The golden rules for implementing the balanced business scorecard

The balanced business scorecard is a widely-used management framework for optimal measurement of organizational performance. Explains that the scorecard originated in an attempt to address the problem of systems apparently not working. However, the problem proved to be less the information systems than the broader organizational systems, specifically business performance measurement. Discusses the fundamental points to cover in implementation of the scorecard. Presents ten “golden rules” developed as a means of bringing the framework closer to practical application. The Nolan Norton Institute developed the balanced business scorecard in 1990, resulting in the much-referenced Harvard Business Review article, “Measuring performance in the organization of the future”, by Robert Kaplan and David Norton. The balanced scorecard supplemented traditional financial measures with three additional perspectives: customers, internal business processes and learning and growth. Currently, the balanced business scorecard is a powerful and widely-accepted framework for defining performance measures and communicating objectives and vision to the organization. Many companies around the world have worked with the balanced business scorecard but experiences vary. Based on practical experiences of clients of Nolan, Norton & Co. and KPMG in putting the balanced business scorecard to work, the following ten golden rules for its implementation have been determined: 1 There are no standard solutions: all businesses differ. 2 Top management support is essential. 3 Strategy is the starting point. 4 Determine a limited and balanced number of objectives and measures. 5 No in-depth analyses up front, but refine and learn by doing. 6 Take a bottom-up and top-down approach. 7 It is not a systems issue, but systems are an issue. 8 Consider delivery systems at the start. 9 Consider the effect of performance indicators on behaviour. 10 Not all measures can be quantified.