Explain the four perspectives of the balanced scorecard and how a balanced scorecard is related to a strategy map.
What will be an ideal response?
A balanced scorecard gives top managers a fast but comprehensive view of the organization via four indicators: (1) customer satisfaction, (2) internal processes, (3) innovation and improvement activities, and (4) financial measures.
The financial perspective answers the question "How do we look to shareholders?" by using financial measures.
The customer perspective answers the question "How do customers see us?" by translating the mission of customer service into specific measures of concerns that really matter to customers.
The internal business perspective asks "What must we excel at?" and looks at quality, employee skills, and productivity as internal things that must be done to meet its customers' expectations.
Finally, the innovation and learning perspective answers the question "Can we continue to improve and create value?" by creating a culture that encourages rank-and-file employees to make suggestions and question the status quo.
The balanced scorecard is related to a strategy map in that the strategy map is a visual representation of the four perspectives of the balanced scorecard that enables managers to communicate their goals so that everyone in the company can understand how their jobs are linked to the overall objectives of the organization.
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