{"id":39956,"date":"2020-01-17T09:58:22","date_gmt":"2020-01-17T15:58:22","guid":{"rendered":"https:\/\/balancedscorecard.org\/staging\/?page_id=39956"},"modified":"2020-02-10T15:03:07","modified_gmt":"2020-02-10T21:03:07","slug":"the-four-perspectives-of-the-balanced-scorecard","status":"publish","type":"page","link":"https:\/\/balancedscorecard.org\/staging\/bsc-basics\/articles-videos\/the-four-perspectives-of-the-balanced-scorecard\/","title":{"rendered":"The Four Perspectives of the Balanced Scorecard"},"content":{"rendered":"<p>[et_pb_section fb_built=&#8221;1&#8243; specialty=&#8221;on&#8221; custom_padding_last_edited=&#8221;on|phone&#8221; padding_top_1=&#8221;109px&#8221; padding_top_2=&#8221;0px&#8221; padding_bottom_1=&#8221;0px&#8221; padding_bottom_2=&#8221;0px&#8221; padding_1_tablet=&#8221;&#8221; padding_2_tablet=&#8221;&#8221; padding_1_phone=&#8221;109px||0px|||&#8221; padding_2_phone=&#8221;6px||12px|&#8221; padding_1_last_edited=&#8221;on|desktop&#8221; padding_2_last_edited=&#8221;on|phone&#8221; 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saved_specialty_column_type=&#8221;3_4&#8243; _builder_version=&#8221;3.25&#8243; custom_padding=&#8221;68px|0px|0px|0px&#8221; custom_padding_tablet=&#8221;&#8221; custom_padding_phone=&#8221;&#8221; custom_padding_last_edited=&#8221;on|desktop&#8221; padding_last_edited=&#8221;on|desktop&#8221; custom_padding__hover=&#8221;|||&#8221;][et_pb_image src=&#8221;https:\/\/balancedscorecard.org\/staging\/wp-content\/uploads\/2018\/07\/bsc_balanceman8-min.png&#8221; align_tablet=&#8221;center&#8221; align_phone=&#8221;&#8221; align_last_edited=&#8221;on|desktop&#8221; _builder_version=&#8221;3.23&#8243; max_width=&#8221;200%&#8221; max_width_tablet=&#8221;&#8221; max_width_phone=&#8221;200%&#8221; max_width_last_edited=&#8221;on|desktop&#8221; module_alignment=&#8221;left&#8221; custom_margin=&#8221;-7px|0px|-145px|0px&#8221; custom_margin_tablet=&#8221;-36px|-243px|-107px|-257px&#8221; custom_margin_phone=&#8221;46px|-100px|5px|-74px&#8221; custom_margin_last_edited=&#8221;on|phone&#8221; 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custom_padding=&#8221;0%||61px|&#8221; animation_style=&#8221;slide&#8221; animation_direction=&#8221;bottom&#8221; header_font_size_tablet=&#8221;&#8221; header_font_size_phone=&#8221;42px&#8221; header_font_size_last_edited=&#8221;on|phone&#8221;]<\/p>\n<h1>The Four Perspectives of the Balanced Scorecard<\/h1>\n<p>[\/et_pb_text][\/et_pb_column_inner][\/et_pb_row_inner][\/et_pb_column][et_pb_column type=&#8221;1_4&#8243; _builder_version=&#8221;3.25&#8243; custom_padding=&#8221;|||&#8221; padding_phone=&#8221;6px||12px|&#8221; padding_last_edited=&#8221;on|phone&#8221; custom_padding__hover=&#8221;|||&#8221;][et_pb_text _builder_version=&#8221;4.1&#8243; header_text_color=&#8221;#ffffff&#8221; custom_margin=&#8221;28px||||false|false&#8221; custom_margin_tablet=&#8221;&#8221; custom_margin_phone=&#8221;130px||||false|false&#8221; custom_margin_last_edited=&#8221;on|phone&#8221; custom_padding=&#8221;68px||||false|false&#8221; header_text_shadow_style=&#8221;preset1&#8243; global_module=&#8221;39878&#8243; saved_tabs=&#8221;all&#8221;]<\/p>\n<h1>For More Information<\/h1>\n<p>&nbsp;<br \/>\n\n\t\t\t\t\t<script>\n\t\t\t\t\t\twindow.hsFormsOnReady = window.hsFormsOnReady || [];\n\t\t\t\t\t\twindow.hsFormsOnReady.push(()=>{\n\t\t\t\t\t\t\thbspt.forms.create({\n\t\t\t\t\t\t\t\tportalId: 5279658,\n\t\t\t\t\t\t\t\tformId: \"5dc44a0f-8372-472e-a49d-06656599c2eb\",\n\t\t\t\t\t\t\t\ttarget: \"#hbspt-form-1776399393000-9698239780\",\n\t\t\t\t\t\t\t\tregion: \"\",\n\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t})});\n\t\t\t\t\t<\/script>\n\t\t\t\t\t<div class=\"hbspt-form\" id=\"hbspt-form-1776399393000-9698239780\"><\/div><\/p>\n<p>[\/et_pb_text][\/et_pb_column][\/et_pb_section][et_pb_section fb_built=&#8221;1&#8243; _builder_version=&#8221;4.0.6&#8243;][et_pb_row column_structure=&#8221;3_4,1_4&#8243; _builder_version=&#8221;4.0.6&#8243;][et_pb_column type=&#8221;3_4&#8243; _builder_version=&#8221;4.0.6&#8243;][et_pb_text _builder_version=&#8221;4.2.2&#8243;]<\/p>\n<h2><span id=\"dnn_ctr431_dnnTITLEH2_titleLabel\" class=\"titleH2\">The Four Perspectives of the Balanced Scorecard<\/span><\/h2>\n<div class=\"contentmain1\">\n<div id=\"dnn_ctr431_ContentPane\" class=\"contentpane DNNAlignleft\">\n<div id=\"dnn_ctr431_ModuleContent\" class=\"DNNModuleContent ModDNNHTMLC\">\n<div id=\"dnn_ctr431_HtmlModule_lblContent\" class=\"Normal\">\n<p>One of the signature features of the <a href=\"https:\/\/balancedscorecard.org\/staging\/bsc-basics-overview\/\">balanced scorecard<\/a> is that it looks at organizational performance from various Perspectives. Perspectives are the performance dimensions, or lenses, that put strategy in context. It takes several perspectives&#8212;usually four&#8212;to understand an organization as a system made up of elements that work together, like the gears in a clock or fine watch. Together, these elements create value, leading to customer and stakeholder satisfaction and good financial performance.<\/p>\n<h2><span id=\"dnn_ctr431_dnnTITLEH2_titleLabel\" class=\"titleH2\">Why Does Your Organization Need Perspectives?<\/span><\/h2>\n<p>Drs. Robert Kaplan and David Norton found in their initial work together that too many organizations were measuring their success only from a financial point of view and that a broader, more strategic set of dimensions was needed. The success of few strategies can be measured from only one point of view. The basic four perspectives enables the organization to use a <a href=\"https:\/\/balancedscorecard.org\/staging\/about\/what-is-a-strategy-map\/\">strategy map<\/a> to articulate to employees how value is created by the organization.<\/p>\n<h2><span id=\"dnn_ctr431_dnnTITLEH2_titleLabel\" class=\"titleH2\">What Balanced Scorecard Perspectives Should a Private Sector Organization Use?<\/span><\/h2>\n<p>The four perspectives of a traditional balanced scorecard are <strong>Financial, Customer, Internal Process,<\/strong> and <strong>Learning and Growth<\/strong>. In the <a href=\"https:\/\/balancedscorecard.org\/staging\/about\/nine-steps\/\"><em>Nine Steps to Success<\/em>\u2122<em><\/em><\/a>, the original Balanced Scorecard \u201clearning and growth\u201d perspective has been changed to \u201corganizational capacity\u201d, to reflect the internal capacity building needed to improve internal processes. The four components included in the organizational capacity perspective are human capital, tools and technology, infrastructure, and governance. Learning and growth takes place throughout the whole organization and during the execution of strategy, not just in one perspective. The image below shows the value creation story through the perspectives for business \/ commercial sector organizations.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/balancedscorecard.org\/staging\/wp-content\/uploads\/2020\/01\/Graphic-7-2-1024x633.png\" width=\"550\" height=\"354\" alt=\"\" class=\"wp-image-39962 aligncenter size-large\" \/><\/p>\n<p style=\"text-align: center;\"><span style=\"color: #1d5878;\"><strong>How Perspectives Show a Value Creation Story in Business \/ Commercial Organizations<\/strong><\/span><\/p>\n<h2><span id=\"dnn_ctr431_dnnTITLEH2_titleLabel\" class=\"titleH2\">What Balanced Scorecard Perspectives Should a Public Sector Organization Use?