Hi, I'm Jay Gulick, I'm director of BNET.com, and today, I'mgoing to talk about balanced scorecards. A balanced scorecard is a performancemanagement and measurement system that was created by two really smart guys:Robert Kaplan who was a professor of accountancy at Harvard Business School,and David Norton. And really, balanced scorecard concerns itself with the veryfundemental part of business which is strategy. What Kaplan and Norton said wasthat companies for a long time looked at strategy in a very one-dimensionalway. This was something that was one time, per year, and involved a very smallgroup of decision-makers and it looked primarily at the financial metrix of acompany. And they said that's fine for companies that were in the industrialage, things were'nt moving as fast, you can look at your assets and say this iswhat our future value is going to be. But what they said was for companies thatwere innovating in an economy that's growing as rapidly as ours has been overthe last fifteen years, you need to look at things from a more balancedstandpoint.
So I'm going to draw a little scale here. It's got fourdimensions that Kaplan and Norton talked about. One was the financial, one wascustomers, another one was the internal business processes of your company, andthe final one was L and G, or learning and growth. So essentially the financialperspective was "what are we doing as a company from a profitability andgrowth standpoint as viewed by our shareholders?" From a customerstandpoint, "how do we add value or differentiate our products or servicesin the marketplace?" Internal business processes, these are the thingsthat as a company we excel at, whether it be a manufacturing process, orrolling out new products. And then finally learning and growth or L and G. Whatdo we do as a company to foster a climate that enables people to be innovative,and create new value for our customers?
What's interesting about balanced scorecard is, it wasrolled out in 1992, I think the last data that I saw is that more than half ofthe Fortune 1000 was using balanced scorecard. It's become clear organizing anda performance and a metric system for many corporations, and it's more relevanttoday than when it was rolled out in 1992.
