have been improved. The activity based costing model, created
by Kaplan and Cooper is a good example. Recently however other measures became more
and more important like quality time based measures(Simons, 2000 p192). These elements
of strategy are now a crucial part in gaining competitive advantage.
The competitive environment now a days demands more and more quality features
of products, services and operating processes. Quality features has become an imp ortant
part of the customers proposition of companies. Research done by Buzzell and Gale 1987
shows a high correlation between relative product quality and profitability. Almost all
companies have therefore quality initiatives and quality programs in place (Simons, 2000
p193). Quality management can be defined as Total Quality Management (TQM). This is the
organizationwide approach to the continuously improving of quality of all the organizations
processes, products and services( Kotler, 2000 p 56).
Throug h a well defined customers perspective, a company can identify what kind of
quality the target customers value. Two types of quality can be distinguished namely
conformance quality and performance quality( Kotler, 2000 p 57). The level of conformance
in quality totally depends on the chosen strategy of a company towards its customers. It
constantly makes decisions whether to produce high, middle or low quality comfort products.

18

The performance quality of products and services however depends on the


functionality of the internal processes. To translate strategy concerning the demanded quality
of internal processes, well defined measures are necessary. These measures for production
processes can include:

Process parts per-million defect rates

Amount of scrap

Amount of rework

Quality improving measures for services can include:

Waiting times in stores

The amount of inaccurate information given to customers

Access denied of delayed for customers

The TQM strategy demands a constantly focus on external marketing and internal
management. This in order to let quality to be on the perceived level that gives customers the
best solution the company can offer.
The second way to improve the operation process is through the shortening of the
cycle time of the product or service. This is the elapse time from when customers place an
order until the time they receive the desired product or service. It appears that customers
highly value a short and reliable cycle time(Simons, 2000 p194). This is why it also is one of
the core features in the customer value proposition.
There normally are two ways of offering short and reliable lead times to customers.
The first way is through producing and holding enough stocks of finished goods inventory. In
this way finished goods immediately can given to the customer when an order is placed. This
however increases the necessity of storing space which is not for free. The second way is to
have an efficient just in time, order fulfillment. This so called Just In Time (JIT) model,
created by Foster and Horngren, deals with inventory costs through the introduction of a pull
system. This model takes the date of delivery as a starting point and everything is
coordinated and scheduled back through the production process to make sure that date is
achieve(Hirsch, 2000 p124). The failure rate of achieving this goal can be used as measure
in the balanced scorecard. Another purpose of the JIT model is to lower the so called
throughput time.
Throughput Time = Processing Time + Inspection Time + Movement Time +
Waiting/Storage Time
All measures concerning throughput time can be used to set strategic goals in order to
improve cycle time.

19

The last category on which operation process strategy can focus is costs. Traditional
cost accounting systems can be used to measure the expenses and efficiencies of individual
tasks, operations or departments(Simons, 2000 p195). These systems however tent to fail to
measure costs at the process level analysis. A good system to avoid these kind of failure is
Activity Based Costing. In short this system tries to measure accurate the costs of every
individual business process or activities. In this way important parameters cab be tracked to
enlarge the effectiveness and efficiency of critical internal business processes.
3.3.3

The post-sale service process

The last couple of decades the post-sale services has become a major battleground for
competitive advantage. Some equipment companies even make over 50% from their profits
from these services like for example John Deere( Kotler, 2000 p 446). It appears that in the
global marketplace the companies who provide poor service support are seriously
disadvantaged. It is therefore logical to add the post-sale service process to the internal
value chain.
The first task to fulfill is to understand what kind of service is expected by the target
customers. When this is clear the company must find out whether there is a gap between
what services it offers and what services are expected(Beach and Burns,1995). Important
here is to understand that dissatisfaction can arise from both under-delivery and overdelivery of services relative to expectations(Beach and Burns,1995). Some critical
performance measures of the post sale service processes may be associated with:

Warranty and repair activities

Treatment of defects and returns

The administration of payments

Response to failures and downtime

Most companies have customer service departments. This is wise because in this way they
stay close to the equipment and know its problems. As said before there could be a
possibility to make good money in running the parts and service processes. Strategically
however it could be better for the company to switch more and more maintenance or even
service procedures to authorized distributors and dealers. This for example is the case for
the automobile industry where most of the problems are solved by independent garages. The
benefits here comes from a quicker service for the customer at a nearby location(Kotler,
2000 p447).

