A balanced scorecard (sometimes abbreviated to BSC) is a conceptual framework used in business execution software and in less automated strategy execution. While there is no single standard report or scorecard that can account for the details of every business- each one operates in their own specialist niche and each one uses different methods to achieve their various goals- the balanced scorecard method has been widely adopted and adapted to meet the needs of a diverse range of companies.
Every business has goals, both financial and non-financial. The bottom line is integrated into the balanced scorecard method, but the aim of most business execution software is not just to measure performance against target levels. In order to make progress, the causes of success or failure in each area must be pinpointed. Balanced scorecards allow executives and managers to view the links between poor, average, or outstanding performance in any sector and the performance of the company, measured against set goals.
The aim is to concisely summarise not just the level of success meeting and exceeding targets, but the employee activities that impact them. Like all popular strategy execution measurement tools, balanced scorecards should be brief enough to be easily understood but powerful enough to convey actionable insights.
The balanced scorecard is one of the many methods used to make the jump from data regarding profits and losses, targets, and staff action or inaction to useful information. By providing a clear and easy to understand template, standard approaches like balanced scorecards allow analysts to more quickly process business data, and end users can get results in a format they recognise.
While there are many competitors to the balanced scorecard approach, it is undoubtedly one of the most popular management analysis tools in use today. It forms the basis of several high-profile software tools and has given rise to any number of derivatives and variations- the most certain sign of a sound concept.