The balanced scorecard (BSC) is a management tool that lets you move beyond backward-looking financial-only metrics to a more holistic view of your business from four different perspectives. The four BSC perspectives can be arranged in different formats. The most common is a vertical linear progression upward from learning and growth at the bottom, to process, to customer, and finally to financial. This example is a rudimentary scorecard for a hypothetical healthcare organization:
Although not necessarily linear, the above progression follows a certain logic: how do we organize our policies, people and technology (learning and growth) to execute our work (process) to provide value to customers (customer) to generate a profit (financial) so we are sustainable? Each perspective asks what success looks like from its unique vantage point:
- What financial performance is required to sustain and grow the enterprise?
- Who are our customers, how do we create value for them, and what makes us unique in creating it?
- At which processes must we excel to meet our customer and financial objectives?
- What employee competencies, information systems, and organizational culture do we need to continually improve our processes and customer relationships?
The value of the BSC is that it is an established methodology, with a large and thriving community of practitioners generating an ever-increasing body of knowledge that can be learned, improved, and taught. The inventors, Robert Kaplan and David Norton, first introduced the BSC in a 1992 article in Harvard Business Review. Since then they have published at least five books and countless articles on the topic. Others have expanded the methodology into various domains, including healthcare.
This post is part 2 of 5:
- Macro, meso, and micro management methodologies;
- Example of a balanced scorecard for a healthcare organization (you’re reading it!);
- Using a strategy map to illustrate value creation for a health clinic;
- A process map for the employee journey;
- Procedure checklists and workflow automation.