20

3.4 The learning and growth perspective


The learning and growth perspective identifies the organizational infrastructure that would
best fit the strategic objectives of the company. It defines the employee capabilities and
skills, technology and the corporate climate that is needed to make sure the critical
objectives of the other perspectives will be realized(Kaplan, Norton 2001a ). This perspective
tries to improve the capability of human recourses, technology and organizational procedures
in order to meet the curren t and future strategic goals. The balance scorecard is able to
identify possible gaps between existing organizational recourses and the recourses that are
required for a successful implemented strategy. Possible gaps that are found can be closed
through in vestments in the training of employees, the enhancing of information technology
and the alignment of organizational procedures.
Although it is important to improve the existing recourses to align strategy with the
capabilitys of the company, it must also recognize the changing environment in the long run.
This is a special link, created by the balanced scorecard, between this perspective and the
innovation processes of the company. It forces managers to define long term strategic
objectives and therefore it provide a better change on continuance.

21

4.

The balanced scorecard as control mechanism of strategy

Previously the balanced scorecard was used as an instrument to translate strategy


throughout the entire company. Important was that different managers of different strategic
business units were given different critical performance measures to focus on. These critical
performance measures could be subtracted from the four perspectives of the balanced
scorecard. When a good combination of financial performance measures and non -financial
performance measures is made, a manager of a strategic business unit will be able to
understand the overall strategy and knows what he or she must do to support this strategy. A
shot term and long tern notification of a manager is created. This translation of strategy into
operational terms and the creation of strategic objectives for individual business units is the
first step of the strategically use of the balanced scorecard (Kaplan, Norton 2001b).
The second step to of an strategy focussed company is to control and, if necessary,
improve the companys strategy. The balanced scorecard can play an important role in this
process. As seen before information is gathered with the balanced scorecard and this
information can give top managers a fast and comprehensive view of their business ( Kaplan,
Norton 1992). With this information strategy can evolve in order to adapt the company
strategy to the dynamic environment it operates in.
To see what kind of role the balanced scorecard can play to control and improve
strategy, the levers of control model designed by Simons will be used. This model is focused
on management control and its framework is the implementation, accomplishment and
monitoring of strategic goals( Simons, 1995;2000). The model introduces four types of
control systems a company can use to set, implement and understand business-strategy and
its possible changes over time. These control systems are named: beliefs systems, boundary
systems, diagnostic control systems and interactive control systems. These four systems are
described in this chapter and when the balanced scorecard can play a role in this model, this
role will be described. This mostly is the case in the diagnostic control system and the
interactive control system. The describing of the beliefs system and the boundary system
however play a crucial role in controlling and protecting the business strategy in the levers of
control model.
4.1

Beliefs systems

Where managers must make choices every day there is the danger that they make the
wrong ones, which could be devastated to the company. A top manager who sets the
company strategy, must act against the risk of making the wrong choices. For example the
probability of sub -optimization earlier explained. To ensure that employees will take the right
actions, one must start with defining the core values of the firm. According to Simons the

22

core values are the beliefs that define the basic principles, the purpose and the direction of
the firm. They can provide guidance about responsibilities to customers, employees,
shareholders and other stakeholders. They explicitly define top managements views on
trade -off problems, for example short term performance versus long term responsibilities.
Finely they provide guidance to employees where rules and standard operating procedures
alone are not sufficient enough.
Although core values can be communicated informally for small companies, this will
not be manageable for larger companies. These companies should formalize their beliefs
systems. According to Simons, beliefs systems are the explicit set of organizational
definitions that senior managers communicate formally and reinforce systematically to
provide basic values, purpose and direction for the organization. Along with the core values
these formal beliefs systems also contain mission statements and credos, this all to provide a
compass for action ( Simons, 2000). All employees must be able to understand these beliefs
systems so they must be written at high levels of abstraction and generality. This is why
beliefs systems are never specific enough to tell employees, facing a difficult choice, what
exactly to do stating that there is to little guidance.
Being the core of a business strategy, the beliefs system plays a critical role in
subtracting strategic objectives. Therefore it also can be seen as the fundament of the
balanced scorecard. Setting the core strategy of a business and its communication has also
as purpose to protect business strategy. Whether this is realized through the balanced
scorecard or through other tools.
4.2

