Introduction to Strategic Performance
Balanced scorecard basically refers to as a strategic performance tool or strategic planning and management system which is extensively used by every business and non-business organization in order to align business activities with the vision and strategy of the organization. Balance scorecard plays a vital role in an organization as it helps in strategic management and it aids in aligning all the activities of an organization along with vision and strategy (Johanson and et.al., 2006). This report has been emphasized on the development and role of balance scorecard in a production as well as in service organization. Further, this report discuss the critical analysis and argument of role and development of balance scorecard.
Development of Balance Scorecard
Balance scorecard which was developed by Robert Kaplan and David Norton in order to deal with a problem, for instance, a firm reduce their customer service level so that current earnings can be boosted but in future earning might get reduce due to reduction in customer satisfaction. For that purpose, balance score card was developed. It is basically a strategic performance management tool which is used by managers in order to keep track of the execution of activities by employees and to monitor the consequences which will arise from their action (Chavan, 2009). It measures financial data, customer satisfaction, business process and learning measures. This translate the strategy of organization into four perspectives along with a balance between the internal and external measures; between objective and subjective measures and balance between performance results and the future results.
Balance scorecard is developed in a different manner in different organization depending upon the nature of a company. In production firm it is developed in accordance with a operations but it is altogether differently developed in a service sector company. Balance scorecard is developed by following few steps such as firstly company has to build their purpose statement which includes the information about how company will be different from its competitors and it also includes objectives of a firm plus advantage plus scope of a company (Gurd and Gao, 2008). It explains that what company is going to do, where the firm will win and where the organization is going to do it. Second step is the designing of change agenda which states that change is an ongoing process. This also states that what company needs so as to make it better for achieving the purpose of an organization. Thirdly, firm should make a map towards the destination in which lots of wrong turn should be included while on the way to strategy execution. Cause and effect should also be linked along with the strategic objective. Fourthly, after making a map the next step is of creating great measures (Soderberg and et. al., 2011). Measures are created for doing two things that is understanding what is not working in an organization and helps to motivate. Company has to choose that measure which helps in driving the strategy. Then last step is to set up some initiatives such as to focus on the strategy a company should stop doing certain things which is less important. This initiatives has to be taken by firm in order to excel. These were the few steps which is used in order to develop the balance