"You Cannot Manage What You Cannot Measure." Whether Deming or Drucker said it, this thesis has as many proponents as opponents. I belong to the group of proponents, because how can you determine a company's performance without a Profit and Loss Statement, how can you check customer satisfaction without asking for their opinion? This is what measuring is all about. And the Balanced Scorecard, is my favorite tool for regularly verifying whether a company is on its chosen path.
Balanced Scorecard as a strategic management method in an enterprise
Does your company have a strategy? But a real one, one that every employee knows, one that you live by when you come to work, one from which operational goals are derived? Many companies declare that they have a strategy, but only as a nice document. Meanwhile, a company's strategy should be a roadmap for the entire organization, showing how to achieve long-term goals and how to measure them. In response to this problem, Robert Kaplan and David Norton developed the Balanced Scorecard (BSC) method, also known as the balanced scorecard.
BSC is a strategic management method that allows translating strategy into specific actions and linking them to measurable indicators. The Balanced Scorecard is based on four perspectives: financial, customer, internal processes, and employee development. Managers can simultaneously monitor financial results, customer satisfaction, and the effectiveness of operational activities.
The Balanced Scorecard makes the company's strategy a management tool, not just a theoretical document.
The Balanced Scorecard – BSC construction and its four perspectives
The Balanced Scorecard is a strategic management tool that allows you to look at a company more broadly than just through the prism of finance. The BSC construction is based on four perspectives: financial, customer, internal processes, and learning and growth.
Each of these is linked to specific strategic goals and metrics that are interconnected. Financial goals in enterprises are paramount – they determine the stability and development of the company. Customer-related goals result from them, because to achieve revenue growth or improve profitability, customer satisfaction and loyalty must be ensured.
A good example of BSC application is IKEA, which sets a financial goal of increasing sales. To achieve this, it focuses on the customer perspective – it offers attractive prices, functional products, and convenient online shopping. These actions are supported by the internal processes perspective, i.e., efficient logistics and supply chain optimization, as well as by the learning and development perspective, including employee development and investment in new technologies. All perspectives work together to achieve the overarching financial goal.
Thanks to such an approach, strategy can be effectively translated into concrete actions, instead of leaving it in the realm of general declarations. Financial goals are complemented by indicators related to customer loyalty, process efficiency, and investing in employee development. In practice, this means that the organization's operational activities affect not only financial results, but also the company's development and its ability to maintain market share.
The process of implementing the strategic scorecard
The process of implementing the Balanced Scorecard (BSC) in enterprises usually begins with a readiness audit – companies must check whether they have described strategic goals and the ability to measure them. A study by the French Institute of Economics Poland from 2022 shows that 44% of companies use BSC as a strategy implementation tool, which is a significant increase compared to 17% of companies in 2006. Companies that previously did not have a strategy document often only create a strategic map and qualitative and financial metrics during the BSC construction. BSC implementation also requires the involvement of the board and managers – without support at the highest level, a strategic initiative makes no sense.
An important stage is also the readiness test stage – whether the organization has the data needed for measurements, appropriate reporting systems, and managerial competencies to analyze results. In practice, BSC implementations emphasize that the process does not end with setting the strategy, but must involve communicating goals throughout the company and regularly monitoring and improving metrics and strategic initiatives.
Opponents of the theory of measurement and management enter the fray at this point, arguing that excessive focus on measurement itself distracts from action. And I agree with that. Therefore, you need to decide what (and why) to measure. As in many other areas - excess is not advisable. Sound judgment and logic are advisable.
The role of the financial perspective and controlling in the BSC approach
The financial perspective in the Balanced Scorecard for businesses is the starting point, because financial results show whether the implementation of the strategy brings the expected effects for owners and investors. Financial goals – such as revenue growth, improved profitability, or cost control – are an element of every Balanced Scorecard. To monitor them, a company needs appropriate metrics, i.e., financial indicators linked to other BSC perspectives.
Controlling plays an important role here, measuring the effectiveness of actions and supporting managers in decision-making. Thanks to controlling, it is possible to check how operational activities or strategic initiatives affect the financial results of the organization. Importantly, the scorecard shows that achieving good financial indicators depends on customer loyalty, the efficiency of internal processes, and investments in employee development. In this way, the financial perspective does not function in isolation, but is the result of the entire organization's actions.
How the Balanced Scorecard helps translate strategic goals into business results
The Balanced Scorecard is a modern approach to management that allows companies and organizations to effectively translate vision and strategy into concrete actions. The scorecard enables the creation of a clear strategy map, where strategic goals are linked to metrics and initiatives in various areas. Thanks to this, the company does not focus solely on financial results, but can also take into account the perspective of customers, internal processes, and learning and development.
This tool supports not only measurement, but also performance management, because it shows which business actions actually lead to the realization of the strategy. Implementing BSC often requires a change in organizational culture, where employees understand how their daily tasks affect the company's goals. As a result, the strategy map becomes a practical guide, not just a document. The Balanced Scorecard also helps develop innovations, because it shows where the company should invest to achieve lasting success in a dynamic business environment.
The Balanced Scorecard makes strategy cease to be theory and become a practical tool supporting daily decisions. This management approach allows companies to build a coherent organizational culture in which everyone works towards common goals and achieves measurable results.
At Symmetria Partners, we help companies translate strategy into results. Regardless of whether you are just learning about the Balanced Scorecard concept or are already working on implementing a balanced scorecard, we support you throughout the entire process. From building a strategy map and defining key indicators, to integrating BSC with business processes and controlling – we ensure that your strategy does not remain on paper, but works in practice. Thanks to us, your company operates – with precision and results and can develop an organizational culture and achieve long-term goals. Contact us to learn more.