Business conduct boundary system

Business conduct boundaries are those boundaries that define and communicate standards
of business conduct for all employees, the so called codes of business. These formal
systems establish explicit limits and rules, normally stated in negative terms or minimum
standards (Simons 1994). These can be seen as the behavior constraints, which involves
ensuring that employees do not perform certain behaviors that are forbidden and so harmful
to the organization (Merchant, Van der Stede, 2003). This does not mean that all these
possible actions are forbidden by law but that they are forbidden by the rules of the
organization.
Simons makes a distinction between structural safeguards, system safeguards and
staff safeguards as internal controls to make sure the core values and codes of business are
not be violated. The structural safeguards contain, physical security for valuable assets,
defined levels of authorization, segregation of duties and independent audit. The system
safeguards contains complete and accurate record keeping, restricted access to information
systems and databases and timely management reporting. Finally the staff safeguards

23

contain adequate expertise for accounting and control staff, rotation on key jobs and
sufficient recourses, the latter to make sure the costly internal controls can be implemented.
4.2.1 Strategic boundaries
Although beliefs systems, business conduct boundaries and their internal co ntrols deal
primarily with the risks that people will make errors or wrong choices in balancing profit,
growth and control, Simons recognizes another kind of risk namely wasting scarce resources
on initiatives that do not support business strategy. For the se kinds of risks, strategic
boundaries are drawn as a clear definition of the market position a company wants to have.
This means that all unfocused initiatives by employees should be reduced to a minimum. On
the other hand making a very stiff market position statement reduces innovative actions by
employees, which can be harmful for the evolution of the company. The choices which must
be made to create a strategy should always be negotiable and flexible so adaptations is
always possible. However, the time to spend on strategy change is limited and so a trade off
should always be made.
As said before, effective strategy boundaries draws a clear definition of the market
position of the company. As companies grow bigger the communication of the market
position will be harder and so must be formalized. The following points can be worked out to
have a clear guidance for strategic market positioning. First of all the minimal levels of
financial performance must be clear to employees. This means that investments with a ROE
lower than a certain level should not be made. Other financial indicators can be used as a
measure for accepting an investment. This can lead however to an issue of sub-optimization
and/or myopia. Second, employees must know the minimum sustainable competitive
position, which means they should know what kind of market position top managers dont
want. Third, managers should know what kind of products and services do not draw on core
competencies so no management attention is wasted on these products or services. Fourth
and last is that managers should know which market positions and which competitors should
be avoided.
4.3

Diagnostic control systems

Up until now we spoke of the type of control where employees and managers had a guardian
about what kind of actions not to make in a business cadre, set by the top -management in
the form of beliefs systems and boundaries. Now control systems, which tells whether the
action made by employees and managers are efficient enough according to the targets set
and monitored by top managers, are introduced. Simons (1995) defines diagnostic control
systems as the formal information systems that managers use to monitor organize actual
outcomes and correct deviations from pre -set standards of performance. This means that

24

information systems can be used diagnostically if it is possible to set goals in advance,