<\/span><\/h2>\n<p>Civilian government, defense and not-for-profit organizations are mission driven. These organizations use different value-creation logic than business and industry (profit driven) organizations. In <a href=\"https:\/\/strategymanage.com\/product-category\/books\/?__hstc=51463094.d17342a73cd88fcfd57e33dabc6ed923.1578930660058.1580319348054.1580395439895.46&amp;__hssc=51463094.25.1580395439895&amp;__hsfp=1856758919\" target=\"_blank\" rel=\"noopener noreferrer\"><em>The Institute Way<\/em><\/a>, mission-driven scorecard systems reflect the unique nature and value proposition of mission-driven organizations. Perspective nomenclature needs to reflect this difference. For example, governments are not in the business of making a profit, so a \u201cfinancial\u201d perspective can be a misleading way of identifying this perspective to stakeholders. \u201cFinancial stewardship\u201d might be more appropriate, as stewardship connotes a message of wise use of (&#8216;taxpayers\u2019 or &#8216;funders\u2019) money and fiduciary responsibility, rather than improved profitability and shareholder value. In military organizations, other government organizations and not-for-profits, terms like \u201cresource effectiveness\u201d or \u201cbudget effectiveness\u201d are commonly used. For not-for-profits, financial stewardship imparts the concept of using resources cost-effectively, something donors and funders would no doubt like to see. The image below shows the high-level value-creation story through perspectives for mission-driven organizations.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/balancedscorecard.org\/staging\/wp-content\/uploads\/2020\/01\/Graphic-7-3-1024x633.png\" width=\"550\" height=\"354\" alt=\"\" class=\"wp-image-39963 aligncenter size-large\" \/><\/p>\n<p style=\"text-align: center;\"><span style=\"color: #1d5878;\"><strong><span>How Perspectives Show a Value Creation Story in<\/span> Mission-Driven Organizations<\/strong><\/span><\/p>\n<p>Likewise, for the customer\/stakeholder perspective in the <a href=\"https:\/\/balancedscorecard.org\/staging\/about\/nine-steps\/\">Nine Steps Methodology<\/a>\u00a0(as detailed in\u00a0<em><a href=\"https:\/\/strategymanage.com\/product-category\/books\/?__hstc=51463094.d17342a73cd88fcfd57e33dabc6ed923.1578930660058.1580319348054.1580395439895.46&amp;__hssc=51463094.25.1580395439895&amp;__hsfp=1856758919\">The Institute Way<\/a><\/em>), words like client, member, solider and citizen are used because they emotionally tie the management system to the people or groups served by the programs and services of these mission-oriented organizations. For business and industry scorecards, the word \u201ccustomers\u201d is traditionally used to describe this perspective.<\/p>\n<p>In <em><a href=\"https:\/\/strategymanage.com\/product-category\/books\/?