What is a Balanced Scorecard
A Balanced Scorecard is a tool that tracks company performance and aligns goals by measuring results across four perspectives. These areas are Financial, Customer, Internal Processes, and Learning & Growth.
What Are Balanced Scorecard Perspectives?
Financial metrics alone don’t show the full picture of an organization’s health. Tracking all four perspectives helps identify growth opportunities, improve long-term performance, and ensure the business is sustainable and competitive—not just profitable in the short term.
1. Financial Perspective
This perspective focuses on the financial health of the organization. It looks at profitability, return on investment (ROI), and cost management. Key performance indicators (KPIs) here include net profit margin and return on capital. Essentially, it helps ensure that the organization is generating sufficient revenue and managing expenses effectively.
2. Customer Perspective
The customer perspective emphasizes understanding and meeting customer needs. It measures satisfaction, retention, and market share. KPIs such as customer satisfaction scores and churn rates provide insights into how well the organization is connecting with its customers. Happy customers are more likely to stay loyal and recommend the business to others.
3. Internal Process Perspective
This perspective looks at the internal processes that drive the organization’s efficiency and quality. It focuses on optimizing workflows and ensuring that products or services meet quality standards. KPIs like process cycle time and defect rates help organizations identify areas for improvement and streamline operations.
4. Learning & Growth Perspective
The learning and growth perspective is all about building the organization’s capabilities. It focuses on training, innovation, and employee engagement. KPIs such as training hours per employee and idea-to-launch rates measure how well the organization is fostering a culture of continuous improvement and innovation, which is crucial for long-term success.
Who Uses the BSC?
From multinational corporations to government agencies and grassroots nonprofits, the balanced scorecard finds application in organizations of all sizes.
- Executives: Align board-level initiatives with tactical projects.
- Strategy Managers: Design and maintain scorecard frameworks.
- Project Leads: Track KPI progress and report outcomes.
- Consultants: Guide clients through BSC adoption.
- Technology Teams: Integrate data sources for automation.
- HR Leaders: Align training with growth metrics.
How to Make a Balanced Scorecard in Creately
Step 1: Define Vision, Mission, and Success Criteria
Establish a clear vision that outlines the long-term aspirations of the organization, ensuring alignment among all stakeholders. The mission should articulate the organization’s purpose, guiding day-to-day operations and strategic decisions.
Step 2: Identify BSC Perspectives and Objectives
Categorize your company objectives into four key perspectives: Financial, Customer, Internal Process, and Learning & Growth. This mapping helps ensure a holistic approach to strategic planning and performance measurement.
Step 3: Open a BSC Template
Start by selecting a suitable template from Creately’s list of balanced scorecard templates. Utilize this standard framework to add objectives under each perspective using sticky notes, or custom labels.
Step 4: Select KPIs and Set Targets
Identify key performance indicators (KPIs) that are quantifiable and directly related to the organization’s objectives. Establishing realistic targets for these KPIs provides a benchmark for success and motivates teams to achieve their goals. In Creately, these KPIs, data sources, and target values can be added as cards and linked with connectors to their objectives for context.
Step 5: Map Strategy and Link Initiatives
Visualize how initiatives drive strategic objectives using cause-and-effect diagrams to clarify priorities and resource alignment. Use Creately to build strategy maps with connectors to show these relationships.
Step 6: Choose Owners and Set Timelines
Assign specific individuals or teams as owners for each objective, fostering accountability and ownership of results. Additionally, define clear timelines for deliverables to ensure progress is tracked and maintained throughout the implementation process. You can assign these directly in the Creately canvas using task cards and tagging your team members to them.
Step 7: Share Scorecard and Communicate
Roll out the scorecard organization-wide with clear communication to drive adoption and alignment. Share your BSC workspace with view/edit permissions, embed diagrams into team wikis or dashboards, and use commenting tools for real-time collaboration and feedback.
Step 8: Review, Learn, and Iterate Regularly
Review performance quarterly, make improvements, and adapt strategy to stay aligned with evolving goals. Use Creately’s version history to track changes, update visuals in real time, and run review sessions with discussion threads.
Step 9: Use the AI Balanced Scorecard Template
You can skip the data gathering and organizing steps by using Creately’s AI balanced scorecard template. Simply enter your strategic goals as a prompt, and let the AI auto-generate objectives, KPIs, and initiatives across all four perspectives with a single click.
Free Balanced Scorecard Templates by Creately
History of the Balanced Scorecard
The Balanced Scorecard, introduced by Kaplan and Norton in 1992, evolved from a performance measurement tool into a strategic management system linking metrics to long-term goals. Initially adopted by Fortune 500 firms, it expanded to public and nonprofit sectors. Key milestones include the introduction of Strategy Maps in 2004, scorecard automation through software in the 2000s, and real-time dashboards in the 2010s which enhanced its use. BSC adoption peaked in the early 2000s, with over 50% of large organizations using the tool.
Helpful Resources for Making Balanced Scorecards
Use this AI-powered tool to instantly generate your Balanced Scorecard.
Find out what our Balanced Scorecard Template can do for you.
Learn how to master performance management with a Balanced Scorecard.
FAQs about Balanced Scorecards
Why Use a Balanced Scorecard?
What Are the Common Uses of a Balanced Scorecard?
What are Balanced Scorecard Advantages?
How is the Balanced Scorecard different from traditional KPIs?
Can small organizations use a Balanced Scorecard?
How often should a Balanced Scorecard be reviewed?
Resources
Kaplan, Robert S. “Conceptual Foundations of the Balanced Scorecard.” Handbook of Management Accounting Research, vol. 3, no. 3, 2009, pp. 1253–1269, https://doi.org/10.1016/s1751-3243(07)03003-9.
Perkins, Mike, et al. “What Do We Really Mean by “Balanced Scorecard”?” International Journal of Productivity and Performance Management, vol. 63, no. 2, 13 Jan. 2014, pp. 148–169, www.emerald.com/insight/content/doi/10.1108/IJPPM-11-2012-0127/full/html, https://doi.org/10.1108/ijppm-11-2012-0127.