measure outputs, compute or calculate performance variances and use that variance
information as feedback to alter inputs and/or processes to bring performance back in line
with pre-set goals and standards ( Simons 2000).
To limit the amount of measures, out of the enormous amount of possible measures,
top managers must first select those measures they want to monitor. To manage this they
first have to recogn ize the critical performance variables, those factors that must be achieved
or successfully implemented for the intended strategy of the business be successful. They
form the link between strategy and the limited goals and targets, implemented and monitored
by the top management. Through diagnostic control systems strategy is implemented and
communicated to the entire organization.
To monitor through diagnostic control systems managers can save time by using
them on a management by exception way. This is the process of getting involved only when
problems appear. To manage this, diagnostic control systems should be implemented
effectively. First, appropriate goals, in terms of the desired direction and level of
achievement, should be set. Second, performan ce measures must be aligned in a way that
they truly reflect strategic goals and priorities. Third, through designing incentives and the
linking of rewards with results, employees behavior should be focused on strategy. Fourth,
monthly and quarterly exception reports must be released so managers can quick review and
analyze to see if strategy still is on track. Finally when exceptions occur, managers must act
quickly to get the strategy back on track.
The way Simons describes his diagnostic control system is exactly how the balanced
scorecard is set and implemented. It must be no surprise that the balanced scorecard
therefore is an excellent tool to act as an diagnostic system. Especially where it contains
processes in the company that existed for a while in the business. We also have seen before
how management incentive are controlled through the balanced scorecard. With the
appropriate critical performance measures management notion can forced to be both short
and long term. It must be said however that the balanced scorecard is not enough to have as
an diagnostic system.
Other systems can coexist with the balanced scorecard to monitor management
behavior and business processes. The most important here is cost related and is known as
activity based costing developed by Kaplan and Cooper. This model was developed to
correct the inability of traditional costing systems to identify the drivers of indirect and support
costs (Kaplan, Cooper 1998). The model operates by relating organizational spending to
activities and processes that support the design, production, marketing and delivery of
products and services to customers( Kaplan, Norton 2001b). To be more specific one could
say that with identifying different activities and processes and identifying what the se activities

25

and processes cost, this model can complement the balanced scorecard. First of all this
system could improve the purpose to limit the amount of critical performance measures in the
individual strategy maps. All cost control related measures can now fall into the activity
based costing system. Second of all where costs can be seen as critical, like in the internal
business perspective, the activity based costing system could trace organizational expenses
more accurately to the different processes(Kaplan Norton 2001b). Therefore more accurate
critical performance measures in the form of costs can be set in the balanced scorecard with
the help of the activity based costing system.
4.4

Interactive control systems

When beliefs systems, boundaries and diagnostic control systems are in place, business can
run efficiently now. However strategists may be sure for now, they never can be sure
forever(Mintzberg 1990). There are always strategic uncertainties, the emerging threats and
opportunities that could invalidate the assumptions upon which the current business strategy
is based which should be handled effectively by a top manager( Simons, 2000). These
strategic uncertainties rather focus on question than on answers and that is why a diagnostic
way of handling control systems is not sufficient enough to deal with these uncertainties.
Simons introduced interactive control systems which are the formal
information systems that managers use to personally involve themselves in the decision
activities of subordinates. Through these interactive control systems, managers seek to get
information out of the entire organization. When information is gathered, debates and dialogs
take place to stimulate organizational learning. This makes strategy a continual process as
strategy must be reviewed during management meetings(Kaplan, Norton 2001b).
As any control system can be used interactive, some characteristics are necessary.
Interactive control systems must provide information about strategic uncertainties. Becau se
they must be used by managers at multiple levels of the organization they must be simple to
understand. They further must generate new action plans. Interactive control systems bear
the same risks already mentioned by setting up diagnostic control systems. Therefore it is
important that top managers decide which aspects of management control systems to use
interactively(Simons 1987b). As seen before different control systems can complement each
other so this decision is necessary in order to make this interactive process manageable.
Simons found out that there are three functions an interactive control system must provide.
The first is signaling which is the use of information to reveal preferences(Spence
1974). Loosely speaking, a signal can be defined as a behavior or phenotype produced by
one individual (the signaler ) that serves to influence the behavior of a second individual (the
signal receiver) by transmitting information(Bergstrom 2002). Without deepening this out one
could say that signaling is necessary since top managers cannot always know when or