__hstc=51463094.d17342a73cd88fcfd57e33dabc6ed923.1578930660058.1580319348054.1580395439895.46&amp;__hssc=51463094.25.1580395439895&amp;__hsfp=1856758919\">The Institute Way<\/a><\/em>, the placement of perspectives on government and not-for-profit scorecards is differentiated. Financial should not be the top perspective for a mission-driven organization\u2019s scorecard because financial stewardship is not the end of the value chain for that type of organization&#8212;stakeholder satisfaction is the end of the value chain. For these organizations, the value chain ends not with improved business financial results (although that\u2019s a good thing!) but with satisfied members, citizens or other stakeholders. Putting the financial (stewardship) perspective in the second position from the top is more appropriate, as stakeholder satisfaction is derived in large part by the delivery of programs and services that are cost-effective and are judged necessary and sufficient. One client used a hybrid scorecard matrix putting the financial and customer perspectives on the top row to reinforce that both financial success and customer experience were equally important results. The <em><a href=\"https:\/\/balancedscorecard.org\/staging\/about\/nine-steps\/\">Nine Steps to Success\u2122<\/a><\/em> framework is very flexible to accommodate modifications like these and still keep scorecarding principles intact.<\/p>\n<h2><span id=\"dnn_ctr431_dnnTITLEH2_titleLabel\" class=\"titleH2\">Can I Change the Names of the Perspectives?<\/span><\/h2>\n<p>The perspective names can change to fit the culture of the organization, although the underlying focus typically does not. In other words, while a public sector organization might prefer the &#8220;Stewardship&#8221; label, the focus of the perspective should remain on financial performance. Choose labels that resonate with the organization\u2019s strategy and clearly communicate internally and externally. For example, one organization might use \u201cPeople and Tools\u201d instead of \u201cOrganizational Capacity\u201d (or \u201cLearning and Growth\u201d), and another might aptly describe this perspective as \u201cPeople, Knowledge and Technology\u201d.<\/p>\n<h2><span id=\"dnn_ctr431_dnnTITLEH2_titleLabel\" class=\"titleH2\">How Do I Learn More About the Balanced Scorecard Perspectives?<\/span><\/h2>\n<p>Check out our <a href=\"https:\/\/balancedscorecard.org\/staging\/training-certification\/balanced-scorecard-certification\/\">Balanced Scorecard Professional Certification<\/a> Program or <a href=\"https:\/\/balancedscorecard.org\/staging\/contact-us\/\">Contact Us<\/a> with questions to learn more about Perspectives or the Balanced Scorecard.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<p>[\/et_pb_text][\/et_pb_column][et_pb_column type=&#8221;1_4&#8243; _builder_version=&#8221;4.0.6&#8243;][et_pb_cta title=&#8221;Balanced Scorecard Professional Certification&#8221; 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srcset=\"https:\/\/balancedscorecard.org\/staging\/wp-content\/uploads\/2020\/02\/GWU-homepage-300x140.png 300w, https:\/\/balancedscorecard.org\/staging\/wp-content\/uploads\/2020\/02\/GWU-homepage.png 479w\" sizes=\"(max-width: 300px) 100vw, 300px\" \/><\/p>\n<p>[\/et_pb_cta][et_pb_cta button_url=&#8221;\/bsc-basics\/articles-videos\/&#8221; button_text=&#8221;Click Here&#8221; _builder_version=&#8221;3.21&#8243; header_level=&#8221;h3&#8243; header_font=&#8221;||||||||&#8221; custom_margin=&#8221;||8px|&#8221; custom_padding=&#8221;22px|0px|22px|0px&#8221; link_option_url=&#8221;\/bsc-basics\/articles-videos\/&#8221; locked=&#8221;off&#8221; button_text_size__hover_enabled=&#8221;off&#8221; button_one_text_size__hover_enabled=&#8221;off&#8221; button_two_text_size__hover_enabled=&#8221;off&#8221; button_text_color__hover_enabled=&#8221;off&#8221; button_one_text_color__hover_enabled=&#8221;off&#8221; button_two_text_color__hover_enabled=&#8221;off&#8221; 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