Value-Based Management in Government

CHAPTER FOURThe Strategy Map and Its Balanced Scorecard

THE BALANCED SCORECARD, THE methodology developed by Drs. Robert S. Kaplan and David Norton, recognizes the shortcoming of executive managements' excessive emphasis on after-the-fact, short-term financial results. It improves organizational performance by shifting attention from financial measures to managing nonfinancial operational measures related to customers, internal processes, and employee innovation, learning, and growth. These influencing measures are reported during the period when sooner reactions can occur. This in turn leads to better financial results.

The balanced scorecard is one potential approach to completing the linkage between the setting of strategic direction and the organization's ability to deliver on that direction, thereby supporting the full vision of VBM. Will the adoption rate of the balanced scorecard find the same difficulty crossing the chasms encountered by activity-based costing (ABC) systems in the 1990s? It took many failures in ABC system implementations before organizations learned what ABC is and how to shape, size, and level the detail of ABC systems before organizations began to get them ready and right for use. Are balanced scorecard implementations going to travel down the same bumpy road?

There is lack of consensus as to what a balanced scorecard is. To complicate matters, many organizations initially start with developing a balanced scorecard without first developing its companion ...