26

where the impetus for important policy decisions will originate. To be more specific they dont
know how or why a decision is made and by whom. Top managers must therefore use
interactive control systems to monitor strategic uncertainties to reveal their values and
preferences to the many individuals in the organization who have input on the decision
processes(Simons 1990).
Surveillance is the second function an interactive control system must have. This is
the search for possible surprises(Feldman, March 1981).The interactive control system must
give information in order to monitor its environment for surprises or for the reassurances that
there are none(Simons 1990). These surprises could be for exa mple new alternatives, new
possible preferences, or new significant changes in the world.
Finally the interactive control system must serve the decision ratification by top
managers. This is necessary when any strategic policy decision commits the organization
and its recourses(Mintzberg 1973b). With this function, top managers can be fully informed
about such decisions throughout the organization.
It appears that the balanced scorecard provide a general template for an organizations
interactive system(Kaplan, Norton 2001b). We have seen that through the strategic goals
and the outcomes toward these goals, the balanced scorecard provides a lot of information
for the company. Because these strategic goals and outcomes are put in a strategy map for
each individual strategic business unit, top managers are able to understand better why
decisions are made and by whom with this information. This sort of signaling is the first
necessary function of an interactive control system as stated by Simons.
Because all the different strategy maps comes together at the top management, the
balanced scorecard also can serve the decision ratification, also a function an interactive
control system must serve. So both signaling and decision ratification are made easier using
the balanced scorecard because every business unit has its own strategy map, providing
information. Critical here is that the use of this information change strategic objectives
constantly. To use the balanced scorecard interactively the objectives set must be able to
stretch. Therefore the objectives cannot be used to compute bonuses for strategic business
managers. These managers must be rewarded on the effort they made the previous
period(Simons 1990). Otherwise these managers will try to obtain the previous set strategic
goals in order to get rewarded without trying productivity or efficiency. Information in this
case is useless to improve strategy because it will be not clear what actually is possible with
the recourses available.
The last function of an interactive control system is surveillance. As said this function
contains the information gathering of the environment in order to find surprises. The
balanced scorecard provides the customer value proposition in the customer perspective.
This customer value proposition constantly tries to monitor the changes of the customer

27

needs. If any changes appear in the customer environment, the customer perspective will
signal this.
We have also seen that the internal process perspective and the learning and growth
perspective must be provide the optimal solution in order to fulfill the customer value
proposition with the recourses available. These two perspectives provide an environmental
focus in order to fulfill this purpose. Therefore they are able to notice changes in the business
environment whether these are opportunities or threats. The balanced scorecard can provide
a fit between the organization and its environment. This is called organizational learning and
according to Simons this is necessary to complete the strategic analysis.

28

Conclusion
The continually changing business environment demands a dynamic business strategy. If a
company decided which strategy it wants to follow the next period, this strategy must be
communicated with the rest of the company. This can be done by using a management
control system. This paper uses the balanced scorecard as such a management control
system. The question therefore is:
How can you translate and implement strategy into the organization and how can this
strategy be controlled, both with the help of the balanced scorecard.
This model tries to find the most critical performance measures both financially as non financially. To find these critical performance measures, the company must try to see itself
from four different perspectives namely a financial perspective, a customer perspective, an
internal processes perspective and a learning and growth perspective. These four
perspective make it possible that managers are focussed on the short term financial goals as
well on the long term non-financial goals. When these critical performance measures are
found, a balance between financial and non -financial strategic objectives for these critical
performance measures are put in strategy maps. The model recognises that different
strategic business units may have different strategic objectives and so different strategic
maps must be provided. The paper shows that these strategic maps are very useful
instruments to translate and implement the overall business strategy throughout the entire
company.
After seeing how the balanced scorecard is able to communicate strategy through the
implementation of strategy maps, the paper turns to the second part of the central question.
This is done by introducing the levers of control model developed by Simons. This model
provides four different systems which are able to control the overall business strategy. The
first two types of systems, the beliefs systems and the boundary systems, must be set up to
make sure all employees are aware of the core values of the company and what kind of
actions are forbidden by business rules. The balanced scorecard plays no significant role in
these systems.
The balanced scorecard can however be used as a diagnostic control system and an
interactive control system. The implemented strategy maps throughout the entire company
provide useful information. Diagnostically, this information can be used to see whether
known processes are malfunctioning. No actions should be taken if the outcomes reflect the
previous set strategic objectives. These strategic objectives could be set quite accurately
because of the historically functioning of some typical business processes. The Strategy

29

however must be improved constantly. To be sure this happens a constant flow of


information must arrive at the top management level. If strategic objectives are stretched out,
information gathered with the help of the strategic maps can be used interactively. This all
shows that the balanced scorecard can play a crucial role in p rotecting and improving
strategy.

