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Techniques
Balanced Scorecard
.4 Financial Dimension
The Financial dimension identifies what is financially necessary to realize the
strategy. Examples of financial measures indicate profitability, revenue growth,
and added economic value.
.5 Measures or Indicators
There are two basic types of measures or indicators: lagging indicators that
provide results of actions already taken and leading indicators that provide
information about future performance.
Objectives tend to have lagging indicators, but using related leading indicators
can provide more real-time performance information.
10.3.4 Usage Considerations
In order for measures to be meaningful they should be quantitative, linked to
strategy, and easily understood by all stakeholders. When defining measures,
business analysts consider other relevant measures that are in place and ensure
that any new or changed measures do not adversely impact any existing ones. At
any time, any dimension of the balanced scorecard may be active, changing, and
evolving. Each dimension affects and is affected by the others. The balanced
scorecard allows the organization to establish monitoring and measuring of
progress against objectives and to adapt strategy as needed.
Because scorecards are used to assess the performance of the enterprise or a
business unit within the enterprise, changes to the measures can have wide
reaching implications and must be clearly communicated and carefully managed.
.1 Strengths
• Facilitates holistic and balanced planning and thinking.
• Short-, medium-, and long-term goals can be harmonized into programs with
incremental success measures.
• Strategic, tactical, and operational teams are more easily aligned in their work.
• Encourages forward thinking and competitiveness.
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.2 Limitations
• A lack of a clear strategy makes aligning the dimensions difficult.
• Can be seen as the single tool for strategic planning rather than just one tool to
be used in a suite of strategic planning tools.
• Can be misinterpreted as a replacement for strategic planning, execution, and
measurement.
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