Q: I am surprised to see you operating the plane with a single instrument. What does it measure?

A: Airspeed, I am really working on airspeed this flight. Q: That's good. Airspeed certainly seems important but what about altitude. Wouldn't an altimeter be helpful? A: I have worked on altitude for the last few flights and I've got pretty good on altitude. Now I have to concentrate on air speed.

Q: But I notice that you don't even have a fuel gauge. Wouldn't that be useful? A: Fuel is important, but I can't concentrate on doing too many things well at the same time. So this flight I want all my attention focused on air speed. Once I get to be excellent at airspeed, as well as altitude, I intend to concentrate on fuel consumption on the next set of flights

Probably no one would choose to be a passenger on this plane after such a conversation. Managers are like pilots. Navigating today's enterprises through complex competitive environments is at least as complicated as flying an airplane. The executives thus need a full battery of instrumentation to guide their journey. The Balanced Score Card provides an Enterprise view of an organizations overall performance by integrating Financial measures with other key performance indicators around Customer satisfaction, Internal business processes and Organizational growth, learning and innovation.

Increase focus on strategy and results Improve organizational performance by measuring what matters Align organization strategy with the work people do on a day-to-day basis Focus on the drivers of future performance Improve communication of the organizations Vision and Strategy Prioritize Projects / Initiatives

The balanced scorecard suggests that we view the organization from four perspectives, and to develop metrics, collect data and analyse it relative to each of these perspectives:
The Learning and Growth Perspective The Business Process Perspective The Customer Perspective The Financial Perspective

TO ACHIEVE OUR VISION, HOW WILL WE SUSTAIN OUR ABILITY TO LEARN AND IMPROVE?

This

perspective includes employee training and corporate cultural attitudes related to both individual and corporate self-improvement. In a knowledge-worker organization, people -- the only repository of knowledge -- are the main resource. In the current climate of rapid technological change, it is becoming necessary for knowledge workers to be in a continuous learning mode.

Metrics can be put into place to guide managers in focusing training funds where they can help the most. In any case, learning and growth constitute the essential foundation for success of any knowledge-worker organization. Kaplan and Norton emphasize that 'learning' is more than 'training'; it also includes things like mentors and tutors within the organization, as well as that ease of communication among workers that allows them to readily get help on a problem when it is needed.

TO SATISFY OUR CUSTOMERS, AT WHAT BUSINESS PROCESS MUST WE EXCEL ?

This

perspective refers to internal business processes. Metrics based on this perspective allow the managers to know how well their business is running, and whether its products and services conform to customer requirements (the mission). These metrics have to be carefully designed by those who know these processes most intimately

TO ACHIEVE OUR VISITION HOW SHOULD WE APPEAR TO OUR CUSTOMERS? Recent management philosophy has shown an increasing realization of the importance of customer focus and customer satisfaction in any business. This perspective identifies the customer and market segment in which the business will compete and measures performance in these targeted segments. The perspective typically includes several core/generic measures like customer satisfaction, customer retention & acquisition and market share. The perspective should also include specific measures of value proposition in the specific market/customer i.e. lead time, on time deliver if applicable

Poor performance from this perspective is thus a leading indicator of future decline, even though the current financial picture may look good. In developing metrics for satisfaction, customers should be analysed in terms of kinds of customers and the kinds of processes for which we are providing a product or service to those customer groups.

TO SUCCEED FINANCIALLY, HOW SHOULD WE APPEAR TO OUR SHAREHOLDERS ? The BSC retains the financial perspective since financial measures are valuable in summarizing the readily measurable economic consequences of actions already taken. They indicate whether a company's strategy, implementation and execution are contributing to the bottom line. The financial measures tend to be profit related (by operating income), return on capital employed (ROCE or EVA) and Sales growth or generation of cash flow.

But the point is that the current emphasis on financials leads to the "unbalanced" situation with regard to other perspectives. There is perhaps a need to include additional financialrelated data, such as risk assessment and cost-benefit data, in this category.