30

References
Ambler, T. (2003): Why Financial Managers Need to Think about Marketing.
http://ria.thomson.com/journals
Beach, L.R. & Burns, L.R. (1995): The service quality improvement strategy
Identifying priorities for change. International Journal of Service Industry
Management, Vol. 6 No. 5, 1995, pp. 5 -15.
Berggren, E. Thomas, N. (2001): Introducing new products can be hazardous to your
Company:; Use the right new solutions delivery tools. Academy of management
executive, 15, no. 3, (August), 92-101).
Bergstrom, C.T. 2002: The Theory of Honest Signalling.
http://octavia.zoology.washington.edu/handicap/signalling_as_game.html
Blair, M.B. (1995): Ownership and control: Rethinking corporate governance for the twenty
first century. Washington, D.C.. Brookings institution
Brown, S.L. & Eisenhardt, K.M. (1995): Product development: past research, present
findings and future directions. Academy of management review, 20(3): 343-383
Buzzel, R.D. & Gale, B.T. (1987): The PIMS principles: Linking strategy to performance.
New York: Free press, 1987
Durden, C.H. (2001): The development of a strategic control framework and its relationship
with management accounting.
Feldman, M.S. & March, J.G. 1981: Information in organizations as signal and symbol.
Administrative science quarterly, 1981. Pp. 171-186
Hirsch, M.L. (2000): Advanced Management Accounting. Second edition. Thomson
Learning, London.
Itnner, C.D. & Larcker, D.F. & Meyer, M.W. (1997): Performance compensation and the
balanced scorecard.
Johnson, G. & Scholes, K. (2002): Exploring corporate strategy. Sixth edition
Kaplan, R. S. & Norton (1992): The balanced scorecard: measures that drive performance.
Harvard business revieuw january-february
Kaplan, R.S., Norton, D.P (1996b): Translating Strategy into Action: The
Balanced Scorecard. Harvard Business Review, Harvard Business School Press.
Kaplan, R. S. & Norton (2001): Transforming the balanced scorecard from
performance measurement to strategic management: part 1. American accounting
association accounting horizons vol 15 no 1 , pp 87-104
Kaplan, R. S. & Norton (2001): Transforming the balanced scorecard from
performance measurement to strategic management: part 2. American accounting
association accounting horizons vol 15 no 2 , pp 147 -160

31

Kitchenham, B. (1996): Software metrics: measurement for software process improvement.


Camebridge, MA, Blackwell
Kotler, P. (2000): Marketing Management. Prentice-Hall, Inc. Upper Saddle River,
New Jersey
Kueng, P. (2000): Process performance measurement system: a tool to support
process-based organizations. Total quality management, vol11, no. 1, 2000. pp. 67 85
Martinsons, M. & Davison, R. & Tse, D. (1999): The balanced scorecard: a foundation for
the strategic management of information systems. Decision support systems 25, pp.
71-88
Merchant, K.A. & Van der Stede, W.A. (2003): Management control systems, performance
Measurement, evaluation and incentives Edinburgh Gate Harlow: Pearson education
Limited.
Mintzberg, H. 1973: The nature of magerial work. New York: Harper & Row, 1973b
Pandya, A. & Dholakia, N. (2002): B2C Crash as an innovation failure: Organization
learning from the dotcom debris. Journal of electronic commerce in organizations
Reichheld, F. & Sasser, W.E. (1990): Zero defections: Quality comes to services. Harvard
Business review, September- October 1990
Simons, R. (1987b): Planning, control and uncertainty: a process view, in Burns, W.J.Jr
And Kaplan, R.S.. Accounting and management: Field study perspectives, Boston,
MA: Harvard business school press, 1987b. pp. 339 -362
Simons, R. (1990): The role of management control systems in creating competitive
advantage: New perspectives. Accoun ting, organizations and society 15, pp.
127- 143
Simons, R. (1994): How new top managers use control systems as levers strategic
renewal, Strategic management journal, vol 15, 169-189
Simons, R. (2000): Performance measurement & control systems for implementing
strategy. Upper saddle river, NJ: Prectice Ha ll
Spence, M. 1974: Market signalling. Cambridge, MA: Harvard university press 1974
Webber, A.M. (2000): New math for a new economy, Fast company
Winchell, W. (1996): Inspection and measurement in manufacturing. Dearborn, MI,
Society of manufacturing engineers

32

33