A balanced approach [balanced scorecard]

During the early part of the 20th century, performance focus was primarily result driven and this did not matter as huge growth and demand dictated financial results, not the effectiveness of underlying process. However, with the maturity of manufacturing and commodity markets, internal processes and organizational culture became a significant lever to financial outcomes. The concept of the balanced scorecard was first introduced by Robert Kaplan in 1992 in the Harvard Business Review, in which the premise was that a business should not only measure its financial output but also other areas of performance. Furthermore it should give these areas the same focus as financial performance. Kaplan showed that these measures are interdependent and, without a balance on all areas, world-class sustainable performance cannot be created. Thus, the balanced scorecard concept is a unique way of measuring performance - a visual, sustainable and accountable process, managed locally - yet with a direct impact on the bottom line. This approach is different from traditional target setting that often focuses on pure output rather than on improving and sustaining the underlying process.